Thursday 18 October 2018

American tied houses

The late 19th century was a vert capitalist time in the UK. With many investing in shares in limited companies. Breweries were especially popular investments in the 1880s and 1890s.

But, at a certain point, all the large - and many of the not so large - breweries had already converted to limited companies. What did investors do? They started to look abroad. The USA - presumably partly because of the common language - was a popular choice. British investors sometimes purchased breweries outright or, as in the case of The Peter Schoenhofen Brewery, simply bought shares. These investments didn't always work out well.

From this report it's clear that Schoenhofen was quoted on the London stock exchange. Which would have made it much simpler for UK investors to get involved.

"The Peter Schoenhofen Brewery Company, Limited.
A statutory meeting of this Company was held on the 29th ult. at Winchester House. Mr. HALE, who presided, said that there were no accounts to lay before the shareholders, but he had encouraging information. The Company’s agent in Chicago wrote that he had just seen the balance sheet, which, after providing interest on the debentures and preference shares, showed over 17.5 per cent. on the ordinary shares. The Company was turning out 19,000 barrels a month, and they would be able to pay a dividend of 20 or 22 per cent., or double the guaranteed amount — 11 per cent. The brewery premises, situated in the best parts of Chicago, were very valuable, and they had 161 tied houses. Just now barley was 40 per cent. and hops were 20 per cent. cheaper than they had been for the last two years. The chairman also explained that the American alien law would not affect the shareholders. In England, he said, £200,000,000 was invested in the brewing and malting trades, and as much was similarly invested in America.—Mr. RADFORD, representing the American share holders, said that a cable received that morning stated that last month there had been an increase of 1,170 barrels in the output, which meant increased profit.-—-The proceedings then ended."
"The Brewers' Guardian 1889", 1889, page 390.

19,000 barrels a month works out to 228,000 barrels a year. It's not clear whether those are imperial or US barrels, but it's still quite a lot of beer. Enough to put it in the top 20 UK breweries. In 1889 only 18 UK breweries produced more than 200,000 barrels a year nd only 23 over 150,000 barrels.*

But what really struck was the bit about their tied houses. I knew tied houses exicted in the USA before Prohibition. I've seen the Schlitz signs on their former tied houses in Chicago. But it's great to have something concrete on the subject. 161 is a fair number. Though I'm sure well short of the estate of large UK breweries.

The Schoenhofen brewery survived Prohibition and seems to have finally closed sometime in the 1960s.

* "The Brewers' Guardian 1890", 1890, page 322.


Dave said...

You may have seen this but some interesting photos:

Ed said...

Some pictures of what they were buying:
The buildings were built from 1890 to 1910. The Photos are from the mid to late '70's.