Politics And Kentucky Distilling

Ever since Kentucky became a state in 1792, politics has influenced Kentucky distillers and Kentucky distillers have tried to influence politics. These early distillers found themselves as part of the first constitutional crisis – the Whiskey Rebellion. Kentucky distillers resisted the tax just as heartily as the distillers in Pennsylvania, but unlike their more northern colleagues, the Federal Government chose to use peaceful means and the court system to solve the problem. A distiller, Judge Innes, was appointed to solve the problem in Kentucky and eventually, the tax money was collected, but it took several decades before the cases were resolved without interest or penalties. The tax was repealed in 1802 and except for a brief period between 1814 and 1817, there would be no Federal tax until 1861.

This does not mean that whiskey did not play a role in politics in the period without taxation. Henry Clay was fond of taking barrels of Old Crow Bourbon to Washington D.C. to serve to other members of Congress during negotiations. The distillers in Kentucky were still family-owned farmer-distillers and not a united group when it came to politics. This would change after the American Civil War.

After the war, Kentucky Bourbon was becoming big business with distillers making huge investments in column stills, warehouses and sales teams. It took more money to make the whiskey in huge quantities and the Federal tax added to the expense, but there was money being made. These distilleries were often controlled by investors. These businessmen started to work together to influence the Congress to lower the excise tax.

The tax was at such a high rate that it was difficult to compete with illegal moonshine because legal distillers had to pass on the tax cost to consumers. They eventually achieved their goal of a lower tax, but interestingly enough, they did not want the tax repealed completely. The tax kept the production at a sensible level and market prices at a level that profits were being made. These myriad interests finally came together in 1880 to form the Kentucky Distillers Association (KDA) to lobby both on the state and federal levels on behalf of Kentucky’s distillers.

By working together and with fellow Kentuckian, the Secretary of the Treasury John Carlisile, they were, by the end of the century, able to get the Bottled-in-Bond Act of 1897 passed at the federal level, and they influenced many pieces of legislation on the state level. State laws often dealt with the growing Prohibition movement. However, the industry was divided. The growing rectifying industry opposed the Bottled-in-Bond Act and many of the local and state laws supported by the KDA. This split became even more apparent with the passing of the Pure Food and Drug Act of 1906 and the “What is whiskey?” Question that came with the law. The Taft Decision of 1909 settled that question and the internal feud quieted down, but still existed between the two factions of the industry.

Prohibition wiped out much of the distilling industry. When Prohibition was repealed in December 1933, all factions of the whiskey industry came together to form a united front. They started to self-regulate to prevent many of the problems that led to Prohibition. They also sent a lobby to both Frankfort and Washington to influence the regulations that were being placed on the industry. They were not always successful.

Their biggest failure was the ad valorem tax placed on aging whiskey by Kentucky governor A.B. “Happy” Chandler. Their biggest success was the 1964 Act that made Bourbon a product of the United States. In 1973, Three groups, The Bourbon Institute, the Distilled Spirits Institute and the Licensed Beverage Industries, came together to found The Distilled Spirits Council of the United States (DISCUS) to lobby Washington and help market distilled spirits internationally.

Politics has always been a necessary part of the distilling industry in Kentucky. They have a vested interest in the laws that affect the industry and will always have a role to play in making those laws, particularly through the Kentucky Distillers Association, who has done an excellent job to influence legislation to promote whiskey production and Bourbon tourism in Kentucky.