A Year With George Washington
On February 24, 1794, President Washington issued a Proclamation on the Violent Opposition to the Excise Tax and offered a $200 bounty for the discovery and apprehension of the perpetrators.
As a means to pay off the federal and state debt incurred during the Revolutionary War, Treasury Secretary Alexander Hamilton proposed and was granted an excise tax on all distilled spirits produced in the United States. This was the first direct tax on a manufactured product in American history. As one might imagine, it did not sit well with those directly affected.
On paper, it simply looked like a “luxury” or “sin” tax, and thus of little consequence to the majority of Americans. In reality, however, the tax had an outsized financial and social impact on many, particularly those living far from the country’s population centers. This disparity of views was another cause that led to a shift in the country’s political makeup, with the Hamiltonian Federalists on one side and the Jeffersonian Republicans on the other.
The citizens most adversely affected by it were those living on the frontier, far from cities such as Philadelphia, New York, Boston, and Charleston, where goods, services, and specie (gold and silver coin) could be exchanged easily and efficiently.
Whiskey was not only a form of currency for any and all things where specie was scarce, if present at all, but it was also the mode by which frontier farmers transported their excess grain to market. Moving large quantities of raw grain to distant markets was fraught with risk due to the difficulty of moving it over rough, dangerous roads, the potential for spoilage, and the loss of precious time. The conversion of raw grain into whiskey, on the other hand, enabled more efficient transport due to its smaller volume and higher price per yield. The spoilage issue was eliminated as well: unlike raw grain, which was prone to rot, whiskey benefited from time in transit.
The excise tax on whiskey disrupted the rural and frontier economies in ways unforeseen by Hamilton and Congress. The law, for instance, required that the tax be paid in gold and silver specie, which was very hard to come by in remote areas of the country. Most exchange of goods and services was just that; an exchange of goods and services – no coinage was involved. Acquiring the specie to pay the tax was a far more difficult proposition for the rural inhabitant than for the urban citizen.
What’s more, the law provided that the tax could be paid in two ways; Either by the gallon or by the still. Though the tax on the still was higher, the urban whiskey distillers more than made up for it through economies of scale, producing more volume in massive, around-the-clock operations. The rural and frontier distillers, in contrast, had little choice but to pay the tax by the gallon as they only used the excess grain from their annual harvest. This made their whiskey tax per gallon as much as twice that of the large distillers.
In addition to the adverse economic impact, many of the on the frontier were veterans of the Revolutionary War and felt that the ideals for which they fought were being trampled upon. In short, the whiskey tax made them believe, right or wrong, that they had simply traded the English Parliament for an American Congress. The cry of “no taxation without representation” whistled through the air in the West as it had two decades before.
While Hamilton and those to the east thought the notion that they lacked representation absurd. Those on the frontier felt their well-being was ignored by Congress, as frontier violence was ever-present. Congress had not addressed the issue of Spain and France prohibiting access to the Mississippi River, thereby making them reliant on the eastern markets 300-500 miles away. Eastern manufacturers did not incur onerous transportation costs on their goods, including whiskey. When the regressive excise tax was added, it made it impossible to compete.
Washington’s Proclamation was ineffectual, and the violence he so abhorred continued. By September of 1794, President Washington would again find himself at the head of 12,950 man army bound for the Pennsylvania frontier.
His often-cited mantra that the surest way to peace was through a show of strength proved true once again as the Whiskey Rebellion was quelled without another drop of blood being spilled. Washington received widespread affirmation for maintaining federal authority without resorting to violence.
Opposition to the Whiskey tax did not wane, but the discontented decided that their best redress was through the ballot box. Thomas Jefferson’s Republican Party, aided by frontier farmers, defeated John Adams’s Federalists in the election of 1800. One of Jefferson’s first priorities was the repeal of the Whiskey excise tax. He did so in 1802.
