Ambitious Brew: The Story of American Beer (14 page)

Wild women, indeed. For every honest saloonkeeper who earned his living dispensing drinks and camaraderie, there were fifty who all but ignored the beer or whiskey in favor of more lucrative “sidelines”in the back room or upstairs: gambling, prostitution, pickpocket rings, and the like. A standard saloon-based vice operation consisted of a bar fronting the street. Prostitutes worked the room, soliciting for tricks, whom they took upstairs to one in a warren of curtained cubicles. A thick cloud of cigar smoke hung over the gaming tables and roulette wheels in the back room.

“Big Jim” O’Leary, son of Mrs. O’Leary of the Chicago cow-bucket-and-fire, owned such a place just opposite the city’s stockyards. His Horn Palace contained baths, a barbershop, and a thousand-seat concert hall. There was a bar, of course, well stocked with lager, but its take was measly compared to the money O’Leary earned from his gambling room. There his customers placed bets on sporting events in New York or California, and then whiled away the hours at cards or roulette while they waited for the in-house “wire” to convey the results. Saloons near railroad stations provided a base of operations for organized theft, as painted women and skilled pickpockets hailed the rube off the train, accompanied him to the saloon for a (drugged) drink, and then rolled him, relieving him of cash and luggage. The saloonkeeper took a cut of the loot, and Mickey Finn and his wife earned national fame for the skill with which they separated their quarry from its money.

August Busch and other brewers well knew that many, perhaps even a majority, of the saloons tied to their beer profited less from lager than from larceny. When a well-known Chicago gambler declared bankruptcy not long after the turn of the century, he listed Anheuser-Busch as his main creditor. The Seipp Brewing Company advertised its saloons and beers in a guide to Chicago brothels. The brewers also understood that they were at least partly to blame for crime-ridden saloons: The barkeeper, leashed to his brewer, had no choice but to pay the brewer’s prices, not least because he was already in debt to him for the price of the license, the fixtures, and perhaps his first month’s rent. The only way an otherwise honest man could make a tied saloon profitable was by steeping himself in the dishonesty of gambling or prostitution.

Was every saloon a morass of illicit sex and organized theft? No. But there were enough of them that even the most respectable bars were tainted by association. Val Blatz found that out in 1884 when he announced plans to build a new saloon on a lot in a prosperous residential area. The news sparked an outcry from nearby property owners, and especially a group of developers who were planning to build $100,000 worth of new houses in the neighborhood (the equivalent of about $18 million today). Eighty residents signed a petition asking Blatz to back off. “Mr. Blatz,” wrote the complainants, “would do better to establish his saloon, bowling-alley, etc., in some neighborhood where there is more demand for such an institution.” Mr. Blatz obliged. The potential profits from the “club-house” were worth less than the headaches his antagonists would cause.

A
T THE HEART OF
the tied system, of course, was a brewer who needed to sell enough beer to recoup his investment in a sprawling plant filled with expensive machinery. Sell more beer every year: That was the brewer’s goal. And if that forced him into retailing on one hand, it also prodded the largest among the beer-makers to conquer markets far from home. The good people of St. Louis, for example, would never be able to drink as much beer as Adolphus Busch’s ambition inspired him to brew. He had no choice, then, but to invest in long-distance shipping. But the larger his market grew, the more brewing capacity he needed; and the bigger his brewvats, the more beer he had to sell in order to make the investment in plant pay off.

That constant interplay between ambition and production in turn spun a vast web of warehouses, depots, train schedules, agents, and salesmen needed to move the beer from brewery to saloon to far-distant market. In the late 1880s, Busch, for example, built an agency depot in Fort Smith, Arkansas, complete with an icehouse, vault, bottling line, and stable. He opened an office in Toronto, constructed warehouses and bottling plants in Salt Lake City, and did the same in St. Augustine and Jacksonville, Florida, towns fast becoming posh winter resorts for the nation’s newly wealthy. He staffed agencies in Chicago, New York, Philadelphia, New Orleans, and Savannah, and built and owned shares of breweries in Houston, Galveston, and San Antonio. The Uihleins saturated the upper Midwest with a string of warehouses and offices, and shipped tens of thousands of barrels of beer to California. So, too, Pabst, whose outlets ranged from the Dakotas to the Oklahoma Territory, and east to Pennsylvania and New York.

Saloons grabbed most of the headlines then, and much of the historical interest later, but the brewers like Pabst and Busch wanted their beers associated with tonier settings. Much of the barons’ bottled beer ended up in brewery-owned hotels, theaters, and opera houses, swanky piles of marble, stone, and glass that featured high-tone bars where polite, white-aproned waiters dispensed company brew. The Uihleins’ famous Palm Garden in their Schlitz Hotel in downtown Milwaukee featured a barrel-vault ceiling, Gothic-style stained-glass windows, an orchestra, and a forest of feathery potted palms. Busch and Pabst followed suit, Pabst most notably with his Manhattan properties: the Pabst Grand Circle, a theater and restaurant at Columbus Circle; Pabst Harlem, the world’s largest restaurant, located in what was then a fashionable middle-class residential neighborhood, and the Pabst Hotel, a nine-story structure that stood at the heart of what is now Times Square and featured cuisine from the chef at Delmonico’s, the nation’s most famous restaurant.

Building the properties proved the easy part of long-distance shipping and sales. Acquiring and managing the necessary staff required finesse and patience. Emil Schandein spent much of his time on the road, wooing reputable beer dealers with promises of fine lager at low prices. In the spring of 1880, he visited Manchester, New Hampshire, where he courted the man who handled beers from George Ehret’s brewery, hoping to persuade him to switch to Best products. The man was ready to listen, for Ehret’s beer was “not as good” as it had been in past years and the agent was anxious to preserve his own reputation by selling only “good beer.” Schandein accomplished his mission. “With this [new agent],” he crowed, he and Pabst had “crowded out [their] two biggest competitors” and rendered them “harmless” in the region.

If only it were always that easy. “
[S]ecure such Men as you want to do the Work right at the KC. Branch
,” Pabst told his Kansas City manager in 1882 with his usual flourish of emphatic underlinings, “
& and we will then see what can be done with Redwitz but leave him down there until such time as we can dispose of him I don’t want him here
.” Perhaps, he suggested, the manager could move Redwitz to Peoria, “because there is not a great deal to be done there.” Pabst promised another salesman “a good warm overcoat” if he could sell “30 cars Bottled Beer to new trade” during September and October of 1880. An overcoat was a small price to pay: In 1888, that salesman soldiered through a staggering 350 days on the road, visiting saloons and buying rounds for the house, listening to bartenders’ woes, wooing agents, and scolding recalcitrant customers in a sixteen-state territory that ran from New York and Pennsylvania to Montana, the Washington Territory, and California. His expenses averaged just over $16 a day (about $300 in today’s money), which irritated the penny-wise Charles Best. “Danzinger uses money too freely,” Best complained, and “has been talked to on this point.”

At least Danzinger was honest. The same could not be said of Charles Best’s brother Phillip, whom Charles hired in the mid-1870s to work in the company’s office. Phillip repaid the favor with embezzlement, first in Milwaukee and then at the Kansas City branch, where he had been sent to make a fresh start. Upon being discovered, Phillip faked his suicide, a maneuver that distracted Charles, the local branch manager, and the police long enough for him to hop a train for Colorado. Pabst and Schandein absorbed the loss and moved on, but they had learned a lesson. In 1894, Pabst brought in the police after the manager of the company’s Louisville office emptied the safe of $6,000.

The search for reliable men sometimes required dubious forms of enticement. “Concerning a suitable agent I regret to say that we have found none,” Charles Best wrote to Joseph Billigheim, who managed sales in northern Wisconsin, suggesting that Billigheim pursue Miller Brewing’s man in the region, a Mr. Toepel. “Undoubtedly we would acquire in him a good, well-known and . . . well-liked agent and with him the Miller clientele and in this way drive our competitors out of the field.” Best instructed Billigheim to offer Toepel $100 in cash and “a fine suit of clothes, or something of that sort (you understand)? . . . You can make it hot for him if you’ll make him understand that otherwise we will give him colossal competition and that it would be a point of honor with us to crowd him out of his territory.” Winning Toepel, Best added, would “immediately make us masters of the situation.”

"M
ASTERS OF
the situation.”That described the baron’s endgame: to make and sell the most beer, earn the most profit, and demolish the competition.

Gilded Age robber barons such as Carnegie, Rockefeller, and Gould demonstrated brilliance in creating and implementing new modes of business organization, but those accomplishments were overshadowed then (and for the most part still are) by the tactics they employed to control markets and crush competitors: They organized pools and cartels in order to fix prices. They forced railroads to offer rebates and special pricing, and created trust mechanisms that enabled them to skirt tax and incorporation laws.

So, too, the beer barons, who were as adept at such tactics as their more famous counterparts in steel, banking, and railroads, integrating vertically in order to reduce production costs and horizontally in order to absorb competitors. Pabst owned a power company that supplied energy to a theater, hotel, and office building that he owned in downtown Milwaukee. His stock farm provided the draft horses that hauled the brewery’s beer wagons (which also functioned as rolling billboards). He and the Uihleins co-owned a barrel-making operation, the Delta Cooperage Company; the lumber came from 41,000 acres of timber the men held in Mississippi. Busch founded Manufacturers’ Railroad, a small line that linked the brewery yard to the city’s main rail line. His St. Louis Refrigerator Car Company supplied the company’s cool cars. Bottles came from two company-owned glass factories or from a third in which Busch held shares. He owned all or part of coal mines, hotels, and banks.

Assets like these enabled Busch, the Uihleins, Pabst, and a handful of other giant brewers to integrate vertically and so reduce costs. But brewers also used price to maneuver and manipulate their markets, especially in the 1880s and 1890s, when they engaged in a series of price wars that ravaged the industry. When Uihlein or Pabst decided to invade new territory, he dispatched his advance guard—his agents—to scout the terrain. “[K]eep on the lookout,” Fred Pabst, Jr., instructed his branch managers, “so that if you find that any of the shipping brewers [such as Schlitz or Anheuser-Busch] have taken trade from us, you can immediately report to us. In such instances we will make it our business to retaliate.”

Translation: we’ll lower our price. The operatives arrived armed with deeply discounted barrels—perhaps 50 percent less than the going rate in that town. Local brewers, smaller fry making only a few thousand barrels each year, lowered their price to match. The invader, armored by his giant beer factory and near-million-barrel capacity, lowered his again; the local lords replied with the same reduction. Sniffing the possibility of plunder, another baron’s man charged into the fray, brandishing barrels priced even lower. Warfare ensued, lasting for weeks, sometimes even years. More often than not, the small local brewer gave up, leaving the titans to wage war amongst themselves.

In one contest, according to Adolphus Busch’s grandson August “Gus” Busch, Jr., a group of small New Orleans brewers resisted Adolphus’s efforts to control that city’s trade. A prolonged struggle drove the barrel price well below the profit zone. Finally Adolphus ended the conflict by informing the men that he planned to “control the price of beer for the next 25 years . . . whatever goddamn price I put on my beer, you go up [or down] the same goddamn price.”

Gus, who claimed to have witnessed the encounter, recounted the tale years later as evidence of his grandfather’s wily ways and masterful control over lesser men. If the Busches invaded, say, Peoria, they could afford to wait out the competition; could afford to absorb the losses incurred by selling barrels at cost. Small local breweries could not. More often than not, the conqueror drove the conquered into bankruptcy.

The anecdote, though it captures the brutality of the struggle, is likely apocryphal. The most ferocious beer wars unfolded in the two decades prior to Gussie’s birth in 1899. Adolphus’s health failed in 1906, leaving him frail and wheelchair-bound; from then until his death in 1913, he spent most of his time in California or Europe. Even assuming the event took place as late as, say, 1910, when Gussie would have been eleven years old, Adolphus would not have been involved and his grandson would have been too young to comprehend the grownups’ conversation, let alone remember it accurately some seventy-five years later. More likely the tale evolved over the years as part of the mythology that surrounded a family of successful men with oversized personalities.

More to the point, Adolphus Busch was no fool and understood that price wars consumed time and energy better devoted to creating new markets or making fine beer. He laid part of the blame on salesmen, agents, and saloonkeepers. “The men we have to deal with,” he argued, “are given to misrepresent facts . . . The traveling agents very often make false reports and try to get trade through misrepresentations and wrong statements; while they are out, they always endeavor to reduce prices . . . ” Inevitably, he added, such false reports spawned “competition that helps to ruin the profits.”