March 28, 2008

Whiskey Companies During Prohibition

Stupid Question ™
March 7, 2002
By John Ruch
© 2002

Q: Several American whiskey companies claim to have been around since the 1800s. So how did they survive Prohibition?
—David Houston

A: National Prohibition, which ran from January 1920 to December 1933, basically outlawed any booze of 0.5 percent and higher alcohol content. It killed about half the country’s distilleries and breweries, and perhaps 75 percent of the wineries.

But survival was possible. Many companies simply shifted production to legal items: Breweries sold barely alcoholic “near-beer” and yeast, while wineries sold grapes and grape juice.

The really successful companies diversified. The famous brewing company Anheuser-Busch made yeast and near-beer, but also ice cream, soft drinks, commercial refrigerators and car bodies.

Prohibition law also had several exemptions to exploit. Many distilleries survived with a medicinal-use license; doctors wrote prescriptions for whiskey to the tune of 1 million gallons a year during Prohibition.

Sacramental wine for church and synagogue ritual use was allowed (production skyrocketed by 800,000 gallons in what must have been a very religious first two years of Prohibition), as was wine for making vinegar and flavoring foods and tobacco. This kept a few lucky wineries afloat.

Home-brewed beer and wine also were legal. That’s why so many companies started selling yeast—a key ingredient. Some even sold bricks of wine grapes, or bottles of half-brewed beer, packaged with some yeast and a “warning” not to use them to make booze.

And an unknown number of firms simply kept operating illegally, bribing officials and reaping the benefits of bootlegging.

America’s most famous whiskey distillers used all these tactics. But in most cases the companies didn’t really survive. More commonly, it was the families who owned them who survived, then reinvented the companies after Prohibition.

For example, the label on a bottle of Jim Beam declares the recipe has been “standard since 1795.” It’s indeed based on Jacob Beam’s original recipe, but it wasn’t made at all during Prohibition. The Beam family sold the entire distillery and went into fruit farming, limestone quarrying and coal mining.

In fact, the company’s name—the James B. Beam Distilling Co.—and the Jim Beam brand name itself date only to 1934, when Jim (Jacob Beam’s great-grandson) reinvented the company.

Jack Daniel’s has a more colorful survivor story. Established in 1866, the distillery was sold off during Prohibition by Lem Motlow (Jack’s nephew). The buyer was Cincinnati’s George Remus, a flamboyant murderer who ran more than a dozen distilleries under medicinal-use licenses, while actually diverting the product into bootlegging.

Lem survived as a mule-trader, then got Jack Daniel’s back after Prohibition. Today it’s owned by Brown-Forman, a 132-year-old distiller that itself survived on a medicinal-use license for its original Old Forester brand.

Bloodied but unbowed, Jack has certainly had the last laugh on Prohibition: It’s made in a dry county.

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