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How America’s First Domestic Tax Almost Ended the Nation

Just 15 years after the Declaration of Independence, a federal tax was the foment of the Whiskey Rebellion.

Any American knows when the Declaration of Independence was ratified: July 4, 1776. That was the beginning of the fledgling government of the newly-formed United States. Of course, the government didn’t spring into being just as it is today. The first few years—decades, even—of self-governance were rocky and filled with false starts and sudden stops.

Prohibition, which lasted from the ratification of the 18th Amendment to the Constitution in 1919 until the 21st Amendment repealing Prohibition was ratified in 1933, may be one of the most famous (or infamous) of these false starts. But that was some hundred-plus years after the formation of the United States, and Prohibition was far from the first time a law relating to booze had stirred the public consciousness and ire of the young country.

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Just fifteen years after the signing of the Declaration of Independence, the new government passed its first tax on a domestic product. Intended primarily to help generate revenue to offset the debts accrued during the Revolutionary War, this tax applied to any and all distilled alcohol made in the United States. However, since whiskey was by far the most popular local spirit, this excise quickly became known as the Whiskey Tax.

whiskey rebellion
  • Alexander Hamilton.

  • Photo Credit: Wikimedia Commons

Just as quickly, the tax became controversial. Prior to 1789, the United States hadn’t even had a federal government. The Articles of Confederation had provided for a temporary government that was unable to levy taxes, paying for expenses like the Revolutionary War by borrowing money from individuals and foreign powers. As only a group of state governments rather than an official federal body, the Confederation didn’t have the broad power that our federal government does today.

Even once the federal government took over, the country’s primary source of revenue came from import duties—taxes charged on goods that were brought in from overseas. However, this model was not sustainable for a growing country, and by 1790 Alexander Hamilton, who was then Secretary of the Treasury, proposed the Whiskey Tax to help pay down the national debt.

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As the country’s first domestic tax, any proposal was bound to be unpopular. But the Whiskey Tax had some specific qualities that made it hard to swallow—especially for citizens along the western frontier of the newly-formed nation. Farmers in Western Pennsylvania and other locations west of the Appalachian Mountains often supplemented their income by distilling excess grain into whiskey.

According to these farmers, the Whiskey Tax unfairly targeted their livelihoods. Not only was whiskey a popular commodity that was easy and comparatively inexpensive to transport over the mountains, but cash was often hard to come by on the nation’s frontier, and many people far from the seats of government received their pay in whiskey.

This, combined with the fact that larger-scale distilleries in the east could afford to operate stills at full capacity all year long, making it easier for them to pay the tax’s optional flat fee, rather than the per-gallon tax that was foisted upon smaller distillers, meant that the tax disproportionately affected small still owners along the western frontier.

The law also required that all stills be registered with the government, which some distillers saw as an inherent infringement on their only recently-won freedoms.

The Whiskey Tax was not without its supporters, however. Hamilton had the backing of social reformers who opposed the harmful effects of alcohol—the same sorts of reformers who would eventually support Prohibition—and the larger distilleries quickly jumped on the bandwagon when they saw how the tax would hamper their smaller competitors while they avoided the worst of its burden.

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Many individuals living on the frontier opposed the passage of the tax before it was signed into law, and afterward, residents of Western Pennsylvania organized conventions to advocate for repeal and petition the government for redress of grievances.

Revenue collectors were already making the rounds attempting to collect the Whiskey Tax. Along the nation’s frontier, however, they were having a particularly tough time. Tax rebels not only harassed the revenuers themselves, but also anyone who assisted them or provided them aid or shelter.

These difficulties led to a modification of the law in 1792, including a one-cent reduction in the tax, but the damage had already been done. Despite appeals for nonviolent resistance from moderate politicians, a tax collector was tarred and feathered in Washington County, Pennsylvania in September of 1791. When an official was sent to serve warrants on the attackers, he, too, was beaten, tarred, and feathered. 

whiskey rebellion
  • President Washington overlooks troops on their way to suppress the Whiskey Rebellion.

  • Photo Credit: Wikimedia Commons

To the tax rebels, their actions felt similar to the beginnings of the American Revolution. After all, to their way of thinking, the Whiskey Tax was little different than the taxation without representation over which that war had been fought. Since only government officials had been polled about the tax, and not average citizens, how else were they to make their voices heard?

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The distant government, to their eyes, had little care or concern with how the tax affected their livelihoods, and the big distillers who backed the tax seemed to have the politicians in their pockets.

In 1792, a second convention was held in Pittsburgh by those opposed to the tax. The convention was dominated by the Mingo Creek Association, a militant group that included individuals who had been involved in the Revolutionary War. Taking pages from the same playbook they had used in the Revolutionary War, these individuals took control of local militia and formed an extralegal court of their own.

Alexander Hamilton and President Washington saw this unrest as a danger to the growing federal government. However, their initial efforts to quell the growing rebellion only made matters worse. Anonymous newspaper articles signed by “Tom the Tinker” threatened those who complied with the tax, while tax supporters found their barns set afire, and Pennsylvania tax inspector General John Neville was burned in effigy in Washington County.

Things came to a head when more than 60 subpoenas were ordered for various distillers, leading tax rebels to march on Neville’s estate at Bower Hill. Some 700 men were met by only a handful of soldiers, who told them that Neville was not at home.

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The rebels, undeterred, demanded his surrender. During the ensuing confrontation, their leader, Major James McFarlane, a Revolution veteran, was shot dead. In retaliation, the rebels burned Neville’s estate to the ground. The Whiskey Rebellion, fomenting since the passage of the tax in the first place, was now officially underway.

Following what they saw as the murder of Major McFarlane, some 7,000 rebels gathered at Braddock’s Field near Pittsburgh. Many of those present did not even own land or stills and were using the Whiskey Rebellion as an opportunity to vent other grievances. 

There was talk of leaving the United States, and the rebels flew a special flag of their own design. They planned to march on Pittsburgh, with violence in mind, but eventually a nonviolent march through the city streets was negotiated instead.

The existence of such an organized rebellion, however, looked like a threat to national unity to both President Washington and Secretary Hamilton. Washington first sent a peace envoy, which failed, and then a federal militia made up of more than 12,000 soldiers to restore order. As the militia marched into Western Pennsylvania, they were met with anger, but not with the organized insurrection they had feared.

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Most of the organizers of the Whiskey Rebellion had already fled, and of those captured by the militia, only two stood trial for treason, and both were pardoned by President Washington. Ultimately, the Whiskey Rebellion was seen by many historians as a sort of “epilogue to the American Revolution” and the first major test of America’s newly-formed federal government. 

Was it successful? It depends on who you ask, but the Whiskey Rebellion was ultimately quashed with minimal bloodshed, and the Whiskey Tax stayed on the books until 1802, when it was repealed by Thomas Jefferson’s administration, who opposed Hamilton’s Federalist tax policies.

Featured photo: Wikimedia Commons

Published on 24 Sep 2019

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