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Hard Times are nothing new in history. The prime example of this is the panic of 1877. The Presidential election caused economic turmoil in the United States. The Democratic candidate, Samuel J. Tilden, won the popular vote, while the Republican candidate, Rutherford B. Hayes won the Electoral College. This caused mass protests in the south and civil war was threatened to break out again. It was settled by recognizing Hayes’ win with the promise of ending reconstruction. However, it caused uncertainty in markets and a depression. So how did this depression affect the distilling industry? It caused the Bankruptcy of the O.F.C. and Oscar Pepper distilleries. To understand why this happened, we must first look at the history of these two distilleries.

When Oscar Pepper died in 1867, James E. Pepper, his son, was still a teenaged boy and too young to own a distillery. Edmond H. Taylor, Jr. was named his guardian and ran the distillery until James reached the age of 21. Taylor bought a distillery in 1870 and borrowed money to rebuild it into the O.F.C. distillery. He also loaned money to the Pepper Distillery to improve the facilities there. While business was good and whiskey was selling well in the market, things were good. But then the depression hit the country in 1877. Money was tight and Taylor was desperate to pay his debts. He sold the same lot of barrels to two different purchasers and that got him into financial and legal trouble. His debts were so high, that he considered moving to South America to avoid his debtors. To make things worse, James E. Pepper could not afford to pay the money owed to Taylor. This caused Pepper to declare bankruptcy as well. The Pepper distillery was sold to Labrot and Graham and the O.F.C. distillery was sold to the St. Louis firm of Gregory and Stagg.

Taylor and Pepper would recover and go on to found other distilleries. Taylor had already owned a small distillery that until that time was run by his son, Jacob Swigert Taylor, and he rebuilt it into the Old Taylor Distillery. James E. Pepper would purchase land near Lexington and build the James E. Pepper Distillery. However, the hard times had taken their toll and their original distilleries were now owned by other people. 

The Great Depression and World War II also caused many distilleries to go bankrupt. Prohibition ended in 1933 and many people with a distilling heritage and brand tried to get back into the business. Many of these distilleries, such as Bernheim Distillery, failed in the first few years after Prohibition ended and was sold to Schenley, but the war caused many other distilleries to declare bankruptcy and sell to larger distilling firms. When the U.S. entered World War II all distilleries were required to make high proof alcohol for the war effort. The profit margin was minimal and many distilleries simply could not pay their bills, so they sold to larger companies that could survive on such slim margins. Yellowstone was sold to Glenmore. Henry McKenna was sold to Seagram. The same story was true of many other small distilleries and you see companies such as Schenley purchase them.

Hard times hurt distilleries. We see that happening today with several distilleries across the nation that have gone bankrupt and are being sold. Hard economic times provide no forgiveness for bad business decisions. Those distilleries with solid management should survive, as long as the hard times are short lived. Until then, look for another wave of consolidation as larger companies purchase the assets and aging whiskey of these smaller distilleries.