Romain found revenue fraud at Elora distillery

The following is a re-print of a past column by former Advertiser columnist Stephen Thorning, who passed away on Feb. 23, 2015.

Some text has been updated to reflect changes since the original publication and any images used may not be the same as those that accompanied the original publication.

For the past three weeks this history column has been exploring the adventures of Charles Romain, District Inspector of the Department of Internal Revenue in the 1870s, with responsibility for distilleries.

This week focuses on some of his activities in Elora.

Elora had two distilleries. First was James Phillip’s North Wellington Distillery, which began production in 1852, but operated only sporadically after the mid-1850s.

More important was the distillery at the Elora Mill, which was constructed in 1859. The building still exists as the east wing of the building. James M. Fraser was the proprietor. A diminutive Scotsman with a fiery, explosive temper, he earned the nickname The Elora Bantam for the way he strutted about in his self important way.

He thoroughly disapproved of the taxation of whiskey, and this fact led to the downfall of his distillery. Nevertheless, Fraser filed returns to the government, tolerated occasional inspections and paid at least some of the excise tax he was required to remit.

Fraser’s Elora Distillery found customers across the county and beyond. The Wellington County Museum has invoices of his sales to Alex Meiklejohn of Harriston, one for an order of 216 gallons in 1867, at a cost of 65 cents per gallon. With a trail of receipts and invoices such as this, he probably paid the tax on this particular order.

In the same year, authorities intercepted a convoy of three wagons as they passed through Morriston. One was Fraser’s, the others were owned by George Wyllie, the enterprising Fergus distiller.

The excise men confiscated the wagons and the whiskey before they reached their destined market in Hamilton. This incident, which received wide publicity, earned J.M. Fraser a place on Charles Romain’s troublemaker list when Romain received his appointment in 1868.

Romain stationed one of his agents in Elora in 1869, renting a house for him on Price Street, from which the distillery could be seen a couple of hundred feet away. As well as Fraser’s distillery, the agent had responsibility for a malt house in Elora, breweries in Elora and Salem, and the two Fergus distilleries. There were also reports of illegal operations to the north and west that had to be investigated. The duties of the excise agent took him out of Elora frequently.

At such times, Fraser and his men attempted to rush an extra batch through the distillery. He usually got away with it, but on two occasions he didn’t.

On March 25, 1869, Fraser received word that the inspector was returning to Elora early. To cover up the discrepancy between the inventory and the books, Fraser reported that 200 gallons of whiskey had been stolen from the distillery. Knowing he would never have to pay out the money, Fraser made a grand gesture by offering a $200 reward for information on the theft.

Chief Inspector Romain didn’t believe a word of it.

Revenue agents made a spot inspection of the distillery some months later, in a period when Fraser reported the distillery idle. Some of the seals were found to be broken, and there was evidence of recent activity.

Fraser feigned surprise, swearing that he had no knowledge that anything was amiss. Romain, fearing the scant evidence and no reliable witness, decided not to prosecute.

A fire destroyed the Elora Mill on Jan. 23, 1870. The flames did not touch the distillery wing, but there was some damage to the equipment. Fraser decided to rebuild the mill immediately, and the job was finished by midsummer.

In the meantime, Fraser rented the distillery to A.W. Gay, a local grain dealer, who resumed whiskey production in the first week of March 1870. A large quantity of wheat had been damaged, mostly by water and some scorched, in the mill fire.

Fraser’s men were able to retrieve much of it from the rubble. He made a deal to dry it at the malting facilities at Dalby Brothers brewery, located two blocks away. The plan was to dry the grain and return it the distillery for fermentation.

On Mar. 7, 1870 Romain’s sidekick, Collector of Revenue James Gow, paid a surprise visit to the brewery and seized it, along with all the grain on the premises. The brewery had been reported as idle for the previous two years, and any activity in it, including the use of the malting ovens, had to be reported to the government.

The sentiment in Elora was that the charges were a mere technicality, and that no fraud was involved. Chief Inspector Romain entertained suspicions that the lease of the distillery to A.W. Gay was a ruse, and that J.M. Fraser, with his questionable practices, was still involved.

Romain and Gow returned the brewery to the Dalby Brothers, and Inspectors White and Dickson supervised the operations closely.

Meanwhile, District Inspector Romain, in his office in Guelph, continued to review the reports filed by Gay. He soon concluded that the old practices had resumed, and that the reported production was impossibly low.

Romain made his move in May, 1870, on Friday the 13th. With his sidekick Collector Gow, he drove to Fergus. This would not arouse suspicion – he frequently went to Fergus to investigate the two distilleries there. From Fergus he made a surprise swoop on the Elora Distillery.

It proved to be an unlucky day for J.M. Fraser.

Romain seized the distillery and caught Fraser’s employees trying to drain a fermenting tank into a pipe that ran directly to the Grand River. Quickly checking the paper work, Romain noted that most the grain in the building was not recorded in the inventory book.

Fraser and Gay had been feeding the spent slops to cattle and pigs in a feedlot beside the distillery. They pleaded that the animals would starve if the distillery was closed down.

It is also likely that J.M. Fraser used his political connections to influence Romain’s superiors. Fraser was the most prominent Conservative in Elora at that time.

In any case, the distillery resumed production a week after the raid, and before the matter had been to court, a somewhat unusual circumstance in cases such as this. Romain was taking no chances. He assigned one of his agents to be in the distillery at all times. The agent slept there at night on a cot.

Fraser and Gay got off with a fine, and the court returned the distillery to Fraser. In the long term, it turned out to be a victory for Romain.

A.W. Gay, tired of dealing with Romain and his men, and exasperated with his relations with the volatile Fraser, did not renew his lease.

Fraser, whose reputation as an impossible employer had spread far and wide, could not find a qualified distiller to work for him. He tried to operate the distillery personally, but the product was so bad that no sane man would purchase or drink it.

The Elora Distillery ceased production late in 1870. Romain insisted that some of the equipment be dismantled. The fermenting tanks remained in the building, unused, until 1876. By then Fraser had lost the business in a bankruptcy. New owners ripped the remains of the distillery out, and turned the building into a warehouse for grain.

Charles Romain was not out of work after shutting down the distilleries in Fergus and Elora.

Tracking down and dealing with illegal stills kept him busy for most of the 1870s.

*This column was originally published in the Wellington Advertiser on Aug. 20, 1999.


Stephen Thorning - 1949-2015