Once in New Ulm, August found a job as a machinist in a flour mill. But as the years passed, August realized that good German beer was difficult to find in such a small, rural area. In the fall of 1860, August partnered up with Jacob Bernhardt, a former brewmaster at the Benzberg Brewery in St. Paul, MN (what today was known as the Minnesota Brewing Company). They erected a small brewery just two miles from town along the banks of the Cottonwood River. During their first year of operation they produced 200 barrels of beer, a very small amount based on today’s standards.
The location of the brewery was ideal. Aside from the beauty of its natural surroundings (August was especially fond of his hikes into the woods), the brewery was located next to an artesian spring, providing exceptionally pure water for brewing. Its proximity to the Cottonwood River gave the brewery a means of transporting beer and supplies, and the river also became essential to the refrigeration process. Each winter, large blocks of ice would be harvested and hauled up the hill where they would be stored in underground caves. The ice would keep the caves cool throughout the spring and early summer in order to allow proper aging and fermentation of the beer.
But along with the rewards also came the risks. New Ulm, as many settlers back then realized, was located in the heart of Dakota Indian country. In the early days of the brewery, many of the Dakota Sioux Tribe visited the brewery where Mrs. Schell often provided them with food. This goodwill proved to be a blessing for the brewery. In 1862, southern Minnesota was the focal point of the "Sioux Uprising," otherwise known as the "Dakota Conflict." While buildings were burned and ransacked in New Ulm and other towns in the region, the brewery remained untouched due to the kindness of the Schell family.> THE 1870'S