In Baltimore, in the mid 1800's there was a man who sold corpses to the
hospital for research.

He stored the cadavers in cheap whiskey to ferment them before turning
them over to the researchers. He then sold the whiskey to the medical
students...thus the term "rot gut."

The above was submitted via our free, daily mailing list.  However, it is disputed by Lee Daniel Quinn, who writes:

"The term "rotgot" can be traced back to 1597 and meant, as it says,
alcohol which will rot your gut."