Lewis Rosenstiel, Capitalist Champion of America’s ‘Native Spirit’

The post-Prohibition era was very, very good for a very, very small number of people. If you had pushed your way through the 1920s with a toe still dipped in the legal liquor business—by managing, for example, to secure one of the small number of ‘medicinal spirits’ licenses available—you might be one of the lucky few. If you were huge and successful enough before Prohibition that you had other income sources, and you held on to your booze-making equipment just in case, you might be in luck. If you had a product that might easily be made nonalcoholic—like grape juice, or some kind of malted beverage—the news was also good. The failed Noble Experiment really crushed a previously-competitive industry; with all the small producers out of the game, the landscape was ripe for a total takeover by a few well-positioned companies.

One of those well-positioned companies was called Schenley Industries, and one of those lucky people was its owner, Lewis Rosenstiel. Rosentiel’s father was a distiller in Kentucky, and the business-savvy son took dad’s idea and blew it up. He acquired several distilleries toward the end of Prohibition, believing it would soon end. His gamble paying off, he built the company into one of giants of the mid-20th century, part of the “big four” of Schenley, Seagrams, Hiram Walker, and National Distillers, which together came to control almost three quarters of the American liquor business.

At the beginning of the 1950s, however, Rosenstiel made a bet that put the whole thing at risk. As Reid Mitenbuler describes it in his excellent book Bourbon Empire, World War II had created a serious whiskey shortage, and when the Korean War began, Rosenstiel figured the same supply pinch was just around the corner, and he ramped up production. When the war wrapped up without the same kind of economic peril, he was in trouble; he had produced far more whiskey than American consumers wanted.

Thankfully for Rosenstiel, he had some serious political connections. The ardent anti-communist was closely aligned with Joseph McCarthy’s camp, and close friends with infamous McCarthy lawyer Roy Cohn. He spent much of the 1950s and ’60s championing various law changes that might make it easier to sell his stores of whiskey. Some were successful, some were not; all were probably good ideas for the industry in the long run, but nearly all were opposed by at least some of his competitors, since they would have given him a market advantage. Perhaps his most important legislative triumph was the Forand Act, which increased the amount of time distillers could age their whiskey before they had to pay taxes – good for the industry, and very good for Rosenstiel and his supply surplus. What could now be called his most famous success, though, was really only a footnote at the time.

America’s growing international role after World War II had created new possibilities for American businesses. One of Rosenstiel’s goals was to turn international markets on to American whiskey, and to do that he hoped to build up the prestige of that most American of whiskeys, bourbon. Europe was known for placing trade protections on distinctive regional products, helping to ensure that no one from another country or region would sell something that used the same name as a product heavily associated with a specific place (think “cognac” or “scotch”). Rosenstiel went to Congress and asked them to recognize bourbon in a similar way – as a “distinctive product of the United States.”

A few members of Congress had reservations about all this. The distilling industry had an unsavory reputation at the time, with ties to crime bosses and questionable business practices still clinging to it from the Prohibition era. Rosenstiel himself was suspected of crimes related to bootlegging during Prohibition. Why should Congress give bourbon such a show of support?

But, as is so often the case, the economic argument won the day. Those misgivings stayed out of the spotlight, the bill passed in 1964, President Johnson signed it, and hardly anyone noticed. People just didn’t find bourbon-related news all that exciting.

And then that changed. The American alcohol scene took off, first with Robert Mondavi and California wine, then with microbreweries and brew pubs, then with the modern cocktail movement and a tide of interest in spirits, especially whiskey. Rosentiel’s dream of seeing bourbon on the same pedestal as scotch and other European spirits became reality, and the “distinctive product” label became important, both as an actual trade protection and as a symbol of its national importance. The resolution is now trumpeted by bourbon producers and aficionados as an essential moment in American whiskey history. It’s quite the sentimental legacy for such a calculated move.

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Funnily enough, today references to the law often claim that it named bourbon “America’s Native Spirit”, not just a distinctive product, though those words never appear in the bill. In fact, when the Senate declared September National Bourbon Heritage Month in 2007, their resolution began: “Whereas Congress declared bourbon as “America’s Native Spirit” in 1964…”

The first source for this post was Reid Mitenbuler’s excellent book Bourbon Empire, with additional research into several of the sources cited therein, as well as archived newspaper articles on Rosenstiel, this Slate article by Mitenbuler, and this interview with him.

For more on protecting bourbon, see my article from last year, Appalachian Appellations!