Was Joseph Greenhut “Svengali of The Whiskey Trust”?

       

In his pioneering 1963 book on American whiskey,  Gerald Carson called Joseph Greenhut:  “The organizer and promoter, the diplomat, the handler of men, the Svengali of the Whiskey Trust….”   In a 2013 account Clay Risen has termed Greenhut, shown here,  “immensely corrupt” and a “conniving stereotype of the Gilded Age tycoon.”  Yet a 1902 biography extolled the same man as “…Honored by all who know him…for his generosity , his ability as a man of business and his sterling upright character.”   What is going on here?

The answer lies somewhere in the story of Joseph Bendist Greenhut, born in February 1843 at a military post in Teinitz, Austria.  After his father’s death and his mother’s remarriage, the family moved to Chicago when Joseph was about nine years old.  His formal schooling ended at the age of 13 when he was apprenticed to learn tin and copper smithing.  That trade took him to Mobile, Alabama, for two years, where he may have developed a strong antipathy to slavery.

When the Civil War broke out Joseph immediately returned to Chicago and in April 1861 became city’s second enlistee as a private in the 12th Illinois Volunteers.  Soon promoted to sergeant, Greenhut was badly wounded in the right arm during Grant’s attack on Fort Donelson, and sent home to recover.  By 1862, the Austrian immigrant was back in uniform and captain of Company K, 82nd Illinois Infantry.  

Greenhut subsequently fought in the Virginia campaigns and was at Gettysburg where he displayed conspicuous bravery.  He was transferred to General Hecker’s staff as the adjutant-general and in this command experienced more hot combat, particularly at Lookout Mountain in the battle for Chattanooga.  Later he would be appointed one of three Illinois commissioners for monuments on the Gettysberg battlefield, including one for the 82nd Illinois, shown here.

When his health seriously deteriorated in 1864, Greenhut was forced resign his commission and given the rank of brevet-colonel.  He returned to Chicago where initially he used his metal-crafting capabilities to fashion a number of useful agricultural and other mechanical devices.  Joseph also found a wife in the Windy City.  In October 1866, he married Clara Wolfner, a woman extolled as a “true helpmate” who is reputed to have taken a deep interest his undertakings and encouraged his ambitions.  The couple would have four children, Fannie V., Benist J., Nelson W., and a son who died in infancy.

Perhaps it was the financial challenge of his growing family that caused Greenhut to make a sharp pivot away from mechanics to the whiskey trade.  Over the next few years he worked for several Chicago liquor houses, in 1869 rising to secretary-treasurer of one.  But Joseph’s ambition had a wider scope than anything Chicago could offer.   Peoria, Illinois, to the south provided more expansive grounds for a go-getter’s whiskey interest.

In late 1879 when he arrived in Peoria, the thriving downtown shown here, Greenhut is said to have come with just $50 in his pocket, indicating that his Chicago experience had not proved particularly lucrative.  Boasting some 73 distilleries operating between 1837 and 1919, Peoria often was called the “Whiskey Capital of the World.”  The city was renown in the trade because of its plentiful supply of grain; clean and abundant spring water;  convenient rail, water, and road transportation, and ample wood and coal for fuel.

Greenhut took a job with a grain dealer who also ran a distillery to use surplus grain and to sell spent whiskey mash for cow feed.   Within two years, the German immigrant rose to the top of the distilling division and in 1881 broke away to start his own distillery.  Shown above, Greenhut called it “The Great Western Distillery,” a facility that became among the nation’s largest.  Even after a disastrous fire that destroyed the plant, right, he quickly rebuilt and resumed making whiskey.

By the early 1880s overproduction of whiskey had caused prices to decline to the great alarm of the distilling community.  Initial attempts to curtail production proved unsuccessful. In 1887 Greenhut and other distillery owners, using as a model the Standard Oil Trust, created the Distillers and Cattle Feeders Association, better known as the “Whiskey Trust.”  At its formation the Trust combined 65 distilleries, including 24 in Illinois.  Twelve were in Peoria, that became its headquarters at 217 N. Jefferson Avenue.  One of nine trustees and a moving force, Joseph Greenhut was elected its president.   He had reached the pinnacle of the liquor industry.  

In its early days, the Trust made a profit and paid dividends.  Those payments were made to convince still other distilleries to join.  Some did.  Compensation also was given to wholesale dealers and “recifiers” (whiskey blenders) who promised to buy only from Trust distillers.  For holdouts, the Trust would move into an area and undercut their prices—join the Trust or go out of business.  Sometimes the Trust used violence.  A Chicago hold-out, the H. H. Schufeldt company, was dynamited.  [See my post on Schufeldt, June 4, 2012.]

Greenhut was responsible for bringing to the United States a Japanese scientist, Dr. Jokici Takamine, with an idea for cutting distilling costs.  The scientist is shown above left with Greenhut in a cartoon.   Central to distilling is an enzyme obtained from malt made by germinating barley.  As Takamine knew, the enzyme in Japan is derived from a fungus grown on rice and is far more active and less expensive to prepare than malt.  The scientist saw commercial opportunities for the process in the American liquor business.  Greenhut envisioned a way of cutting costs for Trust distilleries and set Takamine up with a laboratory.  In the end nothing came of the experiment. [See my post on Takamine, August 5, 2018.]

The Whiskey Trust initially flourished.  Although more than 80 distilleries joined the monopoly, only a handful were allowed to continue production.  From 1888 to 1895, its heyday, the Trust produced 300.4 million gallons of alcohol.  That was 75 percent of all alcohol made in the United States.   With that seeming stranglehold on American whiskey production in 1888 Greenhut and the Trust responded by raising prices, in part to help pay off extravagant bonuses they earlier had promised to distillers who joined.

When that strategy simply brought into the marketplace new distilleries with lower  whiskey prices, Greenhut tried a series of ploys, including reneging on bonuses and rebates to get funds to buy additional distilleries.  The Trust slowly was  sliding into insolvency.  Increasingly the Trust president was being blamed.  Whiskey men and others holding a vast majority of the stock demanded a meeting with him and his fellow directors.  Greenhut tried one more gambit.  He asked a federal court to “appoint a receiver to control the assets and ensure their responsible use” and then sought appointment as a receiver.  Dissident stockholders protested and the judge agreed with them.  After eight years, Greenhut was out.  With him went his son, Benedict, who had been hired as his father’s personal secretary.

Nevertheless, Joseph Greenhut exited a very rich man.  His 35-room mansion on Peoria’s Sheridan Street, shown here, featured a tall tower, a turret and a glass conservatory.  It was of red brick construction and had an adjacent carriage house, replete with white cast iron horse heads.  As testimony to his influence, in 1889 Greenhut entertained President William McKinley there.  He had met McKinley during the war.  He also boasted a beachfront house on the New Jersey shore that in 1916 he loaned to President Woodrow Wilson as a Summer White House. 

Having exited distilling, Greenhut remained as president of the National Cooperage and Woodware Company of Peoria, accounted one of the country’s largest, and was a major investor in the Central Railway Company, later the New York Central.  He also was heavily into banking, including Peoria’s German-American Bank, the Merchants National Bank, and the National Bank of the Republic located in Chicago. He is credited with founding the Glucose Company of America.

Greenhut eventually sold his Peoria home to a brother-in-law and moved to New York City.  There he bought a major Gotham dry good store known as Siegel-Cooper. Son Benedict joined him there as secretary-treasurer of the corporation.  After more than a decade of living in New York,  Joseph died in November 1918, age 75.  He is buried adjacent to Clara in Salem Fields Cemetery of Brooklyn, right, in a family mausoleum.  His estate has been estimated at $10 million, 20 times that in today’s dollar.

Greenhut made sure that Peoria would remember him fondly for a long, long time.  He made a two-thirds contribution toward the erection of Peoria’s the Grand Army of the Republic Building, designated as the “Greenhut Memorial Hall.”  Even today portraits of Joseph and Clara are displayed there and a plaque outside commemorates his contribution.  

Greenhut also underwrote the construction of the Civil War Soldiers and Sailors monument in Peoria’s Courthouse Square.  Additionally, in 1902 a biographer opined:  “Mr. and Mrs. Greenhut are noted for their helpfulness to the poor and all in want or trouble.”

Others might argue that Greenhut’s philanthropy might have emerged from ill-gotten gains.  Carson asserts that:  “Greenhut found his metier in manipulating stocks for the benefit of insiders….”  Risen similarly points out that the whiskey man was repeatedly accused of financial impropriety:  “…Rumors floated around Wall Street that its stock was inflated  by 10 times what the company [Trust] was worth, and that Greenhut was skimming off the difference.”

For all that, despite vigorous attention from federal and state authorities, Greenhut was never accused of a crime or brought before the bar of justice. Moreover, Charles C. Clarke, a Peoria distiller who early broke from the Trust,  testified before a Congressional committee that poor management practices, not fraud, ultimately doomed the monopoly.  Those flaws certainly can be laid at the feet of Greenhut as Trust president.  But bad judgment is not a crime.  Analysts in our own day have concluded that given the nature of the U.S. distilling industry it was impossible from the outset for the Trust entirely to corner the market on whiskey.  Thus, the true character of Joseph Greenhut remains an enigma.

Note:  This vignette has been created from a wide number of sources.  Principal among them are Gerald Carson, “The Social History of Bourbon,” 1963;  Clay Risen in an article in the Virginia Quarterly Review, October 28, 2013; and the “Encyclopedia of Illinois & History of Peoria County,” ed. David McCulloch, 1902.  This McCulloch is not the famed American historian.

Whiskey Men Abetting the Whiskey Trust

Foreword:  Founded in May 1887, the Whiskey Trust was an attempt to corner the market in U.S. whiskey production, severely limit competition, and thereby drive up prices.  Organized in Chicago as the Distilling and Cattle Feeding Company, within a year after its formation the Trust had absorbed 81 distilling companies across America and is said to have controlled 75% of total U.S. whiskey production.  This post describes briefly four whiskey men who were not among the founders of the Trust but found it advantageous, for a variety of reasons, to play along.  A subsequent post will profile whiskey men who opposed the Trust and helped bring it down.

An immigrant from Northern Ireland as a child with his family,John Beggs early moved into making whiskey, operating distilleries in Ohio and Indiana before settling in Terre Haute, Indiana.  There he purchased a major interest in the Wabash Distilling Company, serving as treasurer.  Still only 50 years old, John Beggs was ready for new ventures and when the Distilling and Cattle Feeding Company was being formed, he was an eager participant, closing down one of his own distilleries and working vigorously to increase whiskey prices by shutting down other small distilleries.

As the Trust took over supervision and operation of a number of Midwest distilleries, Beggs was tapped for an executive position.  In 1894 he resigned his position with the Wabash Distilling Company and moved to Peoria, Illinois, where he became a vice president for that monopolistic enterprise.  He spent much of the remainder of his working career in its employ.

From their base in Lexington, Stoll family members at various times owned part or all of five Kentucky distilleries, bought and sold them frequently, and played cozy with the Whiskey Trust.  Their gambits in the liquor trade did not bring them lasting fame but in their own time earned them grudging respect as canny businessmen.  The eldest, born in 1851, was Richard P. Stoll, shown here, whose jutting chin and stern demeanor give some hint of his determination to succeed. 

In May 1897 the assets of Kentucky’s Ashland Distillery, shown here, were assigned to Richard and his brother James S. Stoll, as receivers.  The major asset was 10,000 bottles of  quality whiskey in bond.  Two years later the distillery was sold at auction for $61,000 to a “straw bidder” for the Kentucky Distillery & Warehouse Company, a subsequent iteration of the Whiskey Trust. The cartel was now a major force in Kentucky distilling and Charles H. Stoll was the Trust’s attorney who engineered the deal.  

As the Stolls' relationship with the Trust ripened they deeded another of their Kentucky distilleries to the Trust and promptly were allowed to expand production.  Returning the several favors the Stolls had bestowed on it, the Trust reciprocated in 1902 by ceding the family the Bond & Lilliard Distillery located in Anderson County.  In March 1905, once more with Trust assistance, the Stolls acquired the Belle of Nelson and the E. L. Miles distilleries, both located in New Hope, Kentucky.  With those acquisitions the Stolls now were running the largest whiskey-making operation in Kentucky.  

Their new unified corporation featured James Stoll as the president and George J. Stoll III and Richard’s son, John G. Stoll, as vice presidents.  Suggesting the Stolls' continued relationship with the Whiskey Trust, the cartel’s man, Samuel Stofer, was secretary and treasurer.   That arrangement was in place only one year when James Stoll died in May, 1908.  With James’ death the Stoll liquor empire rapidly came to an end.  Stoll distilling interests were ceded in their entirety to the Trust, the organization that all along had controlled much of the family’s whiskey.  

In failing health and only three years from his death, Charles Corning Clarke, seen here in his late 30s, was summoned in 1899 from his Peoria, Illinois, home to testify to an elite Washington, D.C., Commission investigating the Whiskey Trust.  He knew a lot about the organization. While not a founding member, Clarke early brought his distillery into its fold. When asked why, he replied: “I went into the first Trust because I was glamoured with the pictures that were painted of fancy profits, and also because of the intimations that, if I did not go in, the Trust would get after my customers and make life a burden to me....After some time I agreed to do it. I regretted it from the day I went in, although I secured very good profits for a long time.”  

The Trust shut down the Clarke Bros. distillery, gave the Clarkes $100,000 in stock, and put Charles and his brother each on the payroll for $5,000 a year, a substantial salary in those days. When the stipend ended as the Trust fell into financial difficulties, Charles broke out of the monopoly in 1885 and began distilling again as independent operator. He continued to be harassed by Trust forces but persisted. 

In his testimony to the Commission Clarke was cautious. He revealed nothing very new, restating only the obvious. The Trust was, Clarke testified, “bound to fall of its own weight”  because of poor management.  He argued against passing new antitrust laws. The Commission, however, did not agree and in concluding its work in 1902 recommended stronger legislation. President Theodore Roosevelt agreed, ushering in the “Trust Busting Era” in American history.

The Commission was particularly focussed on the Trust’s use of violence to get its way.   On December 11,1888, at 6:15 a.m., a tremendous explosion had rocked Chicago’s Shufeldt distillery, smashing windows for blocks around and creating panic in the neighborhood.  Someone had thrown two packages of dynamite, containing seven sticks each, onto the roof of the distillery storeroom.  There were no other clues.  But Thomas Lynch knew the culprits all too well.

Beginning about 1871, Lynch was running the Henry H. Shufeldt distillery in Chicago and was outspoken about the Trust.  “How such an organization as the ‘Trust’ is allowed to exist, I cannot understand.  It has issued $35,000,000 of certificates and I can prove that it is not in possession of more than $4,000.000 worth of property,” he said.  A lawyer for the Trust complained that Lynch’s company was making money while the Trust was losing it by paying big salaries to former owners, carrying closed down plants in its capital accounts and shouldering other expenses.   He suggested:  “The Trust might easily put up the price of spirits but it cannot do so as long as Shufeldt holds out and it would be a mighty good thing for the Trust if Shufeldt is out of the way.” 

Accordingly, in 1888 the Trust decided on concerted action against Lynch and Shufeldt.  In September a valve on a vat was found to have been tampered with to the extent that it might have caused an explosion.  Only by luck was a worker able to spot the sabotage. Three months later the distillery was dynamited. The Trust denied all knowledge of the incident.  Eventually, however, the secretary of the Trust, a man named Gibson, was arrested and indicted by Federal authorities for attempting to sabotage the Shufeldt plant.  Acquitted, Gibson resigned from the Trust and with a $290,000  “gift” from the cabal fled to Cuba and later died there.  

The “big bang” worked a change of attitude on Thomas Lynch.  He sold out to the Trust for a reported $1.75 million but would not admit that he was capitulating.  “Mr. Lynch insisted to the last that he was not aware he was selling out to the Trust….”  It was, nevertheless, the Trust that owned H.H. Shufeldt Co. from 1891 on. It closed down the Chicago distilling and rectifying operation, shown here, and moved its equipment to Pekin, Illinois. 

Charles C. Clarke and "The Whiskey Trust"

In failing health and only three years from his death, Charles C. (for Corning) Clarke, seen here in his late 30s, was summoned in 1899 from his Peoria, Illinois, home to testify to an elite Washington, D.C. investigating commission about one of America’s most notorious organizations, known popularly as “The Whiskey Trust." That monopoly bore a reputation for ruthlessly shutting down distilleries throughout the Midwest and beyond, reputedly using dynamite when necessary.

 Charles’ father was one of Peoria’s pioneer distillers. Born in 1821 in Northhampton, Massachusetts, the elder Clarke had a natural head for business. He started distilling whiskey about 1860 in Peoria, seen here in panorama. His enterprise was assisted by his friendship with Abraham Lincoln and other prominent Republican politicians. 

Charles, the eldest son, was born in 1856 and educated in the Peoria, graduating from the local high school. Early on he began working at his father distillery but his health was fragile. As part of his recuperation the young Charles went to Montana for a better climate and went into business raising cattle. Although ranching was physically and financially beneficial to him, his father’s retirement brought the young man back to Peoria in 1880. 

Taking up the family distilling business, he formed a partnership with his youngest brother, Chauncey, and called the firm Clarke Bros. & Co. The distillery stood on Grove Street, at the foot of Persimmon in Peoria. It produced a number of brands, including Castle Rock, Checker Board, Elkhorn Gin, Kickapoo Bourbon, Pearl Spirits, and R.D.C. Bourbon. The flagship brand was Clarke’s Pure Rye. 

Clarke Bros. operated at a tumultuous time in American distilling history. Anxious to insure high profits, a number of Midwest distillers in 1887 organized a monopoly under the name of the Distillers and Cattle Feeders’ Trust. Headquartered was in Peoria, it quickly became known as “The Whiskey Trust.” 

When a distillery joined the Trust its owners received stock but surrendered control of their operations to a board of trustees. Of some 86 distilleries that eventually joined (or were forced into) the Trust, only about a dozen were kept operating. The rest were shut down. The idea was to corner an overwhelming market share and fix prices to insure ample profits. At the time such business practices were still legal. Criminal activity, however, often was alleged in the strong arm tactics employed by the Trust, including bombings, against distillers who refused to join. 

No evidence exists that Charles Clarke was involved in any mayhem, but he knew a lot about the Whiskey Trust. . While not a founding member, Charles early brought his distillery into its fold. When later asked why, he replied: “I went into the first Trust because I was glamoured with the pictures that were painted of fancy profits, and also because of the intimations that, if I did not go in, the Trust would get after my customers and make life a burden to me....I was quite a young man at the time and did not like to go into a combination and lose control of my business, but after some time I agreed to do it. I regretted it from the day I went in, although I secured very good profits for a long time.” 

The Trust shut down the Clarke Bros. distillery, gave them $100,000 in stock, and put each of the brothers on the payroll for $5,000 a year, a substantial salary in those days. When the stipend ended as the Trust fell into financial difficulties, Charles broke out of the monopoly in 1885 and began distilling again as an independent operator. He continued to be harassed by Trust forces but persisted.  Amid the tumult he was married in 1892 to a young widow, Alice (Chandler) Ewing. Charles and Alice would have three children: Alice, born in 1893 who died five years later, Charles C., born 1895; and Margaret, born 1897. 

Beginning about in 1889 the revived Clarke Bros. dropped the most of its other brands to concentrate on merchandising Clarke’s Pure Rye. It was sold in clear glass bottles with little embossing and paper labels. About 1990 Clarke Bros. built a new facility at the foot of Pecan and South Peoria Streets, illustrated here, boasting that it was the “largest whiskey distillery in the world.” 

 It also incorporated as Clarke Brothers Distillery. Its letterhead and ads stressed its “independent” status -- by inference a jab at the Whiskey Trust. The most unusual merchandising strategy employed by Clarke Bros. was plastering the face and body of an elderly and sickly looking man on its advertising. This geezer shows up on items from hand mirrors to decorative plates, canvas and wooden bar signs. 

As the company prospered it also became known for its giveaway items. On saloons featuring its whiskey it showered shot glasses, tip trays back of the bar bottles, and attractive “nips, ” including a hollow dog with a pottery and cork stopper at the rear and Clarke’s Pure Rye written across its back. 

While Clarke Bros. & Co. were prospering as an independent distillery, Federal authorities were increasingly becoming concerned about the Whiskey Trust. President William McKinley in 1898 had appointed a special Industrial Commission to investigate monopolistic practices in a wide range of industries, It was chaired by a close friend of the President, Andrew L. Harris, a former Ohio governor and Civil War general. Federal investigators saw Charles Clarke as a key witness who might, under oath, disclose the full inside story of this secretive organization. 

Being summoned to Washington by a high-powered investigative panel likely held no fears for Charles. His father had been a a well-known figure in the Republic Party both nationally and in Illinois. Clarke himself, running on the GOP ticket, had been elected twice as major of Peoria, the first time when he was only 36. In short, this witness was accustomed to the rough and tumble of politics. The New York Times of May 14, 1899, headlined his testimony before the Commission. 

Clarke was cautious. He revealed nothing very new, restating only the obvious. The Trust was, Clarke testified, “bound to fall of its own weight.” He argued against passing new antitrust laws. The Commission, however, did not agree and in concluding its work in 1902 recommended stronger legislation. Teddy Roosevelt, by then President, agreed, ushering in the “Trust Busting Era” in American history. 

By then the Whiskey Trust had disintegrated into several organizations and Charles Clarke was dead in 1902, only 46 years of age. He had never been in good health and it is speculated that the strain of the past several years had taken their toll. One obituary said: "Few men in Peoria developed a better capacity for business, and no man had a better reputation for integrity and honor than Charles C. Clarke."  

After Charles’ death, the company remained under members of the Clarke family. They advertised their rye widely as meant for “family and medicinal use” but eventually the company was closed down by Prohibition. Ironically, the Whiskey Trust may have had the last laugh on the Clarkes. After Repeal one of its Peoria-based remnants called U.S. Industrial Alcohol, Inc., bought their facility and sold the Clarke Bros. brand name to another distiller.