Did Al Capone use the Hammond Distillery to Super Charge His Empire During Prohibition?

When the nation went dry, the Hammond Distillery went belly up. But is there truth to the rumors that gangster Al Capone moved the distillery’s product across the state line to help fuel his organized crime empire?

Rich Barnes, former president of the Hammond Historical Society, said he heard Capone purchased the distillery’s existing inventory when Prohibition began and sneaked it across the state line.

Before Prohibition killed the Hammond Distillery, it was arguably the second largest in Indiana, cranking out 25,000 to perhaps 50,000 gallons of alcoholic beverages daily.

The distillery was such a big operation in Hammond that its owner, John E. Fitzgerald, had a seat on the Chicago Board of Trade, allowing the distillery to make large grain purchases to fuel production, Barnes said.

The early days

The Hammond Distillery was on the southeast corner of Calumet Avenue and 150th street, just north of the Grand Calumet River. It began operations in December 1901, according to Barnes.

In The Lake County Times’ first issue, on June 18, 1906, the Hammond Distillery said it had a capacity of 25,000 gallons daily, offering Hammond Bourbon, Hammond Sourmash, Hammond Rye Malt Gin, Hammond Dry Gin, Cologne Spirits and Refined Alcohol.

In 1909, Fitzgerald built a $50,000 plant that would eliminate the need to keep cattle at the distillery to consume the byproduct. Instead, the new building would have enormous evaporates that, it was said, would use 700 to 800 tons of copper. That would dry the slop so it could be shipped to farms for cattle feed.

On Dec. 16 1911, the distillery paid $40,742 in excise taxes to the federal government for a record-breaking shipment of whiskey, taxed at $1.10 per gallon. “Three revenue days like today would pay the cost of building the splendid Hammond federal building,” The Times reported that day.

Drying up

The push for Prohibition began before the Civil War, but accelerated in the progressive era, fueled by the push for women’s suffrage.

Jason Lantzer, assistant director of the University Honors Program at Butler University in Indianapolis, is considered one of the state’s top experts on the alcoholic beverage industry. “The temperance pledge card, there were several of those large national campaigns starting before the Civil War that (would) sweep the country,” Lantzer said. But a card in the wallet won't protect you from lure of saloons, the thinking at the time went, so Prohibition was needed to enforce abstinence.

“Until we remove the temptation, good people are going to (be) hurt by Demon Rum, and King Alcohol and John Barleycorn and all the other wonderful names they had for alcohol,” Lantzer said.

Finally, in 1917, the reformers succeeded in Indiana. “Indiana goes dry ahead of the nation, so we actually enact Prohibition in April 1917, giving brewers, distillers, saloons, everybody a year before they have to close down,” Lantzer said.

“We are not the only country to do that. Just about every nation has some sort of restriction on alcohol, and the rational is twofold — one is on the battleground that soldiers are not drunk, and the other is that grain can be better used for foodstuffs. So there is a definite slowing down on the national level,” Lantzer said.

Business shifts

The Hammond Distillery was hit hard by Prohibition, although World War I kept it in business. It got a government contract to produce alcohol for use in making smokeless gunpowder.

On Dec. 27, 1917, Peter W. Meyn, president of the Lake County Savings & Trust Co., bought the distillery for $65,500 “as an investment to locate a new industry,” The Lake County Times reported. Before Prohibition, the plant was worth five times that price.

Former saloons, a majority owned by breweries by the time Prohibition is passed, become ice cream parlors, selling ice cream and soft drinks, Lantzer said.

A lot of the breweries switched over to other products, whether near beer, which has such a low alcohol content that it didn’t violate Prohibition laws, or medicinal alcohol, or milk and other nonalcoholic beverages. “A lot of the breweries own their own canning and bottling infrastructure, so they switch over to canning and bottling, or at least try to,” Lantzer said.

Organized crime

Barnes said he heard that “Scarface” Al Capone moved alcohol across the state line to fuel his criminal empire. That has Lantzer intrigued.

“There’s this mythology that organized crime in the greater Chicago area, in Northwest Indiana, had to all been linked to Capone,” Lantzer said. “And there’s enough truth to that in that you do have definite Capone-owned or -operated outfits and purchases of different things, and it became very easy to mythologize that that was also by Capone. Whether or not we ever will be able figure out it was or not. But if had to do with organized crime it must have been linked to Al Capone.”

Here’s how it works: “This building was around in the 1920s, so it must have been used by Capone, or there are these stories that they were used by organized crime. Whether that actually happened, I don’t know, but that’s what I’ve been told, or that my uncle’s cousin told him that Capone came here on vacation or something,” Lantzer said of the mythology

Lantzer has heard the rumors, too.

“There’s a story that Capone owned or ran bootleg liquor out of the Paramount Theater in Hammond. Whether or not that’s true, I have no idea.”

May 8, 1929, brought the Capone empire into Hammond if it wasn't there already. That’s when the bodies of three gangsters were found in what is now Douglas Park. Two of them, Giovanni Scalise and Alberto Anselmi, had been implicated in the St. Valentine’s Day Massacre.

Right across the state line, in Calumet City, known then as West Hammond, the Capone gang or his organization owned several establishments.

Bootleggers

Could the Hammond Distillery have been in clandestine use during Prohibition? It’s feasible, Lantzer said.

Unless the distilling apparatus was scrapped, it would be easy to continue production, Lantzer said. “So if you’re Capone, you don’t have to bring all that malt in from, say, Canada, and you definitely don’t have to rely on people who were sort of figuring it out on their own, a sort of bathtub gin and moonshine and whatnot.”

What the Hammond Distillery had that other would-be producers didn’t was the know-how to make good alcoholic beverages. “The problem wasn’t the availability of things. If you’ve got corn, yeast and some sugar and can fashion a still, you can make yourself some alcohol. The problem was whether it would be good. Or whether you would kill your customers, because that doesn’t really breed a lot of confidence and repeat confidence when it gets around that Joe down the street bought from you and he’s dead now because he drank what you made,” Lantzer said.

Former alcoholic beverage sites were a target of frequent federal, state and local enforcement agencies. “They knew where those were. So it’s not uncommon for those places to get visited.”

“Maybe it’s fun to attach it to Capone, but maybe it’s a way to say that wasn’t really us, that was an outside element. I think that is something for the 1920s that we need more study on," Lantzer said.

Attacks at the distillery

The distillery saw repeated attacks.

In 1919, The Lake County Times reported, 10 barrels were stolen. In 1921, “whiskey bandits” stole 2,000 gallons after attacking the guards. In 1922, a barrel of whiskey was found in the gasoline tank of a new Auburn Six automobile at the distillery. Thirty bandits cleaned out the distillery in September 1923, and there had been other thefts earlier that year.

Prohibition agent Robert Anderson was shot to death at the Hammond Distillery on April 16, 1923. He had been stationed there less than a year. The Bureau of Alcohol, Tobacco, Firearms and Explosives has a page dedicated to him on its website.

On Jan. 28, 1924, The Lake County Times published a banner headline, “Rob Hammond Distillery As Guard Gets Drunk.” Twenty armed bandits stole thousands of dollars worth of whiskey before the Prohibition agents could move it to another location.

After Prohibition

In 1933, Prohibition was repealed. The distillery was incorporated in December 1933 with 100,000 shares of stock to be listed at $10 apiece on the Chicago Board of Trade. The plan was to resume distiling operations at the building then occupied by Nowak Milling Corp., with Nowak moving its feed mill to another site.

In March 1934, the distillery was delisted from the Chicago Board of Trade, and plans were made to seek private financing.

On Aug. 15, 1934, the plug was finally pulled on the plan to restart the distillery.

When the plan to restart the distillery was announced, whisky was selling at $1.25 to $1.75 a gallon. A year later, the price had dropped to 40 cents as additional capacity came on line.

Nowak operated at the site until February 1938, when owner Maxwell M. Nowak told The Times he couldn’t afford to pay high taxes and still expect to make a profit.

Thanks to Doug Ross.