Bourbon Empire (21 page)

For a while, Remus’s arrangement worked just like Smith said it would. Remus worked out in the open, casually whipping out all the proper paperwork during police raids and pullovers. And, just as Smith had warned, Remus was prosecuted. His largesse had made him a prime target for Mabel Willebrandt, the seemingly incorruptible assistant U.S. attorney general, who wanted to use him to set an example. Nevertheless, Remus wasn’t particularly worried, but he was cautious enough to have given Imogene the power of attorney over all his assets. Smith regularly let Remus know that he was in the clear and not to fret.

But despite Smith’s reassurances, Willebrandt’s case was gathering steam. She drew testimonies from his witnesses with knowledge of operations that by this point had become too big to hide. On April 15, 1922, Remus was indicted by a federal grand jury. Smith told him not to worry, that the case needed to be prosecuted vigorously for the sake of appearances, but that he’d make sure Remus didn’t go to jail. A commutation would occur or the sentence would be repealed. Besides, he could always get Remus a pardon.

On May 16, Remus was convicted and sentenced to two years in Atlanta. He continued to smile, figuring he was in safe hands with Smith and Imogene. But then on May 30, Smith was found dead in his pajamas, his head in the trash can he had used to prevent blood splatter when he shot himself. He had been ill for a while and had decided that it was finally his time to go.

With his prime source of protection dead, George Remus was going to prison. Everything was now in the hands of Imogene, to whom he had given power of attorney. She would run everything—a bootlegging syndicate worth about $40 million—while Remus was in jail.
Nevertheless, Remus considered it little more than a hiccup. He had secured a spot at a country-club prison and was planning to use his stay to lose some weight. Imogene would be able to visit regularly.

Things began smoothly. Imogene was a capable operator, managing to dodge charges when she inevitably came under investigation herself. Eventually, Remus decided to seek early parole after learning the name of the man who had orchestrated his conviction: Franklin Dodge, a rising star in the Justice Department. Dodge was apparently “approachable,” according to the prison grapevine, and Remus asked Imogene to reach out to him.

Imogene did just that, but Remus nonetheless sensed something wasn’t right. His wife didn’t seem to be pursuing his parole very aggressively, although he did hear rumors that she was spending a lot of time with Dodge. When Remus’s release was two days away, he learned that Imogene had filed for divorce. And when he stepped out of prison, curious to ask her about events, federal authorities rearrested him on charges related to old cases he thought had been buried. He would soon serve another year, during which Dodge quit his government job and began using Remus’s permits to sell booze alongside Imogene. She had originally approached Dodge, just as Remus had asked, but the two somehow fell in love, sleeping with each other for the first time in the warden’s office. Remus boiled, and was starting to hear rumors that Imogene and Dodge were planning to kill him.

 • • • 

After Remus was released on parole, his first step to rebuild his empire was to retaliate against Imogene by testifying about her role in the case involving the bleeding out of the barrels at the Jack Daniel Distillery. His second goal was to find Imogene alone—the two occasionally met for the divorce proceedings, but those were like military summits, each side armed with guards. Eventually, Remus discovered the hotel where Imogene was staying with the couple’s daughter. He told his driver to take him there. Pulling up to the hotel, he saw Imogene and his daughter driving away in a taxi, and told his own driver to step on it.

Remus’s car easily overtook the taxi. He jumped out and ran toward her, chasing her up a hill before finally catching up. Imogene turned around, pleading. Remus responded by jamming his pistol so far into Imogene’s gut that onlookers barely heard the sound when he pulled the trigger.

Remus immediately turned himself in after shooting his wife. When the police told him that Imogene had died at the hospital, he replied, “She who dances down the primrose path, must die on the primrose path. This is the first peace of mind I’ve had in two years.”

Remus the criminal defense attorney was going to trial for murder. Even though he had won freedom for former clients with insanity pleas, he didn’t want to use the defense for himself. He was too proud, arguing that his murder of Imogene was the sane thing to do and that he “owed it to society.” But the cooler head of former Cincinnati district attorney Charles Elston, whom Remus hired for his defense, ultimately prevailed. Elston argued that it was insane not to plead insanity in a case like this.

Despite his impressive defense team, Remus argued most of his own case. The jury sat and “listened to stout, baldheaded, raucous George Remus, attorney, defend stout, baldheaded raucous George Remus, accused of murder,”
Time
magazine reported. Even though Remus had killed his wife in cold blood in front of the couple’s daughter, the prosecution still had a hard time getting the jury to sympathize with her. Remus’s defense strategy was seamless. The famed lawyer Clarence Darrow, whom Remus knew from his days lawyering in Chicago, even testified on behalf of his character. Elston, himself slick and to the point, told the jury that Remus’s behavior could only be considered “an insanity brought about by a series and set of circumstances and acts which turned an otherwise normal man into an insane man.”

The jury bought it, and Remus went free. “American justice! I thank you!” Remus shouted from his chair. The
Cincinnati Post
was less sanguine, running the headline, “A Chicago Bootlegger Gets a Chicago Verdict.”

Temporary insanity. It kind of summed up the whole decade, but Remus was able to walk away from it all. When he tried to walk back
into his old business, however, he found it was too late. The holes had closed and others had moved in. Men like Lewis Rosenstiel had moved in to exploit the medicinal whiskey clause and gangsters like Al Capone had risen in the ranks.

Remus’s single act of violence against Imogene paled in comparison to the increasingly brutal gang wars erupting throughout American cities. Incidents like the 1929 Saint Valentine’s Day Massacre in Chicago, when gangsters disguised as policemen executed seven other mobsters, continued to remind people that Prohibition was a failed policy and would always be defied. Calls for repeal grew louder.

Repeal’s most powerful lobbying force—its Wayne Wheeler, so to speak—was a woman named Pauline Sabin. Heir to the Morton Salt fortune and married to the president of J.P. Morgan, Sabin was the first female member of the Republican National Committee and had originally been a powerful advocate for Prohibition. But like the reasonable majority of most Americans, she soon realized that the policy was impossible to enforce. Whereas Remus justified his criminal enterprise on the grounds that Prohibition was a hypocrisy, Sabin claimed that efforts to continue the failed policy, knowing that it was futile, were also “an attempt to enthrone hypocrisy as the dominant force in this country.”

Sabin organized other women who, like her, had supported Prohibition but were now against it. Most came from high society as well. They toured the nation and gave repeal a fashionable face backed by smart arguments. After the stock market crash of 1929 and the beginning of the Great Depression, she began arguing that repeal would provide crucial tax revenue—Prohibition cost $40 million a year to enforce and diverted $1 billion per year in taxes to criminals. Convinced, Congress eventually met in a lame-duck session and passed the Twenty-First Amendment. A symbol of a nation that realized the error of its ways and changed course appropriately, Sabin was an essential force behind bourbon’s return. In 1933, liquor would again be legal, in no small part because of her efforts.

As for George Remus, the man spent the rest of his days in relative modesty, shuffling between Covington, Kentucky, where he had
bought his first drugstore, and Miami, where he occasionally popped up at the dog races. He made front-page news once again in 1952 when he quietly died. The
Cincinnati Enquirer
announced, “Fabulous George Remus Dies; Made Millions as Bootleg King.” The headline was a reminder of how American history is just a continuous cycle of fortunes made and lost, lessons learned and forgotten.

T
housands of Virgin Mary statues populate the rolling countryside of Kentucky’s Nelson County, located in the very center of bourbon country. In fact, these Catholic sentries guard the homes and small businesses of many of the counties clustered near Louisville: Jefferson, Bullitt, Franklin, Woodford, Anderson. Today, this little chunk of north-central Kentucky produces close to 95 percent of the world’s bourbon, and the Virgin Mary statues scattered across the rural landscape are nestled into makeshift altars fashioned from old bathtubs cut in half and stood on their ends. The locals lovingly refer to them as “Marys on the half-shell,” and they’re the unsung heroes of bourbon.

The distillers in this area historically have come from a variety of religious backgrounds, but the Catholic influence has always been strong. During the late eighteenth century, much of the land here was purchased, sight unseen, by people in Maryland—originally a colony for persecuted Catholics—who needed a place to send their young sons, the ones buried under piles of older brothers, who wouldn’t be inheriting the family businesses. One of those sons was David Bard, who founded Salem, Kentucky, in the 1770s. The locals soon started calling his settlement “Bard’s Town,” and today it is the Nelson County seat and known as Bardstown. The Bardstown Diocese was formed in 1808, and was one of four in the United States, alongside Boston, Philadelphia,
and New York. It was the center of all Catholic matters west of the Allegheny Mountains.

Just outside of Bardstown is the Abbey of Gethsemani, the Trappist monastery where the jazz-loving monk Thomas Merton, author of
The Seven Storey Mountain,
lived. After World War II, Merton traveled the world studying interfaith spirituality and promoting social justice, and that connection has drawn a number of Buddhist monks to the region today. Trappists usually earn a living by making homemade foods such as beer, cheese, or fruitcake—the ones at Gethsemani make bourbon fudge. The abbey is practically within shouting distance of distilleries for Jim Beam, Heaven Hill, Wild Turkey, Brown-Forman, Four Roses, and Maker’s Mark and is about an hour’s drive west of Buffalo Trace and Woodford Reserve.

After Repeal, the relatively open attitude of American Catholics toward alcohol helped whiskey distilling reemerge in north-central Kentucky. During Prohibition the Vatican had even weighed in and criticized the U.S. policy, which infuriated the Protestant forces working hardest to maintain it. In other parts of the country, Congress was redistricted to more accurately reflect America’s increasingly urban (and wet) population.

But even though Repeal was a blow to Prohibitionists, they still held considerable power. During 1936, in the thirty-one states that still permitted local-option laws like those utilized by Wheeler during his grassroots campaign, dry advocates promoted three thousand referenda and won half of them, scuttling attempts to return whiskey to large parts of the South and in other distilling centers like Tennessee. They wielded heavy power in Kentucky as well, but not as much in the areas where the Virgin Mary statues, living in their old bathtubs, stood guard. Eighty-six of Kentucky’s 120 counties—many of which orbit today’s Bourbon Belt—were still dry as late as the 1960s, and 48 remained dry as of 2014.

Kentucky has always had a special relationship with bourbon, but it wasn’t until after Repeal that bourbon and Kentucky became truly
synonymous. The state had always enjoyed a strong reputation for making good whiskey, matched only by distillers from a handful of other states like Pennsylvania and Maryland, but those distillers quickly dwindled after Prohibition.
*
Many eastern distilleries, as well as those around Cincinnati and Chicago, sat closer to cities. Their proximity to such places would also work to rural Kentucky’s advantage—the land occupied by those former competitors was too valuable to sit unused for fourteen years and was quickly converted to other purposes. The closing of eastern distilleries was also a blow to the production of rye whiskey, which would continue to fall in proportion to bourbon.
*
Before Prohibition, bourbon accounted for about 70 percent of American whiskey sales, a number that would grow more lopsided as the squeeze of industry consolidation smiled upon Kentucky. It had never been the country’s biggest whiskey producer by volume, but it soon would be, fully enshrining the state’s reputation.

The whiskey industry after Repeal would be very different than before. Almost every brand on liquor store shelves today came after Repeal, regardless of whatever ancient date is plastered on the bottle. Even old stalwarts like Old Forester were retooled—new yeast strains, new distillery locations, little recipe tweaks here and there. As a product, bourbon’s DNA remained the same, but no brand with roots extending past Prohibition would taste exactly the same as it did before 1920—
everything
went under the knife for cosmetic surgery.

When F. Scott Fitzgerald wrote that “there are no second acts in American lives,” perhaps after observing the fate of George Remus, he was wrong. Americans, it turned out, love a second act as much as they love a second round. After Repeal, the bourbon industry got its new beginning. All along, the Virgin Mary statues in northern Kentucky weren’t mourning the loss of bourbon, they were simply waiting for its resurrection.

 • • • 

After Repeal, the nations of the world pounced on the United States. Here was a nation of big drinkers and big spenders ready to buy alcohol again, but with very little supply of its own. Even in the midst of an economic depression, it was the biggest consumer of spirits in the world, most of it whiskey. Beer and gin could be made quickly enough, but aged whiskey stocks, held over from the medicinal clause, could only supply about a quarter of demand. The United States would have to import, and the rest of the world was waiting for the feeding frenzy.

Spain was one of the first to move. The Spanish Wine Institute in Madrid paid for a set of American phone books and mailed out pamphlets a month before Repeal was officially announced, wagering that it could spark America’s interest in Spanish wine. It was a noble attempt, but Americans weren’t about to quench their thirst with Garnacha. Spain was muscled aside as major whiskey producers like Scotland and Canada stalked closer.

Franklin Delano Roosevelt used the U.S. whiskey market as trade leverage. During his presidential campaign, Repeal was billed as a way to boost the struggling economy and whiskey was a blue chip in international trade negotiations. FDR’s new Executive Commercial Policy Committee hinted to trading partners such as Great Britain that scotch whisky imports would depend on its willingness to take pork and butter exports from the United States. Trade barriers were also lowered in order to discourage the still rampant bootlegging. U.S. distilleries were pumping out three times more whiskey than domestic demand, to get it aging in storage, but shortages would be normal for the rest of the decade. Extremely young whiskies made their way onto store shelves by the mid-1930s, but the best stuff was still years away.

Speculators swarmed the market. Within twenty-four hours of Illinois’s ratification of the Twenty-First Amendment, Hiram Walker, the Canadian company responsible for Canadian Club, announced that it would build a huge distillery in Peoria, a move that boosted the company’s stock by 2,700 percent. It wasn’t long before Seagram, also from
Canada and the biggest distiller in the world, followed. As for the U.S. companies, National Distillers held in its saddlebags 50 percent of the U.S. aging whiskey stocks left over from the medicinal whiskey clauses, and saw its stock jump close to 700 percent, from $17 to $117. Seton Porter, president of National, was on the cover of
Time
magazine. Schenley, which held 25 percent of U.S. whiskey stocks, acquired sweetheart import rights to foreign brands like Dewar’s scotch.

In America’s long contest between Jeffersonian and Hamiltonian ideals, Repeal was a decisive victory for Hamiltonians. Of the nearly two hundred distilleries operating in Kentucky before Prohibition, only about half resumed business in 1933, and many of those quickly folded for lack of the kind of large capital an atmosphere of intense consolidation would now require. Rounds of corporate reshuffling to accommodate the entrance of the two Canadian companies converted the Big Six into the Big Four: National, Schenley, Seagram, and Hiram Walker. George T. Stagg joined Schenley and the other two outfits that had been part of the Big Six—Brown-Forman and the A. Ph. Stitzel Distillery—moved slightly into the background. They were still big players, but with far less muscle than the industry’s Goliaths.

Also present was a smattering of much smaller independent distilleries. Most were either starting fresh, knowing that Repeal would be lucrative, or rebuilding companies from before Prohibition. The cards were being redealt and the more moderately successful independents, distillers like Jim Beam—a respected but not widely known name—now had a chance to recreate themselves. The page was still white, and smart moves at key moments—better financing, shrewder partnering—would determine how it would be written. If these smaller operators played their cards right, they might someday become big corporations themselves.

 • • • 

In 1933, Jim Beam was in his seventies, and his tired old bones must have loved walking away from the rock quarry where he had worked to make ends meet while waiting for Repeal. He had also dabbled in
Florida citrus groves, but without any great success. Other members of the Beam family had moved to Canada and Mexico to make liquor during Prohibition; once it ended, they would also come back.

Beam returned to a business that many others had abandoned. Other independents alongside Beam included Leslie Samuels (whose son would create Maker’s Mark twenty years later), the Tom Moore Distillery, and A. Smith Bowman. For old-timers like Beam, distilling was all he had known. He had the pride of knowing his craft, and at his age it was his only real option to make a living, as the rock quarry and the failed citrus grove had proved. But in order to make a go of things, these distillers would need money. Aside from a few farms, some rock quarries, lots of a thing called “authentic heritage,” and an army of Virgin Mary statues, the Bourbon Belt doesn’t have much.

Beam was in the same boat as many of his smaller Kentucky counterparts. Many came from respected old families with years of distilling experience—in Beam’s case, his family’s whiskey-making roots legitimately extended back to the frontier, when a German Mennonite farmer named Jacob Boehm migrated there during the 1780s. Most of these old distilling families had started their businesses organically, as side projects to farming that were slowly built up over time. But after Repeal, the bar was significantly higher and required more capital. Aside from their know-how, the only thing that Beam and Kentucky’s other old distilling families had to sell was the valuable sense of heritage that could be created around their names. In a business greatly disrupted by Prohibition, having the steady normalcy of an old name was an enormous asset. But was there a market for such old names? If so, survival meant finding a benefactor.

The investors mostly came from the crescent of northern industrial cities above Kentucky: Chicago, Cincinnati, New York. They had money but didn’t know anything about making whiskey. For many old distilling families, the opposite was true, and thus began a flurry of business partnerships. In many ways, these new marriages were like Henry Ford’s worst nightmare: scores of Jewish names—Abelson,
Bronfman, Getz, Lehman, Rosenstiel, Shapira, Wertheimer—swooping in and trading cash for the names of distillers whose families had been there since frontier times. But despite the worries of anti-Semites like Ford, these investors were helping preserve, not destroy, a part of America’s legacy.

The courtships were chaperoned by lawyers buckling under stacks of paperwork. Beam’s suitors were three men from Chicago: Phillip Blum, Oliver Jacobson, and Harry Homel. The three Chicago men pooled together $15,000 and struck an arrangement with Beam. They would own the company outright, and Jim and his son, T. Jeremiah, would run it. On August 14, 1934, the James B. Beam Distilling Company was founded.

The arrangement was bliss. The Beams returned to work and had control over the whiskey portion of the business. Their investors stayed content in the background, waiting to see if their investment panned out. In 1941, Homel and Jacobson sold their shares to Blum for around $1 million, giving him control of a brand name that would eventually be worth far more.

Heritage was important, but Repeal also offered a perfect chance to shed parts of history that didn’t fit in with the future. The Beam family’s best-selling brand before Prohibition was called Old Tub. It had been moderately successful and respected, but wasn’t a particular standout. The company briefly tried to revive it after Repeal, but soon learned that it had lost the rights. Perhaps that was for the best, as the unappetizingly named Old Tub was put to rest and the company’s new signature brand was named after Jim himself.

Beam’s financiers learned that heritage could be purchased outright, while others discovered that it could also be acquired by different means. New distillers could adopt a kind of “loaner heritage,” then trade it in once their real heritage grew out of its diapers. The formula went something like this: start with a story of a Kentucky pioneer, then gradually replace it with the real story of your company once it fully matured. This was the strategy of Heaven Hill, which alongside
Beam would eventually become one of the most important Repeal-era start-ups. Like Beam, it started small, with just one or two brands, but over the decades it would acquire or create many more.

Heaven Hill was founded by the five Shapira brothers—Ed, David, Gary, George, and Moses, along with some other outside investors. The Shapiras had owned a small chain of department stores in Louisville and decided that Repeal made whiskey a smart investment. Although they “didn’t know a barrel from a box,” as Heaven Hill president Max Shapira would say seventy-five years later, they did know where to find people who did. The Shapiras struck an arrangement with Joseph Beam and a handful of other Beams (a few branches away on the family tree from Jim) to get the distillery on its feet and make the whiskey.