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Wall Street History
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12/01/2000
Budweiser, Part I
Well, it''s holiday season with one of the many joys being those
great commercials from Budweiser. They know a good thing
when they have it.
But the Budweiser story goes far beyond some television spots.
It''s another classic tale that helps comprise the history of
business in America. So, for the next few weeks, we are going to
delve into the "King of Beers." After all, with all of the damage
in the stock market these days, some of you may have resorted to
quaffing an ale or two yourself!
Born in 1839, Adolphus Busch was the son of a German lord.
By the mid-1850s, Adolph found his way to America, initially
settling in the Mohawk Valley region of upstate New York (near
Cooperstown). The area was then known for its cultivation of
hops.
On a recent trip to Cooperstown to check out the Baseball Hall of
Fame, I stopped at a terrific place, The Farmer''s Museum, which
details the history of the brewing industry in this part of New
York. It was the leading employer in the region but fell on hard
times by the late 1800s. Some would say the area''s economy
hasn''t recovered since. And a major reason for the down times
was the departure of Adolphus Busch.
Busch migrated to St. Louis in 1857, once he learned that hops,
barley, and wheat could be grown there just as easily. So Busch
started a brewery supply business to service the local brewers.
And, before you know it, Adolph was courting the daughter of
Eberhard Anheuser, a wealthy businessman in the area. You
might say that Busch married well.
Mr. Anheuser had acquired a small bankrupt brewery in 1860
and, by 1865, Adolph became a partner in the new Anheuser-
Busch Company. Busch, who had a flamboyant personality and
a flair for marketing, quickly helped turn the business around.
But before we continue with the Anheuser-Busch story, it''s
important to take a step back and look at the state of the farming
industry. It was the mechanization of American agriculture,
particularly after the Civil War, which enhanced America''s
reputation worldwide for all things farming related.
Inventions such as the Mash Harvester (1858), a reaper, and John
Appleby''s "wire binder" of 1878, which enabled the harvest to
be brought in eight times faster than previously, were huge
reasons why the Midwest was able to capture the title of the
nation''s breadbasket. Because of the climate, it was essential
that when the harvest was ready, it be brought in as quickly as
possible. And, of course, the more efficient the farm was, the
more crops that could be sold. Between 1860 and 1880,
production roughly doubled.
And then the wheat combines arrived with the American
consumer as the beneficiary. Food was cheaper, more plentiful
and of higher quality.
But to digress a bit, historian Paul Johnson has an interesting
take on the era from about 1860 to the early 1900s, one often
categorized as that of the ''Robber Barons;'' ruthless, greedy men
who were thought to have exploited the millions who worked
under them.
"A list of American millionaires compiled in 1902 shows that a
very large proportion of the new plutocracy, as its critics called
it, were those who serviced the farming community, both ending
the backbreaking labor of earlier days and bringing cheap food to
everyone." Men such as Charles and John Deere, Edward Wells
(the hog-packer) and Herman Armour; all helped transform
America. As did Adolphus Busch.
And aside from the advancements in agriculture that were to play
a key role in the development of Anheuser-Busch, there was the
railroad.
Prior to 1860, America''s goods moved ostensibly over land and
by waterways. Passage was slow and the modes of
transportation also limited the scope of commerce. But all of
that quickly changed. In 1860 America had some 30,000 miles
of track. By 1900 the total was 193,000. So the railroads
allowed for vastly expanded markets, which led to greater
profits.
To give you an idea of just how difficult it was to ship beer to
distant places before the advent of the railroad, Robert Sobel
writes in his book, "The Pursuit of Wealth," that, for example
with a shipment to Texas, "Midwestern brewers would send ice-
packed barrels by river boat to New Orleans, where they would
be deposited in ice houses and later transshipped via the Gulf of
Mexico to Galveston."
Meanwhile, St. Louis had become a premier city in the heartland,
due to its location on the Mississippi River. But, prior to the
railroad, commerce only flowed north and south. Now it could
move east and west, where the market opportunities lay. The
German-American brewers in the Midwest, particularly in St.
Louis and Milwaukee, would be major beneficiaries.
St. Louis became the second largest railroad hub in the Midwest,
next to Chicago. And in 1870, Adolphus Busch was completing
his new brew house complex. As the Eads Bridge across the
Mississippi was being constructed, he knew his opportunity for
expanding the business was at hand. [Overall, in 1874 St. Louis''
businesses shipped 307,878 tons of goods to the West. In 1880,
that figure was 818,182.]
While the railroad made things easier, however, Busch still faced
other difficulties. He had to concern himself with things like
shipping costs, establishment of depots, dealings with agents and
customers in relatively distant places. And, you had to keep the
beer cool! So there was the need for ice houses along the
shipping routes.
Back in 1862, the French inventor, Ferdinand Carre, came up
with a workable device for manufacturing ice. Another pioneer
of mechanical refrigeration was the Australian James Harrison,
who developed a compression machine in the 1850s that was
useful for storing perishable products.
Busch wasn''t the only large brewer to take advantage of these
breakthroughs. In 1870, Guinness of Dublin installed a
refrigeration system and in 1873, the Spaten brewery in Munich
introduced a refrigeration plant.
[Meanwhile, on a trip to Europe in the early 1870s, Adolphus
Busch sought a novel recipe, one which he found in Bohemia; a
light, refreshing pilsner brew that would go well with changing
tastes in American cuisine. As the writer Jack Bettridge noted,
this new brew could be imbibed in great quantity.ching ching!!
In 1876, Busch launched "Budweiser."]
By 1881, Anheuser-Busch installed an artificial refrigeration
system at its brewery. The machines enabled the company to
operate without the services of a large cadre of ice haulers.
Those cost savings alone justified the installation.
Busch thus set about selling everything he could produce. And
he was a marketing genius, using giveaways, promotions of all
kinds and appeals to patriotism.
And with the advent of pasteurization and the modern forms of
refrigeration which allowed beer to be transported long distances,
Adolphus was able to celebrate warm weather around the country.
The hotter the better. I''ll have another round!.and we''ll be
back next week with Part II of our story.
Sources:
"A History of the American People," Paul Johnson
"The Pursuit of Wealth," Robert Sobel
Article from the April issue of Cigar magazine by Jack Bettridge
"The Complete Guide to Beer," Brian Glover
*Eclectic group of sources, wouldn''t you say?
Brian Trumbore
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