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To understand how this happened, we first need to understand the history of whiskey in Appalachia.
In the 1700s, Scotch and Irish were leaving their countries in droves to escape poverty and a tyrannical government. They were unwelcome in most of the major cities in the Colonies, so they staked their claims in the harsh mountains of Appalachia. One of the things they brought with them was a cultural knowledge of distilling, and they started making whiskey; a lot of it. The flood of booze was so substantial that it actually changed the local economies from a rum-based bartering system to one that was whiskey based.
The Scotch-Irish community had a rough life in the region they tried to settle. They invaded the lands of the Indians, ultimately fighting with them for twenty years. Through this, they became hardy fighters and learned to live off the land. After a few generations they adapted and became completely self-sufficient communities, rarely coming down from the mountains to interact with outsiders. The whiskey flowed and they started thriving on the trade—until George Washington ruined all the fun.
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