Bourbon Empire (12 page)

Nevertheless, the shelves above Jack Daniel’s are owned by bourbon. Among them is a popular brand called Rebel Yell, which was created in the 1940s amid a flare-up of southern nationalism that preceded the civil rights movement. The label was the brainchild of Kentucky congressman Charlie P. Farnsley, who convinced his uncle, Stitzel-Weller Distillery co-owner Alex Farnsley, to create a bourbon brand specifically for southerners (the distillery’s other co-owner was Julian “Pappy” Van Winkle, who typically handled marketing).
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Rebel Yell
uses wheat instead of rye as the flavor grain and has a refreshing citrusy quality that is particularly suitable to the steamy southern states where it was exclusively marketed after its creation. The original label read, “Especially for the Deep South” and featured a Confederate soldier—sword drawn, the taste of Yankee blood in his mouth—riding a galloping horse into battle. Almost a century after the Civil War ended, its iconography still resonated deeply with southerners.

But after Rebel Yell was expanded into national markets in 1984 and international markets shortly thereafter, the provocative label was toned down, presumably so it wouldn’t offend its new and larger customer base. The soldier’s sword became a little smaller and the bright Confederate gray tones of his uniform became more muted (although the brash logo did play well in Japan, where it apparently clicked with customers holding romanticized notions of violent American subcultures). A few years later, as the war’s wounds continued to fade and the message carried by Rebel Yell’s original marketing became less politically acceptable, the brand’s label was sanitized further when the soldier was replaced by the silhouette of a cowboy. By 2014, the marketing was fully scrubbed as the phrase “Rebel Yell,” which remained offensive to some, was shortened to just “RY.” In brand advertisements today, the “rebel” has been converted into something far more palatable to modern consumers: a musician with a scruffy beard and sunglasses, strumming a
guitar.

T
hroughout the summer of 1875, a cascade of headlines, full of political scandal soaked in corruption, sex, and whiskey, swamped the nation. Newspapers reported how Republicans had diverted tax revenue from a giant network of whiskey distilleries into illicit political slush funds used to buy elections and bury opponents. The politicos who faced charges all attempted to backstab and bribe their way out of trouble. The group was quickly nicknamed the Whiskey Ring, and investigators traced it all the way up to a little room just off the Oval Office, occupied by Orville Babcock, personal secretary to President Ulysses S. Grant.

Whiskey had entered the Gilded Age, the period lasting from the end of the Civil War to the early twentieth century. Also nicknamed “the Great Barbecue” and “the Saturnalia of Plunder,” it was the most corrupt era in U.S. history and a time of great transition as a relatively invisible prewar federal government transformed into a powerful postwar government. These complicated new institutions were largely reliant on alcohol taxes (including both domestic excise taxes and tariffs on imported liquor), which gave the government nearly half its revenue and were its biggest cash source until the income tax was introduced in 1913. As the nation figured out how that kind of power and money should be organized, public office became a regular tool for private
gain. The railroad mogul Collis Huntington showed up at each new Congress with a cash-filled trunk to buy votes, lobbyists sold stock certificates outside the House and Senate chambers, Boss Tweed ruled New York, western lands were seized with fraudulent grants, and the financier Jay Gould created his own fortune while masterminding stock schemes that created enormous losses for his own investors. The generation of men who had fought to save the Union—and were likewise turned numb by an excruciating war—all scrambled to get their cut of the action.

Whiskey producers were deeply involved in all the corruption, and the quality of the whiskey itself often reflected that fact. They were a casualty of an industry with too few regulations or protections against copyright infringements, truth-in-packaging laws, and labeling requirements. Good whiskey in the league of Old Crow and other fledgling brands was less than 5 percent of the market because it was expensive and time-consuming to make. With almost no government oversight or accountability, outfits called “rectifiers,” specializing in high volumes of cheap spirits, grew to dominate the trade. Even today, the whiskey industry struggles to reverse negative parts of its image rooted in this era. But the Gilded Age wasn’t all gloom for the whiskey industry. Working to scrape its way out of the muck and adapt to an increasingly industrialized business model, bourbon managed to make some bold strides during this period that continue to be part of its modern legacy.

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For an industry that peddles a drug, maintaining a good image is crucial. The Gilded Age years provided a wellspring of ammunition—on a variety of fronts spanning political, economic, and cultural matters—for Prohibition advocates who would begin making their strongest case during this period. Whiskey’s image was given no favors by the fact that at the beginning of the era it was also the lifeblood of the era’s most outrageous political scandal.

The Whiskey Ring had a simple design: more whiskey was made than reported, and the additional profits from the untaxed overage
were pocketed when the whiskey was sold for the same price as its taxed counterparts. But the simple design included logistics that were a criminal’s worst nightmare—a blizzard of bogus accounting, false serial numbers, and counterfeit labels all managed by crooks who were paid different amounts according to their rank in an unequal pecking order. It’s a testament to the times that the scheme lasted as many years as it did.

Ever since whiskey taxes were invented, people have broken laws to dodge them. During the first whiskey tax—the one that caused the Whiskey Rebellion and was eliminated after Thomas Jefferson became president—the government ordered tax collectors to use hydrometers to accurately measure a spirit’s alcoholic proof. Without a hydrometer, measuring proof was a slapdash affair: distillers would “prove” (hence the origin of the term) a spirit’s strength by mixing it with gunpowder and lighting it on fire. If the flame sputtered because the alcohol content was low, the liquor was “under proof.” If it flared up like a bonfire, it was “over proof.” A steady and even flame, which occurs when whiskey is about 50 percent alcohol by volume, meant it was “100 percent proved” (which is why liquor that’s 100 proof is 50 percent alcohol). By 1868, with the whiskey tax back in place, the government further clarified the definition of a proof gallon as 50 percent alcohol by volume at 68 degrees Fahrenheit in order to foil tax evaders. Alcohol contracts at cooler temperatures, and distillers were chilling their vats at tax time in order to lower the amount of measurable alcohol.

After the war, the government assigned revenue agents called “gaugers” to guard whiskey that sat aging in warehouses and prevent any tampering before taxes were assessed. In many cases, if gaugers weren’t actually in charge of profit-skimming plots, they were soon bribed or bullied into them. Redundant serial numbers were written on barrels and paperwork was doctored. Tax evasion became so lucrative that some distillers were able to transport grain from the Midwest to New Orleans, turn it into whiskey, ship it back upriver, and still undersell competitors who were running legitimate businesses. The Whiskey
Ring was created as hundreds of individual tax dodges snowballed into one giant scandal. Various officials, increasingly higher up the food chain, began noticing gaps between revenues and volumes on the paperwork turned in by their subordinates. They assumed, correctly, that profits were being skimmed, and soon began demanding their cut of the action.

The Whiskey Ring’s nerve center was John McDonald, a former brigadier general who was close friends with Orville Babcock, Grant’s personal secretary. Before establishing the ring, McDonald had narrowly missed getting pinched in another scheme to rob the federal treasury by cashing bogus war claims on property that had been destroyed during the fighting. The plan failed, and McDonald soon turned to his friend Babcock for a job. Babcock convinced the president to give McDonald a position at the Bureau of Internal Revenue, effectively placing a wolf in the henhouse.

McDonald was assigned to St. Louis as the head revenue collector for a large part of the Midwest. Once he arrived at his post he soon noticed the bizarre accounting at the whiskey warehouse and seized on the lucrative opportunity. The ring of McDonald’s devising had five principal members—including himself and Babcock—who each received between $45,000 and $60,000 per year, roughly the same amount paid to participating distilleries. Babcock, serving as the inside man in Washington, kept his boss Grant only selectively apprised of matters.
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In 1871, the ring earned $1.5 million, an amount that turned McDonald’s St. Louis office into the de facto headquarters for Republican Party politics. Party members facing tough campaigns would telegraph the former general asking for new duties on distilleries in order to raise cash that would prevent a close election from slipping to the Democrats. In 1872, Grant, perhaps coincidentally, won reelection.

The Whiskey Ring continued collecting $1.5 million each year until
1875. Meanwhile, ring members were buying elections, lavish homes, and nights with exclusive call girls. The men dripped with diamond jewelry, which was easy to hide during bankruptcy proceedings or stash away during quick getaways. Babcock’s appetites in particular “for clothing, drink, and fornication—all to be satisfied at the cost of the public Treasury—led him to ever more brazen adventures and needless risks,” according to
The Politicos,
Matthew Josephson’s seminal 1938 book on corruption during the era.

By 1874, the ring’s wake of saturnalia caught the eye of treasury secretary Benjamin Bristow, one of the era’s few honest operators. Suspicious of the tax evasion scheme, Bristow recruited Myron Colony, a business reporter with the
St. Louis Dispatch
, for an undercover operation. The reporter, who regularly hung around distilleries and grain depots collecting information for the paper, would secretly record incoming and outgoing shipments of grain and spirits. Within a month he collected enough evidence to arrest three hundred ring members and implicate thirty-two distilleries in every major distilling center across the nation. Bristow estimated that only one-third of the total taxes due on whiskey in the United States were being collected.

The ensuing investigation quickly led to the White House. When Bristow approached the president to tell him, Grant, famously oblivious to many of the working parts of his administration, replied, “There is at least one honest man in St. Louis on whom we can rely—John McDonald. I know that because he is an intimate acquaintance and confidential friend of Babcock’s.”

“Mr. President,” Bristow said with a grimace, “McDonald is the head and center of all the frauds.” Babcock was also fingered.

Even so, Grant was fiercely loyal to his friend Babcock and insisted that he testify on his behalf, just barely earning him an acquittal. McDonald, with no similar favor from the president, did prison time. Nevertheless, the era’s suffocating corruption soon found Babcock involved in another scandal, involving the planting of fake evidence on a man who had helped the ring’s prosecutors. Grant, still faithful to his friend, removed Babcock from Washington and set him up with a plummy gig as the chief
inspector of lighthouses. Babcock loved the job, which allowed him to use his engineering degree from West Point and spend time near beautiful beaches. Seven years later, however, tragedy struck when a boat ferrying him from a schooner to shore near Florida’s Mosquito Inlet capsized. A few days later, Babcock became an unfortunate symbol of the era when his body washed up on a scrubby patch of beach, nibbled on by sharks.

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Most of the distilleries involved in the Whiskey Ring scandal resembled sawmills or factories. They were a far cry from the small distilleries that had defined the whiskey industry just several decades earlier: a single pot still in a shed or a barn, located near a creek. America was shifting from an agrarian economy to an industrial one, a trend that whiskey—a product that is both agrarian and industrial—represented well. Of the many small farmer-distillers who were still making tiny amounts of whiskey, most sold their spirits to larger distilleries. The bigger operations souped together this random mix of unaged spirits and redistilled it to an eye-popping proof with their own equipment, giving it consistency but removing much of the character.

The industrial efficiency of this new type of large distillery came from towering column stills. These were the stills patented by Aeneas Coffey in 1831 that by now had come to replace many pot stills. Today, pot stills are seen as beautiful relics of a bygone era—they were never the most productive pieces of equipment, but there was a beauty to their inefficiency. Slow and sputtering, they produced spirits at a lower proof, thus preserving the liquor’s heavier, richer flavors. A handful of distillers still use them, but their numbers are few. Column stills dominate the industry today, but are often misunderstood because they can do both great and terrible things to whiskey.

Column stills specialize in efficiency and volume. They hold the ability to strip almost pure alcohol (ethanol) from a liquid and leave behind all the trace elements that lend a beverage spirit its character and flavor. This brazenly sterile product is known as “grain neutral
spirits,”
and it is produced at well over 190 proof (something like that is sold as Everclear or as vodka—with vodka, the proof is lowered with water before it is bottled). You can age neutral spirits, but coaxing life from them is like trying to grow a vegetable garden on the surface of the moon—they will chew away at the wood for years but the barrel will typically spit out something medicinal and unpleasant. Outside of the spirits industry, column stills are used to produce industrial solvents, furniture polish, and torpedo fuel. The mechanics behind them are similar to those found in distillation columns at oil refineries.

But despite their industrial nature, column stills also produce some of the most renowned spirits in the world, as well as the vast majority of bourbon on store shelves today. If a distiller shows restraint with a column still, aiming for a lower proof that preserves the oils and compounds that give a spirit nuance and character, the same flavor richness of a pot can still be achieved. That’s how bourbon makers today use column stills. The different kinds of stills do produce slightly different flavors because their mechanics are different, but they are simply just that:
different.
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One kind isn’t necessarily better or worse than the other—it simply depends on how they are used.

But this point is fiercely debated by modern whiskey geeks, a group that will admittedly find a way to argue everything to death. The romanticism of the pot still—harkening back to a simpler time before everything got so big and intimidating—is hard to resist. Today, Woodford Reserve uses large pot stills where visitors see them during tours of its facilities, but the brand is primarily made with column stills located at a different facility (the spirits are mixed together afterward). Despite this marketing ruse, Woodford’s decision to use column stills arguably results in a better whiskey. Many modern distillers find that column stills give them greater control over corn and rye’s relatively high lipid levels, which can foul a spirit’s flavor. (This isn’t as much of an issue for the malt used
in scotch, an industry for which pot stills are often more prevalent.) Even though Matt Hofmann, master distiller at Seattle’s Westland Distillery, uses pot stills to make the company’s single-malt whiskies, he once told me that if he were to make a corn or rye-heavy spirit he would probably use a column still, for the control it would give him over lipids. The choice would be made entirely on what he thought would result in the best flavor, not the mystique associated with the equipment.