Mike, regarding the social position of bourbon, I was referring to an earlier time. Tastes were formed not in the 1990's but in the 1890's. At that time, bourbon was growing in strength and was a valued regional product. There were so many distilleries and they supplied the cultural and physical product to the satisfaction of a cohesive, traditional society. I don't think there was mcuh foreign product in America period then, but much less in the South, border South and South West than in the richer, smaller North.
People knew brandy, Scotch, Canadian (CC), Irish, genever and dry gin in New York, Boston, Philadelphia, Baltimore, etc. I don't think this was as common in Louisville of the time, Lexington, Atlanta, etc. in the Southern belt. The cities there were smaller and less sophisticated than in the North and the rural belt was dry anyway, unlike in many parallel areas in the North.
So taste preferences were different in the two areas from the outset I think.
However I agree with you about the 30's ads showing Vernon, Overholt, Taylor, Grand-dad together. Ditto after the war although the change started early. Vernon becomes a blend in about 1946, the ads suggesting its lightness and lower proof made it a better product than the straight product (grrr!).
Why did rye fall off so precipitously, as you asked, in this period?
Distilling and the demand correlatively for its traditional product was much weaker after 1933 in the North than the south, for straight whiskey. It was very weak and finally succumbed to further out-of-state acquisition and change. Taxes may have played a part but I don't think so. Had the market, anyway, subsisted, rye could have been made in quantity in Kentucky to supply the market.
The problem is that American disinterest in rye was a longstanding problem, not something new in the late 40's.
And emerging sophisticated methods of national advertising could not change that.
Some people thought rye would endure, e.g., it is salutary to recall that Jim Beam's rye (of that name) was introduced in that decade.
I think though it was a decline of long standing and it just continued to vanishing point (almost).
In 1880 corn first exeeded rye in usage for liquor grain bills. This change was not precipitate. That heralded, or rather reflected, a sea-change (slow and completely transforming).
Quite honestly too (or maybe this is saying the same thing), we should remember rye is a more challenging drink.
Even M'Harry in 1809 writes that a blend of corn and rye makes "better whiskey" than all-rye (as the traditional product was or mostly was).
We have to come to terms with this.
Unlike the producers of, say, blue cheese or caviar, no one in the industry knew or cared to explain or felt confident to explain (in a time of looming Prohibition) to consumers what a fine, distinctive, individualistic product rye whiskey was. They had other options and the upshot was declining sales, from 1880's on.