Surviving a dry spell

How Scottish distilleries managed to weather the prohibition years
By Gavin D. Smith
News of the imminent imposition of prohibition of alcohol sales in the USA from January 1920 sent shock waves through the Scotch whisky industry. According to Moss & Hume in The Making of Scotch Whisky, the United States was “… the most important pre-war market for Scotch Whisky,” and in 1920, exports of Scotch to the US stood at the sizeable quantity of over seven million gallons (31.8 million litres).

Before the 18th Amendment enacting prohibition could be ratified, Scottish distillers and blenders shipped as much Scotch whisky as possible to the States, but this was at best a short-term measure. Loathe to see the trade they had established disappear almost overnight, the Scots looked for ways to keep Scotch in the minds and mouths of US drinkers.

Apart from the loss of trade during prohibition, there was a real concern that once the ‘dry spell’ ended, American consumers would not return to Scotch, having discovered alternatives and been put off the genuine article by inferior quality fakes. Indeed, White Horse supremo, Peter Mackie successfully sued a German spirit manufacturer for selling ‘Black and White Horse Scotch Whisky.’

One legal way of selling Scotch whisky in the States during prohibition was to have it certified for medicinal use, and a number of blended Scotch brands and some single malts were imported for this purpose. They included Laphroaig, which distillery chief, Ian Hunter had been trading in the States with real success for some years prior to prohibition.

The story goes that he managed to continue selling the Islay malt into the US during prohibition as everyone nosing or tasting it imagined the spirit could only really be used ‘for medicinal purposes’ and not consumed for anyones’ pleasure!
Confidence in the future of Laphroaig, at a time when there was little confidence in the Scotch whisky industry generally, meant that Hunter oversaw enlargement of the maltings in 1923, the construction of new warehouses in 1924 and 1928, and extensions to the mash house and stillhouse in 1929.

Altogether less legal, but much more profitable than going down the ‘medicinal’ route was to indulge in the practice of ‘bootlegging.’ This involved the illicit importation of whisky into the USA by way of third parties, many of whom were doubtful characters who would not hesitate to dilute or adulterate the whisky in order to increase their profit margins.

However, one figure who could be trusted to deliver ‘the real McCoy’ was Captain Bill McCoy. William Frederick McCoy (1877 – 1948) was born into a Scots-American family in New York, and from 1921 to 1923, he regularly ran Scotch, Irish and Canadian whisk(e)y to the US.

One favoured route for smuggling illegal alcohol was from Nassau in the Bahamas to a stretch of coast off New Jersey nicknamed ‘Rum Row.’

McCoy transported alcohol to ‘Rum Row’ in a schooner called Arethusa, which he acquired for that purpose, renaming it Tomoka and placing it under British registry to avoid too much attention from the US authorities.

He also installed a machine gun for extra insurance. Small boats operated by bootleggers would sail out to the vessel and collect the cargo to be transported ashore.

McCoy became particularly associated with the Cutty Sark blend, introduced in March 1923 by the venerable and highly respectable London wine and spirits merchants Berry Bros. & Rudd, who had enjoyed a strong pre-prohibition trade in blended Scotch with the US.

Cutty Sark was light in colour and style, and had been formulated particularly for the US market, where it received a very positive reception that stood it in good stead for when America became ‘wet’ once more.

More than 7,000 cases had been sold by 1934, rising to 80,872 cases per annum just two years later.

Berry Bros. & Rudd was not the only highly respectable whisky company to resort to bootlegging.

Chivas Brothers packed bottles of their whisky in waterproof boxes that were dropped outside US territorial limits for collection, and Teacher’s Highland Cream cases were fitted into hessian sacks for the same purpose.

Teacher’s actually shipped 137,927 cases of Scotch into the US via Antwerp and on to San Francisco Bay by way of the Littlehorn, a vessel owned by Joseph Hobbs, who later went on to begin developing a significant interest in Scotch whisky distilling.

Trusted bootleggers were few and far between, and most distillers were anxious to avoid incurring the wrath of both British and US governments by openly engaging in the trade.

Industry leader, The Distillers Company Ltd (DCL) came up with a solution in 1925, by creating ‘The Scheduled Area Organization.’

Apart from the stigma attached to bootlegging activities, the DCL had concerns that a number of distillers were not adhering to the Whisky Association’s declared prices when supplying whisky for bootlegging importation, and that its ‘standard’ brands would lose market share.

The creation of the Organization was the work of Thomas Herd, DCL deputy general manager, who proposed its establishment in February 1925, and once in place, it imposed tight control on issues such as prices and price structure, product quality and the vetting of potential customers.

Bottled whisky was preferred over bulk liquid shipments as the integrity of the liquid was much easier to preserve. The spirit was shipped from Scotland to territories close to the USA borders, including Cuba, The Bahamas, Mexico, and islands such as St Pierre and Miquelon in the Gulf of St Lawrence.

To give an example of the organization at work, one of the principal blended Scotches traded during prohibition was Haig, and in 1927 the DCL-owned brand exported 37,233 gallons (169,264 litres) to the United States.

This accounted for 17 per cent of its total annual exports, making the States the third-largest market for the brand, behind the Far East and South Africa, but ahead of Europe and Canada.

There was no immediate stampede for Scotch when prohibition ended, as might have been expected. This was partly because alcohol consumption in the US had actually fallen, the ‘Great Depression’ that began in 1929 meant that money in the States was scarce, there was still a great deal of illicit distilling, and in an effort to discourage imports and protect and nurture the domestic distilling industry, tariffs of $5 per gallon were imposed on those imported spirits.

This was halved at the end of 1935 and exports of Scotch whisky to the USA began to grow again. As Moss & Hume note, “By 1939 almost 4,800,000 gallons [21,821,000 litres} of Scotch whisky were shipped to the United States.”

What American president Herbert Hoover described as ‘a great social and economic experiment’ had ended in failure, but as RB Weir declares in The History of the Distillers Company 1877-1939, Scotch “…maintained, even enhanced, its reputation for quality, creating a taste in the US market which was there when prohibition ended.”

One effect of prohibition, combined with harsh economic circumstances all over the world during the 1920s and 30s, was dramatic consolidation of the Scotch whisky industry. This was led by the DCL, which bought up struggling competitors, usually proceeding to close down their distilling operations.

Moss & Hume explain that, “During 1926 only 113 distilleries were working in Scotland compared with 124 the previous year, and in 1927 just 84 distilleries were licensed for production. Of the 50 distilleries that had shut down since 1921,
about 40 had been closed, to all intents permanently…”.

Just two pot still and 13 grain distilleries were active in 1933, but the total grew to 64 the following year. From the mid-1930s an improvement in the British economy, partly aided by rearmament, stimulated whisky production significantly, along with the aforementioned halving of the existing US tariff.

The prevailing philosophy may be that the Scotch whisky industry as a whole did not come out of prohibition too badly, but one historic single malt-producing region that was badly damaged by it was Campbeltown. Moss & Hume note that, “The surviving Campbeltown distilleries quickly built up a large bootlegging business with the United States which strained their resources, making them sacrifice quality for quantity.”

Overly-rapid distillation led to Campbeltown whiskies being nicknamed ‘stinking fish.’

In order to avoid association with his rivals in the Argyllshire port, Peter Mackie, proprietor of Hazelburn distillery, wrote to his customers to explain that from now on Hazelburn was producing ‘Kintyre’ rather than ‘Campbeltown’ whisky!

Of the 20 distilleries active in the town during 1920, all but Rieclachan closed during prohibition, with that distillery finally falling silent in 1934. Only Glen Scotia and Springbank were ever to return to distilling activity.