Bitter Brew: The Rise and Fall of Anheuser-Busch and America's Kings of Beer Part 3

Anheuser-Busch lost $2.5 million in 1919, $1.6 million in 1920, and $1.3 million in 1921. Before the company returned to profitability, August A. had been forced to borrow $6.5 million from family members and banks and to sell off most of the animals at Grant's Farm, including his beloved Tessie, who was purchased by the Ringling Brothers Barnum & Bailey circus. He saw Tessie one last time some years later when the circus came to St. Louis. According to a story told by his grandson Dolph Orthwein, as Tessie led a parade of elephants into the ring, August A. rose from his seat and called out her name. At the sound of his voice, she raised her head, broke ranks, and trotted around the ring to where he stood in the third row, reduced to tears. After the performance, he tried to buy her back, but the circus refused to sell.

Prohibition took a terrible toll on St. Louis, wiping out an estimated 40,000 brewing-related jobs as dozens of breweries shut down. But even when the unemployment level reached 30 percent in the city during the Depression-80 percent among blacks-August A. managed to keep the Anheuser-Busch brewery operating, with 2,000 workers still on the payroll. For that, his employees and the city loved him.

August A. never stopped fighting against Prohibition. For the entire thirteen years, he argued indefatigably that beer should never have been banned because, unlike distilled liquor (which he did not drink), beer wasn't intoxicating. Rather, it was a "wholesome" and "mildly invigorating stimulant." He once told reporters, in all seriousness, "I have always believed that in making a pure, light beer, I was contributing to the temperance progress of the nation." In May 1921, when a congressional committee was considering a proposal to authorize the limited sale of beer "for medicinal purposes," he sent members a letter opposing the idea as elitist. Saying he was speaking "on behalf of the great ma.s.s of men, those with the dinner pail but not the prescription price," he urged the committee to push instead for full legalization: "Beer for all, or beer for none."

He peppered two presidents-Warren G. Harding and Calvin Coolidge-with letters complaining about inequity and hypocrisy in the enforcement of Prohibition. In June 1922 he informed Harding that he had learned through a.s.sociates that the chairman of the shipping board had obtained presidential approval to allow the sale of all alcoholic beverages-including beer, wine, and hard liquor-on U.S. cruise ships. On one ship alone, he said, the United States was operating five saloons. His charges caused a sensation when he sent copies of the letter to all members of Congress and the Washington press corps. The U.S. attorney general quickly declared that all U.S. ships were prohibited from serving alcohol and that foreign ships could not enter American waters with alcohol on board.

To President Coolidge, August A. sent a nearly book-size missive alleging, among many things, that "quite recently there appeared in the newspapers of the country a series of syndicated articles under the name of Roy A. Haynes, Prohibition Commissioner of the United States. The articles bore evidence that they were written from official information gathered at great expense to the taxpayers. It is within our knowledge that they were offered to certain newspapers at $1,500 for the publication rights. It is a matter of current knowledge that the Prohibition Commissioner received a large sum of money for the articles."

His most effective broadside came in the summer of 1930, when he issued a pamphlet t.i.tled An Open Letter to the American People, which argued that the relegalization of beer was the perfect antidote to the nation's economic woes because it would return 1.2 million Americans to work in the brewing industry, put money in the pockets of farmers, coal miners, and railroad workers, save the government the $50 million it was spending each year on enforcement, and recoup nearly $500 million in lost taxes. He sent the pamphlet to every senator and congressman, and reprinted it in full-page ads in national magazines. Franklin Roosevelt, then governor of New York, was among the politicians who took his argument to heart. Running on a platform that included the total repeal of Prohibition and supported by former Republican August A., Roosevelt swept to victory over Herbert Hoover in 1932. Nine days after his inauguration, he recommended that Congress sanction the renewed sale of beer immediately, saying, "I deem action at this time to be of highest importance." Congress quickly approved a law authorizing the sale of beer with 3.2 percent alcohol content.

On February 20, 1933, Congress proposed the Twenty-First Amendment to the Const.i.tution, repealing the Eighteenth Amendment. Eight months later, on December 5, Utah became the thirty-sixth state to vote for ratification. Prohibition was dead, and Anheuser-Busch was very much alive.

In one way, Prohibition had benefited the company, wiping out most of its compet.i.tion, including St. Louis's Union Brewery, whose owner, Otto Stifel, shot himself to death in 1920, and the William J. Lemp Brewing Company, the maker of the popular Falstaff brand, which shut down in 1922 and was sold to the International Shoe Company for $588,000, less than 10 percent of its pre-Prohibition value. Several months later, the brewery's president, William J. Lemp Jr., committed suicide by shooting himself twice in the heart. Nationally, of the more than 1,300 U.S. breweries operating in 1914, only 164 survived to celebrate the repeal, and a mere handful of those were in any kind of position to challenge A-B for market share.

But the end of Prohibition did not end hard times for the company. After an initial surge, Budweiser sales slumped badly; American consumers had grown accustomed to mixing their bootleg alcohol with ginger ale and other sweeteners. As a result, many former Budweiser drinkers now complained that it tasted bitter. Some among the sales staff argued in favor of changing the formula to make the beer sweeter. August A. wouldn't hear of it. "No one will tinker with the Budweiser taste or the Budweiser process as long as I am president of Anheuser-Busch," he declared, predicting that consumers eventually would come around and the brand would rebound. He also predicted that before that happened, "somebody is going to suggest that we can sell more Budweiser and make more money if we produce it faster. This we will never do," he said, recalling his father's insistence that Budweiser had to be aged for at least two and a half months, or it was not Budweiser.

He was proven right about the customers eventually coming back, but it brought him little joy. By then, it was too late; the triple whammy of the war, Prohibition, and the Depression had worn him out. At age sixty-eight, he was in rapidly failing health, suffering from heart disease, gout, claustrophobia, and edema, which caused his legs to swell painfully with fluid. On the morning of February 13, 1934, following a night spent doubled up in pain and crying out, "I can't stand this any longer; please do something," he went to his bedroom, wrote a note that said, "Goodbye precious mama and adorable children," and shot himself in the chest with a pearl-handled .32-caliber pistol he kept in a drawer by his bed. The bullet just missed its intended target, his heart, so he lay on the bed in agony for about fifteen minutes as his wife and other members of the household watched him die.

In his will, August A. requested that his funeral services be conducted "with the utmost simplicity," and so they were, at least by Busch standards. More than ten thousand people paid their respects during an open-casket viewing in the living room of the mansion at Grant's Farm, and members of the St. Louis Symphony Orchestra played for the funeral service while 2,000 spectators gathered outside listened. He was buried on a gra.s.sy hilltop in a nearby cemetery, in a pine-shaded plot he had picked because it afforded a view of his mansion. "I can see my home from here," he had said. "This is where I want to be buried." His gravestone served to further differentiate him from his father, whose final resting place is a quintessentially "Buschy" pink granite and marble Gothic mausoleum, built at a cost of $250,000, festooned with gargoyles and vaingloriously inscribed with the quote from Julius Caesar-"Veni, Vidi, Vici" (I came, I saw, I conquered). In stark contrast, August A.'s grave is marked by a small slab of red Missouri granite inscribed, in utmost simplicity, "Busch."

August A.'s estate was valued at $3.4 million, a huge fortune by most standards of the day, but a small fraction of what Adolphus had left behind. The bulk of it consisted of 23,889 shares of Anheuser-Busch stock, which made him a minority shareholder. At the time of his death, there were 180,000 shares outstanding, all but 4,000 owned by descendants of the two original partners, Adolphus and his father-in-law Eberhard Anheuser. August A. had maintained voting control over 167,000 shares, and before his death he established a trust that transferred the voting power of the stock to his two sons, Adolphus III and Gussie. He also left "the boys" joint ownership of his beloved Belleau Farm, a 1,500-acre duck-hunting retreat that the family always referred to as "the Shooting Grounds." As the firstborn son, Adolphus III inherited his father's position as president of the company, while Gussie had to settle for the t.i.tle of first vice president and general manager.

Still, no one who really knew Gussie doubted that he would one day take control of everything. And when that happened, the company, the family, and the brewing industry would never be the same.

2

THE ALPHA BUSCH

August A. "Gussie" Busch Jr. first entered the public consciousness on April 27, 1918, the day he married Marie Christy Church. The event had all the earmarks of an arranged marriage, a union of old cla.s.s and (relatively) new money. Gussie was nineteen years old; Marie was twenty-two. Beautiful, refined, and polished, the product of a young women's finishing school in Bryn Mawr, Pennsylvania, she could trace her ancestry to General William Clark, one of the leaders of the Lewis and Clark expedition, and to Rene Auguste Chouteau, along with French fur trader Pierre Laclede, one of the founders of St. Louis in 1764, nearly a century before Adolphus Busch stepped off the boat. St. Louis blood didn't get much bluer than hers. The couple first met at a Junior League charity event. He spotted her in the dance lineup, liked what he saw, and introduced himself.

No one ever called Gussie Busch refined or educated. He'd grown up in almost feral bliss in the mansion at Grant's Farm, where his father's indulgences included letting him skip school whenever he wanted, which after the fourth grade was most of the time. "I never graduated from anything," he boasted later in life. Instead, he spent much of his boyhood as a stable rat, homeschooling himself in horsemanship, becoming a championship rider and carriage driver by the time he was a teenager. He was coa.r.s.e, blunt, and brash, a young man of unbridled appet.i.tes and a reputation as an incorrigible carouser, habitual barroom brawler, and insatiable lothario known for romancing women of varying age, social station, and marital status. He bragged that while he was still in grade school he snuck out of the house late at night to visit a brothel. One of his cousins once walked in on him in a bedroom at Grant's Farm, locked in a pa.s.sionate embrace with the wife of another cousin.

The Busch-Church wedding took place in the home of Marie's widowed mother, but newspaper accounts played up the upper-crust aspects of the event-the diamond-encrusted platinum bracelet the groom gave the bride, the $10,000 check his grandmother Lilly presented to the couple, the plans for a European honeymoon while a small army of craftsmen redecorated the gray stone mansion his father had given him on Lindell Boulevard, the city's most fashionable thoroughfare.

The Busch family had not been embraced by St. Louis high society, which disapproved of their earthy exuberance and the fact that their fortune, ma.s.sive though it was, flowed from such a plebeian enterprise as making beer. Denied membership in the WASPish St. Louis Country Club, Gussie's father, August A., built his own weekend social club in south St. Louis County, a few miles from Grant's Farm, starting with an elegant hotel, the Sunset Inn, then adding a golf course and swimming pool in 1918 to complete the Sunset Country Club. In a typically Buschy touch, the pool at Sunset was the first in the St. Louis area that allowed men to swim topless.

August A. also founded his own foxhunting club, the Bridle Spur Hunt, which rode in full regalia twice a week through the woods and pastures of Huntleigh Village, an estate-studded suburb that was becoming something of a Busch family enclave. Gussie's sister Clara and her husband Percy Orthwein maintained a mansion there, as did his brother Adolphus III and his cousin Adalbert von Gontard, the son of Gussie's great-aunt Clara and her German husband, Baron Paul Kurt von Gontard. Most of the BuschOrthweinvon Gontard clan partic.i.p.ated in the hunt, but Gussie stood out. In his mid-twenties, compact and muscled, clad in the hunt's traditional pink jacket, white breeches, and black velvet hat and knee-high English boots, always riding headlong in the lead as the club's Master of Fox Hounds, he was without question the alpha Busch.

The marriage to Marie produced two daughters-Lilly in 1923 and Carlota in 1927-but it didn't alter Gussie's womanizing ways. He had begun a dalliance with a married woman in their social circle, Elizabeth Overton Dozier, when Marie contracted pneumonia and died in January 1930. By all accounts, Gussie was devastated by the death of his beautiful young wife (she was thirty-three), but it didn't cause him to break off his relationship with Elizabeth. When he married Dozier three years later, the society pages practically clucked with disapproval. One article noted that the bride was "recently divorced" and the ceremony was "performed in a New York hotel with few present," while recalling that Busch's previous wedding had been "an outstanding social event."

The second marriage didn't yield much in the way of domestic bliss: Elizabeth moved into the mansion with the three children from her previous marriage, but Gussie's youngest daughter, Carlota ("Lotsie"), didn't get along with her, and the six-year-old promptly ran away from home to impress the point on her father. Elizabeth was asthmatic, a condition exacerbated by horse dander, which kept her from partic.i.p.ating in one of the great pa.s.sions of Gussie's life. Their relationship was stormy from the start, and got worse over the years as Elizabeth developed a dependence on alcohol and prescription drugs. Decades later, Lotsie would recall that her stepmother "was in bed much of the time." Fortunately for Gussie, he had a company that required his attention, and he threw himself into the task with the same hard-charging energy he applied to chasing foxes and women.

During Prohibition, Gussie had been given the unenviable job of overseeing daily operations of the all but moribund brewery, while Adolphus III had focused on the company's default profit center, the Yeast, Malt and Corn Products Division. The minute the taps were turned back on, however, the relative importance of their respective roles was reversed. Gussie, ostensibly the No. 2 man, now held the power. Publicly, he deferred to his older brother as the president of the company, but privately, he was determined to run the brewery as he saw fit, and to h.e.l.l with anyone who didn't like it.

The task ahead of him was enormous. As part of the price of repeal, Congress and the president had imposed new regulations on the industry, outlawing some of the sales practices that had helped make his grandfather Adolphus so successful. Roosevelt created the Federal Alcohol Control Administration to establish codes for fair compet.i.tion, and one of FACA's new rules prohibited breweries from owning any financial interest in retail establishments. Now they had to sell their product in arm's-length transactions with independently owned distributors who in turn sold to the taverns and restaurants. The so-called three-tier system meant that Gussie had to put together a network of hundreds of wholesalers around the country, teach them how to sell his beer, and cut them in for a commission.

Further adding to his cost of operation, Congress had raised the federal excise tax on beer from $2 a barrel to $5. Gussie didn't think he could offset the new costs by raising prices in an economy just starting to recover, and he refused to skimp on ingredients or cut corners with the forty-five-day Budweiser brewing process. The good news that orders were exceeding production meant he had to invest heavily to increase plant capacity or risk losing market share to his two national compet.i.tors, Pabst and Schlitz. As a result, even as Budweiser regained its No. 1 position, with more than a million barrels shipped in 1934 and 1935, the brewery division continued to run in the red, subsidized by his brother's yeast operations and the proceeds from the government-ordered divesture of the company's ownership interests in taverns and restaurants.

In February 1936 Gussie was elected president of the newly established Brewing Industry Inc., a self-described "organization of leading American brewers." One of his first acts was to issue a state-of-the-industry report pointing out that since April 1933, America's brewers had paid $800 million in federal, state, and munic.i.p.al taxes, another $200 million in wages to labor, and $150 million to farmers for grain and other agricultural products used in brewing.

"The records show that more than 50,000 union wage earners are employed directly in the brewing plants," Gussie was quoted as saying. "The products of the industry are distributed by 15,000 wholesalers, each of whom employs from two to four men. The products are sold to consumers by 175,000 retailers, each of whom employs at least two men. The agriculture products needed require at least 65,000 100-acre farms to produce them, so the industry, directly in the manufacture and distribution of its products, has given employment, and better than average wages, to 650,000 persons."

The report was practically a point-by-point affirmation of his father's 1930 Open Letter to the American People pamphlet proposing the relegalization of beer as a cure for the Depression. As it turns out, economists now mark March 1933, the month Congress voted for the return of beer, as the official end of the Great Depression. Over the next three years the economy experienced a robust recovery, with unemployment falling from 25 to 14 percent as beer sales soared. In 1937, however, the economy went into a tailspin, and unemployment shot back up to 19 percent. Economists ascribe the "Great Recession of 1937" to a confluence of factors that sounds familiar today-an attempt by the Roosevelt administration to reduce the deficit by slashing government spending, coupled with a tax increase on the wealthy and a tightening of the money supply by the Federal Reserve. There was widespread fear that the country was going to slip back into a depression.

Viewed from an era of egregious corporate greed, Anheuser-Busch's reaction seems extraordinary. The company announced that it was going to devote its entire 1938 advertising effort to a series of newspaper and magazine ads aimed at calming the nation's economic fears and restoring confidence in the ability of the country's inst.i.tutions to deal with the problems. The idea was "to sell America to Americans," according to a statement A-B sent to its employees and the industry at large. "Our challenge is more important than selling beer, more important than making profits."

The ads contained no pictures of the product, no statements about its merits. Instead they offered patriotic pep talks that might have made Ronald Reagan blush. "Each sunrise in America ushers in new opportunities to those who keep their chins up ... who never lose that l.u.s.ty courage and willingness that made ours the most envied nation on earth," said one. "Confidence sailed our pioneer forefathers across the turbulent Atlantic," said another. "Confidence helped our grandfathers extend the stubborn frontier, and made ours the strongest and most abundant land on earth today. Confidence is ready now to take America further still."

The only mention of Budweiser came in the ads' tagline: "Live life, every golden minute of it ... Drink Budweiser, every golden drop of it."

Without question, there was self-interest behind the ads-Gussie and Adolphus III figured that confident wage-earning men were likely to drink more beer than fearful unemployed men. But the campaign was hardly a cynical ploy. Gussie believed in his gut that serving the public good also served the company, and that goodwill was always the best salesman. It all went back to the beginning, when his grandfather Adolphus first explained to his new partner and father-in-law, Eberhard Anheuser, that their business was not just making beer. "Making friends is our business," he said. Gussie had made that his motto; rarely did he go a day without uttering it. Over the years, he came to the conclusion that the company could never go wrong by doubling down on patriotism and the public good. "If we do something in the public interest which at the same time is profitable to the company, then this is, indeed, very good business," he said.

As it turned out, Anheuser-Busch did very good business in 1938, selling more than two million barrels, surpa.s.sing its pre-Prohibition high by 400,000. At a time when the industry as a whole grew by 26 percent, A-B sales increased 173 percent. For the first time in nearly twenty years, the brewery division turned a profit.

All of which helped boost Gussie's public image in St. Louis. No longer was he seen as merely a beer baron's playboy son. Now he was considered a bona fide captain of industry, cut from the same cloth as his grandfather Adolphus. c.o.c.ksure and playfully extravagant, he was great copy for the local newspapers, which gleefully reported on his extracurricular activities, whether it was his arrest for driving 70 miles per hour on a city street in his Pierce-Arrow sedan or his purchase of an eleven-ton, thirty-three-foot private bus equipped with a kitchen, bathroom, and sleeping berths for eight. He got the idea for the bus, which he called "my land yacht," from his pal silent film cowboy Tom Mix, who had customized his traveling horse trailer to include sleeping quarters for humans. On a trip to New York City, Gussie entertained himself by taking a shower as the bus cruised down Fifth Avenue, lathering up and laughing uproariously at the thought that he was probably the first person ever to do that. A reporter for the St. Louis Globe-Democrat was on hand when Gussie returned home from an Arizona vacation accompanied by "12 cow ponies, two cowboys and a cowgirl" that he planned to employ in a calf-roping exhibition at the St. Louis Spring Horse Show. To practice for the event, in which he intended to perform, Gussie built an elaborate corral, "patterned after those on Western ranches," at Belleau Farm. As he watched his hired cowpokes put on a roping demonstration for the newspaper, he boasted that the pony named Indian Summer had cost him $1,000 and was "one of the best roping horses in the nation today." He was, said the newspaper, "like a kid with a new toy."

In the years immediately following Prohibition, it was good to be Gussie. He had a valet, a personal barber, and a driver to attend to his daily needs. Tailors came to his office to fit him for his business, formal, and sporting attire. His household staff included a butler, two cooks, several maids and nannies, a laundress, and a yardman. If he was not yet a king, he was definitely a crowned prince. The only thing lacking in his life, as far as he was concerned, was a male heir. Over the course of nineteen years and two marriages, he had fathered three daughters-the youngest, Elizabeth, was born in 1935-and each birth had been more disappointing for him than the last. He loved his girls, and doted on them, particularly Lotsie, whom was s.p.u.n.ky and free-spirited and reminded him of himself at her age. But he needed a son to carry on the family name and run the family company; it was an ancestral imperative. His grandfather and father were never far from his mind. He adored August A., whom he invariably referred to as "my good Daddy," and was awestruck by Adolphus. "Grandaddy would take us hunting, let us smoke and have a drink of whiskey," he recalled. "I was a big man when I was with him. And everything he touched turned to gold."

Gussie wanted to be a big man to his own boy-teach him to ride and hunt and run a brewery, encourage him to drink deeply of the golden American dream that his forebears had realized.

He finally got what he wanted on June 16, 1937, when Elizabeth gave birth to August Anheuser Busch III. As if to make it clear to the world that the future leader of the company had been born, Gussie arranged for the baby to be fed a few drops of Budweiser even before he tasted breast milk.

The arrival of August the Third would prove a cla.s.sic case of "Be careful what you wish for." Gussie's firstborn son would lead the company to heights his father never dreamed of, but in the process he would commit an act of betrayal that Gussie would never fully forgive.

3

"BEING SECOND ISN'T WORTH s.h.i.t"

At the outbreak of World War II, fearful that a wave of anti-German, anti-alcohol hysteria would once again devastate their industry, America's brewers fell all over themselves trying to prove their patriotism. They retooled sections of their plants to manufacture parts and equipment for the military. They conducted highly publicized programs encouraging their employees to buy war bonds. And they launched ad campaigns that seem almost laughable today, tying their product to the war effort by suggesting that drinking beer would help defeat the enemy.

Hoping to head off any government-imposed rationing of grain similar to that which occurred during World War I, the industry dispatched its lobbyist to Washington to convince lawmakers that beer was not only vital to the American economy, it was also a necessary ingredient to maintaining morale among the troops and the civilian population. The U.S. Brewers Foundation borrowed a page from Adolphus Busch's pre-Prohibition playbook with an advertising campaign that promoted beer as "America's Beverage of Moderation." Working with the government, the trade a.s.sociation created what became known as the "Beer Belongs" series of magazine ads, which contained the tagline, "Morale is a lot of little things." A typical ad featured a Norman Rockwellstyle rendering of a young man, perhaps a college student, lying on his bunk reading a letter from the folks back home. "A cool refreshing gla.s.s of beer ... a moment of relaxation. In trying times like these, they, too, help to keep morale up." Anheuser-Busch ran an ad that said, "Every sip helps somebody."

The brewers' main contribution to the war effort was, of course, beer-millions of bottles and cans of it, shipped to military bases around the world under contracts with the government. "Every fourth bottle of Schlitz goes overseas," blared one of that brewery's most memorable wartime ads, which pictured a ship bristling with big guns and slicing through the waves as if chasing down a German U-boat. The Big Three national breweries-Anheuser-Busch, Pabst, and Schlitz-sold the lion's share of the beer to the military because the smaller regional firms didn't have the production or distribution capacity to service the contracts.

In addition to providing hundreds of thousands of olive-drab cans of Budweiser to all the service branches, A-B manufactured ammunition hoists for the navy, and arranged with the Army Air Force to earmark the company's employee war bonds program for the purchase of B-17 bombers. A-B employees bought enough bonds-nearly $900,000 worth-to pay for two of the so-called Flying Fortresses, which, in a smart bit of branding, the company got the army to name Miss Budweiser and Busch-whacker.