Wednesday, February 12, 2014

The Whiskey Trust. Seemed Like a Good Idea at the Time

In 1881, Joseph Benedict Greenhut built the Great Western Distillery in Peoria, Illinois. The production of whiskey and neutral spirits was booming in Peoria and each new distillery was bigger than the last and, therefore, the biggest distillery in the world.

Six years later, Great Western and 65 other distilleries merged to form the Distillers & Cattle Feeders' Trust. Popularly known as the Whiskey Trust, Greenhut became its president.

The Trust used its resources to buy more distilleries, many of which it closed. The idea of the Trust was to limit production industry-wide to reduce competition and protect profits. Although the Trust was technically legal (it would not be today), it engaged in many illegal activities including the intimidation of distillery owners who did not want to sell.

The Trust rationalized its activities by saying it brought order and stability to an often chaotic and wasteful marketplace by eliminating the over-production that sometimes forced producers to sell below cost. Doesn't a 'free market' also give market participants the right to cooperate for the betterment of an entire industry?

Greenhut left the Trust in 1895 when legal and financial problems forced it into receivership. It was never the same but never quite went away either. It kept mutating into different corporate forms. It even survived Prohibition, coming back after repeal as National Distillers. It was no longer a trust, however. Those were now illegal.

By the time Prohibition shuttered the industry in 1920, the Trust or one of its spin-offs controlled every distillery in Peoria. It also owned distilleries in Kentucky, Pennsylvania, and other distilling states. After Prohibition, the Trust was supplanted in Peoria by Canada's Hiram Walker and Sons. Walker bought Greenhut's Great Western, tore it down, and built -- you guessed it -- the biggest distillery in the world. (Pictured above.) Today that plant makes grain neutral spirits for Archer Daniels Midland.


EllenJ said...

Just an interesting question I've never yet seen a believable answer to...

Although I doubt most of us are aware of the New York Times articles from the early 1900's that dealt with whiskey consolidation, I'm pretty sure you are. So, were there ANY brands of American whiskey that you know of that came OUT of Prohibition which were not part of the whiskey trust that existed just before 1917 (the WWI cutoff)? It seems to me as though every brand I've ever seen that (re)existed after 1933 was a brand owned by whatever the whiskey trust was called in 1920.

Chuck Cowdery said...

The original National brands all were Trust-owned but the biggest piece of National, although it came later, was the Wathen family's American Medicinal Spirits Company (AMS), based in Louisville. They were the largest consolidation warehouse in the country and most of the brands they acquired were from Kentucky, e.g., Old Taylor, Old Crow, and Old Grand-Dad. I believe some of AMS's brands were Trust-owned but most were not. I think that's the answer you're looking for.

Chuck Cowdery said...

So, basically, the rump Trust bought AMS, which was not Trust.

Kyle W. said...


Would love to hear more about the distilling history of central IL. The J.K. Williams guys have said that there's a rich and fascinating history here. You have any good sources?