The early US central government, under the Continental Congress and later under the Articles of Confederation had been unable to levy taxes. It had borrowed money to meet expenses and fund the Revolutionary War, accumulating $54 million in debt. Additionally, the state governments had amassed another $25 million in debt. When the new U.S. federal government began operations in 1789, following the ratification of the United States Constitution, Secretary of the Treasury Alexander Hamilton found a tricky situation. Current income from federal tariffs and excise taxes amounted to just $4.4 million, enough to cover current government operations. Adding to the complexity of his task, the French were now in trouble politically and financially, and an unknown number of original bond owners had sold their government debts to speculators.
All solutions had drawbacks. If Hamilton shrugged off the debt as a responsibility of the Confederation, no lender would ever loan to the U.S. again and the country would remain an agricultural appendage of Europe. If he paid only notes and debts still held by their original owners, he would threaten small merchants and open the government up to case-by-case decisions. If he paid off the debt entirely, he would need to impose the kind of taxes that had sparked Shays' Rebellion two years prior.
Solution to the Debt Issue: The Whiskey Tax
When it came time to present a plan to Congress, Hamilton looked to use this debt to the nation’s advantage. In his Report on Public Credit, he urged Congress to merge the state and national debts into a single debt funded by the federal government. He proposed to pay for the debt through a gradual schedule of dependable tax resources, generate new revenue through western land sales, and taxes on luxuries—notably, distilled spirits.
After much debate, Congress approved these measures in June and July 1790 and the effects on public credit were immediate. U.S. government securities tripled in value, thanks to the assurance that they would be paid, supplying Americans $30 million in capitalization that had not existed before.
As a result of this decision, the government needed a source of revenue to pay the amount due to the bondholders. By December 1790, Hamilton believed that import duties (tariffs), which were the government's primary source of revenue, were as high as possible without negatively affecting the economy. He therefore promoted passage of an excise tax on domestically produced distilled spirits. This was the first tax levied by the national government on a domestic product.
Whiskey was by far the most popular distilled beverage in late 18th-century America, so the excise became known as the "whiskey tax." While taxes were politically unpopular, Hamilton believed that the whiskey excise was a “luxury tax” and would be the least objectionable tax that the government could levy. In this, he had the support of some social reformers, who hoped that a "sin tax" would raise public awareness about the harmful effects of alcohol. The whiskey excise act, sometimes known as the "Whiskey Act", became law in March 1791. George Washington defined the revenue districts, appointed the revenue supervisors and inspectors, and set their pay in November 1791.
Western Grievances, Resistance, and Insurrection
What Congress did not predict was the vehement rejection of this tax by Americans living on the frontier. Residents viewed this tax as, yet another instance of unfair policies dictated by the eastern elite that negatively affected American citizens on the frontier. Western farmers felt the tax was an abuse of federal authority wrongly targeting a demographic that relied on crops such as corn, rye, and grain to earn a profit. Shipping this harvest east was dangerous because of poor storage and dangerous roads. Thus, farmers in these areas often distilled their grain into liquor which was easier to preserve and to ship to seaports in the east.
Acceptance of the excise tax also varied with the scale of the production; large producers, who produced alcohol as a business venture, were more willing to accept the new tax. They could make an annual tax payment of six cents per gallon. A smaller producer, who only made whiskey occasionally, had to make payments throughout the year at a rate of about nine cents per gallon. Large producers could reduce the cost of the excise tax if they produced even larger quantities. Thus, the new tax gave the large producers a competitive advantage over small producers. Another issue that the frontier citizens had with the tax was that it was only payable in cash, something rare on the western frontier.
Other aspects of the excise law also caused concern. The law required registration of all stills, and those cited for failure to pay the tax had to appear in distant Federal, rather than local courts. The only Federal courthouse was in Philadelphia, some 300 miles away from the small frontier settlement of Pittsburgh. In addition to the whiskey tax, westerners had several other grievances with the national government, chief among which was the feeling that the government was not supplying adequate protection for the residents living in western frontier. The Northwest Indian War was going badly for the United States, with major losses in 1791. Furthermore, Spain (which then owned Louisiana) prohibited westerners from using the Mississippi River for commercial navigation. Until these issues were addressed, westerners felt that the government was ignoring their security and economic welfare. Adding the whiskey excise to these existing grievances only increased tensions on the frontier
Almost at once, individuals in parts of western Pennsylvania and western Virginia voiced their displeasure by refusing to pay the tax. The easiest form of nonpayment was to prevent the excise officer from setting up an office in the county. To do this, rebels threatened anyone who offered to house the excise office. Often, the excise officer received threats of physical violence as well. These threats were usually enough to discourage the officer from staying and trying to collect the tax. Federal tax collectors were not the only people targeted in Pennsylvania; those who cooperated with tax officials also faced harassment. Anonymous notes and newspaper articles signed by "Tom the Tinker" threatened those who complied with the whiskey tax. Those who did not heed the warnings might have their barns burned or their stills destroyed.
Federal Response, Negotiations, and Military Action
In 1792, he issued a national proclamation, admonishing westerners for their resistance to the "operation of the laws of the United States for raising revenue upon spirits distilled within the same." This proclamation went unheeded and by 1794 President Washington faced what appeared to be an armed insurrection in western Pennsylvania.
Determined to maintain governmental authority, Washington acted cautiously. He did not want to alienate public opinion, so he asked his cabinet for written opinions about how to deal with the crisis. The cabinet recommended the use of force, except for Secretary of State Edmund Randolph who urged reconciliation. Washington followed both paths. While sending commissioners to meet with the rebels he also went ahead with raising a militia army.
Washington privately doubted that the commissioners would accomplish anything and believed that a military expedition would be needed to suppress further violence. In July 1794, 400+ whiskey rebels near Pittsburgh marched on regional tax collection supervisor John Neville's house in Washington County, had a shoot-out with him and his slaves, and eventually burned his home. Fortunately, Neville narrowly escaped the grasp of the crowd. Not only did this mob attack the tax collector but they also stole the mail from a post rider leaving Pittsburgh. The “leaders” of the insurrection assembled a crowd of six thousand angry protestors ready for action with one individual, emboldened by the ongoing French Revolution, suggesting the use of guillotines. Left unchecked, the rebellion threatened to spread to other states.
In early August 1794, Washington dispatched three commissioners to the west, all of them Pennsylvanians. Beginning on August 21, the commissioners met with a committee of westerners where the government commissioners told the committee that it must unanimously agree to renounce violence and submit to U.S. laws and that a popular referendum must be held to determine if the local people supported the decision. Those who agreed to these terms would receive amnesty from further prosecution.
The committee of westerners, divided between radicals and moderates, narrowly passed a resolution agreeing to the government's terms. The popular referendum held on September 11, produced mixed results. Some townships overwhelmingly supported obeying U.S. law, but opposition to the government remained strong in areas where poor and landless people predominated.
On September 24, 1794, Washington received a recommendation from the commissioners that in their judgment, "(it was) ... necessary that the civil authority should be aided by a military force in order to secure a due execution of the laws..."
On September 25, Washington issued a proclamation summoning the New Jersey, Pennsylvania, Maryland and Virginia militias into service and sent warnings to the locals not to “abet, aid, or comfort the Insurgents aforesaid, as they will answer the contrary at their peril”
With little choice left, Washington donned a general’s uniform, tailored to look just like the one he wore during the Revolution. Washington organized a militia force of over 12,000 men and led them towards Western Pennsylvania. He had every intention to quash these “self-created societies” who refused to recognize the tax, voted on and passed by their elected representatives. To Washington, their actions were a “treasonable opposition” and he felt he must carry out his duty to “preserve and protect” the Constitution.
The calling of the militia had the desired effect of ending the Whiskey Rebellion. By the time the militia reached Pittsburgh, the rebels had dispersed and could not be found. Immediately before the militia’s arrival as many as 2,000 of [the rebels] – had fled into the mountains, beyond the reach of the militia. It was a great disappointment to Hamilton, who had hoped to bring rebel leaders such as David Bradford to trial in Philadelphia. Instead, when the militia at last turned back, out of all the suspects they had seized a mere twenty-some were selected to serve as examples, They were at best only small time players in the uprising, but they were better than nothing.
The captured participants and the Federal militia arrived in Philadelphia on Christmas Day. Some artillery was fired, and church bells rung as a huge throng lined Broad Street to cheer the troops and mock the rebels. Neville said he “could not help feeling sorry for them. The captured rebels were paraded down Broad Street being 'humiliated, bedraggled, half-starved”.
Most of the leaders had eluded capture, so only ten men stood trial for treason in federal court. Of these, only Philip Wigle and John Mitchell were convicted. Wigle had beaten up a tax collector and burned his house; Mitchell was a simpleton who had been convinced by David Bradford to rob the U.S. mail. These, the only two convicted of treason and sentenced to hang and later pardoned by Washington. Pennsylvania state courts were more successful in prosecuting lawbreakers, securing many convictions for assault, and rioting over the following months.
In his seventh State of the Union Address, Washington explained his decision to pardon Mitchell and Weige. Hamilton and John Jay drafted the address, as they had others, before Washington made the final edit:
“The misled have abandoned their errors”, he stated, “For though I shall always think it a sacred duty to exercise with firmness and energy the constitutional powers with which I am vested, yet it appears to me no less consistent with the public good than it is with my personal feelings to mingle in the operations of Government every degree of moderation and tenderness which the national justice, dignity, and safety may permit"
The Washington administration's suppression of the Whiskey Rebellion met with widespread popular approval. The episode proved the new national government had the willingness and ability to suppress violent resistance to its laws. It was therefore viewed by the Washington administration as a success, however, the Washington administration and its supporters usually did not mention that the whiskey excise remained difficult to collect, and that many westerners continued to refuse to pay the tax.
While violent opposition to the whiskey tax ended, political opposition to the tax continued. Opponents of internal taxes rallied around the candidacy of Thomas Jefferson and helped him defeat President John Adams in the election of 1800. By 1802, Congress repealed the distilled spirits excise tax and all other internal Federal taxes. Until the War of 1812, the Federal government would rely solely on import tariffs for revenue, which quickly grew with the Nation's expanding foreign trade.
The Rebellion raised the question of what kinds of protests were permissible under the new Constitution. Federalists believed that the government was sovereign because the people had established it; radical protest actions were permissible during the American Revolution but were no longer legitimate, in their thinking. But the Whiskey Rebels and their defenders believed that the Revolution had established the people as a "collective sovereign", and the people had the collective right to change or challenge the government through extra-constitutional means.
Soon after the Whiskey Rebellion, actress-playwright Susanna Rowson wrote a stage musical about the insurrection entitled The Volunteers, with music by composer Alexander Reinagle. The play is now lost, but the songs survive and suggest that Rowson's interpretation was pro-Federalist. The musical celebrates as American heroes the militiamen who put down the rebellion, the "volunteers" of the title. President Washington and Martha Washington attended a performance of the play in Philadelphia in January 1795.
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