Interview with Ova Haney, October 17, 1985

SYVERTSEN: Mr. Haney, would you tell us something about your own background and how you became involved with Seagram's? As I understand, you started with Seagram's. Is that correct?

HANEY: That's right. That's really my first permanent job after I got out of college. Seagram's had a distillery about ten miles from where I lived, so, while I was waiting for a real job, why, I went and applied at Seagram's; and I got the job. And, I was planning on just staying there for a short time until something opened up in another field; but it didn't take me long to find out that I really liked this business. It is really exciting, one of the good reasons to stay. Had a good company I was working for and a lot of fun to work 1:00in this area.

SYVERTSEN: And, you joined it when it was really taking off. I mean, Seagram's production in this area, in the early 60's, was --

HANEY: Oh, yeah.

SYVERTSEN: And, it seemed to have no end at that point. Is that not correct?

HANEY: Oh, no end, no. Everything was rosy. There were several plants running, all of them running full speed, five or six or seven of them in Kentucky running every year and only shut down in the summer times when they got short of water. The big plants in Louisville run most of the time seven days a week. Lawrenceburg, Indiana, seven days a week. Dundog Wheeler, Maryland, running. And, a lot of movement of people; a lot of opportunities for growth. So, it was really a -- it was an expanding company so to speak. But, that didn't last forever. That -- somewhere in the early 70's, why things started going the other 2:00way; and we've been sort of shrinking ever since.

SYVERTSEN: When did you really feel that things were beginning to move to a down side? If you had to date it, would you date it '73, '74 or --

HANEY: Oh, I think, for my purposes, around '74, because I was beginning to feel that they were going to shut down the production of the 7th Street plant in Louisville; and I was working in the distillery then as a distillation coordinator. It did shut down, and this was unprecedented, and shortly after that -- I think it was in '75 -- why, I was transferred to Lawrenceburg, Indiana, which was running full-blast.

SYVERTSEN: So, there were rumors in '74 that the Louisville plant, the 7th Street plant, might close down internally.

HANEY: Those had been going on for quite some time. I think we all knew that we were making more whiskey than we were selling, and it was just a matter of mix-and-matching. We all knew that something was going to happen some place. It was sort of hard to believe it was going to be Louisville though, because they had been there so long. It was difficult to comprehend at first.

SYVERTSEN: There were about seven plants operating in the 1960's, Seagram's plants; is that correct?

HANEY: That sounds about right, yeah.

SYVERTSEN: And, how would you compare the production at the various plants. Could you give us a little comparison of what was happening at that point?

HANEY: Well, they were all running --

SYVERTSEN: ______ into the 7th Street plant?

HANEY: Well, of course, 7th Street was the only bottling house, so all the production that were being made at these plants -- some of it was barreled on 4:00the site; some of it was moved to other locations, and there was a lot of movement, not only within the Kentucky area, but movement of barrels back and forth to Indiana, to Baltimore, and that sort of thing to keep different kinds of whiskeys to all locations, because Baltimore produced a lot of the same brands that Louisville did. So, the same kinds of whiskeys had to be transferred back and forth. Then came the age of the computer, because a lot of this "where you send what barrels" was quite a logistics problem, so, when the computer age came along, we had a fellow sit down and calculate the cost of filling barrels at each plant, the cost of dumping barrels at each plant, the cost of warehousing barrels at each plant, and what the future mix was going to be: what 5:00plant needed what whiskey down the road, so, when he put all this through the computer, it ended up that there was some big money savings to be made by shipping all barrels to one location for dumping, barrels to another for storing, barrels to do different things, because different places have different facilities and they did them at different costs. So, to optimize their operation, why, then a lot of things started happening. A lot of closing this plant, you know, keeping this one open, and moving the barrels here and doing this and that, and this was about the time when we really had to sort of get a hold of the financial end of things, and they were beginning to do it and saving big bucks by doing it, but it also was the beginning of the --

SYVERTSEN: So, the computer started showing you that there were real problems in terms of efficiency at the 7th Street plant; and I guess the decision was then made to keep most of the rural Seagram operations going. Is that correct?

HANEY: Well, they would keep them going; but they changed a lot of where they barreled goods and -- instead of they used to -- I know, when I first went there, they were putting barrels away at Athertonville; and they finally started putting some barrels away at Athertonville and shipping out a tank truckload every day and shipping it either to the Lotus warehouse after it was built or to Louisville or to Jeffersonville. And, as time went on, they were shipping out more by tank truck and barreling less than the local facility. And, I'm sure this was going on at other locations, too.

SYVERTSEN: Now, was there much bottling done at the other Seagram plants in the 60's, or was most of the bottling being done at 7th Street?

HANEY: Practically all of the bottling was done at 7th Street during my time, 7:00but I think there had been some distilleries where they did a small amount of hand bottling at some of the local facilities. I'm not sure if that was before Seagram's or after Seagram's, but some of the employees had been there through the previous owners when I got there. So, I do remember hearing them talk about the bottling; and the facilities were still there. Like in Athertonville, they still had the bottling line in -- pretty much intact --it wasn't very automated, but there was enough facility there that you could bottle there, when I went to work there in '61.

SYVERTSEN: The quality control at the various Seagram's plants in Kentucky, can you tell us anything about, you know, how quality control is maintained at the various plants and how you came up with -- I presume you were trying -- was the aim to get slightly different whiskeys at each of these plants for blends, or 8:00was the aim to get primarily the same type whiskeys produced at each of the plants? What was the philosophy involved in the Sixties, and did it change during the Seventies in terms of, you know, Seagram's overall Kentucky operations?

HANEY: I think that they thoroughly expect to get a different whiskey at each plant; and that's the reason you have more than one plant in some instances, that they like the kinds of whiskey and, the way our quality department works, they like to have more than -- the more the merrier -- and they're -- in some ways, because it gives them a better chance to mix and match more, more opportunity to build their blends if they have more things to choose from. The consolidation of our business and the shutting down of our plants is really 9:00hurting our quality people; they really have missed those special whiskeys that came from each plant, because they had developed a way to use those; and, when they don't have them, why their options have shrunk quite a bit. So, they would like for me at this plant to be able to make more different kinds than I am, if I really knew how to do it, to make the quality.

SYVERTSEN: When I think of the larger Seagram blends today and, say, I were to taste a bottle of one that was bottled within the past year versus one that was bottled, say, in 1960, in terms of the total blending process, would there be much difference in that same name brand? And, maybe you could tell us how many blends actually have gone into, you know, some of these in the past versus how 10:00many would go in, say, in a run in 1984-1985.

HANEY: Well, I'm not in the blending end of it. I have worked there briefly about two years ago, but I do know at one time there was -- the period of time that I was there -- that we had as many as forty-some-odd different straight whiskeys that would go into, say, Seven Crown. And, I remember the last time I looked at the blend numbers, seemed like it was down to thirty-two; and I expect it's down even further than that now, because we're still using -- again, the last time I looked at it -- we still had whiskeys in inventory from our Athertonville plants which hasn't run in four or five years -- our Fairfield 11:00plant and our Cynthiana plant, we still have whiskeys from those plants around which we still use, so which gives us a variety. But, some day soon, I'm sure they'll all be gone; and their numbers will be even further reduced. But, to get back to your original question, I think, if you were an expert, you would see some difference. It would be a very subtle difference, and probably the public wouldn't notice it, but I think a Seagram's quality person, if he could set them side by side, would pick up the difference. I'm sure they'd like to go back to having more brands, though, more choices in bourbons and stuff to pick from.

SYVERTSEN: Do you think that the bourbons that Seagram's produced in the Sixties, the blends, as a whole, perhaps, had a stronger taste than what would 12:00be produced in the Eighties; and would this be typical within the industry?

HANEY: Yes, I think so. I think that the flavors are not quite as strong as they used to be. For one thing, most -- a good many -- at least Seagram's has -- and some of them have reduced their use of malt due to economic reasons and gone to other means of conversion of starch to sugar; but most of the things that are forced on you economically take away from the flavor somewhat. I believe we're making good whiskeys today; but, if we weren't interested in economics somewhat, we could put more flavor into them and have more, I think.

SYVERTSEN: Would that enhance the selling of them today, in today's market?

HANEY: That's a good question. I don't think they believe that it would, or else 13:00they could do that if they thought so. They know how to go back to that. If they thought it would be an advantage in the marketplace, I think they would do it.

SYVERTSEN: You developed a reputation as a master distiller, and I gather that you became a master distiller some time around the mid-Sixties?

HANEY: Well, I've worked in distilling for a long time. This is my fourth plant, but this is really the first distillery in which I've been in control, you know, in total control. I'm known as distiller and plant manager both, so to speak; and, heretofore, I've been on the staff of the distilleries at Louisville, Lawrenceburg, and Athertonville. But, this is my first where I'm in total control of it.

SYVERTSEN: Was your functioning as a master distiller back in the Sixties quite different from your functioning later on in the Seventies, as the romance of the master distiller began to wane somewhat and the chemists began to take over a 14:00much larger role in the industry?

HANEY: I think the romance was mostly probably outside of Seagram's to some extent, except for a few who we acquired from without. You know, those who grew up in the Seagram's organization, I think, at least internally, the romance wasn't too much; we were mostly scientific people. And, we believe in scientific principles and laws. But, in our industry, there is a lot of romance that people have similar positions in other companies, why they create quite a picture sometimes.

SYVERTSEN: Did the whiskeys that were produced here in the 1960's versus those 15:00that were, say, produced at the Atherton plant, how would you characterize the difference?

HANEY: Well, there again, I'm not a quality person per se; but I was working in Louisville and had an opportunity to look at all the whiskeys from each of the plants and did so daily, as I worked in the distillery at Louisville, to compare what we were making there to what was being made in the rural plants or the other Kentucky plant down there. It quickly became -- with very little training, you could quickly pick out Athertonville's whiskeys from Lawrenceburg's whiskeys or Fairfield's or Cynthiana's. They each had a distinct quality to them.

SYVERTSEN: Was that from the mashing process or in the fermentation process?

HANEY: Well --

SYVERTSEN: At what point --

HANEY: That's a good question. You can -- my theory is that every plant will produce a different kind of whiskey; there's something indigenous in the indigenous bacteria, the flora, the fauna -- all these added their own particular and peculiar flavor to it. Plus, no two distilleries have the same equipment; and there's always enough difference in any two facilities that you're going to get a different product. And, to try to duplicate whiskeys made from another distillery by this distillery is really very difficult to do. In fact, it's impossible, I think.

SYVERTSEN: So, if you had an order to produce a whiskey basically to supplement Athertonville, the same type of whiskey, you would find it very, very difficult to do.

HANEY: Right. That's --

SYVERTSEN: Is that true even today?

HANEY: Yes. We would -- we're working on that somewhat -- our research 17:00department, and we would like to take this one distillery and make some of that Cynthiana whiskey or that Athertonville whiskey or -- the quality people really miss it. They like to have it. It makes their job much easier to have it sometimes. And, we're thinking about making some efforts along those lines; but so far we haven't really done that. I don't really see us being very successful at it.

SYVERTSEN: Historically, perhaps, can you tell us which whiskeys were produced here? Now, we're sitting at the -- what used to be the Old Joe Distillery, which, as I understand, is now the Prentice --

HANEY: The Old Prentice --

SYVERTSEN: The Old Prentice Distillery.

HANEY: Well, as to brands, what came out of here before Eagle Ware(?), I'm not 18:00sure; but I think Rare Antique came out of here. It was an old brand that -- Antique, normal Antique was made in Athertonville -- but there was another brand that came out of here, and I think it might have been the Rare Antique. But, I don't recall the specific brands prior to what we're making right now, which is Henry McKenna, which, by the way, Henry McKenna was originally the Fairfield brand. But, once we ran out of that whiskeys, why, then we started producing whiskeys at this plant to go into the Henry McKenna. And, there again, I'm sure that the Henry McKenna changed a little bit. They put whiskeys of similar quality in there, but -- obviously made at two different plants. If you compare the two, why, you'd see some difference; but I would hope not much. And, it would be in the same flavor intensity and on the same level; and most people probably wouldn't notice the difference. But, the brands of whiskeys, I'm really 19:00not too good on as to what was produced here. I didn't have any experience with this plant prior to coming here, you know, a couple of years ago.

SYVERTSEN: If I were to drink a bottle of Kessler this afternoon -- or part of a bottle of Kessler -- excuse me -- would I be drinking whiskey produced here for the Kessler?

HANEY: Some of it. Yes. There again, you have to remember that they put whiskeys -- different kinds of whiskeys, and the percentages -- we make 64 different kinds of bourbon whiskeys at this plant, and so they might use a per cent or two of each of those in a Kessler blend. It would be a pretty small amount of the fraction, but the Kessler and the Seven Crown and the Calvert Extra all probably 20:00would have some of our whiskeys in it; that's one age or the other, you know.

SYVERTSEN: So, your mission today would be to produce, if I understand you correctly, four basic whiskeys and not to deviate from those four and these four might also be used in some other blends but there would be four specific whiskeys --

HANEY: Right.

SYVERTSEN: -- to keep the quality control of those four distinct and uniform. Would that be correct?

HANEY: That's exactly right.

SYVERTSEN: Okay. And, how would this, perhaps, be different from what your mission was, say, in 1960 at this plant when you were here?

HANEY: It would be essentially the same. As far as I know, we're using about the same procedures. This plant is probably more apt to produce the same whiskeys it 21:00did twenty years ago than any other distillery we've got, because we still have the same old equipment, still, you know, the wooden fermentors and the old mash tubs and yeast handled in the same fashion; and we're as close to the old-time, the original concept as ay distillery that Seagram's has. So, our whiskeys should be pretty much like they were in the Sixties.

SYVERTSEN: Did you use then natural limestone water?

HANEY: The water source would be the same.

SYVERTSEN: Would that have varied at the -- I mean I presume that one of the reasons for the various rural plants was to get at the natural limestone water historically.

HANEY: Well, it was to get at water. We frequently treat our water, you know. We 22:00take it from the rivers ____________, and then we treat it to get out the sluggies and filter it to get out the -- and then chlorinate it to get out the bacteria, and then we carbon filter that to remove the chlorine. So, you know, we take -- we could take -- the limestone water is a good story; but I don't know --

SYVERTSEN: If that's still important.

HANEY: -- how much of that's hype.

SYVERTSEN: Within the Seagram's group, perhaps, you can answer this, is there much use of demineralized water today? Would that have been very different, say, from 1960 or earlier?

HANEY: Well, in 1960 or earlier, they probably used distilled water, which is another way of getting demineralized water; and it was probably, in some ways, 23:00better than maybe the water -- the demineralized water, because you don't ever have the problem of the demineralizer getting saturated and giving you poor quality water. You know, if you distill it, it's pure. The problem with distilling -- the water still -- was that it's expensive and it took quite a bit of equipment to run, but demineralizers do it much simpler, easier to operate.

SYVERTSEN: What about the actual mashing process? Is there much difference at this plant versus what was done at Louisville versus the other rural plants.HANEY: The concepts are the same. The equipment's different. The Louisville plant uses, you know, they use a lightning-type mixers, cylindrical tubs, where we use big round tubs with rakes in them and cooling coils in them. 24:00Where Louisville cooled by a vacuum, we cooled with actual cooling coils; and the big rakes gives us, I think, better mixing and more positive mixing which is important for your malting process to get a thorough conversion of starches to malt.

SYVERTSEN: You don't use outdoor aging here. ____________________ aging here at this plant?

HANEY: Aging of --?

SYVERTSEN: Of the barrels?

HANEY: We age the barrels down in Cox's Creek. Our ___________ warehouse is down in Bullitt County. But, we just put them in warehouses for a prescribed length of time, four years, you know.

SYVERTSEN: Oh. It's not controlled heat/cooling cycle?

HANEY: No. We don't have air conditioning or heat; there might be some heating, 25:00but I don't think so. I think we just --

SYVERTSEN: Has Seagram's, at any of its plants, historically used controlled heating/cooling?

HANEY: Yeah. We've tried it, and we used it some. Yeah. Lawrenceburg, Indiana, did it; and I think Louisville, Kentucky, did it. They had brick warehouses that weren't very drafty. They had to be -- the climate had to be helped along a little bit. But, these metal-clad warehouses like we have out in the rural plant, why, they pretty much breathe on their own.

SYVERTSEN: In terms of bourbon production, 1960 to, say, 1980, where would Seagram's bourbon production rank amongst the other major Kentucky distilleries in that period? Was there much change in position over that 20 or 25 year cycle?

HANEY: Oh, that's -- I know in volumes, I wouldn't. Well, I do know, in the period of time when I started with them in the Sixties, Seagram's produced more bourbon than anybody in the world probably, in the country or in the state. In the world is going to be in the state. They were the biggest bourbon producers going, and they just didn't sell it as a bourbon. It was -- it went into the straight whiskey portions of the blended whiskeys, which were the number one sellers, the big sellers. But, I don't think anybody out-produced them, at that time, in bourbon whiskey.

SYVERTSEN: Has that changed over the 20 or 25 years?

HANEY: Oh, yeah. I'm sure it has. I don't know, but I know we sell -- we don't sell that much bourbon yet today; but, in our blended whiskeys, you know, we're 27:00down to two operating distillers at 2,400 bushels each. That's the one here in Lawrenceburg, Kentucky; and Lawrenceburg, Indiana, has that same capacity -- 2,400 bushels a day to make a bourbon-type whiskey. So, that's where Seagram's is.

SYVERTSEN: Sam Brockman, who is a story, legend perhaps. Did he often come in from New York to the Seagram plants here, to your particular plant here in Lawrenceburg, to check on production and quality and so forth; or did you largely operate with relative autonomy?

HANEY: I saw Sam a couple of times in my career, you know. He did come a couple 28:00or three times maybe -- he did come occasionally, but it wasn't really to check on anything; it was usually to have a meeting or to come to the Derby or something like that, you know. But, I -- Seagram's has always been pretty centrally controlled, New York controlled; so, Sam wasn't, in the years that I met him, he was beyond individual contact with the -- like plant managers and what not -- but, then he had a president that would do those sorts of things and vice presidents. He -- in my day, he didn't have much personal contact with the operating plants.

SYVERTSEN: Did they bring in people from the outside to basically run the management of the Kentucky bourbon plants, the Seagram plants; or was it historically simply left to Kentuckians in the area to operate these plants? Like Seagram's Canadian organization, Canadian British organization and the 29:00central office in New York or another main office, I believe, in Baltimore, how would you characterize these associations with the Kentucky operation of this big whiskey producer?

HANEY: Well, they usually -- I think, by and large, Kentucky was the best training ground for managers, because of the number of distilleries they had and the kinds of experiences you could get from going from one distillery to another and then the Louisville plant. By and large, it was the local people. There was some transfer of people between Louisville, Lawrenceburg, and Baltimore; but they were all, even though they weren't Kentuckians, they were all promoted from within the ranks, you know. But, Louisville enjoyed a lot of movement because they had better experiences coming out of the Louisville plant.

SYVERTSEN: I've been told that the Louisville plant was a training ground, where 30:00people tended to come in for a year or two; and then they tended to move them out of it. It seemed to be a plant always in flux in terms of personnel, and that was part of the Seagram philosophy to move people into that Louisville plant and then move them out someplace else. Was that true of these other Seagram plants out in the rural portions of Kentucky?

HANEY: Yeah. For management people. Yeah. This was -- practically everyone, you know, once you went to work for Seagram's, the most basic training you could get was go to the rural plants and become a supervisor and -- or, you usually went out there and become a chemist, do control lab chemistry work, become a supervisor; and then, after that training, you were prepared to go into the Louisville bigger plant at some higher rated key job or something like that. 31:00But, it was very good training and background. To be thrown into a large plant, you'd learn distillery only. But, in a small plant, you could very quickly learn warehousing, distillery maintenance, boiler houses. It was a small contact operation; and you have a good feel for all of those things, so that, when you got into the big plants, you didn't get so pigeonholed. So, it was a very good training ground.

SYVERTSEN: I gather there probably was not much interaction in terms of personnel with the Canadian Seagram's group.

HANEY: Very little.

SYVERTSEN: The Kentucky -- the two operated very separate, is that correct?

HANEY: As far as I'm concerned, yeah.

SYVERTSEN: Did they use much of your rural Kentucky whiskeys in the Canadian blends, or were the Canadian blends separate in terms of production? I know you mentioned earlier, for instance, that, in many good Kentucky bourbons that Seagram's produced, there might be 30 or 40 different blends altogether. What about on the Canadian side with Canadian whiskeys?

HANEY: I really couldn't tell you. I do know that there was movement of whiskeys from here to Canada that was -- and we're still doing that; we still provide some of the whiskeys for some of the Canadian operations. And, of course, Canada 32:00ships us some whiskeys, too. But, we bottle some imported whiskeys, too; but we sent some barreled whiskey to Canada and have done it regularly; but I don't know how much and what kinds. We do ship them whiskeys. What they do with it, I don't know.

SYVERTSEN: Do you think perhaps other distilled products would have been produced in Kentucky during the Sixties if the tax situation had been different? I mean, as a young manager, did you hear within the operations that the tax situation was perhaps preventing the production of other distilled products in 33:00this area? Or, do you think that maybe Seagram's never really intended to bring other distilled products into Kentucky operations?

HANEY: Well, that's hard to say, because the tax that was somewhat oppressive back then was a distillation tax, and, no matter what you do with whiskey, in order -- you start out with a high wine, which is a 135-proof product. Now, if you want to make some other products, why, you have to go from there; but the tax was on that original distillate, so you get that tax -- after that, why, it didn't make any difference whether you did any more in Kentucky or not probably, so that probably didn't run them out from making different products. But, it certainly ran them out from making more of what they were making. They tried not to make any more there than they could. They shipped a lot of the operation to Indiana and Maryland. I know that. They built warehouses out of the state to get 34:00away from it, some of the taxing. We had warehousing facilities at Cox's Creek and at the Louisville plant; and then we bought the old Army Depot in Jeffersonville, Indiana, to store whiskeys. When it was not physically favorable to store them in Kentucky, why they put them over in Indiana. But, that, you know, that's always a problem when a state gets you captured, why they start raising the taxes. So, up in the Indiana area, why we also have warehouses in Ohio. So, if Indiana gets tough, why we can move it over into Ohio. So, you know, we could always -- to be competitive, you have to do what you have to do.

SYVERTSEN: But, you never, I gather, really heard serious talk within the corporation or on the plant level of perhaps, at some future point, gearing up -- I'm talking now about, you know, the Sixties - Seventies period -- gearing up for production of other distilled products. It seemed to be apparently assumed that this would be bourbon whiskey production territory but not anything else. Would that be correct? As I'm doing the interviews with the various company people, this is one of the things I'm trying to get at, you know, whether there was any movement, going back to the Sixties, say to bring in other distilled products into Kentucky for diversification purposes.

HANEY: Well, I guess I really don't understand, you know. There's a rectification tax that would have made it a little uncomfortable, but the decline of Kentucky was just against distilled spirits in general and not in 36:00specific kinds or items. I remember that we campaigned pretty hard. I went to the Representatives and the Senators when the tax bill was up to try to tell them to, you know, to give us some tax relief, because it was making it difficult to stay in this state. And, Seagram's has never had any incentive much to stay in this state, because, not being heavily in the Kentucky bourbon business -- they make bourbons -- but Kentucky has nothing to do with most of the uses they have of their bourbons, so they weren't under any obligation to stay in the state except for a couple of minor brands and a few that they sold but not like the other distilleries. So, it was easier for them to leave the 37:00state than it was for some others; and they did, you know.

SYVERTSEN: Do you know -- this is probably a very difficult question for you to answer -- but do you know if, during this period of the Sixties, they felt that the efficiency of operations in Kentucky was any better than the efficiency of operations in other states for the small amount of whiskey that was produced by Seagram's in Kentucky?

HANEY: Are you talking about in the small plants like this one?

SYVERTSEN: Mm hmm.

HANEY: Well, I don't think efficiency is -- you know, we're running this plant just like we did 20 years ago. It's no better efficient, but it's no worse. The only efficiency that I know about was when they rebuilt the Athertonville distillery after it burned; they automated it. It's not computerized, but it's 38:00highly automated. It takes two people to run the still house, for instance. And, it's a beautiful thing. It's all automated, but unfortunately it didn't make very good quality whiskey. But, it took very few people to run it. Their attempt was efficiency, of course; but, after several years, why, that was shut down; and we're running this one, staffed just like we were 25 years ago, which is not efficient, you know; but we make good whiskey.

SYVERTSEN: Why was there a question with that whiskey production in terms of being a good whiskey. Would you attribute it more towards environmental factors or labor factors or management factors?

HANEY: A design factor. They built into it some automation that maybe shouldn't have been there, and they couldn't get rid of a contamination problem. They had 39:00a contaminated bacteria that got in there and reduced their yield and made bad quality, and they had a very difficult time of doing it. I guess it was very expensive to correct it, and you finally get to the point where you don't want to throw any more good money after your bad, and so --

SYVERTSEN: It sounds as if there could be a problem of over-automating in the production of bourbon.

HANEY: Oh, I think that's --

SYVERTSEN: Is that still true today?

HANEY: Oh, I think so. Yeah, I think there's some things, you know, that you want to sort of leave to tender loving care, you know. I mean, the yeast room operation is something you want to automate; and that's where they made their mistake;, I believe that they tried to automate the yeast room. And, you know, that's just something that you've got to be flexible -- you've got to put the 40:00human element into it to take care of it.

SYVERTSEN: The yeast, of course, is dear to the hearts of the master distiller; and I've been told by some master distillers and production run people that, within a given bourbon company, there may be only three or four, perhaps six or seven yeast strains but rarely any more than that. Is this true of the Seagram's operations within Kentucky as well? And, what would you say in terms of the yeast that have been used historically? How many different strains are we talking about? And, how would you describe the ___________?

HANEY: Well, we have probably a couple of hundred of them, different yeast that we --

SYVERTSEN: For production runs? Or --

HANEY: Well, for experimentation, and they keep them because they experiment with them; and they said, "Well, they have some degree of usefulness maybe," you 41:00know, but most of them have been experimented with, you know, put out in the plant and run for some period of time. But, we have a handful that's used at most plants, you know. We have their specialty yeast, too. We have five or six of those that we use just a little bit here and there, but we don't make large production runs out of it. But, by and large, we have five or six that we use most of the time.

SYVERTSEN: In over the period, say from '60 to the present, you would say that in production runs roughly how many yeasts have been used in say the last 25 years?

HANEY: Well, all the plants use -- except for two or three of them -- they use about the same, I'd say six or seven yeasts. You know, we have a -- like I say, we have occasion to run 247, 257, 260's, you know, we'll run a week or two of each of those. That's one way we're trying to make whiskeys that are different, I think, different kinds, exotic yeast, yeast that we haven't used before. That's one good way of doing that, but we're pretty set on the yeast we want. We've got certain numbers -- code numbers that we use and they keep cropping up at every plant regularly. They try some of these others, but they always go back to the tried and true ones.

SYVERTSEN: Would it be fair to say that over the past, again, quarter century, 25 years or so, that Seagram's has heavily experimented with different yeasts to try to develop some new specialty, and is that pretty much an ongoing process --

HANEY: I think so.

SYVERTSEN: Is that something that's still important today?

HANEY: I think so. I think that -- yeah, to develop new products, they continuously look for new yeasts, look for different ways to handle old yeast, try old yeast with new medias, different kinds of grains, different cooking methods. They're always looking for different flavors, unique, special tastes and things that they might put into a new product.

SYVERTSEN: What about the by-products? How, over the past quarter century or so, has Seagram's dealt with the by-products; what did they do -- I know some distillers have put them into feeds and, of course, most distillers have contributed money over the years to the feed council people to experiment with B 44:00Vitamin chains and proteins and so forth. I know there have been some recent attempts to make certain type of foods that might appear on the shelves with vitamin supplements in them, high protein, and has been apparently some research to see if perhaps there's not another missing link in the B Vitamin chain and so forth. What can you tell us about Seagram's and its by-products operation over this period of time?

HANEY: Well, most of what I know is that Seagram's was sort of a pioneer in developing dried grains into the kind of uses that it has today. They had their own experimental farm at one time and pioneered some of these nutrition programs 45:00demonstrating the exceptional value that proteins out of our by-products had in animal nutrition. And, some of -- if you look at any DFRIC, you go back, you'll see a lot of references to Seagram's where Ed Rueff, for instance, was --

SYVERTSEN: Mm hmm. I've seen a few of those.

HANEY: manager of the farm at one time. Ed did a lot of work, and he's still quoted quite a bit.

SYVERTSEN: Where was the farm?

HANEY: Somewheres out here in Eastern Jefferson County, not too far from Louisville, or maybe Oldham or someplace out here. It was before my time, but I think it was out East of town, Louisville, someplace. They experimented with corn, you know, different varieties. They were really a complete organization back in their day. They did a lot of stuff, but then the DFRIC came along. But, 46:00while all this was going on, the various plants did various things. This place here fed cows; had a feed lot here. We've still got the old barn that's about ready to fall down back there and the old ural ponds still full of sludge. Fifteen years since a cow peed in that thing and me and my daughter were canoeing back there in it last summer; and, if you've ever been in a canoe, why, you end up turning over in the damned thing; and there was junk up to -- old black -- been in there for 15 years and it just stayed there. But, --

SYVERTSEN: The farmers just drove in and picked it up?

HANEY: No, we had our own cows. We bought our own cows. We had our own operation. We fed -- well, a head a bushel, 2,400 bushel operation; we had 24 head of cows back there, had about 400 acres back through there and several feed lots, you know, several feeding barns. And, we piped the waste product through 47:00pipes all the way back -- a couple of miles back there and --

SYVERTSEN: And, Seagram's gave you many steak dinners, huh?

HANEY: Oh, yeah. Well, you know, they produced a lot of income, you know. The problem was you weren't in the whiskey business, you were in the cattle business. And, you couldn't shut down your distillery when you had enough whiskey, because you'd have to go out and buy feed for those cows. If you bought feed for the cows, then you'd starve them off of this stuff and start them on something else. They'd lose weight, so they really didn't like to be in the cattle business; they wanted to be in the whiskey business. So, back during the war, it was a cost-plus thing with the government to build dryer houses as part of the war effort, and --

SYVERTSEN: World War II?

HANEY: W W II, yeah, the big war. So, there were some -- I think Athertonville's dryer house was built back then. This one didn't have one; Cynthiana didn't have one; Fairfield didn't have one. Most of them didn't have one. And, that was one 48:00of the other problems that was difficult to run these places. The EPA got tougher and tougher, and people got wiser and wiser about dumping that stillage in the creeks. They closed down on your options, you know, and labor got expensive. You know, we used to -- I know at one time, they said, if we'd shut down all the distilleries at Seagram's, it'd be twenty years before they'd run out of whiskey. But, every plant does a little bit different. Some had dryer houses. When I went to Athertonville, they had a rotary dryer, which meant they dried the -- well, they had two kinds of dryers; they had a rotary dryer and a big drum dryer, so they dried the light grains, the solid stuff in a rotary dryer and the thin stuff -- they made what they called solubles and sold them as separate items. Then, they decided to put them all together and they could run 49:00them all through the rotary dryer. But, the price kept going up. I remember starting out, they was $30 a ton; and a year or so ago, they was like $150 a ton. But, now they're going back down again, because they flooded the market with dried grains and all these big gas haul plants came on the market. The corn products -- the gas haul plants -- why they really got the market flooded. The price went from $150 - $160 down to -- last time I looked, it was $85. So, those are big bucks. You know, we produce about 40 tons a day, a truckload a day; and that's --

SYVERTSEN: Where is this product sold? I mean, can you tell me something about 50:00the chain? I don't want to get too proprietary; but, you know, what is the chain for selling these by-products?

HANEY: Well, we have a by-products salesman. We have a man up in Lawrenceburg, Indiana, who's in charge of by-products; and we have a -- well, it's a whole department, and he deals through brokers, most of which are out of the New York area. But, it used to be, in the early Sixties, we sold a lot to Memphis and different places; but New York's a big dairy state. This stuff is particularly useful for dairy farmers, because the cows that get on it do give more milk with higher butterfat and all this; and they get a better rating, so they really like it.

SYVERTSEN: That ties in with what Bob Hatch has been telling me; you know, Bob Hatch is a __________________ man. I just want to interject that, because your point, I think, ties in well with some of the things he said.

HANEY: There's an X factor in this stuff that makes it, for the same analysis of protein and fats, fibers -- cows just give more milk with it, you know, they just do better. And, so do some other animals. Poultry does well on that. They feed it to slimes(?). You know, it's got a -- it's a real valuable food -- food item, so most of it goes to brokers up in the New York area. They ship it mostly by bulk. We used to bag it in all these places. We used to have a sewing machine, baggers, and trucks coming in here to -- throw 30 bags on this one and 150 on that one -- have a crew to load, you know. But, you know, it became as -- again, as wages go up and what-not, it become much easier to simply bulk it out and let somebody else blend it and bag it. Most of them blend it anyway, you 52:00know, most of the big outfits, they have their carload of this and put it in one bin; a carload of that and put it in the other; and they blend them together in certain proportions. Hardly anybody feeds it straight; it's mixed with soybeans or whatever else is out there. But, it's been an important part of our business. The price that we got out of it continues to increase as people discovered it and found out about it, pretty much with the help of the DFRIC; and it's really made it worth our while to build the dryer houses and to capture it like that, plus it rids us of the waste problem. We would have to do something with it, and we can't eat it either. And, if you sell it to a farmer and he feeds it to cow, it goes right through the cow right down to the creek, you know. This way we dry 53:00the vapors off into the air as water vapors, contain the solids and have a viable product. Big bucks.

SYVERTSEN: Mm hmm.

HANEY: Sometimes, they was getting -- there for a while they was getting -- like it was almost our main product, you know. We were getting more money out of the by-product than we were out of the product.

SYVERTSEN: Where would you date that period?

HANEY: Well, I guess when it was up to $150, $160 a ton, you know. That's a lot of money.

SYVERTSEN: That was fairly recent.

HANEY: Yeah. A year or so ago, you know. That's, you know, like $6,000 a day there. That pays your overhead, you know.

SYVERTSEN: Has the industry as a whole tried to in any way protect or control 54:00the price of the by-product or done anything as a group regarding this marketing of the by-product, or has it been just almost happenstance from one distiller to another?

HANEY: Oh, I don't think there's any group other than the Distillery Feed Conference -- I think that's about the only thing I know of that ties these people together and gets the information out. Other than that, it's sort of been a seller's market. We really haven't had to go knocking on doors. People know we're here, everybody that's in the business; and they know we've got product. Now, all we're quibbling over is price, you know; as soybean goes up or the anchovies off the coast of Peru are -- you know, when their catch is down, why 55:00our price goes up. But, when they've got a good thing going down there, why our price goes down. You know, we're competing in the world market somewhat -- the price of protein. But, I don't see that we have a big problem with selling; we just have a problem with pricing.

SYVERTSEN: Which is the same problem the industry as a whole is facing at the retail level on the bottled bourbon.

HANEY: I think there's things we can do. I think some people are doing it, some places. In fact, I was talking to people at DFRIC; they were interested in buying this stuff before it's dried. You know, they say they can feed it wet. Well, they're talking about the __________, press-cake ______________, before it's really dried and taken out here --

SYVERTSEN: Before you finish that last 10 per cent. That's standard action. 56:00Larry Carpenter, that last 10 per cent drying process is very, very expensive in terms of energy costs incurred for that drying.

HANEY: Right. But, they're talking about piling it up on the ground up here in some central location and then dispersing it out to a variety of farmers, you know, at a certain cost, because, if you can get that amount that they need -- the dairy animal -- to give that extra bit of milk and increase that quality, no matter which way you dry --

SYVERTSEN: Mm hmm. Mm hmm. The endigross(?) cycle.

HANEY: The endigross(?) cycle. And, all we need to do is get to them and the stuff is sterile when they get it, so -- and he thought it was good for a week or two out there, you know. I guess, if it spoiled too bad, the cows wouldn't eat it; but I thought that was unique.

SYVERTSEN: Mm hmm. It sounds fascinating.

HANEY: Well, Austin Nichols, their dryer house went out here a while back; and they were getting a dollar a barrel for that stuff. Now, you take, at a dollar a barrel, say 24 -- we're about 38 gallon to the bushel -- 2,400 bushels a day 57:00times 38 divided by 55-gallon barrel -- now, that's $1,658. You wouldn't have to run a dryer house. You wouldn't have to have those people over there, you know. That's just, you know, that's easy money; isn't it?

SYVERTSEN: Mm hmm.

HANEY: They were getting that for a while, a dollar a barrel. But, I think -- I'm not sure they'd get that forever; but you'd have to develop enough farmers to where they could take it out from you in a long time, you know. The other thing is, you know, if they're not here, why they'll shut your distillery down.

SYVERTSEN: It's a fascinating prospect.

HANEY: Oh, yeah. There's -- you know, we used to do it all the time. We used to let, you know, back then, it was almost cheaper; you could give it to them; they would haul it out, you know, just haul it away from you. And, then, you can have it or charge them ten cents a barrel or something like that. But, they were feeding mostly beef cattle. But, the real value in this is how it enhances milk production and that little extra -- if you can get the price for that, why --

SYVERTSEN: Bob Hatcher tells me some of this as well. I find it a fascinating conversation. I wanted to ask you a question about purity and quality control. In talking with other people, I picked up comments such as, "going back to the early Forties, mid Forties, Seagram's had a reputation of being very, very 59:00absorbed in quality and purity and cleanliness in production"; and it's been said to me that Wilkie, Fred Wilkie, was largely behind this effort. Wilkie, of course, stayed with Seagram's, as I understand it, until somewhere into the mid Forties.

HANEY: Mm hmm. '46 or so.

SYVERTSEN: When Wilkie left, was there still that apparent, almost an extraordinary absorption in quality and purity, more so than you would expect out of a modern industrial plant for that period? Because this was before a lot of government regulations.

HANEY: I never got the impression that he was responsible for the quality of the 60:00product, but he was responsible for a degree of cleanliness in the plant that was -- I understand he was a military man, and he actually had his white-glove inspection.

SYVERTSEN: I've heard some of this.

HANEY: And, some of the people that I worked with -- Joe Kahn, for instance, he'd tell me stories about, "if you think I'm rough, you ought to see --". But, he had -- also, you have to remember this was back during the war and we were making whiskey for the war effort and it was cost-plus. So, the more people they had on the payroll, the more money was coming in. So, there was an incentive to over-staff rather than to staff. He had huge numbers of people in the sanitation force.

SYVERTSEN: Oh, I see. That's fascinating.

HANEY: Cost-plus, you know, that's -- you can do a lot of things in a case like that.

SYVERTSEN: So, you had _____________ of cleanliness people for the payroll purpose.

HANEY: They wrote -- and they're still available -- I don't have any around here -- but in Louisville, they have complete manuals written, "How to Wash Windows -- Grab sponge in right hand." Have you ever been in the military? Even seen the military --"

SYVERTSEN: I've read some manuals -- Guard manuals.

HANEY: Well, they tell you exactly what kind of soap, how much water and how to mix the soap and stir them and how to grab the sponge and which way to stroke the window first. They had it on everything, from washing the floors to walls to windows to light fixtures. They had a complete manual -- sanitation manual -- of how to -- __________-- he had a whole __________ of people. Then, he had this other philosophy of moving people in at the bottom and out the top in a matter of a couple of years. They had college -- you know, this was during the war, and they had college graduates, you know, mowing yards, you know; they were 4-F's or 62:00were exempt because they worked for a distillery, but it wasn't uncommon to have a man with his doctorate setting on the lawn mower, you know.

SYVERTSEN: Really.

HANEY: They had a lot of these things going on.

SYVERTSEN: I hadn't heard that.

HANEY: Yeah. Like Jule Collins was a distiller in around two years, you know.

SYVERTSEN: I didn't realize it was that quick.

HANEY: Yeah. You know, he starts out in the operating room, cooker operator, still operated them. You know, that's back when the unions weren't like they are today. And, you could make supervisor and give you --

TAPE ENDS

HANEY: Wilkie's philosophy was to train them, and, if they left, so what? 63:00They'll be working in related industries, or most likely they'll make contact with somebody that will offer them a job that maybe Seagram's does business with, and they'll always be doing business with the company that gave them their start. So, we'll always have friends. So, he was willing to pay the price for filling the industry and related industries with Seagram's people. You know, I think it works to some degree. Even when I was -- you know, in the Sixties, when I started, any time I dealt with a grain or a maltster or somebody like that, it was usually some ex-Seagram's guy that was familiar with our concepts and our principles. I didn't have any trouble with them. Tell them I wanted number two or -- and that's what our quality standards were. But, if you get somebody that 64:00didn't understand our quality standards, they'd say, "Why, what the hell you talking about? I gave you number two corn." I'd say, "That's number two corn, but it's musty, and we can't -- we're going to reject it." He'd say, "You can't reject it; it meets the government standards." I'd say, "Well, sure, but it doesn't meet Seagram's." So, a lot of times, they couldn't understand what we wanted. Even when we paid them extra, which we usually did pay them a few cents extra for extra quality; but they'd have a hard time understanding it. But, those were the formative years, I guess, a lot of them at Seagram's, people that later come to be in New York and then head up the company from there, came through this program. After the war was over, why they were pretty well locked into department head jobs; and then, when they moved corporate headquarters to New York, why a lot of them went; and, so, it's only in recent years that we've 65:00had people that -- other than that group -- in charge of the company.

SYVERTSEN: It sounds as though Seagram's was very important for many years in actually training people from other states, in management capacities in particular, and exporting them out to other areas. And, of course, the spin-off of that, you know, for a state, you know, can be very, very important. Now, that the industry is in a state of very slow growth at the moment, that's not happening; and, of course, -- very much -- and, of course, that impacts upon the state, too, in a somewhat negative way.

HANEY: I would think so, yes. Used to be a lot of movement of people back and forth from New York to Louisville; Lawrenceburg to Louisville, you know, a lot 66:00of movement back and forth, a lot of houses bought and sold. It's got a lot more impact than just what you see when you drive down Seventh Street and see that plant. The people that were there at the time, they just happened to be there at that time; and, over a period of years, why those people turn over several times, you know.

SYVERTSEN: Well, what prompted my comment is that, so often, I and many other people, I think particularly around the university here, that comments from Easterners and Westerners that, you know, Kentucky is so much of a provincial area when there is so little traffic from outside ideas and outside people coming through; but Louisville, in particular, I think through G E and through Seagram's and perhaps a few other companies, at least for some period in recent 67:00history, have been very important in this whole process of idea exchange.

HANEY: Yeah. There's been a good mix of people from all over, you know, the Baltimore and New York area and back and forth. And, you know, we're in touch with those people all the time, too. They get through our accents sometimes; we get through theirs. Sometimes, we understand each other.

SYVERTSEN: I was wondering if we could go back over something we started to talk about earlier before I turned the machine on, and that was the history of this particular distillery, as you understand it. Could you trace the development of this particular distillery for us?

HANEY: Well, from the little bit of information I have, this may be -- the person who started it -- Old Joe Peyton started it. They call him one of the earliest distillers in Kentucky, but they don't put a date on it or anything. But, it was moved to this site, I think, the Old Joe Distillery was, from across the road -- from 127 to this site in back, like 1840. So, we're talking about prior to 1840 was the original, the Old Joe Distillery, which is now the old Prentice Distillery; it's moved in location, but it was originally started across the road; now, it's here.

SYVERTSEN: And, that dates back to the 1810's, right?

HANEY: Well, obviously, down in that period of time. Now, that's got to be -- way back -- that's got to be competing with Ethan Williams for being the first distillery.

SYVERTSEN: Mm hmm. I was thinking that.

HANEY: I don't know -- Max Shapira might contest it. I mentioned that to him the 69:00other day. You know, if we really want to do a historical study, I've got a daughter that's a historian. I might give it -- I've shown her some of this stuff, and she -- if she ever gets an opportunity, she might be interested in that. So, I'll get her to -- But, anyhow, after that, you know, it changed hands several times. And, in 1910, why this present building was built by Colonel Brown of J. T. S. Brown. He built not only the distillery but a nice -- we call it a mansion; I've never seen it -- all that's left up there is the front steps and the swimming pool; but there was a mansion back there with all the coach houses and servants' quarters and swimming -- I said the swimming pool -- and the dance hall. Had quite a large dance pavilion back there; it was to entertain 70:00friends. And, they built a rather ornate what they call a Japanese garden -- sunken pools and arched bridges and all the landscaping that went with it, where their friends could take a pretty good little hike through there. It must have been very pretty in its day, which, by the way, some of the rock pools and the bridges are still there and visible. You can see what it was like in those days. It must have been real pretty. But -- and, then, it started changing hands pretty rapidly and --

SYVERTSEN: American Medicinal had it for a while, right? And National?

HANEY: Well, yeah, I forget -- there was a list here someplace in this thing of the people that had it. It passed to the Hawkins family, which is a local name of some note, and the Medley S. Bond -- that's probably the Bonds & Lillard 71:00group -- it's Bond's Mill Road. And, the Rippey, who are the benefasts to the Rippeys; they've been prominent in Anderson County Distilleries forever. They were the original -- they came, I think, Austin Nichols bought their plant from the Rippeys, the old J. T. S. Brown over on the Kentucky River. And, Searcy -- that's a local name. Hawkins family, the Gratts Beam and Hurd Hawkins Manufacturers of the Old Joe and Old Prentice brands until prohibition in 1917. The --

SYVERTSEN: The old fellow that lives right here.

HANEY: Jimmy Waterfield. His family's Waterfield Frazier. I don't know -- that was the brand of whiskey. Well, Jimmy's in his eighties, well up in his eighties, I think. I don't know how old he is, but he's pretty old. But, his dad 72:00used to own this place; and he was born in a house setting right over here. He never knew his dad; his dad died before he was born, I think. His aunt raised him. He worked here until he retired. He really knows the history of these places probably as well as anybody. But, all of these names -- several of these names that I've mentioned here -- the Hawkins, well, some of their kin worked here and retired and some of them still stop by every now and then. But, it's changed hands a lot, but it's -- you know, it's very prominent in the history of Anderson County. It's made a lot of well-known brands over the years, I think.

SYVERTSEN: Did Seagram's tend to hire within particular families? I know some of the distillers believed strongly that nepotism in this industry worked very well. Of course, the Brown-Forman group, of course, you know, has often said 73:00that historically being a nepotistic operation actually had great advantages for that particular distillery. Is that belief fairly strong as you understand it in the industry, and was it strong within the Seagram group?

HANEY: Not within the Seagram's group; and, if it is within the industry, I'm not too sure how strong it was, you know. I -- you're talking about management?

SYVERTSEN: Mm hmm.

HANEY: You're talking about people who'd be managers or distillers or --

SYVERTSEN: Mm hmm.

HANEY: I think there was probably a time when your family connections was important, you know. If you were a Hawkins, you automatically knew how to make whiskey or, if you were a Beam. But, Seagram never really promoted that. They did go out and hire some Beams, you know, for specific reasons, you know; they 74:00wanted their whiskey-making ability, you know -- one at this plant and one at Cynthiana. When they -- they hired them, and they stayed at these plants until they retired.

SYVERTSEN: It apparently didn't cause problem with the Beam Distillery, that some of the family were working for the competition.

HANEY: Well, I don't know -- because Ancient Age had Beams; Glenmore had Beams, you know; they were every place. You know, they were -- as far as I know -- I don't know what the family connection was, if it was the original Beam that ran the Beam Distillery now, but it was some distant relative of these people, but they weren't so close that they had access to their finances, I don't think. I think they were on their own. But, that's one of the few families I can think of, you know, other than the Browns; but they stay in the same company. But, Beams, you know, they moved around to all the different companies. But, 75:00Seagram's never did do that.

SYVERTSEN: Who did J. T. S. Brown finally sell out to?

HANEY: Austin Nichols. That's their plant. J. T. S. Brown owns a piece of property right over here right now. Schenley or --I think this distillery over here is -- some of it is owned by Schenley and some of it by J. T. S. Brown or -- I know J. T. S. Brown has a piece of it. I don't know -- so something -- J. T. S. Brown is around in some fashion, but I don't how.

SYVERTSEN: In terms of this plant at its peak, what would you say was the highest number of employees operating at a given time? Would that be the early 76:00Seventies, or would that be earlier, because --

HANEY: Oh, in the Sixties, you know, in the early Seventies, when it was operating. I really couldn't tell you, because, in addition to what they've got now, they would have had a warehousing crew, probably another five or six people, so probably no more than -- we have 51 now, so I wouldn't think there would be more than five or six people more than that ever, you know, in -- since they bottled here, you know, back when they bottled, why, they would gear up for that, but probably never more than 60 would be my guess.

SYVERTSEN: You're surrounded -- or starting to be surrounded -- by some dry counties. To your knowledge, did that -- how did that affect production here, 77:00and how did it affect relations with these dry areas? I mean, did it cause a lot of difficulties; were there security problems?

HANEY: I don't recall hearing of any problems in security as far as the concept of wet versus dry over the -- they're probably having as much trouble now as they ever had, you know. Some people in the area still have problems with it, you know.

SYVERTSEN: Were your employees harassed when they left the area and went back to their homes?

HANEY: Well, I'm sure a lot of them had difficulty with some people; but I think they're -- some of them are still having difficulties. Anderson County tried to have a bourbon festival here last year. They wanted to celebrate the heritage of their -- and the local Baptist preachers got up and protested, and the Chamber 78:00of Commerce split down the middle, and they threatened to divide, and they called it off. It was tearing the town apart or the community apart.

SYVERTSEN: Last year?

HANEY: Yeah. Last year. It's still very much alive.

SYVERTSEN: Have you heard of other examples of this in the past? Or, do you recall in your own employment here, from the early Sixties on, of similar episodes?

HANEY: Not here. Not particularly, but --

SYVERTSEN: But, it seemed to be under the surface.

HANEY: It's always under the surface. You're in the midst of dry territory. Anderson County is wet, in the sense that they have package stores; and they have a beer and wine license available for restaurants. However, very few restaurants buy them, because nobody in Anderson County will go into a restaurant and -- not nobody -- but most won't go into restaurants and drink 79:00beer or drink wine, much less distilled spirits, you know. When I first came here, I went down to the Pizza Hut and ordered a pizza and a glass of beer; and she apologized that "we don't sell beer". I said, "Well, it's wet," you know. She said, "Well, yes, it's wet; but our company's determined that the atmosphere is such here that it's best we don't sell beer." You know, the climate. I thought that was unusual. But, Anderson County's always been wet in that sense. Over the years, I don't think they've ever been dry.

SYVERTSEN: Have you had good relations with the school system and the local political establishment? Has there been any particular contribution made by this plant over the time that you've been associated with it, with the community? 80:00Anything outstanding? In talking with some other people, there have been instances at some other plants where, you know, the company has gone to great lengths for some kind of community relations.

HANEY: Well, I can't relate here, because I don't have the experiences here. I haven't been here that long. But, when I was in Larue County, at the Athertonville plant, my father was County Superintendent of Schools; and Seagram's had shut that plant down for several years. They had some whiskeys in storage there, but they weren't removing any of it. And, somewhere along about the time I went to work there, I guess, I guess my dad went down there as Superintendent of Schools, like in '53 or somewheres along in there, '53 or '54. 81:00But, somewheres along in that period of time, Seagram's started -- and the school system was broke -- in fact, that's the reason he came in there was to -- you know, they hired someone to come in there and solve their problem. The teachers hadn't been paid. There was a whole lot of indebtedness and a lot of angry school teachers, a lot of community all torn apart, you know. So, about the time he gets there -- and maybe he knew this, I don't know -- the distillery starts removing whiskey and -- so, you don't pay the taxes or you didn't until the whiskey was removed and what not -- and started production on the line. And, man, the money came in like mad, you know. It really bailed them out. It was a tremendous plus for that -- and it's a dry community -- but I think it made believers out of a lot of people; they were able to get themselves out of debt strictly through, you know, originally by the money coming from the whiskey, and 82:00eventually being able to build a big new school building. And, they had a nice program down there, and they still do. Even though they're not -- it's shut down now and they're not getting any money from it, but they learned to not rely on that totally. Previously, they had relied totally on the distillery; and, when it shut down, they were in bad shape financially. They couldn't recoup -- or wouldn't recoup -- they wouldn't raise the taxes. So, there's a pretty graphic example of the impact that it has on the local community. We contribute a lot of money to Bullitt County Schools, where the whiskey is stored. Because we don't store it here, why, we don't contribute that much -- this plant doesn't -- to the school system, because the money is in the stored whiskey. It's stored down in Bullitt County. But, Bullitt County, they get a bonanza.

SYVERTSEN: That's one of the issues I'd like to talk more about. Perhaps you can help me here. Who in the industry should I talk with about the importance of the tax spin-offs to the community and the state from this industry over the last twenty, thirty years, say? You know, is there anybody you can think of who can look at those numbers and kind of crunch them and explain them in terms that maybe people would be able to comprehend?

HANEY: Well, my first thought, it would be Frank Dailey with the KDA.

SYVERTSEN: Mm hmm. I talked with him, right. I probably should have talked more on that issue. We talked about five hours as I recall, though; I think I wore him out.

HANEY: Yeah. You know, he sends out -- of course, this is state --but I don't know where you could get the numbers from each -- you might have to go to each 84:00individual county or each individual distillery and see if they could look up their records what they paid into each county. But, Frank says that this is our state contributions, what the distilled spirit does to the general fund, you know.

SYVERTSEN: That's a state breakdown.

HANEY: That's a state breakdown, but I don't know where in the world -- where anybody breaks one down for the counties. The counties that have distilleries in them, they do well.

SYVERTSEN: Mm hmm. And, from what I understand, it's been very important for the school systems in those various counties. But, getting at the information and, you know, seeing it in comprehensible terms seems to be difficult.

HANEY: Let me see.

SYVERTSEN: Could I make a copy of this sequence?

HANEY: Sure. Yeah.

SYVERTSEN: Thank you.

HANEY: Well, I thought I had a copy of a tax bill here from Cox's Creek. PAUSE. Larue County, back in the Fifties, there was a lot of anti-sentiment against the 86:00distillery; I mean, they didn't think it ought to be there at all. And, I know, my father had several tough run-ins in the school board meetings with these people who decided that money wasn't worth -- maybe wasn't worth taking; and he explained to them, if that money wasn't worth taking, what that would do to his own personal tax and said, "would you like to pay another --" They said, "Well, no, maybe we'll just let it go," you know. So, he would explain to them what it saved them personally by the distillery, you know. If you need the money and they're not paying it, well, you're going to be paying it. So, the money usually swayed those people.

SYVERTSEN: Of course, one of the fascinating things here is that the industry itself, as I understand it, has not tried to emphasize historically the amount of contribution that they were giving on a county-basis, you know, for the 87:00overall operation of the schools. In other words, they seem to really shy away from mentioning this. I suspect, perhaps, that's out of fear that, if people really got into it, they might say, "Well, if you support X per cent of our overall operation and it's a hefty X per cent, you can do Y per cent as well." Maybe this was the reason. Or, maybe it was some other reason. Maybe it was oversight.

HANEY: I doubt if it was oversight. I think it's more a desire to keep a low profile. Either way, good or bad, the thing to do is not be seen; keep your profile low. Go ahead and give your contribution, and those that get it know. And, they're usually the ones in power, and they can quietly protect you maybe from -- or at least by the taxes -- you know. I think, if you go public, why, there's too many zealots out there who'd say, "the hell with the money," you know, "we don't want this tainted money," and throw it back at you.

SYVERTSEN: So, I guess that explains, then, why it's so hard to really get good 88:00statistics, historically speaking, over the last 30 years or so, the contribution of the distilleries in a particular county to the overall school operations in that county.

HANEY: Well, that's like your -- your pastors don't want to know that they're getting whiskey money either when they're getting contributions in their church. They'd just as soon not know that. There's a little article on our bulletin board in there, in our employees' room, in reply. I'll show that to you. This is one of our local employees who respond to their preacher's public denouncement 89:00of our industry.

SYVERTSEN: Mm hmm. About tithing and his job at a distillery. Interesting. To your knowledge, has there been difficulties in other counties to celebrate their bourbon heritage, distillery heritage, as well as in the recent example you mentioned last year in this locale?

HANEY: To my knowledge, there's never been a bourbon festival.

SYVERTSEN: In any Kentucky county?

HANEY: In any Kentucky county.

SYVERTSEN: That's interesting.

HANEY: Yeah. They have apple and sorghum and country ham, and they're scrambling 90:00like mad daily to become -- find a new, exciting name for -- so these people really thought that they really latched onto something that would really capture the imagination and help them start a nice festival, you know; but it turned out to be a can of worms. But, they have quietly gone out and reorganized -- the ones that are for the festival, and I guess they've incorporated, and they still plan to have one. They're not inviting anyone who's not for it to join the organization -- like the last time, they opened it up to the public and the Chamber of Commerce. So, these are the business people and the people that are interested in having this thing. The organizers are -- they're still anticipating having one; they're just not going to ask anybody's permission this time, which is essentially what they did the last time.

SYVERTSEN: To your knowledge, have there been county whiskey festivals in recent times in other states?

HANEY: Not many other states make it, you know.

SYVERTSEN: Well, I was thinking particularly, you know, the huge Hiram Walker plant up in Illinois there.

HANEY: Yeah. If there ever has been, I don't know about it. It's easy to have a wine festival. You can have your October Fest, your beer fest.

SYVERTSEN: Or cheese festival.

HANEY: But, you cannot have your --

SYVERTSEN: That's interesting.

HANEY: Well, equivalents -- it comes up to the equivalency is just -- it's not out there yet for most people, and they're still -- haven't been educated. I think, if Seagram's campaign continues and other people -- other members of the industry are helping, too.

SYVERTSEN: Beer festivals are very common.

HANEY: It will be short order before people will be educated, wise enough to know that a bourbon festival will not harm any -- any less or any more, that -- 92:00in a beer festival, you serve beer. But, at a bourbon festival in a dry county, you wouldn't even serve bourbon. There would be no question; the product wouldn't even be available, you know, on the streets, like beer or wine would be available. But, that is the image that we have; and people don't understand equivalencies.

SYVERTSEN: Do you advertise the distillery in this county and, you know, in the community at large; or basically do you try to keep as low a profile as possible?

HANEY: Well, I have no advertising budgets. You know, I'm a manufacturer, not a marketer, and that's -- I do contribute to school magazines or, if somebody 93:00comes by here, horse shows and things like that want me to take out an ad, 25 or 50 bucks or 100 or something like that. I have a few of those things that I do upon request, but I'm not charged with or feel responsible really to promote the brand in that sense, because they don't allow any financing for it. I guess they'd just as soon I'd leave that to the people that are trained for it. That would be my guess.

SYVERTSEN: My question was partially prompted by the fact that, when I drove up here, I had to look closely to see that this was actually distillery property, I mean, it's not labeled as such. I mean, you can recognize a few of the warehouses at a distance; but one doesn't know, just by driving through, what particular brand or brands are produced here or indeed that even

TAPE ENDS

HANEY: I keep a low profile. One reason is that we don't have promotional materials or promotional items here, and people will always stop and say, "Hey," you know, "what about a t-shirt, a hat," or, you know, "Can I have a drink?"

SYVERTSEN: Sample.

HANEY: Sample. Yeah. And, I have to say, "Sorry," you know; and, so, it's really, you know, it's a bit of an embarrassment. So, it's best to keep low 94:00profile and not have everybody walking away, saying, "Well, those guys don't know -- you know, they don't have anything." In that sense, it's -- I mean, I'd just as soon keep a low profile than have people traipsing up here telling me that I'm not promoting my business right. Well, it's not mine to promote; it's mine to operate. But, I feel like the company should be doing more in that area; and they should be aware that we are in the community and that we need visibility or would like to have positive visibility. But, I think they're still going low profile.

SYVERTSEN: So, there is -- apparently, there's still some fear within the company about high visibility --

HANEY: I think so.

SYVERTSEN: -- in the rural area. And, so part of the way one conducts business is to intentionally keep a low profile.

HANEY: I think that's -- I would say that's, you know, an appropriate assessment.

SYVERTSEN: In -- so, in a sense, that has not changed since repeal.

HANEY: Not really. We're -- you know, we were legalized conditionally. And, in some people's minds, we were never legalized. In some areas, we're not legalized. You know, we've got dry counties and what-not. So, the repeal, you know, is like, I guess, like the slaves being freed, you know, in '65. They weren't really freed. The law was there, but the repeal --

SYVERTSEN: In practice, many things remained the same.

HANEY: And, the government did the same thing. They didn't turn us loose; they controlled us stringently, much more than they ever had to. But, that was just to build job security; you know, they built a whole agency based on the fact 96:00that we weren't responsible. But, now, they're essentially out -- essentially have gone away; and they found out we are responsible. We were all along, but, you know, as responsible as any business, maybe more so.

SYVERTSEN: I was about to ask you on that, this general question on regulation; and I was thinking, "Is there much difference in operating as a rural distiller versus operating as an urban distiller vis-a-vis how the government looks at your operation and how the government presence is felt in your operation, you 97:00know, from the government agency?"

HANEY: Well, at least, for my location here, I'm not a financial center; I don't pay any excise taxes, so they really have very little to be concerned about. And, we have very little government -- I've had no government inspections since I've been here, in two and a half years.

SYVERTSEN: Now, would that have been different in 1960?

HANEY: Oh, yeah. There would have been one located on premise. He would have had an office here, and he was here daily to lock and unlock your warehouses and to allow you to start your business at the first of the week and stop it at the end of the week. And, taking checks throughout the plant in the meantime, about proofing and checking grain inventories and things like that.

SYVERTSEN: Could you chart this for us, this reduced visibility of the government inspection agent, say, from when you came on, you know, in the early Sixties to 1985. I mean, can you kind of describe, you know, how those changes 98:00occurred in, you know, some kind of time sequence?

HANEY: Well, every plant had an inspector on premise, you know, daily. Back before I came on board, they really were tough; they'd have two or three of them, several of them, whatever the size of the plant would dictate. But, at that time, they had your -- you weren't allowed to distill on Sundays, for instance; and you had to lock up all your equipment. You couldn't even drop grain or weigh it on your scales, because they'd lock it up. All your doors were locked, and, so, midnight Sunday night, they'd come in; and they had to be there to unlock these locks, so you could start your operation.

SYVERTSEN: When could you start mashing on Sundays? When did that change take place?

HANEY: I don't really know, but it was some time after I came on, I think. It 99:00was illegal to mash on Sundays, you know. But, finally, they rescinded that and they allowed you to mash. But, they required that you seal up every joint and every line that you pumped whiskey through. And, you keep records of them; if you had to work on them, you know, they had to be there personally to remove the seal. And, then when you got ready to go back, they had to put another one on it, you know. They'd make frequent inspections; and, if they found one missing, they could write you up. You know, they had a whole series of regular and daily chores that they did in the way of auditing your books, inspecting your equipment, and making you follow certain rules and procedures, none of which were of any value to anybody except to create jobs for them, you know, under the guise of protecting their revenue. But, they, when they starting changing where 100:00you pay your taxes, it helped -- it made a lot of things -- you know, you used to pay it like when it came out of the barrel, you know, they assessed you at that point. And, then they later changed it where they assessed you after you got the barrel in the re-gauge room and had it in the tank. Then, they moved it from there to where you actually shipped the case out the door, you know, to pay taxes, which is where we are right now. So, as they moved forward where you pay your taxes, why, you know, as you left that area behind back here where no taxes were paid them, the government cared less and less about these things, you know. So, as that progressed, why, the government would tend to relax and get easier and easier until, about three or four years ago, when that bottle and bond thing came, they left the premises altogether. So, now, they're only things that they 101:00will come in periodically and check your records, your paperflow, do an audit.

SYVERTSEN: Is that an announced or unannounced visit?

HANEY: It could be either way. They have the right to come in here unannounced at midnight or any time they want. Like I say, because we're not a financial center, we pay no taxes from here, they're not too much interested in me. But, they go to the office ____________________ frequently, in our Lawrenceburg, Indiana, plant, well, they're down there. I was the government relations administrator up there before I came here, so I had to deal with them when they came in; and they came in frequently. Special audit -- they'd send a team in to look at this, a team in to look at that, and just be sure you're paying your taxes right in their eyes. But, over the years, they did an awful lot of 102:00supervision and harassing of us that was unnecessary and served no purpose.

SYVERTSEN: Are there particular instances that you can recall which you thought were very uncalled for?

HANEY: Oh, gosh, there were so many of them, I'd find it hard to think of a particular one. Well, you know, they were just involved in your day-to-day activities so much that it was just harassing. A tank truck would come in, and they were supposed to go up and break the seal and take the seal off. And, one of them would say, "I'm not going to climb that tank truck; I don't want to get dirty. You go up there and break the seal." I'd say, "Okay." You know, I'd go up and break the seal and give him the number and all that. And, the next guy would 103:00come along and say, "Hell, you broke the seal. You're not supposed to do that; I'm supposed to do that. The law says --" But, that's the kind of thing that went on, just harassing. They'd take up a great deal of your time going through your books and papers and trying to decide whether all the grain you got came in was for making alcohol. You know, what the hell else are you going to do with it, you know. They make you seal up columns, you know, still columns that were set on a flange to set on top of each other. And, once you set four or five on top of there, they weigh several tons, you know; but you had to drill a hole through them and run those wires through there and seal them. So, hell, you'd have to have a 50-ton crane, you know, 100-ft. high, to lift this thing up to break the seal so you can get whiskey out of there if you wanted to take a drink out of there. Seal all flanges. Thousands of dollars we spent drilling all those little flanges and putting little wires through them, every little place you 104:00could break the line, you know, for fear that somebody was going to break the line and get them a cupful, which, it's our whiskey, you know; but they don't care, you know. Even then, we weren't paying our taxes until after it went out the door, so they were worrying about three cents worth of whiskey if somebody wanted to get a drink. But, if anybody wants it, they're going to get it anyway. You can't stop them. But, they can really harass you for stuff like that, depending on their personality, you know.

SYVERTSEN: This plant, I gather, was never on a rail line. I don't see any old track around.

HANEY: No, the nearest tracks was a half a mile down there. You passed them about halfway between here and the railroad. That's --

SYVERTSEN: So, it must have been just mostly things were just trucked out of here, either by horse and wagon or later by, you know, by teamster truckload --

HANEY: I'm not sure how they did, but the old coal boiler used to be right here along the highway, right the other side of the office there; and -- at least, we did it in Athertonville, they weren't on a railroad track either; but we had a local guy, a contractor, with a dump truck to go down here to the railroad track and unload coal cars and dump it in the hopper here. And, we shipped dry grain out by the same way, rail cars, up until last year. We'd get rail cars in there, and me and another guy would run it back and forth in the loader, and it cost you a few extra dollars a ton, but that's cheaper than trucking it. So, we used the rails, both here and in Athertonville, even though they weren't right at the plant.

SYVERTSEN: Well, when did you stop using rails for the shipping of the actual bourbon product, rather than the by-product?

HANEY: Oh, I don't know that we ever used it for product. Prior to that, we used these warehouses here; and then we loaded those barrels mostly in trucks, 106:00commercial trucks. I'm sure we loaded some rail cars. We used to at Athertonville. We loaded some, but --

SYVERTSEN: It was pretty rare though, apparently.

HANEY: Yeah, fairly rare.

SYVERTSEN: That's what I was trying to get at, because I hadn't seen any immediate rail line here; and I noticed the rail line was a mile or so down the road there. And, it --

HANEY: Well, it's much easier to dump barrels of whiskey and load product into a tank car; and then you don't have all those bulky barrels to ship and all that weight.

SYVERTSEN: And, that's what you do essentially today?

HANEY: Yeah.

SYVERTSEN: You tank-ship it to Louisville, or to Lawrenceburg?

HANEY: To Bullitt County.

SYVERTSEN: Bullitt County.

HANEY: Kentucky. They barrel it there; and then, when it gets ready to be dumped, they dump it there. It goes from there, in tank truck, to Indiana, for bottling.

SYVERTSEN: And, where would most of the bourbon that you produce ultimately wind up? I mean, you talked earlier about the computer age.

HANEY: I really don't know. I think most of it would end up at Lawrenceburg, Indiana; but, whether they're shipping any to ___, Maryland, I don't know. We stopped a whole lot of -- well, we don't have that many facilities any more, you know. Now, it's no longer a computerized problem, because we're down to one facility in Kentucky that's got whiskey, one in Indiana, and the one in Baltimore doesn't make any whiskey, so the only whiskeys that are made are in the two locations, so you don't need to be a mental giant to figure that one out now. But, when you have ten or twelve places producing, why, all at different costs, why --

SYVERTSEN: Could you greatly gear up at this plant, if there was a turn-around 108:00in public taste, a great demand once again for bourbon; or would you basically have to go to building new plants to replace those that have been closed down in the Seagram operation?

HANEY: Yeah. We're essentially, you know, we were down three months this year or three and a half months. And, we're only scheduled to be down two months next year. Two months down is -- we just about have to have that -- so, ten months operation is about all we can get here. So, if we had to gear up and do any more than that, why, we'd have to start another plant. That's the reason we've got the Athertonville plant setting there. It's a --

SYVERTSEN: A back-up.

HANEY: -- back-up. It it turns around, we -- I guess, if it was important enough, we'd put the money in the plant and fix it and solve our problems. And, 109:00that's -- you know, that's a possibility -- if it does turn around, why, we have a new vice president now that -- you know, it depends on how he feels about -- does he want -- it's pretty expensive insurance; does he want to keep it or does he want to look to the future through his own crystal ball.

SYVERTSEN: I gather insurance rates in this industry have traditionally been exorbitantly high?

HANEY: Well, I was thinking more about the other kind of insurance, the insurance of: if this can't produce enough, why, that's our back-up, you know.

SYVERTSEN: Okay. Well, what about the actual physical insurance on a plant? Obviously, alcohol is a supplier product --

HANEY: I don't think it's extraordinary. We're mostly self-insured, you know, because of the size company we are. But, we do have some pretty high deductibility, but we do have some, you know, $50 Thousand, $100 Thousand deductible, some number. I don't know what it is, but it's a pretty big number. 110:00Even though we did lose a distillery down in Athertonville by fire once, why, by and large, I don't think we're a very unsafe industry. I think we have a good record.

SYVERTSEN: Have you had any fires at this plant to your knowledge?

HANEY: Not to my knowledge.

SYVERTSEN: That's a good record, considering --

HANEY: It's old and made of wood. What is it -- this is '85 -- 75 years old now and made of wood, so the wood's pretty well seasoned. So, we try to be careful. You know, we try to have a good safety program.

SYVERTSEN: Can I ask you if you could share with some of the more colorful Brockman stories that you may have picked up over the years, a pocketful, or not?

HANEY: Oh, gosh, I don't know whether I remember any that's really -- anything specific that -- you know, he was always considered very -- very powerful -- and most people thought he was very personable. Of course, there was always a fear when he was around, because there was a time in his life when he'd make a tour of a plant and, if he saw something he didn't like or somebody doing something he didn't like, he might fire them on the spot. And, he might promote them on the spot. So, he was pretty full of his power and his ability, you know; and I guess maybe you should be if you've accomplished what he accomplished. But, people got nervous when he came around, because I think most of all, the people 112:00that knew him, why, thought he was a fair man and took care of his people well. He had a lot of business dealings with a lot of people that weren't necessarily in financially good position, too. He had made special deals with a lot of people around the state -- little distilleries that, maybe they had done a favor for him some time, I don't know, but --

SYVERTSEN: You mean non-Seagram Distilleries?

HANEY: Non-Seagram Distilleries. They'd get in a little trouble, and he'd buy whiskey from them, you know, from what I hear. He'd buy some whiskey from them. And, then, looking at some of the whiskeys that they sent us to buy, it was the worst stuff, you know, and we couldn't understand why we were buying it. But, our quality people would just shake their head and mark it as almost unusable, 113:00you know, and go ahead and put it away and --

SYVERTSEN: I think you told me off-tape, at one point, that some of that whiskey that was questionable would be shipped to Louisville. Is that correct?

HANEY: Well, within our own --

SYVERTSEN: And, then re-processed?

HANEY: That's within our -- what we make from our own company.

SYVERTSEN: I see.

HANEY: When we bought something from someone else, why, I guess they didn't want to hurt their feelings and re-distill that, they'd go ahead and keep it and find a use for it somehow or another.

SYVERTSEN: I see.

HANEY: You know, when you're dealing with blends, you can use a small amount of something that's not very good; you're talking about, you're putting 40 different kinds of whiskeys in there, if one of them is a little bit off, why -- or, if one of them is a whole lot off -- why, it's one fortieth of one twenty-sixth of -- you know, you're talking about -- so, if you use just a quarter of a per cent or a half of a per cent, why, you can work off some stuff that's really not kosher. But, you can't do very much of it; you can't have much 114:00of that stuff. That's where our blending people come in; you know, if you -- at one time, you'll make a particular border-line kind of a whiskey -- one time they'll reject it; next time they'll keep it. But, the reason is that they know what's in inventory and you don't. They'll say, "Well, we've got enough of that kind. We don't need any more of that kind. We can't use it with our blend ____." But, anyway, Mr. Sam had those kind of relationships with a lot of the small distillers and what-not; and he'd do things like, you know, he personally hired Desmond Beam to come to work for Seagram's. He wanted Desmond's jug yeast. And, he had a personal relationship with him; and Desmond wasn't patriarch or head of any major distillery or anything. He was just a working stiff like the rest of us that was looking for a job. So, Desmond agreed to come with Seagram's and 115:00bring his jug yeast and be the distiller in Cynthiana if they'd hire his nephew too. So, that's the way I hear it. I don't know; it may have been different from that. But, Desmond went to Cynthiana as distiller; and Charley came here. Of course, they talked back and forth. If one of them had a problem, why, they would call the other one. Or, the other one would come over, you know, they would help each other out. And, they'd both do a good job. They both made good whiskey, and Seagram's was happy with them. They kept them both until they retired.

SYVERTSEN: Any other Brockman stories?

HANEY: From Sam? No, not really. He was just a -- as I say, I've only seen him 116:00once or twice. He's a pleasant old fellow. He'll speak to you. I can't really --

SYVERTSEN: This is unrelated; but, when we talked on the phone the other day, you mentioned to me the fact that there apparently was, among some of the small rural distilleries, in particular, a fear of having, you know, women in the plants around the mashing. But, apparently, the fear did not extend to the blending. Is that correct? Maybe you could take us through this --

HANEY: Well, --

SYVERTSEN: -- and when did that sentiment seem to break down among distillers? Or, did -- well, you came on board in 1960; did you notice any remnants of it? Was there still any of that around?

HANEY: Well, just from what I've heard, one of the employees there -- he was an 117:00older fellow at the time -- but, I understood that his dad used to be a distiller at that place at one time in the past and, when he was there, that there was actually a sign over the yeast-room door, "No Women Allowed". There was the fear that yeast in the presence of women having their period would -- the yeast would die. And, I guess that's -- that was left over from the day, you know --

SYVERTSEN: You mean that it would actually kill the jug yeast.

HANEY: Well, it wouldn't work like it's supposed to. Like people used to say that, you know, a woman having her period can't make bread, because the yeast wouldn't rise. You know, it's carried over from other --

SYVERTSEN: I see.

HANEY: -- from other, old wives' tales. Have you ever heard that?

SYVERTSEN: Yes, I have. I'd never put the two together; but, now that you say it, yes.

HANEY: When you're working with yeast, why, that was just, obviously, an old wives' tale; but they said it was very true then. They also talked about him, you know, had his jug yeast hung on a rope down the well. And, when they got ready to mix up a batch of it, why, of course, he locked all the doors and got in there by himself and did his magic. And, when he was through, why, --

SYVERTSEN: Voilà!

HANEY: Voilà, yeah, they got yeast. But, that was quite a thing in those days, to have your own jug yeast that had been tried and proven. And, people went through the industry on the merits of their yeast, you know. They could be hired or go from one industry to another based on somebody wanting that jug of yeast they've got.

SYVERTSEN: Did people try to, you know, secretly try to take home yeast and cultivate, you know, --

HANEY: Sure. Yeah.

SYVERTSEN: -- a new string that would excel? I mean, was this something that was a problem --

HANEY: Well, no, the problem, as it turned out, apparently wasn't the yeast 119:00itself. It was how it was handled. You could take the yeast, and you could go home, and you could culture it. But, then, when you put it back in the distillery, it didn't do the same thing. This was tried with Desmond Beam's yeast. Why, our research department got that culture; and they've got it yet today; and they still use it occasionally. But, they don't get the same flavor that Desmond got out of it -- that rich, creamy flavor that they liked so well -- nobody was ever able to run that distillery after that and get that whiskey. So, that's probably one reason why they shut it down and sold it. They couldn't get what they were looking for -- I mean, you know, other than the fact that he really didn't need the production; but, maybe if they had gotten the production kind of whiskey they wanted, why, they might have kept it alive, you know. So, we all, even though we're scientists, why, we see the realities that a guy with 120:00a jug yeast makes a particular kind of whiskey; and, then, the people that come along behind him can't do it. So,

SYVERTSEN: Wasn't there conflict -- going back to, say, the late Forties -- between those who were the scientists and the chemists -- and, of course, Seagram's was known for the heavy use of chemists -- and those who were, you know, the classical master distillers. I mean, would there be actually confrontation at certain plants over production between these two groups? Was there a period in which you had both these master distillers and these chemists together? Or, how do you discriminate between these two groups operating?

HANEY: Well, I'm sure there was; but I just didn't have any personal experience with it. You'd think that there are two different views of the world and that there would have to be some conflict and occasionally they would have to come 121:00together, you know, and be in contention. But, I never really had too many experiences. But, you know, I've heard about Pappy Van Winkle at Stitzel-Weller, the sign saying, "No Chemists Allowed", you know, and having a hydrometer and a thumb on is all you need to run any distillery. Well, you know, he made whiskey. You can do it without -- you can get by with it -- you know, you can do it. But, in the quantities and the varieties that Seagram's wanted, I don't think you can do it. You know, you need to know more about what you're doing, control _________, don't have any surprises. But, you can get by the other way if you have people, enough people convinced that what you're doing is right. Ed Foote took me through Old Fitzgerald once, and I said, "Where's your control lab?", 122:00you know; and he opened a room there where the sampler -- took some stuff in. I said, "Well, there's not much there." He opened a little door behind him, and there was a burad(?) and a PH meter; and he said, "I keep that hid." He was making all the show of "no chemists allowed", but --

SYVERTSEN: I've been on that, too. I know

HANEY: But, he had his little ________ and pH meter.

SYVERTSEN: Oh, he's got plenty of __________.

HANEY: I know. He was putting me on.

SYVERTSEN: That keeps some of that romance in there.

HANEY: You know Pappy Van Winkle's son -- grandson is running a little Huffman distillery, right down the road here. It's called Commonwealth Distillery now. It's just a bottling house, but it's down 144.

SYVERTSEN: No, I didn't know that.

HANEY: It's just a few miles down there on the Salt River, not too far from here. But, I really don't know what all they do there. He does some specialty bottling, I think; but --

SYVERTSEN: For Seagram's or for others?

HANEY: For himself, I guess. There used to be -- the distillery there is called the Huffman Distillery, and they call it Commonwealth now, and I just happened 123:00to meet him one day. He said his name is Van Winkle, and I said, "Are you any kin to Pappy Van Winkle?" He said, "Oh, yeah."

SYVERTSEN: I hadn't heard that. Could I ask you about labor; was this plant unionized early?

HANEY: Oh, I'd say, you know, I went to Athertonville in '61; they were 124:00unionized then, so, as far as I can tell, they were unionized real early. I don't ever remember hearing much about the non-union days, you know. So, it's pretty early.

SYVERTSEN: And, that was true of all the Seagram plants?

HANEY: Yeah. I think they must have pioneered that. I'll bet they wish they hadn't done that.

SYVERTSEN: One of the questions I put to many of the people I've talked with was, you know, "How have your labor-management relations been?" I think it's an important question for the industry, but perhaps even more important for the state of Kentucky, because, as you know, Kentucky in many circles, particularly in the Eastern capital market, has been perceived rather negatively, you know, on those grounds. Yet, of the people I've walked with in the distilling industry, most have

TAPE ENDS

SYVERTSEN: I was about to say, as the tape was running out, you know, the perception in many circles is that, you know, Kentucky has had great difficulty in its labor-management relations. Yet, up to this point, I haven't found a great deal of that in the distilling industry. I was wondering if you could tell me precisely, in your experience, your years at the Seagram's plants, how many serious labor-management conflicts have there been; and how many strikes have there been or any other serious labor-management problems?

HANEY: Obviously, we've had few strikes; but, as middle management most of my life, most of us would agree that Seagram's, particularly, and maybe the whole industry, due to their desire to keep a low profile, gave in considerably to the union demands and that made it extremely difficult for managers to operate 126:00efficiently and they got it to the point that the Louisville plant was a mess when they shut it down. They had 12 or 13 unions, fighting and squabbling with each other. Seagram's was at the top saying, "Let's have no strikes, because we can't afford to have our products off the line," and, "you guys get the work out," and the union saying, "I'm telling you. You make whiskey; you've got plenty of money. We saw in the Wall Street Journal where you're buying this and that, so we want some of it." But, it was just mostly jurisdictional stuff; and it was extremely difficult. And, I'd say we had a really poor labor-management relationship.

SYVERTSEN: At the Louisville plant.

HANEY: At the Louisville plant. It's better out here, because we don't have so many unions; but these guys are still pretty militant. They still have been born and nurtured on that unionism; and they, you know, they're really not too flexible. As long as it's going their way, why; but, if you ask them to give on 127:00any issue, they won't. You know, they just -- they're rigid, even if it means their job, they won't. They don't understand that things are changing or that they need to be more flexible. And, that's a real problem, you know. If other unions are this inflexible, why, I can see where you can't change. The only thing you can do is to shut down and go someplace else where things are not like that. That's the reasons why, if we had to really get efficient here, why, I think they would walk, you know. There's no way you can convince them that we need to be efficient or we can't compete. So, you know, I don't think we have really what I call good relationships, because, over the years, there's a lack 128:00of trust.

SYVERTSEN: But, it, apparently, it hasn't manifested itself in a large number of strikes --

HANEY: No, we don't -- Seagram's don't allow strikes.

SYVERTSEN: -- but it --

HANEY: The industry doesn't allow strikes. You give -- you know, that's the reason we're the highest paid industry, probably. And, I know my people probably make twice as much as anybody else in Anderson County. They have more benefits, and they have more pay, and these people get paid less than they do in the Louisville plant or Lawrenceburg, Indiana.

SYVERTSEN: Does this create great difficulty, I mean that workers at one plant want parity with workers in your other plant paying a little bit more or just across the river in Indiana? I mean, is that a serious management

HANEY: Well, not a serious matter, because what they're making here is so much 129:00better than their friends and neighbors are making in the immediate area, you know. But, that's one reason they keep coming back. I mean, we shut down for a year or a year and a half, start up again; and here they all come again. We pay them good money, and it's good benefits.

SYVERTSEN: If you were to put this in a historical perspective, would you say that these issues you're talking about have been continuous since the post World War II period; or have they come about since the Sixties; or, you know, how do you differentiate?

HANEY: Well, I think it's been a continuous, ongoing thing. It's the desire not to have any publicity, this low-key thing; and a strike is not only publicity; it's bad publicity; it's negative, you know, for our industry. So, every effort was made not to have one. You concede and give. Why else would a plant end up with 12 or 13 different unions, you know; some of them only had three or four people in them. You have to negotiate with each one of them and all the 130:00rivalries that spin off that, which is a real problem. And, when it comes time -- when you're really in trouble and you've got to throw baggage overboard, why, you're locked in; you know, you can't compete. You have to, you know, decertify or get the hell out. Lawrenceburg, Indiana, is in bad shape, too. Three unions __________ and fight each other, and they fight the company, and they make no concessions. They want more all the time.

SYVERTSEN: Is this more of a problem for a large distiller like Seagram's than for, say, a small distiller?

HANEY: Probably.

SYVERTSEN: Does Seagram's have more of this trouble than, say, the medium or 131:00smaller size distilleries?

HANEY: Well, the trouble with Seagram's is internal, you know; it's not outside the --

SYVERTSEN: I realize that.

HANEY: It comes from middle management group who can't manage because of the constraints. I don't know; I heard two or three days ago that Beam had laid off every one of their union people.

SYVERTSEN: I hadn't heard that.

HANEY: Yeah. For some period of time, to get an attitude adjustment or something; but they're in a lot of trouble.

SYVERTSEN: __________ the fact that the industry is in a rough position nationally and internationally, right now, in terms of selling its product, the situation for labor-management relations internally, within the various companies, has not apparently improved greatly in recent years.

HANEY: No. They solved some of their problems by shutting plants down. There are 132:00other reasons; but that still gets rid of that problem, too. But, these people here, you know -- it doesn't phase them that Louisville shut down, you know; it's a mentality I don't understand, but, the same thing in Lawrenceburg, Indiana. They're still wanting more and more, instead of understanding that it's going to take less and less or they're going to have to get productivity up and increase their -- I think it's beginning to sink in somehow; but they don't quite have the mentality to conceive of actually doing it yet. Of course, they won't as long as Seagram's is -- they read The Wall Street Journal, too, you know -- and they see Seagram's making money on oil in Sian, why, they think they 133:00need -- they feel like they deserve a piece of it. Maybe they do; I don't know. But, it makes it hard on us to deal with these people.

SYVERTSEN: Would you say, from a plant manager's perspective, it's more difficult to deal with the union at an urban level, as in Louisville, than at the rural level here? Would that hold -- would that be --

HANEY: Worlds apart.

SYVERTSEN: true?

HANEY: Worlds apart. It's much easier out here.

SYVERTSEN: What are some of the other major differences you would see between the two situations?

HANEY: Well, it's just not the strength of the union itself; it's how many unions you've got that's out there. Out here, we only have one major union; and the other's the firemen and __________; and there's not too much overlap between their duties. But, when you get into having carpenters and welders and 134:00machinists and pipefitters and all those groups fighting over whose work is what, that's when you have it really tough. Out here, I don't have that kind of problem. But, I have the problem of being over-staffed, you know, things that had been agreed to over the years, you know. For instance, I've got a still operator here running one piece of equipment. The still operator in Lawrenceburg, Indiana, will -- he has three different units that he operates that might have -- he might have seven or eight columns and pieces of equipment. A lot of difference, you know. That's the way it grew up around here. I don't know; you really can't -- past practice is what holds, you know; and it's really 135:00difficult to change.

SYVERTSEN: From your perspective, would you say that this problem had a great deal to do with the decision to close down the Louisville Seventh Street facility? Some people, you know, have told me that it seemed to be that the engineering of that facility, which was apparently state of the art, by the 1970's was such that you could not efficiently run mass production without, you know, bumping into yourself in terms of, you know, shifting the barrels from one, you know, area to another and so forth. So, I was wondering; is it more of an engineering problem that seemed to have caused that shutdown or more of a labor problem?

HANEY: It would be illegal to shut it down because you had labor relations problems, so, obviously, the reason you shut it down is because you don't need the facility. But, if you don't need the facility and you shut it down, then 136:00your labor relation problems go away; and I'm not sure that -- we do have an ability for more production than we really need, you know, there's no doubt about it. Lawrenceburg setting up there coasting, and Louisville coasting, and, you know, something had to give. There's no economics for running both of them. There was a great deal of money to be saved by shutting one of them down. But, personally, if it was mine and I could run away from it, I'd run away from the hassle of trying to run a plant where the people that you're running it for don't really understand what's going on.

SYVERTSEN: Would you say that Seagram's probably has had more difficulty historically, when the Louisville plant was operating, with its labor-management relations in that urban setting than Seagram's has had in other comparable cities and states, locales, urban management-labor relations?

HANEY: Well, I only had experience with two -- well, Lawrenceburg, Indiana, is not really urban. But, it's a big plant; and it's -- it could very well be urban, because it has the same mentality, union halls representing the number of crafts -- and they're about -- they were in about the same condition, you know, both of them imponderable, you know, efficiency about -- if you could get 20 per 138:00cent of work time out of your maintenance group, I'd say you was doing good. I mean, that was considered good.

SYVERTSEN: That's fascinating. And, one, you know, one of the things we are trying to do in preserving the history of the industry is to kind of look at why bourbon grew, why it seemed to peak, and why there seemed to be nothing related to come in, you know, to pick up the slack when that peak of the industry was felled, you know, which, I gather from talking to most people at different distilleries, came somewhere between '65 and '75.

HANEY: Well, they've never really -- at least, it was never really attacked that well -- efficiency, or getting the cost of the bottle down through individual effort. You know, they've done it by consolidation, plant closings and all; but they really haven't attacked this problem successfully. They're all very concerned about it, and they're worried about it; and they've never found a way to attack this problem of having to increase -- get through all these agreements we've made over the years, things that we've been a party to. How can they say, "Oh, well, we didn't mean that. Let's take it all back and start all over again."? I don't know whether there is a way or not. I think they're concerned about that now.

SYVERTSEN: Do you worry that this plant might be phased down, looking ten years ahead?

HANEY: Oh, yeah. Or next year or the year after, yeah; we don't feel very secure 140:00at all. You know, in light of what's happened in the last few years, it's just -- but, you know, I come down here in '83, I don't know. The plant was supposed to run; I get down here and get moving from -- and they immediately, somebody gets, takes my job up there -- and they tell me it's not going to run for a year. So, I sit here for a year and a half, you know, without running a plant. Then, they started to run it; and, so, you know, it's a little "iffy".

SYVERTSEN: There seems to be some kind of move toward Canadian whiskeys. Canadian whiskeys seem to be coming in somewhat, while bourbon, as a whole, seems to be still on a downward slide. Is that a true reading of what's 141:00happening; and, if so, do you see any particular reasons?

HANEY: Well, I can't answer about Canadians as such. I know that some of our premium brands are doing all right -- super premiums, you know -- Crown ______ and I guess V O's doing reasonably well. But, I don't know that they're the kind of volume that we really need or, you know, that --

SYVERTSEN: I just meant they didn't seem to be sliding as much as a whole as bourbons are sliding.

HANEY: Well, they're not as big a market for one thing; and they're, you know, premium brands, they don't react the same as medium-priced stuff, you know. We 142:00put an awful lot of emphasis on premiums and super premiums. You know, everybody'd like to have that, I guess, the high profit margin; and they don't have to handle very many cases; but you make a pretty good profit on each bottle. But, I always thought that most of your money was spent by the middle-income people who can't buy the premium; they want to buy something a little less than that. You might have to sell a few more bottles to make the same money. But, I can't answer about the Canadians, because I just don't have any information about that.

SYVERTSEN: I don't want to wear you out; but I did want to ask you, before we conclude; do you have an prescriptions or observations for the future regarding 143:00the industry in Kentucky?

HANEY: Well, we need more visibility and not less. I think we need an educational program of some kind amongst our -- you know, equivalency is the best start that we can make. I think we ought to, somehow or another, get to Kentuckians; you know, Kentuckians are very proud of their product when they go out of state. But, when they come back home, they act quite the contrary. They act like they're ashamed, and they do not support it. It's not supported -- very little. In Anderson County, for instance, they won't sell distilled spirits in their restaurants and what-not; but they'll sell beer and wine. And, there is no wineries in their county; and there's no breweries in their county. So, they're missing a big point here. And, I don't know why they choose to miss things like that; it's pretty obvious. But, the whole state is like that. You know, it's 144:00perfectly okay for a county --this is their choice -- to go wet or dry. But, if you go wet, why don't you let the whole industry in there? Why do you let a piece of it in there? Particularly, why --

SYVERTSEN: Selectively wet.

HANEY: Yeah. Why don't you let that part of the industry that you're famous for and that you're proud of -- or you say you're proud of -- you know, they'll all say, "Oh, yeah, they make more bourbon back there than anybody." But, when realities come along and political judgments have to be made, they won't support it. And, they're not going to as long as we lay over and play dead. I mean, we need a little bit more active force, a little more positive P R. You know, we don't have P R. We don't have anybody doing anything along these lines, and you need P R no matter where you are. School teachers need it; everybody needs it. We do do some good things, the educational contributions, you know; it's kept 145:00secret. The whole purpose of public relations is to highlight your good points and downgrade your bad, so --

SYVERTSEN: Historically, it seems, over recent decades, the Senators and -- the Congressmen from Kentucky have paid great attention to the tobacco industry, yet it would appear, at least in terms of their media attention to bourbon, that that has not received anywhere near comparable attention. Is that your reading of the situation?

HANEY: Yeah. I guess we don't, you know, we don't have the same __________ report that, of course, tobacco does, you know, throughout the Commonwealth. 146:00And, most of their Senators and people of that stature do appreciate, I think, our business and the money we generate. You know, they're kind of proud of it; but it's a political reality that you can't stand up in public in Kentucky and expound the virtues of demon rum, you know. That's how you get beat; they've tried it a time or two. So, they all understand that, too; and I think, in Washington, they're quietly for us if it doesn't come before the public, if they don't have to get up on a forum in front of the 4-H Club or whatever group and explain how they're going to vote for the liquor industry. When it comes to that, they won't do it.

SYVERTSEN: In your years in the industry, has there been any particular Kentucky Congressman or U. S. Senator who has worked against the industry?

HANEY: Why, Happy Chandler. He hurt us bad on that. I'm not sure -- there was 147:00another one -- was it Ned Breathitt? He attached a tax to us, I think, that was unnecessary. I have a thing I've been working on lately, a few years ago. In Bullitt County, they wanted to fire Pine Creek Department or something -- it was a region, fire region -- they wanted to build a firehouse, so they can establish a -- to get insurance rates down. Well, they just passed a law, assessing Beam and Seagram's tax on their inventory of their whiskeys. Beam's portion was $40 148:00Thousand; ours was like $25 Thousand. You know, that was their own fire department. Neither Beam nor Seagram's either one needed fire protection. We were both self-insured; we both had our own fire protection. Well, we went to them and told them we thought that was excessive; and, well, they finally agreed that was excessive. So, we agreed to pay them -- in lieu of that, we would make a donation to them; if they would rescind, not apply, the tax, then we'd make a voluntary donation -- I think our portion was like $13 Thousand a year and Beam's was $14 Thousand, something like that -- for something, again, that we don't need. Well, since then, that law was repealed that said fire districts could assess taxes on whiskey; that was left for schools and cities. But, we've still got that agreement; we're still paying them --

SYVERTSEN: Still paying?

HANEY: Still paying them, yeah. It was a legal agreement. The thing is, if they don't get it that way, they'll get it another way. That's what they essentially 149:00told us. So, we go ahead and pay them. It seems like blackmail, but there's lots of those kinds of little things, too, you know. Most people, they think they can get more and more. But, you know, we're -- we know we're not making the product that -- our product needs to be taxed some, we know that, you know. It's just a matter of being reasonable about it and not taxing us unfairly over the other parts in the industry.

SYVERTSEN: I'm not sure if I should ask you this question, so, you know, if it's improper, please just tell me so. But, this is the first month in which the new FET additional tax is being applied. Can you tell us any effects that you're 150:00feeling within the first few weeks of this new tax or any projections that you feel it will have on the industry as a whole, maybe not particularly at Seagram's but on the industry as a whole?

HANEY: I don't think Seagram's will know until -- you know, they look at everything and make assessments every quarter; and I think the last one was in September, so it'll be a couple of months yet anyway before they'll -- and maybe even longer than that -- before the washout shows what's really happening because of -- everybody did run out, at least around here, and buy up a lot of stuff before those crazy people started hoarding, you know. So, they did have a run on the liquor stores pretty good, prior to October 1; and a lot of them won't have to go back for a while, so I think the Christmas business will be a 151:00little bit early this year and then slow down, but --

SYVERTSEN: A little bit of a slow-down on the Christmas end, because people --

HANEY: They're already had their Christmas --

SYVERTSEN: That's what I was wondering, you know, if the industry was anticipating that kind of --

HANEY: But, you know, they interviewed several liquor store proprietors; and you'd have mixed results from it. But, I think that's like asking a real estate person "how's business?", you know, in the worst market in the world, "yeah, it's really good, picking up." But, I know it's going to hurt us; it has to. You raise the price on anything, and you reduce the number of those items that are sold. You know, that's a basic concept of marketing, I think. We have to find ways around it, though, you know. We're trying to get proof reduction is one 152:00thing. Instead of putting a bottle on the market the same size without the big price, I think that's one way of attacking the problem. Of, getting proof reduction so we can get in the same market as beer and wine. An awful lot of the country allows beer and wine only; and, if we could get into those markets, why, it would help us a lot, you know.

SYVERTSEN: One person I talked with, whose family has been in distilling for some time, said that, back in the early Nineteenth Century, bourbon was routinely made at under 70, 60, 40 per cent -- excuse me, 70, 60, 40 proof -- and that, really, the selling of bourbon at high proof was more representative 153:00of the Twentieth Century.

HANEY: I wouldn't be surprised, because it's very uncomfortable to drink high-proof stuff, you know. It's much more comfortable to have low-proof.

SYVERTSEN: Yet, to sell bourbon and to call it bourbon, don't you have to have it at least at 80 proof?

HANEY: Yes. That's the reason we're going --

SYVERTSEN: And that the industry therefore tried to change the regulations here and perhaps the definition of bourbon so that it could be sold at less.

HANEY: That's what Seagram's is trying to do. They made a petition to the VATF to reduce the proof --

SYVERTSEN: Recently?

HANEY: Yeah. Seagram's and, I think, Hueblein's a party to it, too. I think Seagram's and Hueblein both.

SYVERTSEN: Was that in the financial papers, because I missed that. But, it's been something in my mind for some time.

HANEY: No. It's something they've done -- they've been working at for quite some time. But, they have petitioned the government to -- for the lower proof.

SYVERTSEN: That could be a factor in helping an ailing industry.

HANEY: Yeah. Right. They've got so many rules and regulations that don't let us compete with those lower-proof things, you know. So, we need all the flexibility we can get. Proof has nothing to do with anything. You know, it's an artificial -- you know, the government is very naive if they really think that distilling something makes it any more taxable. You know, it costs you more money to distill it. But, why does it need to be taxed some more, you know. Most people don't drink it at full proof. You know, you go out and buy a drink; it's the same proof as beer, so, you know, where is the -- what are they thinking about?

SYVERTSEN: How far back can you date this petition to the VATF, in years, roughly?

HANEY: Well, it's recent.

SYVERTSEN: Very recent?

HANEY: Yeah. Within a year, I think. You know, I haven't seen it myself; but I know it -- when they first started talking about this new

TAPE ENDS

SYVERTSEN: Mr. Haney, on the part of the University of Louisville Archives, I want to thank you very much for your great assistance in our history project endeavor on the whiskey industry. Thank you.