By Allen C. Guelzo, Ph. D., Gettysburg College
Whiskey is a Gaelic word, which roughly translated means “water of life”. It made its first appearance in the 15th century as medicinal prescription. But on the frontier of the early Republic, the making and selling of whiskey was a major business. In fact, whiskey became the coin-of-the-frontier realm.
Surplus of Wheat and Growth of Whiskey
During early Republic, it was a big business to make and sell whiskey, chiefly because it allowed farmers who grew surpluses of wheat to convert them into a liquid and easily storable form.
According to Pennsylvania lawyer George Dallas Albert, “At that time, wheat was so plentiful and of so little value that it was the custom to grind the best quality and feed it to the cattle, and as for rye, corn, and barley, it would bring no price for man or beast. The only way, therefore, for the inhabitants to obtain a little money to carry on their farming and to purchase a few needful commodities was by distilling the grain…”
Given that specie—hard coin—was as difficult to find in the Appalachian backcountry as it was in Daniel Shays’ Western Massachusetts, whiskey became the coin-of-the-frontier realm.
A gallon of whiskey could go for a half dollar in the West and double that in the East, at a time when a harvest of rye might get no more than 40 cents a bushel. A comparable bushel of wheat could yield three gallons of whiskey, and a horse carrying two 8-gallon kegs could transport $16 worth of the stuff to market. And unlike specie, whiskey could be enjoyed, as well.
This is a transcript from the video series America’s Founding Fathers. Watch it now, on Wondrium.
The Excise Tax on Whiskey
When Western Pennsylvania farmers first learned that Alexander Hamilton’s Report on the Public Credit was proposing to fund the national government’s debt on the back of an excise tax on whiskey, the first response was of deep anger.
An excise tax—whether in the form of a fee or a license or a value-added levy—is a direct tax. Unlike tariffs, which are levied on goods imported from abroad and extracted before the goods actually pass into American hands, an excise tax is domestic. And the levying of internal taxes—as opposed to external taxes like tariffs—was what had been at issue in the 1760s between Britain and America.
The Stamp Act, which had caused so much turmoil before its repeal in 1766, was an excise tax. So were all the other attempts at taxing the internal economy of the colonies without the agreement of the colonial legislatures.
Learn more about Alexander Hamilton’s views about the American Republic.
Opposition and Denouncement by People
It was not any particular fondness for inebriation which set off the second great Shays-like uprising in the life of the new Republic in the summer of 1794. It was instead caused by a fury that people were wrongfully and oppressively taxed.
If, back in old Puritan days, John Winthrop, the Governor of the Massachusetts, had imagined that Boston would become a “city upon a hill” for the entire world to admire, the Scots-Irish and German emigrants at Pittsburgh imagined that they had found the New Jerusalem.
When Robert Johnson, the first federal revenue officer appointed for Washington and Allegheny counties, arrived in 1791, he was attacked, tarred, and feathered by “persons of the lowest class”.
Public meetings in Pittsburgh in 1792 adopted defiant resolutions, modeled on the old Stamp Act protests and promising to withhold “all aid, support, or comfort” from excise collectors. Their representatives in the Pennsylvania Assembly adopted still more resolutions denouncing the excise.
Reaction of Congress
Hamilton was flabbergasted. The excise could be easily passed on by the producer of the whiskey to the consumers.
Washington, convinced that the opposition was being ginned up by “demagogues by speeches and public meetings”, issued a Cease and Desist proclamation against “certain violent and unwarrantable proceedings tending to obstruct the operation of the laws of the United States for raising a revenue upon spirits distilled within the same.”
But Congress acted to “obviate causes of objection” by reducing the amount of the tax in May 1792, from nine cents to seven cents a gallon. And Washington, who was responsible for appointing the collectors, struggled to appease the backcountry opposition “on the subject of the revenue on distilled spirits” by reorganizing the administrative districts of the collectors.
Learn more about the money issues that abounded in the new United States.
Organisations of Clubs
The unrest only spread, from Pennsylvania to Western Virginia, the Carolinas, and inland Georgia. The elections in the fall of 1792 had not produced any noticeable backlash against Hamilton’s policies, but they had not made dissent disappear either. On April 11, 1793, the “Germans” of Philadelphia announced their creation of a political club whose goal would be to lend “advice and watchfulness” to “Republican government—that its principles may remain incorrupt.”
Six weeks later, an even larger meeting in Philadelphia incorporated itself as the Democratic Society of Pennsylvania, inspired by “the successive Revolutions of America and France”. The new Democratic Society promised to discuss without fear the conduct of the public servants in every department of the government—which was clearly a euphemism for Hamilton—and to aid and approve those men and measures, which have an influence in promoting the prosperity of the Commonwealth.
The two Philadelphia clubs were followed in short order by the organization of 42 more clubs, known variously as “Republican” or “Democratic- Republican” or “United Freemen” societies, from Massachusetts to Georgia, with memberships varying in size from a dozen to 400.
The members were largely workingmen and artisans and anyone who, like the Democratic Society of New York, blamed commerce, banking, and manufacturing for “introducing corrupt principles and abandoned politics injurious to the morals of the state.”
Common Questions about the Excise Tax on Whiskey
During early Republic, it was a big business to make and sell whiskey, chiefly because it allowed farmers who grew surpluses of wheat to convert them into a liquid and easily storable form.
An excise tax—whether in the form of a fee or a license or a value-added levy—is a direct tax. Unlike tariffs, which are levied on goods imported from abroad and extracted before the goods actually pass into American hands, an excise tax is domestic.
Congress reduced the amount of the tax in May 1792, from nine cents to seven cents a gallon.
