"America's Native Spirit": Prohibition and the Consolidation of the Kentucky Bourbon Industry

Abstract

"America's Native Spirit"Prohibition and the Consolidation of the Kentucky Bourbon Industry Bailey Browning (bio) Kentucky prides itself on three things: horse racing, college basketball, and bourbon. According to a recent report, Kentucky distillers produced over two million barrels of bourbon in 2021 and have nearly twelve million barrels stored in warehouses.1 Bourbon has provided both an economic and a cultural staple for communities throughout Kentucky. Its importance extends beyond the state. In 1964, Congress declared bourbon "America's Native Spirit."2 Andrea Wilson, a former employee at Stitzel-Weller Distillery, cited "family and relationships" as the bedrock of the industry in Kentucky.3 The history of bourbon in Kentucky runs deep and its importance as the center for the industry dates back more than two centuries.4 It is hard [End Page 3] to imagine Kentucky without bourbon, yet for thirteen years the federal government shut down the industry through Prohibition. This period had a lasting impact on the bourbon industry. The industry model that developed out of Prohibition was different than the one that existed prior to 1919. The families and relationships that formed hundreds of community-based distilleries were replaced by big business. Prohibition resulted in a consolidation of the bourbon industry. In 1920, there were 152 registered distilleries in Kentucky. In 1938, that number dropped to 108.5 Many distilleries that existed prior to Prohibition either permanently closed or were purchased by large distilleries with greater resources and capital. This consolidation forever changed one of Kentucky's most vital economic and cultural resources and required individuals and communities to adapt. The post-repeal industry utilized new strategies and technology to produce bourbon in unprecedented amounts. Yet scant attention has been paid to this consolidation and the transition of the bourbon industry throughout Prohibition and in the aftermath of repeal.6 Much of the published research examines a general outline of the history of bourbon, and Prohibition is often only briefly mentioned in a few paragraphs due to the complexity of the issue. For many communities throughout Kentucky, Prohibition severely impacted local economies. For example, "Louisville alone lost an estimated eight thousand positions" when distilleries shuttered.7 A closer examination of this vital period in both the history of Kentucky and the bourbon industry allows for a more comprehensive understanding of bourbon's evolution. [End Page 4] The consolidation of the bourbon industry occurred throughout Prohibition and continued after repeal. The government permitted six distilleries to begin producing whiskey in 1929 to replenish the medicinal whiskey supply.8 The six distilleries with permits for production were American Medicinal Spirits Company, A. Ph. Stitzel Distillery, Brown-Forman, Frankfort Distilleries, Glenmore Distilleries, and Schenley Distillers Corporation.9 These permits marked a transition from an industry trying to survive Prohibition to one with new hopes for repeal. Following 1929, the roots of a new model of the bourbon industry cemented itself. After the repeal of Prohibition in December 1933, consolidation became more apparent as the demand for whiskey required a different model of business than the pre-Prohibition structure. This shift toward big business and big industry was a trend that existed across the American economy throughout the first few decades of the twentieth century. Railroads expanded and helped connect the country and different markets. Technology provided faster rates of production. Urbanization and immigration contributed to a movement away from rural areas to the formation of large industrial centers in cities.10 As consolidation occurred in various industries, the "great merger movement" in the early twentieth century "changed the face of the American economy."11 The economy experienced growth and progress, and trends of a consumer revolution can be seen in the 1920s. Big corporations were able to meet the demands of an expanded market.12 [End Page 5] The consolidation of the bourbon industry mirrored what other industries, such as the steel industry, experienced earlier in the century. In 1919, the Eighteenth Amendment prohibiting the manufacture, sale, or transportation of intoxicating liquors was ratified. The National Prohibition Act, or Volstead Act, provided the enforcement of the Eighteenth Amendment. National Prohibition officially began on January 17, 1920. However, the liquor industry was already acting within constraints prior to...