The Origins of Bottled-in-Bond (2024 Updated Facts)

Transcript

Hello Whiskey Lore family. Think you’re seeing double?  Do you think you know the Bottled-in-Bond story? Well, check out this new updated version of my 2019, Season 1 episode. About 20 minutes in, this story is going to take a seriously hard turn from what we all thought we knew - and all thanks to one new fact I found during my research for my book The Lost History of Tennessee Whiskey that turned this story on its head. Prepare to relearn history.

Food Safety As An Issue

Check out a store shelf today, and you’ll spot words like “all natural” or “fat free”  or “Non-GMO.” You’ll read about free range chicken, no antibiotics and no steroids. In this information age that we live in, we are inundated with journalist exposes, documentaries, medical journals, and social media posts telling us all the things that may be happening to our food supply. 

While most people go through their lives assured that that big corporate can of corn sitting in their pantry is on the up and up, there are a few that want to question the production standards and act as watchdogs to make sure we can all be comforted in knowing our food is safe for both us and our families and friends.

But as you’re about to hear, our ancestors in the 18th and 19th Centuries were not so lucky. There were no watchdog groups or government agencies overseeing what unscrupulous business owners might attempt to pass off as quality food in the name of profit. 

Food fraud was rampant and sometimes downright deadly.  But after a century of alarmingly despicable and dangerous practices, food safety would finally find a great champion, in one of the most unlikely of sources. A whisky trade bill meant to level the playing field with Canadian whisky.

Food Safety History

Turn back the clock to the birth of the industrial revolution. Those years would bring incredible advances in our achievements as human beings. 

Machine power increased production. Textile production clothed us. Iron production gave us tools and machines. 

In turn machine power increased our production. And as we developed as a society, we harnessed steam power and coal to provide amazing new forms of transportation. Iron lead to steel and bridges and taller buildings began to dot and then fill in the landscape.  Progress was real and things were growing at a pace no one had ever seen or could even imagine.

But one of the hardest transitions of the Industrial Revolution was the move away from an agricultural economy. Families that once provided for themselves were now living in cities with no ability to grow their own food.  Oh there were advantages. There was less danger of going hungry because of a bad growing season on the family farm. You could just take your weekly wage from your job and buy what you needed. But now the quality of food was being taken out of the individuals hands and was being put into the control of business owners.

And for those businesses, getting all of this fresh food into town was becoming a logistical nightmare.  These were the days before electricity, refrigeration, or quick and reliable transportation. It left many of them scrambling for ways to stay in business, even if they had to doctor the food supply to do so.

Many producers saw nothing wrong with mixing in some dirt with coffee grounds. Or dumping broken up leaves into burlap bags filled with tea and spices. With these freely available additives they could easily bulk up a package,fool the customer and make up for losses or potentially take home some profits. This may have seemed harmless to them, but it went well beyond food adulteration. This was food fraud, plain and simple.

What’s the difference? Well, let’s take the case of the people of New Orleans. During a Union blockade of city, Louisianans were cut off from their supplies of their beloved coffee.  In an effort to stretch that supply, they began adulterating their coffee grounds by adding in the root of a weed called chicory. What they found was, the chicory root actually reduced the bitterness of the coffee and improved it. So Louisianans made the conscious decision to add it themselves - in fact, they still prefer their chicory coffee over regular coffee, to this day. 

This form of adulteration was a deliberate and transparent choice.

Food fraud is the obvious and deliberate concealment of adulteration. 

Watering down milk was a common occurrence in those days. The problem with watering down milk though is, it starts to look translucent. Nothing some chalk or plaster of paris couldn’t solve. 

But it was much worse than that. 

In 1840, German chemist Fredrick Acc-um completed an alarming study on some of the staples of life that were found in London mercantiles and how they had been adulterated. Wine, beer, brandy, rum, and cheese - all using lead for coloring, alum - which could be fatal for children and could make adults extremely ill - was being added to bread. His book read as a warning, but also helped readers find ways to detect poisonous pickles, olive oil, custard, and more.

But the graphic on the cover of the book was it’s most impactful message, “there is death in the pot.”

Up until that time, these were easy things to get away with, because there were no real tests available to confirm the quality or purity of food. It was the evolution of chemical analysis and invention of microscopes that provided the first weapons of detection in a war against abnormalities in food.

But the public wasn’t concerned enough. The warning flags sent up by Fredrick Accum were not strong enough to move the needle. It took a horrific event in 1858 to shake a trusting public out of their slumber.

By the mid 19th Century, New York City was firmly established as the nation’s largest city. Teeming with natural waterways, it had become a focal point for both shipping and immigration as hoards of people left desperate conditions in Europe for the freedom on American soil, they’d heard so much about. 

Meanwhile politicians across the country were positioning themselves for the coming Civil War.

But New York was dealing with a population crisis. Yet the political bosses in Tammany Hall were more focused on kickbacks from local businesses and business as usual.

It was during this time that the city fell into the grips of a frightening epidemic. Infants were dying by the thousands and New Yorkers had no idea why. 

It took the New York Academy of Medicine to narrowed the search down to a staple in every infant’s life: milk. And this is where whiskey makes its first appearance.

In those days, there were what are known as dairy-distilleries. Crafty business owners realized that all of that left of grain - called mash or spent grain - would be an incredibly cheap source of feed for their cattle. To maximize profits, as soon as the distillery was done with the grain, they would dump it into troughs to feed their dairy cattle. They didn’t even wait until the grains cooled down. The cattle would burn themselves and step away from it, until they started to starve, and they would adapt and learn how to eat the steaming hot mash. 

And while spent mash does contain certain nutrients such as protein that can be very beneficial to the health of cows, a diet of spent grains alone deprives the animal of other critical nutrients including calcium. The cows were so sickly in these dairy-distilleries that some had to be milked while being held up by ropes because their bones couldn't support their own weight.

Add to that, the horrid conditions these animals were left to live in. Suffering from injuries and maladies (so bad some would have their tails fall off), living in cramped conditions with hundreds or thousands of other cows, and wallowing in their own filth and waste.

And the byproduct of all of this malnutrition and abuse was a product that was not pleasing to the eye - The milk actually had a bluish tint to it and the taste was definitely off. So to produce a sellable product, they doctored the milk with Plaster of Paris and thickened the liquid with rotten eggs and starch. And to chase out that strange blue tint, they would add colorants like burnt sugar or molasses. 

Worst of all, while it was theorized by the distillers that spent grains helped cows produce more milk. In reality, the cows were not only excreting milk, but also puss, disease, and whatever waste their bodies could discharge.  

Yet this disgusting and dangerous product was sold as "pure country milk" or "Orange County Milk" after a county just outside of New York City to give the illusion it came from a farm. And at the same time mothers were being told to wean their infants off of breastmilk because this extremely healthy milk was cheap and in great supply. These poor mothers were unknowingly killing their own children. 

It took an expose by illustrator Frank Leslie, in his own newspaper, to finally sensationalize and blow the lid off of these horrendous practices. He even took out ads in other papers to ask people if they knew what they were drinking.  

In this, it’s worst year, the New York Times reported that an estimated 8,000 infants had died in a single year from what was being referred to as Swill Milk.  And the death’s were by no means pleasant, as they would succumb to dehydration through uncontrollable diarrhea. The Swill Milk Scandal of 1858 was one of the most deplorable examples of how far some producers were willing to go to make a profit. 

And sadly, it all could have been over a decade earlier, the connection between Swill Milk and infant mortality was not a new thing. A temperance reformer by the name of Robert Hartley, the Ralph Nader of his day, raised the alarm bells in the 1840’s, but because of his temperance stance, he was dismissed as having an axe to grind with the whiskey industry.

But even with the siren call of Mr. Leslie and the New York Academy of Medicine, Tammany Hall politicians found a way to protect their buddy’s from their evil deeds. 

Under pressure because of angry mobs outside the distilleries, New York alderman took action and set up inspections of the facilities to placate the crowds. But they tipped the distillery managers off, and when it came time to inspect, the worst they said they could find were some dirty vents.

The next drawing in Frank Leslie’s Illustrated Newspaper showed an alderman painting a cow white to make it appear healthy. The scandal died down, but Frank Leslie, to his credit, wouldn’t let the story die and finally four years later forced the New York state legislature to finally pass stricter milk regulations.

What’s interesting is, to this day, the process of sending spent grains to farmers is standard practice with most major distilleries. And tour guides can’t let go of the urge to suggest that the distillery’s slop is the reason their region is filled with such happy cows. However, when pressed, they’ll admit that the cows only consume this as a protein-filled supplement to their regular diet. And most likely, this was one of the best lessons learned by the whiskey industry during the Swill Milk Scandal. 

But the scandal didn’t kill the concept of dairy-distilleries. In fact, 35 years later, The Distilling and Cattle Feeding Company of Illinois, would find itself in the crosshairs of a Federal investigation into the adulteration of whiskey. 

In an era of greedy business consolidation, that started with John D. Rockefeller’s Standard Oil trust, companies were merging and acquiring at breakneck speed.  In 1887, the Great Western Distillery of Peoria, Illinois decided to take advantage of the business climate of the day and merged with 65 other distilleries, forming what would be known as “the Whiskey Trust.” To drive up profits and control the market, they shut down most of their competition, including some of the distilleries they had merged with. If owners wouldn’t sell, they would use intimidation tactics to force their hand. 

In an era of greedy business consolidation, that started with John D. Rockefeller’s Standard Oil trust, companies were merging and acquiring at breakneck speed. In 1887, the Great Western Distillery of Peoria, Illinois decided to take advantage of this business climate and merged with 65 other distilleries, forming what would be known as “the Whiskey Trust.” To drive up profits and control the market, they shut down most of their competition, including some of the distilleries they had merged with. If owners wouldn’t sell, they would use intimidation tactics to force their hand.

This allowed them to corner the market in their main product, grain neutral spirits. Akin to today’s vodka, this high proof and mostly flavorless spirit was produced to allow whisky wholesalers to extend their whisky supplies. Making a spirit that contained mostly neutral grain spirits and just a fraction of corn or rye whisky for flavoring became a standard practice in the second half of the 19th century. This type of whisky, which was at times referred to as “rectified” whisky, flooded the market, and the Trust became the main beneficiary. In fact, if you were drinking a whisky in those years, it's a good bet some of the spirit came from the Trust.

From a distilling standpoint, they didn’t seem to be doing anything wrong. The practice of blending grain neutral spirits with pure whisky was legitimized in the 1860s in the United Kingdom and the practice continues today in blended whiskies all around the world.

But when the U.S. Congress’ House Judiciary Committee began to dive into the Trust’s anti-competitive practices, representatives were shocked to hear what was being passed off as pure whisky.

A company insider revealed the Trust and its clients were doctoring grain neutral spirits with flavor additives rather than whisky - then selling the spirits as pure whisky. It seems that a Cincinnati chemical company, Alexander Fries & Brothers had come up with a variety of flavoring additives that could turn a barrel of grain neutral spirits into brandy, rum, gin, or more than a dozen varieties of whisky - including Monongahela rye, Philadelphia rye, two kinds of Bourbon essences, Tennessee Robertson County whisky, and Sour Mash. To add color to the spirit, the wholesaler could add prune juice, brown sugar, tea, tobacco, or tobacco spit. And if an extra kick was necessary, some unscrupulous wholesalers might add pepper, strychnine, or sulphuric acid.

There was no evidence that the Whiskey Trust was putting dangerous additives into their own spirits, but what was so shocking to congress was the abuse of the words pure and whisky, when it was evident that the product being sold was neither.

With this deception out in the open, the whiskey industry was earning a black eye. And while it's hard to sense the level of public outrage, for a passionate bourbon baron in Kentucky, this bit of scandalous news meant it was time to take the gloves off.

Enter our unlikely food safety hero, Colonel Edmund Haynes Taylor, Jr., Col. Taylor, a descendant of both President James Madison and old rough and ready President Zachary Taylor, was a banker, politician, and founder of the Old Taylor Distillery, which is today’s Castle & Key, and one-time owner of the Old-Fire Copper (O.F.C.) distillery, which would later become Buffalo Trace. Wearing his shiny black top hat, grey beard, and rimless spectacles, the colonel was a master at promoting and marketing his bourbons.

And having put in the time, money and effort that was required in the 19th Century to promote and market his product, and having unscrupulous “wholesalers,” undoing all of his good works, he knew he had to find a way to keep his customer’s confidence by differentiating his product from all the riff raff.

So he joined with a former presidential hopeful and at that time current Secretary of the Treasury John G. Carlisle and they began to lobby Congress. Their goal was to get a set of legal regulations that would allow distillers to create pure whiskey under a protective set of bottling, production, and advertising rules. (Scratching sound effect)

Alright I’m sorry. I have to shut this off right now and do a little bit of a rewrite here, because we are in the realm of marketing lore and I want us to get closer to the truth. After all, this is the purpose of this show.

Now, for those who haven’t heard the previous version of this episode, I was about to perpetuate the myth of Colonel Taylor being the one who brought about the Bottled-in-Bond Act of 1897. But while I was doing research for my book The Lost History of Tennessee Whiskey, I realized, after stumbling into a needle in a haystack piece of information, that the Colonel Taylor story was not correct. And so I really struggled over what to do with this particular episode. I was thinking about just canning it, because I’m misleading people with something that, now I know isn’t true. But instead, I decided - let’s just get the story straight and re-record the entire second half of this episode.

So what you are about to hear right now, for the first time since it actually took place back in 1897, is the real story of the Bottled-in-Bond Act.
The True Story of The Bottled in Bond Act
The story begins within the less than glamorous office of the Commissioner of the Internal Revenue, Joseph S. Miller, in Washington D.C. At the close of every fiscal year, the commissioner is burdened with writing up a detailed report of the year’s activities. In the Annual Report for 1895, Miller used the distilled spirits under bond report to highlight an unfair advantage imported liquors had over American spirits. The issue surrounded the foreign liquors being bottled in bond, while U.S. distillers had to pay the excise tax on the barrel of spirits and then again when the bottled liquor was shipped out of the country. He suggested that “if spirits were allowed to be bottled in bond, each bottle to have affixed thereto an engraved stamp bearing the signature of the collector, a large export trade would be secured.” He concluded by saying, “this office…recommends the passage of an act authorizing the bottling of spirits in bond.”

What wasn’t mentioned in the report was the brand of imported whisky that was causing all the commotion. It was Hiram Walker’s Canadian Club. Boats from Windsor, Ontario were arriving in Detroit with load after load of this bottled in bond whisky and Americans were drinking it up. The oversupply of Canadian hooch combined with the stuff flooding out of the Whisky Trust and its wholesalers, saturated the market. Not wanting to cheapen their own product, Kentucky distillers were forced to take action, and at a meeting of the Kentucky Distillers’ Association in 1896, prominent distillers in the state agreed, the state would need to take two years off from distilling, simply to allow supply to fall to demand.

Seeing his state’s biggest industry suffering, a U.S. Congressman from Western Kentucky came forward to write a bill that would level the playing field with the Canadians. It wasn’t Colonel Taylor. In 1896, he was too busy talking politics and fighting distillers and wholesalers who were releasing whiskies using the name Taylor. Instead, the man who came forward was former Commissioner of the Internal Revenue, Rep. Walter Evans from Kentucky’s 5th district.

The meat of Evans’ bill was to introduce tax stamps that would allow for duty drawbacks on ready for export bottled spirits that had paid Internal Revenue barrel bonding taxes. The bill seemed a shoe-in for quick passage. But then, a meeting was held between Rep. Evans, the members of the House Ways and Means Committee, Treasury Secretary John G. Carlisle, Commissioner Miller, and John B. Thompson, of the Old Fort Spring Distillery in Harrodsburg, who was representing the Kentucky Distillers’ Association. From that meeting, a concern was raised over potential loopholes that could allow unscrupulous exporters to sneak blended or rectified whisky across the border, getting a drawback without paying the initial taxes. The solution was to strictly limit bonding to the distillers themselves under government supervision, cutting out the wholesalers. It didn’t take long for wholesalers to realize, this meeting only had a representative for distillers and not one for the wholesalers. They saw it as an attack against their whiskies, which would be excluded from the lucrative export trade. When it came time for the congressional hearings, the wholesalers demanded to be at the table. Their representative was Issac Wolfe Bernheim, of I.W. Harper fame - a man whose wholesale company Bernheim Bros., had been a customer of the recently dissolved Whisky Trust. As his arguments fell on deaf ears, he and the other wholesalers began an aggressive and persistent letter writing campaign to U.S. Senators hoping to get the law changed to allow less than four years of bonding. They seemed to realize they weren’t going to get the bill amended to include their spirits in the export trade, so they decided to weaken the bill, so distillers’ would lose their passion for it.

But the plan backfired. By drawing so much attention to it, Bernheim had inadvertently created a cause for the backers of the bill. What had always been a bill about export duties and competition became a battle between wholesalers and their blends and rectified whisky versus the genuine article coming straight from the distillery. No longer was this just about competing with Hiram Walker in dollars, this was a way to guarantee the purity of a spirit, the same way bottled-in-bond Canadian Club was a trusted whisky straight from the source.

As the bill neared its final hurdles, Colonel T.H. Sherley of the Sherley Distillery in Oldham County, R.F. Balke of the Mellwood Distillery Company, and G.H. Cochran, President of the Kentucky Distillers’ Association went to Washington to make sure no amendments were added that might sideline the bill, which had already spent nearly a year bouncing through the halls of congress.

In the end, the wholesalers lost and the reputation of American whisky won. The bill was passed by the House and Senate and was signed into law as the Bottled-in-Bond Act by President Grover Cleveland on his last day in office, March 3, 1897. It’s rules stated that what was bottled / had to be produced by the same distiller, at the same distillery, during the same distilling season, aged for at least four years, unadulterated with anything other than water for proofing, and it must be bottled at exactly 100 proof (or 50% alcohol), all under government supervision, including the use of government bonded warehouses. In addition, the label also had to identify the distillery where the whiskey was distilled and where it was bottled, and it required a numbered green wrapped sticker over the cork.

Those that took advantage of it, would have all the proof they needed to show they had the purest product available on the market.

Of course, the wholesalers continued to grumble about the law. But their leader, Isaac Bernheim saw the writing on the wall early on and decided, if you can’t beat ‘em, join ‘em. While discussing the merits of presidential candidates with a reporter, he said if Governor McKinley and his gold standard won the presidency over William Jennings Bryan’s silver stance, within 24-hours of McKiniley’s victory, he would put sound money down on building a distillery in the Highland Park neighborhood in Louisville. The day after McKinley’s victory, to his word, Bernheim contracted J.F. Minor & Sons to build an $85,000 distillery in Highland Park.

The one person who is conspicuously absent from all of the goings on before the bill was passed was Colonel E.H Taylor. Nowhere could I find an article that pointed to him as having anything to do with the drafting or lobbying for the bill. It’s after the bills passage that the veteran whisky man sunk his teeth in.

As fall approached in 1897, early reports from the Treasury showed dismay over the lack of enthusiasm in the Bluegrass State over the tax stamps. Requests were low, except for one man who seemed to be all in on the new whisky designation - Colonel E.H. Taylor. In fact, on October 6th, the showman and master marketer made headlines when he made one of the biggest sales of bottled whisky in history, up to that time, sending 10,000 cases of bottled-in-bond “Old Taylor” to a wholesaling firm in Chicago. It’s a case where Taylors aggressive support of the law had somehow morphed into him creating the bill and lobbying for it.

He and his brand would continue to take advantage of the bill’s assurance of quality and eventually the act was adopted by distillers across the industry. And during the age of Prohibition, when adulteration of spirits returned enmasse, medicinal whiskey labeled Bottled-In-Bond became the most trustworthy whiskey available. And sadly, it was necessary - because one of the unforeseen tragedies of Prohibition would be the amount of lives lost due to underground adulteration of whiskey that made its way into the gin joints and speakeasies.

As for adulterated food, bad practices were still in play. In 1899 a New York Times article blew the lid off of a deplorable meat production scandal. Showing no shame, producers creating beef bouillon decided they wanted to double dip and make the profits off of the pulp that remained from the extraction process. A product devoid of nutrients was chemically enhanced and sold as roast beef to feed American soldiers fighting in the Spanish-American War. It led to thousands of illnesses and deaths among the military.

This and Upton Sinclair’s book The Jungle, which highlighted the abhorrent conditions present in Chicago’s Stockyards, would lead to the 1906 Food and Drug Act. An act, that would further press the question of what “pure” food or “pure” whiskey was. But one that also created a powerful government watchdog known as the US Food and Drug Administration.

So, when you see a whiskey these days that says Bottled-In-Bond on the label, does it really have any meaning anymore, or is it just a clever marketing ploy to get you to buy a bottle?

Well with the explosion of craft distilleries across the United States, there has been an influx of whiskey produced by third parties and sold to what are referred to as non-distiller producers. Many of these third-party distillers are creating high quality spirits to help jump start many of the new brands that are crowding onto your store’s shelves. But label requirements are lax on non-Bottled-In-Bond whiskeys and there have been some high profile cases where distilleries were advertising a heritage and product while stretching the truth, or creating downright deception.

Bottled-in-Bond, even after having some of its rules relaxed in the 80’s, still requires that a whiskey come from a single distillery, with a single distiller, in a single season. It is still stored in government bonded warehouses, and it still has to be bottled at 50% alcohol by volume, with no additional adulteration and is still aged for at least 4 years. The main things that are missing would be the tax stamp over the cork.

And many find that a 100 proof whiskey provides a whole lot more flavor than it’s 90 and 80 proof cousins. So many Bottled-In-Bond whiskey’s are considered some of the best values on the market.

Our food quality standards have come a long way since the days of the Industrial Revolution. There were some major growing pains along the way. And we still have issues to work out. But we whiskey fans know there is still a place on the shelf where we can rest easy with the Bottled-in-Bond guarantee of quality, and no fear of adulteration or fraud.