The Making of Tormore – Lewis Rosenstiel

The man who built Tormore was Lewis Rosenstiel, head of Schenley Industries, one of the biggest liquor companies in the world, a titan of the industry, but today he is largely forgotten, much less well known than his arch rival Sam Bronfman of Seagram.  Not much seems to have been written about him: his Wiki entry is a stump. There are few articles, and no books.  What is written tends to be incidental to accounts of other people, like Meyer Lansky, J Edgar Hoover, or indeed Sam Bronfman. Yet he was a significant industrialist and once one of the richest men in the country.  Now the company he built  is no more. He lost control when it was taken over in 1968 and it was sold and dispersed twenty years after that. The whisky brands survive but they are now the property of others; Tormore, his Scottish distillery, is now part of Pernod Ricard. His main memorial is the result of the philanthropy of his later years. The Lewis Solon Rosenstiel Award for distinguished work in basic medical research is still awarded annually by Brandies University and there is a Rosenstiel School of Marine and Atmospheric Science at the University of Miami. 

It is though amazing how, once significant, people can fade from view.   

The Early Years and Prohibition

For his early years my major source is an obituary in the New York Times¹ which tells us he was born in 1891 who went to private school and  then university, which indicates his background was comfortable and he was not a totally self-made man. His earliest ambitions were to be either a physician or a professional football player, unfortunately during one game he was kicked in the head and the resultant eye injury meant he had to recuperate away from college. He never returned and both ambitions were lost and it affected his appearance as his eyes were asquint and he always wore amber tinted glasses and when at work he wore a visor jammed far down his forehead as he scanned his papers.

When he was recuperating he went to work in a distillery owned by one of his uncles, doing pretty menial tasks.  In this way it can be said that he worked his way up in the industry but his family circumstances were very different from Samuel Bronfman (his great competitor) who was part of family who emigrated from Russia to Canada and had to work together to escape poverty.

(Any life of Rosenstiel or Bronfman must always mention the other. They were like evil twins, with similar abilities and ambitions but the bitterest of rivals. Each was haunted by the other.  They were two people of domineering temperament operating in the same industry wanting to be number one.)

How Lewis Rosenstiel worked his way up in the distilling business, and how he built up his capital, is not clear, but he was highly motivated to make money.  He had a time as a then whisky broker and then broke with the industry to sell bonds. There is a story that he then travelled to the South of France where he ran into Winston Churchill, who convinced him Prohibition could not last and would one day have to be repealed. This probably reinforced his own beliefs that it was probably right to go home and invest in distilleries and their stock, taking advantage of the low prices against the day when everything would change.  (I have been unable to verify the story, which has the hallmarks of a foundation myth rather than actuality, but it is not impossible. Churchill did spend time in Nice in the early years of the 20s, when he was out of Parliament. In 1922 in particular he wrote the first volume of his World Crisis  there and he spent little time in England in the first half of 1923. He might well have taken a shine to a brash, young American, because he had a fondness for slightly roguish, energetic characters (as we will later see with Brendan Bracken). It is entirely likely he would have given his views on America’s startling social experiment, as alcohol was a subject dear to his heart).

Whatever reason in 1922 Rosenstiel made a decisive move into the legal restricted whisky industry by buying bought a distillery and its stock, in Schenley, and obtained a licence to produce medicinal whisky.  Other distilleries followed as he accumulated stock and waited for Prohibition to end.

(Prohibition was a strange and messy piece of legislation. It was not a simple ban of the manufacture, sale and consumption of alcohol – there were fudges and exemptions. For a start consumption was not banned, it was the manufacture, distribution, sale and non private storage that was outlawed. Additionally three classes of alcohol were allowed: industrial alcohol (impossible to ban as it was vital for many industries), sacramental wine (it would be foolish to mess with religion), and alcohol for medicinal purposes, which was a huge loophole.  Who wold have thought that Prohibition would see a big rise in prescriptions for alcohol?Gangsters  and bootleggers even set up their own drug stores and pharmacy companies. In New York alone nearly 700 new drug stores were registered between 1921-22²)

Rosenstiel could legitimately supply the medicinal market but that really that was a cover. He made his real money importing alcohol from England, Europe and Nova Scotia and supplying it to the illegal market from his base in Cincinnati. It was this trade that first brought him into contact with Sam Bronfman, when sourcing Canadian whisky. In the beginning they both got on very well and Bronfman was slightly in awe of Rosentiel’s ability to carry on his clandestine trade without hinderance. It was a mystery.  Agents on the ground knew what he was up to but somehow he seemed to be protected at a higher level. In 1929 things slipped a bit and he was indicted for illegal liquor trading but he was never prosecuted. Perhaps the protection came from the powerful gangsters he was closely associated with, men like Meyer Lansky, Frank Costello, and Joe Fusco, who were adept at paying off officials, or it might even have come senior law officers like J Edgar Hoover, with whom he had a close bond, dating back to the Twenties.³ We will never know. The essence of any criminal enterprise is not to keep records.

After Prohibition

One of the unintended consequences of Prohibition (and there were many) was that it encouraged mobsters to become businessmen. Before the Volstead Act there had been gangs, of course there were gangs, but they tended to be local, temporary allegiances.  However supplying a large market with booze required skills far beyond casual hooliganism. It needed organisation to transport goods, modify vehicles, hire shipping, pay-off politicians, officials and law officers, keep track of deals, and deal with lawyers and other professionals to establish ancillary, legitimate businesses. The open gang warfare in Chicago, which tends to be our mental pictures of the Prohibition years, was atypical.  For sure there were guns and strong arms but behind that gangs were getting more organised and cooperating for mutual benefit.  Legislation that was introduced with the promise of reducing lawlessness achieved the reverse and embedded criminal business into the fabric of the nation.  Meyer Lansky, who is often portrayed as the éminence grise of organised crime,  boasted to Uri Dan, an Israeli journalist, later in life “To cut costs and increase efficiency we chartered our own ships to bring the scotch across the Atlantic. I must say in all modesty that we ran things well… By the middle twenties we were running the most efficient international shipping business in the world.”⁴ 

When Volstead was repealed the old infrastructure for supplying alcohol was no more.  It used to be a fragmented industry of many small, independent distilleries feeding into a network of brokers, bottlers and agents and could not survive the dry years. It had to be reformed and was ripe for consolidation and the people in the best position to do this were those who’d been active during the bootlegging years. Sam Bronfman with Seagrams and Harry Hatch, of Hiram Walker, had both supplied bootleggers from Canada, Lewis Rosenstiel had strong connections with some important gangsters and supplied illegal alcohol. Seton Porter of National Distillers used a medical licence to build stocks and had strong connections with Joseph Kennedy, a bootlegger. It was these companies who became the ‘big four’ and dominated the industry

After their successful cooperation during Prohibition Bronfman and Rosenstiel laid plans to amalgamate and become the one major force in the American market but it was not to be.  A union of two such dictatorial characters was never possible. Bronfman claimed he called off the marriage because he was horrified that Rosenstiel wanted to exploit the new demand by selling whisky hot off the still, whilst he thought the long term future could only be guaranteed by quality. ⁵ This highlights a character difference: Bronfman had a consistent business philosophy and an ability to think long term, Rosenstiel was more impatient and willing to take advantage of any opportunity. An example of this comes from the Second World War, when grain spirits were  in short supply, Rosenstiel  started using potato spirits in his most popular blends. The result was that Three Feathers was the most popular whisky throughout the war years but its sales bombed afterwards⁶.  However side from their musical differences the more likely reason for the failure to agree is that they both wanted 51% of the new company. There was no way round such an impasse.

Bronfman’s approach to whisky was heavily influenced by the Scottish industry and at the time was in partnership with DCL. He had a clear vision that the future in North America was for similar high quality blends. He was evangelical about blends. Rosenstiel on the other hand concentrated on straight whiskies and, though he had blends in his portfolio, was at heart a bourbon man. Each was successful in their own way but each kept a careful eye on what the other was doing and reacted accordingly. Schenley bought into wine Seagram followed. Seagram invested in Scotland (a natural move given Bronfman’s admiration for Scotch), Schenley followed in 1956. They were fierce competitors.

But their competition wasn’t a gentlemanly sport – it was war. Both men were obsessed with each other as they vied for the top spot.  To Rosenstiel Bronfman was ‘Sam the Bronf’, to Bronfman his rival was ‘Rosenschlemiel’. They were both paranoid and convinced the other was spying on them and bugging their premises. They were probably right it was the sort of thing they would do.  If a senior employee went to work for the opposition, they were never forgiven. Calman Levine was a blender Bronfman brought over from Scotland who was very important to the company as he created Seagrams 7 Crown and Kessler blends. However he was tempted by more money at Schenley and that was that. No longer were his kids able to play with the Bronfman kids and he was written out of the company history so that the sole progenitor of Seagrams 7 Crown was Mr Sam himself.

But here is the weird thing. They might of hated each other in business but on a social level they would meet up of an evening and play cards.⁷ People are strange.

Business Style

Perhaps the most insidious damage done by Prohibition was to the national sense of morality. The blurring of the line between right and wrong. Before Prohibition, for most people, there was an understanding of what it meant to be law abiding.  Afterwards not so much. Many people who considered themselves a good person saw nothing wrong in drinking and enjoying themselves and saw Volstead as a law that could be ignored.  Also the business people who flourished during bootlegging embraced a ruthless ethos where officials were bribed, protection was bought, and competitors crushed.

Rosenstiel continued with the same methods when his business became legit but it was more than a matter of continuing to apply the lessons he had previously learnt. It was also his character; he was probably a sociopath. Being more volatile than Bronfman says a lot as Bronfman famous for his rages and had to have a phone with a specially reinforced handle that would not break when he slammed it down.

Something of the way Schenley was run can be glimpsed in the memoir of marketing manager Philip Kelly⁸, who worked in the Empire State Building HQ for a short time before going to Seagram. He actually found Rosenstiel an “attractive personality, literally vibrating with ideas” but working for him was difficult. Distribution and sales (his area) was overstaffed and demoralised because no one understood the nature of the business or the story of the brands. The only thing understood was money and the only opinion that really counted was Rosenstiel’s.  What he said went, on every subject. “The whole company was a reflection of his own mental attitude, which changed from week to week, month to month”

Within a group of friends and associates Rosenstiel actually wanted to be called “Commander in Chief”. A small detail that tells you an awful lot about the man. He must have imagined himself as a man of destiny, or someone in total control. Everything was run through the sheer force of his personality. Philip Kelly gave a further indication of this when he said  “After a great surge of energy and a consequent surge of ideas – which with Rosenstiel, seemed to come in figurative wave – the Empire State Building shook. Never have I seen an organisation that was so affected, rightly or wrongly, by one man.”

And of course he was paranoid. His New York house was bugged top to bottom.

Once he was convinced everybody in the organisation was plotting against him and had the telephones of all of his executives tapped  At one point he had his secretary phone his top men to tell them he was dying. They gathered in the drawing room of his house where she told them he had died. In another room Rosenstiel was listening and when he heard them congratulating themselves on the work of the grim reaper he burst through the door and fired the lot of them.⁹

Working directly for him must have been very taxing. Now it might be the case that to succeed on a large scale you do not necessarily have the most stable of personalities but even in this field Rosenstiel was out there on the edge. Again a comparison with Bronfman is useful. Mr Sam was known for his rages and for being domineering but he was was also rational, listened to others and took a long term view of the industry. He might have been a hard taskmaster but he respected those who knew what they were doing. He actually wanted to create dynasty so that his company could be passed down through the generations.  I don’t thinking idea of continuity ever entered Rosenstiel head – his private life was just too turbulent.

Private Life

I wouldn’t normally write about someone’s private life but for Lewis S Rosenstiel I will make an exception. It  was complicated and fraught and clearly affected the way he ran his business.

He was married five times and information we have from a couple of those marriages show why they may not have lasted.

His second wife was Leonore Cohn (who had been raised by another despot Harry Cohn of Columbia Pictures) was given every luxury but had to pay for it with humiliation. When she was pregnant Rosenstiel promised to settle $1 million on the baby but renamed when it turned out to be a girl. When she met Walter Annenberg and asked for a divorce she was refused but when she finally did leave every item jewellery and clothing Rosenstiel had given her was confiscated and she was disked by security guards on the way out.

That might be bad but it is nothing compared to the vitriol of the ending of his fourth marriage. The divorce was famous not only for its bitterness but the fact that it took seven years. It went through a number of stages. The first was Rosenstiel’s claim that Susan’s previous divorce to Felix Kaufman was invalid because the Mexico “quickie” divorce was against New York public policy and should not be recognised ( a line of attack, which would have had a profound effect on very many New York citizens who had already obtained divorces this way) but was changed when a search for the original divorce papers revealed it had been annulled  on a motion of a Samuel Goldsmith who claimed he was a creditor of the Kaufman couple. Under Mexico law a creditor could nullify a divorce if he had not been informed of it. If true it would have meant the Rosenstiel marriage was not validated Lewis would not be liable for a sizeable settlement. However Samuel Goldsmith was fictitious and the whole filing had been a fraud had been concocted by Benjamin Javits, Rosenstiel’s lawyer.¹⁰

Eventually Lewis gained his divorce in Miami on the grounds of cruelty (!!!) as witnesses testified to a fiery relationship. However Susan gained some revenge by  testifying to the 1970 New York State Legislative Committee on Crime, where she told of his bootlegging and close, and continuing, links to crime figures. Obviously Schenley representatives claimed it was all untrue and driven by spite but the judge deemed her a credible witness.

But, perhaps, her most dramatic intervention happened after Rosenstiel’s death when she cooperated with Anthony Summers ¹¹ on his biography of J. Edgar Hoover. In it she said she observed a session of group sex with Rosenstiel and other men including Hoover and the lawyer Roy Cohn. Hoover was wearing a dress and her description of this has entered the folklore and Hoover is now thought of as a cross dresser. Although all the attention has been on Hoover, Rosenstiel participated and was clearly bisexual. At that time homosexuality was severely castigated as an abomination and was illegal and so had to be kept hidden; just like a gangster past. Rosenstiel was  a man driven by emotion and waves of energy with an awful lot packed down inside his complex, volatile personality.

It is worth remembering the full quote from Philip Kelly: “The whole company was a reflection of his own mental attitude. This mental attitude changed from week to week, from month to month, depending on his own personal fortunes; it seemed to ebb and flow with the tide, because he had many, serious personal problems.”

Lobbying – or bending the rules in your favour

Lobbying, or the buying of influence, is one of the ways a businessman can tilt the rules in his favour. It has probably been going on forever but industrialisation and the growth of large corporations has seen it become embedded in our system of government. By its nature it is self-serving and may be pernicious but it is not automatically evil. Sometimes industry knowledge or subject expertise can be used to modify a bad political idea, whilst at other times things can be proposed that are actually for the wider benefit. Rosenstiel was a formidable lobbyist and showed all aspects. He could be unscrupulous and use the political system to screw the opposition but some of his changes affected the character of the bourbon industry for the better.

An example of the selfish and underhand happened in California in the 1940s when Hiram Walker’s 10 High was California’s top selling whisky.  Rosenstiel’s representative in the State Legislature was Arthur Samish, a lobbyist once referred to as the ‘secret boss of California’, who worked his magic by selecting politicians who would follow instructions and then getting them elected.  At the time it was said that he had a more effective political machine than either the Democrats of Republicans and the Governor, Earl Warren, once admitted that in certain matters Samish had more political power than him. Rosenstiel  mentioned that he thought Harry Hatch a mean man and something should be done about him. Samish took the hint and upon being told the 10 High was 3 years old knew what he had to do.  He proposed a bill saying that all straight whiskies sold in the state had to be a minimum of 4 yrs and all blends have at least 20% of 4 year old. whisky.  He sold it on the idea that it would mean better quality whisky but of course the real reason was that Schenley owned the bulk of American 4 year old whisky.  The Bill passed and 10 High was knocked off the top spot because the game had been rigged.¹²

Rosenstiel also used lobbying to reverse a gamble that went sour. When the Korean war started Rosenstiel, remembering both whisky shortages in  World War II and the way he had gained an advantage by stockpiling against the end of Prohibition. He took a punt that the new war would cause similar disruption and built up large stocks. But the war did not last very long and its impact on the domestic way of life was slight.  Schenley was left with huge stocks whisky and an axe above its neck as tax legislation, at the time, only allowed whisky to be held in bond for 8 years before duty was automatically charged. Either the company would have to flood the market in a desperate attempt get rid of their whisky at whatever price or they would have pay a huge tax bill up front. The only escape to change the rules, which was accomplished with the Forand Act that extended by 12 years the time whisky could be stored tax-free. It was passed by a mixture of arm twisting and bribery and was overseen by Lou Nichols, who had been a close assistant to J. Edgar Hoover at the FBI for twenty three years before fulfilling a similar role at Schenley.  He had a lot of influence on Capitol Hill because gathering dirt on politicians was Hoover’s main stock in trade and Nichols knew a lot about a lot of people. If there was no dirt then cash could be handed over. Whatever the method, it worked and whatever the cost, it was worth it. The company saved  $40 – $50 million and Schenley’s stock price soared by $33 million in a single day. 

The legislation might have had corrupt origins but the long term implications were not all bad. It opened up the possibility of selling older, more premium whisky and the development of a different markets. The raising bourbon’s profile was also behind his lobbying for the 1964 resolution which declared bourbon a distinctive product of the United States.  Bourbon was turned into an American icon and although this helped Schenley, as one of the Big Four distillers, it was part of a general strategy of the Bourbon Institute (an industry body Rosenstiel founded) to boost the reputation of the bourbon industry and increase sales abroad.

The way Rosenstiel influenced legislation is testament to his power and wealth but the buying of politicians was also something he would have learnt from the days of Prohibition.  His business methods changed little from one era to another, even if after 1933 his position was respectable.

The Difference Between a Gangster and a Businessman

““Why is Lansky a gangster” he [Lansky] complained to Uri Dan in the 70s “and not the Bronfman and Rosenstiel families.” 

But the fact was that Lansky had become accustomed to doing things in the crooked way – that is what he knew and he stuck to his expertise. But the world changed in 1933 and the newly law abiding careers of Samuel Bronfman and Lewis Rosenstiel suggested that the old, sharp, easy way was no longer the cleverest.” ¹³

This assessment by Robert Lacey in his book on Mayer Lansky sounds plausible except that it shows little understanding of Rosenstiel and underestimates the way one person, who completely dominates his company, can act unchecked. The facade might be respectable and most of the activity straightforward commerce but dubious things can be allowed to happen below the surface.

Lobbying is an area already noted but two legal cases that suggest other types of underhand behaviour. The first was a stockholders accounting action filed by Jerome T Broderick  against Schenley Distillers Corporation, Lewis Rosenstiel, Lester Jacobi and the estates of Harold and Stanford Jacobi. The complaint was that the parent company had lost $1,500,000 in profits from 1934 to 1938 through the activities of the individual defendants who purchased and sold, liquors in competition with the company.¹⁴

The second case was an action brought by his daughter contesting the election of three trustees to the board of the Lewis S. and Dorothy H. Rosenstiel Foundation She disputed the legality of the election and in an affidavit accused her father of using the foundation’s assets, which are almost entirely in Schenley stock, to strengthen his control of the company. She further charged that he had withheld form her, since December 1960, the income from a trust fund set up for her by her mother, who died in 1944. The income of the fund was about $100,000 a year. She also charged that her husband Sidney Franks had been forced to resign from his $79,000 per year post as vice president and director at Schenley. The Foundation had been set up by her mother, shortly before her death, with a gift of 125,000 shares of Schenley stock, worth $12 million. She charged her father with mismanagement of the corporation. The affidavit states that associates made inexplicable gains in dealings with Schenley industries after its earnings had been artificially inflated.¹⁵

Rosenstiel was never a family guy but apart from that you can only have sympathy with the complaint of Meyer Lansky.

In Conclusion

Obviously Lewis Rosenstiel was a very difficult man and not a nice man. On the other hand he had a ferocious intellect, a formidable ability with numbers and a restless curiosity.  He was incredibly complex. If his imagination could be engaged he could be sold on an idea and then there was nothing to stop him going full steam ahead.  When Arthur Samish was describing Rosenstiel in his book he said “Unlike most distillers he is voraciously interested in anything from chemistry to a corporations social obligations. Long enthusiastic about finding byproducts and sidelines”

This was reflected in his organisation and the way it didn’t just focus on alcohol but diversified out of it. For example, in 1944 the company started to produce penicillin and became one of its largest producers (there is a certain logic to this as penicillin was produced by a fermentation process).

It is worth remembering his intellectual curiosity when thinking about the plans for Tormore. He could easily have commissioned a bog standard building but instead was sold on a more artistic vision. It is also worth thinking of the 1,481 acre  estate he owned in Virginia, which boasted a manor house, stables, garages, gatehouse, boat house, eight greenhouses, six dormitory houses, a dozen farm houses, a 40 foot high clock tower and sundry other buildings. When he died  and for five years afterwards it remained unsold and was a symbol of decayed megalomaniacal grandeur, like Xanadu in Citizen Kane. When they cleared that property they tossed Rosebud into the furnace. 

There are many similarities in the personality of Charles Foster Kane and Lewis Solon Rosenstiel. I don’t know if he ever had a Rosebud, something, which if known about, would have been a key to to his personality.  All I can do is take things at face value. He was a huge hulking figure in the mid-twentieth century world of American whisky. Forged by the era of prohibition, he accumulated enough wealth and influence to be able to behave with the freedom of a medieval baron. He was more of a hustler than a strategic businessman but nevertheless, despite his erratic personality, he succeeded in building a large corporation.

¹ https://www.nytimes.com/1976/01/22/archives/lewis-rosenstiel-founder-of-schenley-empire-dies.html

² Funderburg, J. Anne. Rumrunners: Liquor Smugglers on Americas Coasts, 1920-1933. Jefferson, NC: McFarland & Company,, Publishers, 2016.

³ Rosentiel’s ex-wife Susan testified to the 1970 New York State Legislative Committee on Crime about his bootlegging days and relationship with Hoover.

⁴Lacey, Robert. Little man: Meyer Lansky and the gangster life. London: Century, 1991

⁵ Marrus, Michael R. Samuel Bronfman : The Life and times of Seagram’s Mr Sam. Hanover, N.H. ; London: University Press of New England for Brandeis University Press, 1991.

⁶ Time Sept 29 1952 p43

⁷ Birmingham, Stephen. The rest of us: the rise of America’s Eastern European Jews. 1^st Syracuse University Press ed, Originally published Boston, Little, Brown. 1984

⁸ Kelly, Philip J. The making of a salesman. New York Abelard-Schuman. 1965

⁹ Marrus, Michael R. Samuel Bronfman : The Life and times of Seagram’s Mr Sam. Hanover, N.H. ; London

¹⁰ New York Times 1 Dec 1966 p50

¹¹ Summers, Anthony. Official and Confidential : The Secret Life of J. Edgar Hoover. London: Gollancz, 1993

¹² Samish, Arthur H. The Secret Boss of California : The Life and High times of Art Samish. S.l.]: Crown, 1971

¹³Lacey, Robert. Little man: Meyer Lansky and the gangster life. London: Century, 1991 p80

¹⁴ New York Times Jun 26 1941 p33

¹⁵ New York Times  28 June 1961 p 36