The Henry Clay Distillery
RD #5, 7 th District
Fayette County, KY

(Est. 1858)

Ambrose (2002) has extensively research this distillery and provides the history that follows.

1869: The distillery was built John A. Headley and James A. Farra on four acres of land purchased from Judge George Robertson for $2,000. The property was located a mile outside of the city limits on Old Frankfort Pike.

1871: The distillery was destroyed by fire after only three years of operation and with a loss of $15,000.

1872: The property was sold by the Federal government in August in settlement for unpaid taxes.

1875-1879: The property was used as a pork processing plant by the Blue Grass Pork House.

1880: George C. Buchanan, a Louisville distiller and land speculator, acquired the property and on April 7 sold it to George A. Starkweather, Jr., a wine importer of New York City, for $7,429.12.

Starkweather then established a partnership with Colonel James. E. Pepper and the pair re-established a distillery on the site. Pepper designed the distillery and the layout of equipment and he hired local architect John McMurty to translate these ideas into plans and specifications.

The grounds contained 48-1/2 acres. The distillery was constructed of brick and enclosed a floor space of 40,000 sq ft. The plant had 20 fermentation tubs of 6,500 gallons and 700 mash tubs of 72 gallons. The three-chambered beer still held 2,500 gallons and the doubler, 1,200 gallons. Both were made of copper.

Pepper installed four steam boilers to provide heat to the mash tubs and stills at a time when many distilleries were still using open flames for heat. In addition, he installed two steam engines of 125 hp each to supply power. The engines drove a series of shafts throughout the plant and these powered the machinery through a series of pulleys and belts. He purchased a six roller mill, also powered by belts, to grind his grains into uniform consistency. He designed rows of windows on two sides of his plant to allow ventilation and lighting. These designs, while not revolutionary, allowed the distillery to operate with higher efficient, improved yields and uniform quality. Moreover, it allowed him to distill a consistent, higher grade whiskey that was his hallmark.

The plant was finished in April with a capacity of 28 barrels (roughly 300 bu) per day. They produced "Old Pepper Whiskey" and "Old Henry Clay", a Rye whiskey.

In September 1880 the company let bids for the construction of two bonded warehouses. Both warehouses were roughly 9,000 sq ft, four stories high and projected to hold 10,000 barrels of whiskey. The foundations were of stone, walls of brick and roof of iron clad. The first warehouse was finished in late 1880 and the second finished in early 1881.

Over the next twenty years, Pepper constructed four additional warehouses - giving the distillery bonded storage of 60,000 barrels. These warehouses were:
Warehouse "A" -- 10,000 barrels, built in 1880
Warehouse "B" -- 8,500 barrels, 1881
Warehouse "C" -- 6,000 barrels, 1890
Warehouse "D" -- 5,000 barrels, 1897
Warehouse "E" -- 8,500 barrels, 1897
Warehouse "F" -- 11,000 barrels, 1901

Water for the distillery was supplied from the farm of Colonel Wilson - with a basin of 75 feet square - and conveyed to the plant by a 5" pipeline. Two pumps supplied 1,000,000 gallons per day. The plant also maintained 500 head of cattle fed from the stillage.

The Louisville, Cincinnati and Lexington Railroad (later Louisville & Nashville Railroad) had tracks on both sides of the plant, with a siding into the distillery on the Frankfort Pike side.

1882: The plant's capacity had increased to 50 barrels per day, 10,000 barrels per year (value $300,000), operating 10 months of the year with 40 hands paid an average of $1.75 per day. They purchased oak barrels from the Bauer Cooperage Company for $2.50 each. The distillery was valued $125,000 and at the time was the largest distillery in the world.

In February, fire destroyed the cattle sheds and pens with a net loss of $4,000 to $5,000. The incident was fully covered by the Western Insurance Company.

1883: Starkweather died in December and Pepper acquired his interest for $70,000. He then sold half his stake in the company to Colonel William S Barnes of Lexington, Kentucky. Both Colonels Pepper and Barnes traveled around the United States promoting "Old Pepper" whiskey. Colonel Pepper concentrated on the East Coast, especially New York, and Colonel Barnes promoted in the North and West, especially in the Chicago area.

1886: The company began bottling "Old Pepper" whiskey in quarts and pint flasks. The entry into the bottling business was to counter the rectifiers that blended whiskey with cheaper substitutes and sold the product under the Pepper name.

1889: The bottling trade was so successful that the company faced a shortage of aged whiskey. They purchased 1,000 barrels from the Wm. Tarr & Co.'s Ashland Distillery and 500 barrels elsewhere. This was blended under Colonel Pepper's supervision with the existing stock of "Old Pepper" whiskey.

1891: In July, Pepper brought out Barnes for $100,000 in cash and broodmares. Over the ten years, Colonel Barnes had taken out $250,000 in profits; receiving $25,000 to $30,000 annually from his interest.

1892: In January, Pepper closed out all of bottling contracts with independent brokers. The following year, Krauss, Hart, Felbel & Company became the exclusive dealer in bottled "Old Pepper Whiskey" nationwide, except for California . The contract specified that they would purchase 30,000 cases of bourbon, 1,000 barrels of bourbon and 200 barrels of rye whiskey each year.

Insurance underwriter records from 1892 describe the distillery as being brick with a frame addition and with a metal or slate roof. The property included five warehouses:
Warehouse A -- brick with a metal or slate roof, located 275 ft SE of the still.
Warehouse B -- brick with a metal or slate roof, located 225 ft SE of the still. Part of this warehouse was Free.
Warehouse C -- iron-clad with a metal or slate roof, located 475 ft SE of the still.
Warehouse D -- iron clad with a metal or slate roof, located 600 ft SE of the still. Warehouses "C" and "D" were adjoining.
Warehouse E -- iron-clad with a metal or slate roof, located 600 ft SE of the still and 36 ft north of "C".

At that time, it was being operated by Jas. E Pepper & Co.

On September 12, the cattle pens were again destroyed by fire. The distillery had ceased production the previous month and arson was suspected because of several small fires around the distillery over the past few months. Damages were limited to several thousand dollars.

1893: An economic depression began that lasted five years and caused Pepper's thoroughbred investments and the value of whiskey stocks to fall dramatically. As a result, the company was placed in receivership (April 15, 1896).

1896: On September 19, the distillery was sold at public auction to Mrs. James E. Pepper for $43,142.69. She paid for it in cash from the prize purses of her thoroughbred stable.

In December, Jas. E. Pepper & Co. was organized, with $150,000 in capital. Colonel Pepper owned 2,994 shares, John G. Offutt (his bother-in-law) and Charles O. Johnson (bookkeeper) owned three shares each. These allowed them to quality as directors under the laws of the time. The company was authorized to "engage in the manufacturing, handling, selling and dealing in distilled spirits at the old distillery, formerly run by James E. Pepper, and in buying, feeding and selling of cattle and hogs".

1897: On February 9, Mrs. Pepper transferred the plant, equipment, stock and other assets purchased at auction to the new concern. The company issued $150,000 in bonds that matured in five years at 6% interest, payable in gold coins and secured with a first mortgage on the company assets. The assets included the Old Pepper Distillery and the trademarks of "Genuine Old Pepper", "Henry Clay" and script signature Jas. E. Pepper & Co. The financing allowed the resumption of operations and the next day the company resumed distilling bourbon. The officers at this time were James E. Pepper (President), A. G. Kinsley (Vice President) and James G. Hubbell (General Manager and Secretary & Treasurer). Mr. Kinsley represented the Harrisburg Trust (who issued the bonds) and the bank placed Mr. Hubbell at the distillery to oversee the financial side of the operations.

1898: Over the next year, Colonel Pepper had constant disagreements with his "overseers" from the trust company. In October Hubbell attempted to take control of the distillery by securing the bonds, but in November 1898, Mrs. Pepper purchased a majority of the bonds, again using winning purses from her thoroughbred stable. Hubbell made one more attempt to secure control of the distillery, by having the Harrisburg Trust declare the bonds in default and have a receiver (Mr. Hubbell) appointed. In February 1899 the court refused to appoint a receiver and sided with Mrs. Pepper in replacing the Harrisburg Trust as Trustee.

1899: In February, Warner S. Kinkead was hired as the distillery's Vice President. Mr. Kinkead was an attorney and assumed the business affairs of the company. He was former U. S. Consul to the UK and was married to Mrs. Pepper's sister. Eventually he would become the General Manager of the distillery.

Pepper continued to operate the distillery until his death in December 1906.

1907: In January, Christopher D. Chenault and Warner S. Kinkead were elected President and Secretary and Treasurer of both Jas. E. Pepper & Co. and the Henry Clay Pure Rye Distilling Co. (which owned the "Little Pepper" Distillery). Mr. Chenault was Cashier of the Lexington Banking and Trust Company (executors of Colonel Pepper's estate). Mrs. Pepper, Mr. Chenault, Mr. Kinkead and Charles J. Bronston were elected directors of both firms. It was noted that Mrs. Pepper was the largest stockholder and bondholder of both concerns.

On May 15, a group of Chicago investors, headed by Joseph Wolf, acquired the distillery from Pepper's estate for $400,000. Joseph Wolf was President of the James E. Pepper Distributing Co. of Chicago which, for the past seven years, had managed the distribution of "Old Pepper". Wolf, a prominent member of the National Wholesale Liquor Dealers' Association, reincorporated the distillery as the James E. Pepper Distillery Co. with Wolf as President, Kinkead as VP , Chenault as Treasurer, William E. Self as Secretary, and Bronston, General Counsel. Self was Colonel Pepper's old bookkeeper.

The new company began making improvements to the distillery and bottling operations at an estimated cost of $200,000. They placed an order for 20,000 new oak charred barrels and immediately stepped up production, even with 60,000 barrels of Pepper whiskey stored in bond at its warehouses.

In June, 355 barrels of "Old Pepper" was seized by federal agents under the Pure Food and Drug Act of 1906 at the Louisville Public Warehouse. The agents claimed that the whiskey was improperly colored with burnt sugar, added to give it a richer color. This was a violation of the law because a rectifier's tax was not paid. The whiskey was traced to the Pepper Warehouse #5 and was manufactured in 1899. The distillery claimed that it was not a violation of the law because the "sugar was put in at the distillery". In August the whiskey was released, after Mr. Wolf agreed to pay $2,500 in fines.

In July, the company acquired six acres adjacent to the Tarr Distillery (across Old Frankfort Pike) for $4,500, where they built an additional warehouse, bottling house and cooperage plant.

1910: In July, installed new distilling equipment that increased its daily mashing capacity to 100 barrels or 1,000 bu. The improvements cost $25,000 and doubled their annual capacity to between 20- to 30,000 barrels. During this period the company introduced "Old Jas. E. Pepper" brand name and continued to sale "Old Pepper" until the end of Prohibition. Eventually "James E. Pepper Bourbon" replaced both trade names. The slogan "Born With The Republic" was introduced around this time.

1914: After the United States entered the First World War, the Federal government rationed barley grains stocks. The Pepper plant distilled for the last time on November 11, 1918, when the wartime restrictions on grains forced production to stop.

1920: During Prohibition, the distilling plant was mothballed and the warehouses used as concentration houses. Schenley acquired the plant shortly before Repeal and razed all the frame building, replacing them with a modern plant that operated until 1958.

Review bonded warehouse transactions for this distillery