While going through some old files at work this morning I found an interesting bit of information that should shed some light on Why Kentucky is famous for great whiskey. It is a 27 Juy 1888 testamony before a House Committee (unfortunately it does not say what committee it has "H. Rep. 4165_1 at the bottom of each page). It is from several distillers from Kentucky and starts with testamony from John M. Atherton. In his testamony he talks about how whiskey is made and that bourbon is about 30% small grains (rye and malt) and 70% corn. The grain comes from the west, Iowa in particular for corn and the barrels are made from white oak from Kentucky and Indiana and can only be used once (yes this is 1888). The most intersting thing is his answer to a question about whiskey in which he defines "Kentucky Whiskey" Here is his answer:

"To be definitely understood with reference to Kentucky whiskey, I may be permitted to say that by the term in the trade "Kentucky Whiskey", we mean, and the trade understands us to mean, a whiskey made for aging; a whiskey that is not intended to be consumed as soon as it is produced. That distinction defines the two great families of whiskey, so to speak, one for aging and the other for not aging. The latter is fit for use as soon as it is produced as it is afterwards, Under that category comes the great production of the United States - alcohol, cologne spirits and redistilled whiskey. Nearly all of that whiskey is made north of the Ohio River, and very little of it, comparatively speaking, is made in the State of Kentucky. THere is a little made in the Stae of Kentucky along the Ohio River, principally in the city of Covington, and having its center of operations in the city of Cincinatti, across the river. But by the term "Kentucky Whiskey" we mean whiskey made to be aged; to remain in a storage warehouse until then. It remains in the warehouse until the time it becomes fit to drink. It remains in the bonded warehouse until the dealers withdraw it for the trade. There is some little of the better grade of Kentucky whiskey that is taken out of bond and goes into consumption when it is fifteen months old, but it is a very small quantity. The consumption of thet whiskey does not largely begin until it has pased through its third summer. The age of the whiskey in the trade is regulated by summers. If it has passed through three summers it is three years old. After it has passed a third summer they begin to use it freely, but a good deal of it is not stored until four, five, six or seven years old. Then of course it is stored as tax paid whiskey."

The bonding period at this time was three years meaning the distiller had to pay the tax at the end of three years and swallow the angel's share as far as taxes were concerned. I think this sheds some light on why Kentucky has its reputation and that is because of aged whiskey.
Mike Veach