The interaction between whiskey barrels and unaged whiskey is one of the most important parts in the whiskey making process.  It turns the whiskey from a clear liquid to an brownish amber color, it smooths out the strong rough taste of the spirit and gives it the majority of the flavor to the whiskey such as notes of caramel and vanilla. 

Whiskey barrels started out as toasted wooden barrels mainly for the purpose of transporting the spirit.  The shape of barrel makes it easy to roll and also has a special shape so that when its on its side its easy to rock it up so its standing tall.  The story goes that one day a wooden cart caught on fire and was full of unused barrels.  Not wanting to waste the barrels, they decided to go ahead and use the heavily charred barrels and found that the whiskey was a much better flavor than just a toasted barrel.

First off american bourbon barrels specifically use white american oak staves to make their barrels.  They cut the staves into strips that are a few inches wide and typically 2.5 inches thick. The barrel maker will then position these wooden staves in a steel hoop and then wire the staves together somewhat loosely.  The partially formed barrel will then take a trip through a steamer so that it will make the wood easier to work with.  The barrels will then pass through gas burners where they char the inside of the barrel.  After a few seconds of very intense charring they splash the barrel with water to stop the barrel from burning.  They then put the permanent thin steel hoops over the barrel.  They will then wedge in a circular peace of wood as the top, coated on the edge with bees wax to help keep the barrel leak proof.  You will notice that this process does not use any type of glue and the pressure created by the wooden staves makes the barrel leak proof as long as the staves are positioned correctly.