Bourbon is America’s native spirit. Federal law says so. But for people in Louisville, bourbon is even closer, sentimentally and literally. The city developed quickly through the growth of the bourbon industry, and the current downtown resurgence depends largely on spirit’s continued popularity.
But it’s been a twisted path from the first batch’s debut and the latest distillery ribbon cutting. It’s a story of taxes, Prohibitions, power and capitalism.
It’s a story we asked four locals to tell, and we present it to you here, with this oral history of bourbon and Louisville.
Our guests are:
Michael Veach with the Filson Historical Society
Tom Owen, Metro Councilman and historian
Larry Rice, managing partner at the Silver Dollar
Kevin Yates, co-founder of Bourbon Built, an apparel and merchandise business
A Business Opportunity
Veach: They weren’t selling Kentucky whiskey down in New Orleans. What was selling down in New Orleans was French brandy. In order to sell our whiskey in New Orleans, they decided to make our whiskey taste more like French brandy and they did that by aging it in charred barrels.
The first written reference to bourbon whiskey is 1821.
Small distilling was the norm for the first half of the 19th Century, the farmer/distiller and such. But it’s really with the invention of the column still in the 1840s and at the end of the Civil War, the North taxed the whiskey in order to pay for the Civil War. With that tax and the invention of the column still, it became a much more capital-intense business, which led to bigger companies and the industry as we know it today really starts growing after the Civil War.
Owen: This is a theme that isn’t going away, and that is the federal government—the feds!—are going to want to be messing around with whiskey-making in this country for the duration. That is, even until our own time.
There were many, many, many distillery operations—warehousing, perhaps blending, rectifying, administration, sales, marketing—along Main Street.
MV: That’s what led to the formation of Whiskey Row. Your distillery may be in Nelson County, but you had an office here in Louisville where you handled the sales and such because it was the center of transportation.
TO: You have intensity. You have urban intensity on Main Street.
WFPL: So it was the city’s dominant industry?
TO: That and tobacco.
WFPL: Was the bourbon any good?
Rice: I’ve had a lot of bottles of old bourbon and a lot of it is excellent, better than good. And then some of it is okay. I think it’s hit and miss.
MV: And there are a few that aren’t so good.
Rectifiers are basically people who sell whiskey but don’t own a distillery. And there are different levels of rectifiers. You have rectifiers that were buying straight whiskey, like they may buy from distillery A and distillery B and marrying the barrels together to create a flavor profile they thought would sell.
Then there were the people making what we would consider a blended whiskey today, mixing aged whiskey with neutral spirits and caramel coloring and other flavors. Prune juice and cherry juice were two big flavoring components of rectifying in whiskey.
Then you had the rectifiers that were the extreme. Marion Taylor was advertising he could make 9-year-old whiskey while you waited.
Aside: Taft Saves Bourbon (or at Least Defines It)
Many fans of bourbon trivia like to cite the 1964 law that defines bourbon as being made mostly of corn, being aged in new charred-oak barrels and coming from America. This was the finishing touch of a legislative battle that began in 1897 with the Bottled in Bond act. Michael Veach explains:
MV: Bottled in Bond came about because there was infighting between the rectifiers and the straight whiskey distillers. Rectifiers are putting out a lot of whiskey at a very cheap price. And they were calling it bourbon, and they were calling it 9-year-old bourbon and things like that. Whereas the straight whiskey people who were selling a product that was all aged whiskey couldn’t compete with those prices.
So some Kentucky distillers go to Washington and they get a Kentuckian—the Secretary of Treasury—help them, and they put together the bottled in bond act. What it says is that every bit of whiskey in that bottle comes from the same distiller, is made in the same season, aged at least four years and bottled at 100 proof. It doesn’t guarantee it’s good whiskey, it does guarantee it’s straight whiskey.
This process was finally finished with the passage of the Pure Food and Drug Act of 1906, because then the big question became ‘what is whiskey?’ Was whiskey straight whiskey or was it blended whiskey or what? The chemist for the agriculture department under [Theodore] Roosevelt said it was only straight whiskey. Everything else would have to be labeled artificial or imitation whiskey. Needless to say it upset the rectifiers.
But it also upset the Scots and the Irish and the Canadians, because every whiskey they were bringing in would have to be labeled artificial whiskey, because they did not have an equivalent to straight whiskey.
It ends up in the legal system for a couple years. Roosevelt leaves office, Taft becomes president. Taft comes from a very judicial family and he knew that the ultimate decision was his, because these regulations were coming out of his cabinet.
He listened to both sides of the argument, then in 1909, he comes out with the Taft Decision, which defines what is straight whiskey, what is blended whiskey and what is imitation whiskey. I always say he must have made the right decision, because no one was happy. It basically stands today, these are the definitions of these categories we know today.
First the Whiskey, Then the Power
WFPL: How popular was bourbon nationwide before Prohibition?
MV: Bourbon has always been more of a Southern or a Western drink. Up north, it was more rye whiskey. So actually, rye whiskey was the more popular drink, but bourbon has always been fairly popular.
WFPL: [The Brown family of Brown-Forman has been very involved in philanthropy here]. What names or brands from this time are well-known today?
MV: There are a lot of families that were or are still part of it. The Weller family, the Bernheims, Phil Hollenbach, Todd Hollenbach III is in state government today.
There are a lot of brands that existed then that are around today. Are the same as they were back then, that’s a whole different story.
LR: Taylor’s come back around again. The same kind of thing has happened recently that happened years ago. A lot of these larger distillers have bought up other brands.
‘Dry, Dry, Dry Kentucky’
TO: I’m just thinking of an image. It’s as if this story is being performed on a stage and bourbon is on stage. But the backdrop is Kentucky. Kentuckian reaction, moral reaction, to the excesses, the violence and the abuses of the rough frontier. Kentucky on fire with evangelical religion. Kentucky on fire with what we would call Souther Bible Belt religion. Kentucky! Dry, dry, dry Kentucky!
MV: There’s a huge conflict between the wets and the drys. Some of the drys were, “We want our whiskey. We just don’t want the poor people to have it. We don’t want the people who are going to abuse it.” They trusted themselves but they didn’t trust others.
But really, what’s more important than the whiskey or the beer itself that brought about prohibition is the evils of the saloon.
WFPL: Did Louisville have a pretty lively saloon culture?
TO: One on every corner, with a rare exception.
MV: You’re seeing a shift in population from rural to urban America and the saloon was where all the immigrants would go, the new American citizens in the cities, and the political bosses could go to the saloon and get their votes and gain control. A lot of people don’t realize this, but the 1910 census was completely ignored. There was no changing of boundaries. If they had, the cities would have gained more representatives in the House of Representatives than rural America, and the people in power did not want to see that happen.
MV: This is some of the myth of Prohibition: First of all, it was not illegal to drink. It was not illegal to own whiskey. What it was illegal to do was to produce and sell whiskey.
TO: There was a consolidation—or a nationalization—of the bourbon making industry in the early 1900s, up to the beginning of Prohibition in 1920. So you had just scores and scores of distilleries across Kentucky and Louisville and Jefferson County, but once the consolidation of the industry occurred, you had fewer and fewer. So that’s up to 1920.
Those that survive during Prohibition got a special license and that license allowed them to operate and that operation allowed a physician to buy a limited amount for medicinal purposes. It allowed others (bakers, pharmacies, etc) to apply for medicinal purposes or some special need. At least there was the storing and the selling on a very limited basis. Then in the late 20s, they began distilling again.
WFPL: Does downtown Louisville crumble at all at this time?
TO: It certainly wasn’t good for the economy. But on the other hand, cigarette production is soaring and the economy was overall in the ’20s in a growing mode. And so, no, you would not have gone down Main Street and seen more, or an inordinate number of boarded-up office buildings.
MV: The fight against Prohibition was more of a fight led by the beer industry. Most of the distilleries were too busy doing infighting amongst themselves between the rectifiers and straight whiskey distillers and such.
But what people often don’t realize is they could not have passed Prohibition if they had not passed the income tax amendment. Because before the income tax amendment was passed, the tax on whiskey and spirits paid—and I’ve seen figures anywhere from 50 to 70 percent of the federal budget every year.
One of the things that helps end Prohibition is that someone finally figured out, ‘You know, the amount of deficit that we have is equal to the amount of whiskey tax that we collected in one year. That whiskey’s still out there, it’s just not being taxed. People are still drinking it. Why don’t we make it legal and tax it. At least then we can pay off the federal budget.’
The Comeback and the Decline
WFPL: Is there a big boom in bourbon production after Prohibition ends?
MV: First of all, Whiskey Row pretty much disappears. But it wasn’t Prohibition that did it in so much as it was the changing of American lifestyles, the building of the automobile and the roads that go with it. All of a sudden it became less important to have offices in Louisville because it was feasible to take people out to your distillery because you had good roads and automobiles.
Companies fail but they don’t go away. This is when we start seeing the consolidation. This is when National and Schenley buy up the companies that are failing. And then the second World War comes along, the economy improves. By the end of the war, they’re making a lot of whiskey and things are being to go very smoothly.
It really was kind of a golden age for whiskey consumers. But it ends up not being so much a golden age for whiskey distillers because the Korean War breaks out.
Lewis Rosenstiel at Schenley says “Oh my God this is going to turn into a world war. We’re not going to be able to make beverage alcohol. Let’s fill the warehouses.” He ordered every one of his distilleries, and Schenley at that time had about 15, to go on a 24/7 schedule and fill the warehouses.
National and Seagram’s to a lesser extent said “Maybe he’s right” and increased their production.
But it never happened.
What happened then, is all of a sudden, these companies had a lot of whiskey they needed to sell, and they were artificially keeping the price low because of that. It was really hurting the smaller distilleries. A lot of distilleries ended up going out of business during the ’50s and ’60s because of this.
WFPL: By the 1970s, bourbon didn’t have a very good reputation, it seems.
MV: We’re looking at a period where you had a generation that said “Don’t trust anyone over 30″ and “We’re not going to drink what our parents drink.” So they turned away from whiskey. Not just bourbon, but rye and scotch and Canadian and everything.
Every year the government would come out with a list of every distilled spirit and what they sold every year. It’s not until 1970 that you see two products appear on this list, and that’s vodka and tequila.
WFPL: So what leads to bourbon making a resurgence?
LR: I think that’s a chicken and the egg story. The cocktail movement came back around. People went back to doing pre-Prohibition crafted cocktails. Rye whiskey and bourbon whiskey were two of the flavor profiles people went for at the time. Once people started paying more attention to that, they started paying more attention to the ingredients in their drinks.
Bourbon is definitely a national treasure now, but I think people, not just here in Kentucky, we have a lot of respect for that sort of thing. We like the history behind it.
MV: What really saved the bourbon industry is the single malt scotch industry. This new generation, they were drinking beer and wine and vodka and tequila and things like that. The scotch industry decided to bring their single malt scotches to America in force. There had been a few here already, but they decided to bring them in force and market them, to show you could enjoy this whiskey for its flavor. It wasn’t just something you shot back. You could pair it with cheese and cigars and food and things like that. And it created interest in the brown spirits again.
LR: I’m sure there will be a peak. There always is in any economic success. There’s a peak and a decline. It’s how much that’s managed.
TO: I think maybe the ace in the hole for the industry—no guarantee, and there are fashions—but I clearly believe that with the Bourbon Trail and with the Urban Bourbon Trail, that the industry is latching on even more so to the story. And the story is that marketing tool that roots this product in the past, roots it in a quainter Kentucky setting, roots it in a process that is carefully done, that is a craftperson’s product with a charred-oak barrel that can only be used once, with a product that has to be nurtured over an extended period of time, with color—you hold bourbon to the sunlight and there’s a richness—all of that is part of that story. It’s one thing to sell it. It’s another thing to tell it. And telling it with these bourbon experiences and other advertising and promotional modes is much a part of the phenomenon, and hopefully the enduring phenomenon.
LR: A lot of places right now are doing something to keep the 20s interested in it. Similar to what people are doing rectifying whiskeys, they’re flavoring whiskeys. Maybe if I’m 21, 22-years-old I’m doing shots of [cinnamon-flavored bourbon] Fireball with my friends. Maybe when I’m 31, 32 I want to taste Buffalo Trace neat. I kind of get that that’s what’s going on there. A lot of brands are doing that sort of thing.
Club-style bars, their clientele is always the 21-year-old. It’s obviously not the same person since everyone gets older. We have to do the same thing, but I don’t think our demographic for attracting people who drink bourbon is 21. It’s a more mature audience, more mature being late 20s. And we do have a chance to do that, especially with all the different micro-distilleries going in downtown and the redevelopment of the southern side of Fourth Street.
Kevin Yates: There’s a certain aesthetic within the design world right now that’s extremely popular, this sort of rustic, Garden and Gun Magazine, it’s extremely popular. I think Garden and Gun exports that Southern tradition and Southern culture. Bourbon fits in really well with that. I don’t know what’s more Southern—or Kentucky for that matter—than drinking a bourbon, smoking a cigar and going to the Downs or Keeneland.
MV: I never see it going back to the bad days of the ’70s. I do think it will probably level off at some point, but I think with the growth of the Bourbon Trail and the Urban Bourbon Trail and other things to bring tourism into it, it’s never going to get bad again. I think we’re always going to have a good, strong, healthy industry here.
That is, as long as the government doesn’t tax the distilleries out of the state.
This story is part of WFPL’s Food & Drink Week. We’ll be exploring dining and libations in the Louisville area ahead of Thanksgiving. You’ll find new stories here everyday through the holiday.