In a large kettle, mix together the sugar and the vinegar and bring to a boiling point. Stir until sugar is dissolved. Add remaining ingredients except peaches and mix well.

To peel peaches, drop into a kettle of boiling water for 1 minute. Drain in a colander. Slip off skins. Halve, remove pits, chop coarsely. Stir into pot with other ingredients.

Simmer over low heat until thickened, about 1 hour, stirring frequently and gently. Fill hot sterilized jars. Water process for 15 minutes. Remove jars from hot water and cool on rack. Check seals, label promptly.