In August 1918 the monopolistic attempt to corner the market on American whiskey sales known as the Kentucky Distilleries & Warehouse Company came to a crossroads. This expression of a Whiskey Trust held a stranglehold on whiskey manufacturing in Kentucky. More recently, however, the combine had experienced problems related to increased economic and social pressures. From its headquarters in Louisville’s Stark Building, Trust officials held what at first glance appeared to be a “fire sale” of 17 Kentucky distilleries among the many it owned or controlled. Hostile press accounts cheered that the auction signaled the demise of the syndicate. But did it?
The Trust distilleries “on the auction block” included producers of well-known Kentucky bourbon brands. Among them were five, each facility captured in an illustration below.
Keller Company, Cynthiana, KY: Established as early as 1840 by Abraham Keller, this distillery, operated under his management for two decades, brought him fame throughout Kentucky and beyond. Although Keller sold the facility before the out break of the Civil War, subsequent owners kept his name on the company. Acquired by the Trust in 1902, its executives continued to market A. Keller whiskeys. By 1910 they had expanded the distillery, shown below, to increase mashing capacity to 450 bushels a day and warehouse capacity to capacity to more than 30,000 barrels.
W.H. McBrayer, Lawrenceville, Ky. William Harrison McBrayer, called Judge McBrayer, is credited with being among the handful of Kentucky distillers who raised the quality and image of the state’s whiskey to international renown. His Cedar Creek brand was called: “The whiskey that made the crowned heads of Europe turn from Scotch to bourbon.” In 1900 McBrayer heirs sold the distillery to the Trust. By then, as shown below, it had three ironclad warehouses and a number of outbuildings.
J. M. Atherton Co., Knob Creek, Ky. After the conclusion of the Civil War, John Atherton, 26 years old, built a new distillery on the bank of Knob Creek and gave it his own name. Shown below, this plant was capable of processing one hundred bushels a day to make about seven barrels of what was known as “sweet mash” whiskey. In 1869 he purchased an interest in a small distillery owned by a man named Thompson and the next year bought him out entirely. Atherton moved this facility to the east bank of Knob Creek, across from his first distillery, calling it the Mayfield Distillery. As a harbinger of the philanthropic efforts in his future, Atherton created homes, a school and a church for his workers at both plants, calling the complex “Athertonville.”
T. J. McGibben, Cynthiana, Ky. During the 1850s, McGibben brought a distillery he called “Edgewater” and named his flagship brands “Edgewater Sour Mash Whiskey” and “Edgewater Rye.” As sole owner, Megibben lost no time in improving and enlarging the distillery. It was expanded over time into a large complex, featuring five warehouses with the capacity to hold 25,000 barrels of aging whiskey. McGibben’s whiskey was one of the Kentucky brands featured at the 1893 Columbian World’s Fair in Chicago. Subsequently a Kentucky publication boasted that Edgewater Whiskey “is to be found in nearly every first-class hotel and bar in this country.”
Wiley Searcy, Anderson County Ky. In 1886 Searcy is recorded as having purchased a distillery that had been established in Anderson County in 1818 When Searcy bought it, according to insurance records, the distillery was of frame construction with a metal or slate roof. The property included two bonded warehouses. The Captain wasted no time in advertising his “Old Joe” brand of whiskey. His product contained “no jug yeast,” he claimed and was “The best whisky that can be made.”
These were just five of the many Kentucky distilleries acquired by the Trust over time and shut down, leaving scores of distillery workers without jobs, in the syndicate’s effort to corner American whiskey production. By 1918, however, the Trust had suffered a number of setbacks. Its efforts at gobbling up the rye distilleries of Pennsylvania and Maryland failed. A strong backlash among distillers and whiskey blenders led to new competition. The WWI ban on alcohol sales for beverages threatened production. Last, but by no means least, prohibitionary forces had dried up markets in many states and localities.
The “fire sale” approach by the Trust, however, was deceptive. As the terms of sale advertised in the Louisville Courier Journal clearly stated: ”There will be reserved from sale all distilled spirits now in bond on any of said premises.” In addition to continuing to owning that whiskey the Trust retained the right to bottle and market it under established brand names, apparently in perpetuity. In effect, the Trust was selling its liabilities — shuttered distilleries — while keeping the assets — the stored whiskey — for itself. Moreover, the longer that whiskey aged, the more valuable it became.
The Eastern financiers behind the effort to monopolize the whiskey market further refocused their efforts in March 1919 by incorporating the Kentucky Distilling and Warehouse Company and other holdings into the Distillers Security Corporation. That entity owned or controlled 13 active plants located in Peoria and Pekin, Illinois; Louisville, Baltimore and New Orleans. Other distilleries were converted to manufacture “cereal products, food and feed products, syrups, alcohol, yeast, vinegar, glace fruits, fruit butters, malt, etc.” Management was under the aegis of another new entity, the U.S. Food Products Corporation.
Yet another Trust subsidiary was organized explicitly to sell whiskey abroad called the “Trans-Oceanic Commercial Corporation” with offices at 25 Broadway, New York City. It was incorporated at $1,000,000 to “carry on an export business in whiskies, spirits, alcohol and other products.” The canny “money men” guiding the fortunes of the Trust believed that impending National Prohibition might offer them better opportunities by selling liquor overseas.
Those machinations have been described in detail by Laura Field, a Philadelphia-based whiskey specialist, who has reviewed the tangled story of the Trust in detail. She notes: “The Kentucky Distillers and Warehouse Co. was well positioned after Prohibition as the largest holder of aged whiskey stocks in Kentucky. The Whiskey Trust created their own consolidation warehouses to bring as much of their assets into nine warehouse locations in Kentucky.”
The U.S. Food Products Company and the Kentucky Distilleries and Warehouse Company were merged in 1924 by the New York money men to become National Distillers. Field relates: “In 1933, when Repeal became imminent, National Distillers began to buy up any remaining/available aged whiskey stocks in the United States. Two Pennsylvania distillery locations with large rye whiskey stocks remaining were purchased….” Rye supplies earlier denied the syndicate now had come under control of this Trust clone. By 1934, National Distillers had cornered about half of all the Nation’s aged whiskey just as National Prohibition ended.
Field believes that the history of the Whiskey Trust’s was “riddled with corruption.” Its tortured history bears her out. The 1918 sale that shut many of the most prestigious Kentucky distilleries resulted in attracting only a single bid, one submitted by a Trust “insider” group of investors. Reviewing that outcome the New York World commented: “The Whiskey Trust’s plan of reorganization is as unlawful as a burglary.” Indeed!
Notes: To learn more about Laura Field, shown here, check out her personal blog, Dram Devotees. She has done excellent research into areas of whiskey production both historical and contemporary. Earlier posts on each of the five distillers featured above may be found elsewhere on this website: Keller, Aug. 1, 2017; McBrayer, Oct. 2, 2011; Atherton, Feb. 12, 2015; McGibben, Sept. 26, 2015; and Searcy, June 22, 2013.
No comments:
Post a Comment