Getting drunk and getting 'shellacked' in the early decades of the 20th century link directly...almost. So also getting 'shellacked' in the sense of being "completely defeated", "beaten thoroughly", to or near to death, in the later decades of the 19th century, then also in the second decade of the 20th, is...close to...a direct link. For the second sense, that is, getting 'shellacked' in the sense of being defeated or beaten thoroughly, the connection between that slang use of 'shellacked' and the first, the slang use in the sense of getting drunk, seems likely to have cemented the adoption of the sense, supposing it did not sponsor it.
The evidence for the suggested connections is straightforward. For the first case, where getting drunk became known as getting shellacked, the use developed from the circumstances represented in these examples:
- From The Baltimore Sun, 24 May 1900 (paywall; emphasis mine):
Another instance of alleged insubordination as reported cites 16 of [the crew of the battleship Texas] as drinking alcohol used for shellacking the decks. This made them so unruly, it is asserted, that the marines found it necessary to level their guns at the sailors before they could induce them to obey.
- From the Fitchburg Sentinel (Fitchburg, Massachusetts), 14 May 1903 (paywall; emphasis mine):
If Major Dwinnell [the "keeper" of the jail in Fitchburg] would tell some of his peculiar experiences with prisoners during the past three decades, they would prove mighty interesting. A short time ago a man was set to work shellacking some woodwork. Later the major found the man in a "hazy" condition, and calling him by name, said, "What's the matter with you?" "Nothing, sir." "I know better," replied the major, getting a whiff of his breath, "what have you been drinking?" "Nothing, sir." "Take ---- to solitary confinement until he is willing to tell what he has had and where he got it," was his order, .... The man was conducted to the solitary cell and on reaching it he said, "Wait a moment, Major, I'll tell you what I've had. I drank the alcohol in the shellac. When the turnkey mixed the alcohol I turned some water into the tin. That separated the alcohol from the shellac and I drank it." Major Dwinnell did not believe the statement, but the man offered to demonstrate that it could be done and the experiment was made. It acted just as he said, the alcohol floating on top.
At least among sailors and prisoners in the early decades of the 20th century, getting 'shellacked' had close to a literal meaning; they got drunk not on the shellac itself, but on the alcohol used as the vehicle in applying shellac. This association is explained more technically in the 13 Jan 1921 Wichita Beacon (Wichita, Kansas; paywall):
As alcohol readily evaporates, shellac and varnishes are dissolved in it in order to apply a smooth surface coating to articles.
In part, the further development from prisoner and shipboard slang, and the more general use of the slang 'getting shellacked' to mean "getting drunk" is owed to US national prohibition, otherwise known as the "dry law" or, more technically, the Volstead Act, which took effect in January of 1920. For example, these subtitles over a 17 Jan 1921 New York Herald article reviewing the effects of the "dry law" after a year on the books:
BAD STUFF EVERYWHERE
Shoe Polish, Hair Tonic, Shellac
and Other Dangerous
Concoctions Drunk in
Similarly, this fanciful recipe from a 20 Jan 1921 filler piece in The Manhattan Republic (Manhattan, Kansas; paywall; emphasis mine):
A little information on how to make forty gallons of home brew. Follow directions carefully: Capture a wild bullfrog and pen him up for three days and feed him on hair springs; turn him loose and chase him three miles; then go back on the route taken by the frog and gather the hops; to said hops add ten pounds of tan bark, three pounds of glue, one of soap, and one pint of shellac; boil for thirty-six hours and strain through a sock. This does not conflict with the Volstead Act.
By 15 May 1922, the use of 'shellacked' to mean "drunk" was well-enough established for it to appear as a synonym of 'jammed' in an article in the Wilkes-Barre Times Leader (Wilkes-Barre, Pennsylvania; paywall; emphasis mine):
JAMMED — Intoxicated, pickled, shellacked, canned, out like a light, potted, shined, drunk.
The comparatively light-hearted use of 'shellacked' to mean "drunk" also developed from rather more somber circumstances. Those circumstances, in concert with the adoption of the "drunk" slang sense, probably sponsored the parallel development of 'shellacked' in the slang sense "thoroughly beaten, completely defeated". The connection in this case, while a bit more marginal, is nonetheless quite close to direct — and gruesome.
At about the same time that sailors and prisoners were getting 'shellacked' by drinking the shellac's alcohol vehicle, a number of serious accidents from the late 1800's were being revisited in the popular press. Those accidents were caused by the hazards of shellacking the interiors of brewery casks and vats; one of the greatest hazards of shellacking the casks and vats was being overcome and crippled, if not outright killed, by the fumes.
For example, a short article in the 29 Jan 1898 Logansport Pharos-Tribune (Logansport, Indiana; paywalled) describes one such incident:
Died from Inhaling Noxious Fumes
Michael Gelhaus and Aloise Metter, who were employed in shellacing the large beer vats in the Pabst brewery, died last night from inhaling the fumes of charcoal and shellac.
Another example, from the 18 Jan 1900 Alton Telegraph (Alton, Illinois; paywalled), a few months before the drunken sailor incident aboard the battleship Texas, describes a man allegedly blinded by fumes from the alcohol in the shellac:
John Grant has begun suit...for the loss of his eyesight. While in the employ of the brewing company he was set to work shellacking barrels and kegs. In the shellac was an amount of wood alcohol. From this, it is asserted, fumes arose which acted on the nerves of the eye till he became blind.
Then, in the 7 Feb 1903 Eau Claire Leader (Eau Claire, Wisconsin; paywalled; emphasis mine), a couple of months before the enterprising prisoner in Fitchburg revealed his secret for getting drunk to the jail "keeper", a doctor detailed his opinion that the fumes of the wood alcohol in the shellac killed the two men mentioned in the 1898 Logansport Pharos-Tribune article:
"In 1898 two men met death while shellacking vats at the Pabst brewery. It was thought to be from the carbonic gases from the charcoal fires. However, I contended and have so said to the American Medical society, that the fumes of the wood alcohol killed the men by inhalation...."
The problem is mentioned again in a general article about painters' problems in the 13 Jan 1907 Chicago Tribune (paywalled; emphasis mine):
Chemicals Hurt the Eyes.
Another kind of work that painters try to avoid is where they have to use wood alcohol in closed rooms and shellacking the interior of tanks in breweries. The odor is so strong that it is impossible for them to work more than fifteen minutes without needing fresh air. There are a number of cases where painters have lost their eyesight doing this kind of work....
Four years later, Health Commissioner Francis E. Fronczak submitted a letter to the editor printed in the 13 Mar 1911 issue of The Buffalo Enquirer (Buffalo, New York; paywall; emphasis mine):
Dear Sir — I noticed in The Enquirer your editorial on "Wood Alcohol." Permit me to inform you that some two weeks ago, following the deaths of men who were employed shellacking vats in a brewery, I ordered an investigation by physicians and City Chemist, to determine what effect the fumes of wood alcohol would have along this line. Examinations are being made at present with a view of preparing suitable ordinances to regulate the use of wood alcohol in the various industries.
While the newspaper articles I found do not go into graphic detail, the effects of shellacking brewery vats were well known. Men (and boys) charged with the task came staggering out of the vats after a very few minutes, then collapsed and, in many cases, died, or went on to suffer grievous disabling injury. The unfortunates had received a thorough shellacking.
These circumstances in combination, the alcohol to be had from working with shellac along with the disabling effects of working with shellac in closed spaces, quite possibly sponsored the development of both slang senses of 'shellacked' and 'shellacking' — the sense of 'staggering drunk' and the sense of 'completely defeated'.
Although the earliest use of 'a shellacking' in the sense of "a thorough beating, a complete defeat" that I found was in a syndicated 17 Nov 1923 article in the Star Tribune (Minneapolis, MN; paywalled; emphasis mine), the context is such as to suggest the slang sense was extant at least a few years, if not decades, prior. In that article, by Damon Runyon (known for his use of colorful vernacular), about the defeat of the Princeton football team by Yale, Runyon describes the event thus:
However, no one expected Yale to rub it in. No one expected Princeton to get such a "pasting" as the thing would be inelegantly termed in more professional circles, such a "shellacking."
la connexion française
The verb, 'to shellac', in all its senses, derives from the noun 'shellac', which itself translates French laque en écailles, "lac in thin plates". An article in the 23 Jan 1921 issue of The Fort Wayne Journal-Gazette (Fort Wayne, Indiana; paywalled) described its production in detail:
SHELLAC is the product of a tiny insect which infests certain trees in the East Indies. The term lac is the same as the Hindu numeral lac — a hundred thousand — and indicates the countless myriads of insects which make their appearance each spring on the young, tender shoots of the infested trees. These feed upon the sap in the bark, and after passing it through their bodies exude it in the form of a crimson-colored resin, which in course of time hardens into a tiny semi-transparent cocoon or shell.
It is these cocoons which, after being melted in boiling water and poured out on a cold surface, constitute the shellac of commerce.
Although the connection is based more on speculation than evidence, I suspect a tradition transplanted to the US from French and London exhibitions in the early 1920s may also have contributed to the adoption of 'shellacked' in the slang sense of 'very drunk'. That tradition is sketchily described in the 21 May 1922 issue of The Cincinnati Enquirer (Cincinnati, Ohio; paywalled):
One of the most gala of these occasions, however, is yet to come — "Varnishing Day," instituted a year or two ago, one of the few known to the United States and which this season will open the spring exhibit of American art.... "Varnishing Day" is by the highest tradition of the spring salons of Paris and London, for the intimate elect...only the life and annual members of the Museum and the exhibitors themselves will be bidden to this private view....
"Varnishing Day at the Royal Academy" is illustrated by George Du Maurier in Punch, 19 June 1877:
As noted at The Victorian Web, "the Academy originally created Varnishing Day to permit artists to bring in freshly painted canvases and then later apply protective varnish."
The day was marked not only by the artists and 'elite' patrons getting thoroughly drunk on wine and other spirits; it was also marked by those in close quarters with their pots of shellac suffering some of the same disorienting effects experienced by the painters in brewery vats in the late 19th and early 20th centuries.