By the 1860’s it was common in the US for a spirit to be mixed with bitters and sugar to form a simple primeval cocktail. When whiskey was used as the spirit and a few drops of other tinctures like orange bitters were added they had a concoction referred to as "old-fashioned", with no capital letters or definite article. According to a Chicago barman quoted in the Chicago Daily Tribune in 1882, Rye whiskey was more popular than Bourbon in this mixture, but nevertheless the combination of spirit, bitters and sugar he describes was very similar to what had been mixed in the 1860’s and before.
The classic recipe:
Method: Put the sugar into an Old-Fashioned glass, i.e. a whisk(e)y tumbler, and douse with the Bitters. Muddle (*see below) the sugar and bitters. Add the ice and then the whiskey and stir. Serve garnished with a twist of orange peel.
*Muddle is a mixology term, meaning to blend by gently squashing ingredients - e.g. sugar, pieces of fruit or leaves like mint - against the bottom of the glass to release flavours, using a tool called a muddler which has a blunt bottom end.
I'm practicing what I preach regarding using top quality ingredient liquors: going with “Eagle Rare” Kentucky Straight Bourbon Whiskey from the Buffalo Trace Distillery in Frankfort, Kentucky. It is smooth and classy and a bit smokey ...and 20€ a bottle more than Jim Beam but you can't make a silk purse out of a sow’s ear. With so few ingredients in this cocktail you've got to go with quality.