The Whiskey Trust was an oddity during the late nineteenth century in that it was one of the few failed monopolies of the era. Although most monopolies prospered by dominating their industries, the Whiskey Trust could not control the whiskey business and ultimately failed.

During the late nineteenth century, many industries evolved into Monopolies;distilling industrymonopolies as one producer dominated an industry and either organized its competitors within its monopoly or drove them out of business. The distilling industry was no different. A variety of distillers vied for control of the industry, but Julius Kessler, JuliusKessler, an Austrian immigrant who manufactured his self-named whiskey in Leadville, Colorado, came to dominate them. Kessler outmaneuvered distillers in the West by selling his whiskey directly to saloon owners throughout the region instead of marketing it through a regional distributor. This allowed Kessler to bypass the middleman and sell his whiskey at a lower price than his competitors could. Instead of competing with Kessler, in 1887 other distributors joined Kessler in the Whiskey Trust, formally known as the Distiller’s Securities Corporation. This Kessler-led monopoly dominated the spirits industry throughout the country. Kessler limited the number of major producers, closed more than half of the large distilleries controlled by the trust, and artificially created a whiskey shortage that drove up prices. The trust defended its actions by claiming that its products were purer and of higher quality than the locally produced moonshine.Whiskey Trust

The trust ran into some opposition, however. The distillers of the Whiskey Trust produced blended whiskeys of neutral spirits with artificial flavoring, a technique that clashed with those of traditional bourbon producers in Kentucky, Tennessee, and other states. The bourbon producers refused to join the Whiskey Trust, and the trust was not powerful enough to drive the bourbon producers out of business. The trust also could not control all the numerous independent and small-scale producers. Distilling was a relatively simple process, and the trust could not drive all competitors out of the market. Intense competition actually caused the trust to temporarily enter receivership in 1895. The trust was also the target of government investigations for charges of tax evasion and bribery of public officials.

The death blow to the trust, however, was the advent of ProhibitionProhibition in 1920. When alcohol production became illegal, most distillers either went out of business or used their machinery for other purposes. Kessler sold his business and retired in 1921, returning to his native Austria. When Prohibition ended in 1933, strong federal antitrust laws and stringent alcohol regulations prevented the re-creation of the Whiskey Trust.

• Clay, Karen, and Werner Troesken. “Strategic Behavior in Whiskey Distilling, 1887-1895.” The Journal of Economic History 62, no. 4 (December, 2002): 999-1023.
• Troesken, Werner. “Exclusive Dealing and the Whiskey Trust, 1890-1895.” The Journal of Economic History 58, no. 3 (September, 1998): 755-778.
• Waymack, Mark, and James Harris. The Book of Classic American Whiskeys. New York: Open Court, 1995.

Alcoholic beverage industry

Antitrust legislation

Prohibition

Restaurant industry

Whiskey tax of 1791