, representing the Republicans, and in the middle we have George Washington. Okay it’s 1790, at this point in our history the United States is in a lot of debt, which we had collected in order to pay for the revolutionary war. And one of the first big needs for our country was to figure out a way to balance the budget.
Hamilton debated a few different tax initiatives but ultimately proposed what he called a whiskey tax. The tax would start off at $.11 per gallon of whiskey, which was nothing even by the standards of the time, and he believed this tax would pay off the $45 million dollars worth of debt that we had. The fact that a tax that small was going to pay off a debt that large said something about how much whiskey we were drinking as a country, but Hamilton was hoping that this would fund other projects that he had in mind as well. Canals, roads, and the big one, a central bank. Ironically Hamilton borrows this plan, in most part, from England. To explain what I mean I’m going to quote a book called, “Bourbon Empire: The Past and Future of American Whiskey.” Quote:
“Hamilton ironically took his blueprints for the whiskey tax from England, where small distilleries and government had long clashed, moonshining thrived, and big distilleries help the British government write tax laws. In return, Parliament offered commercial distillers tax rebates and banded stills under a certain size. This sort of arrangement had given the small island nation the kind of mighty industrial power and efficiency Hamilton wanted for America. He could only imagine what America, a land with much greater natural wealth could become if its resources were utilized in the same fashion.”
Ironic might be a bit of an understatement there, but nonetheless, Hamilton’s whiskey tax was really the first of its kind, that actually taxed an American made product and really supported larger organizations over smaller, individual operations just because of how the taxes collected. In cities distillers only paid taxes on how much spirits they produced, what they were actually put out for sale. It was relatively easy for tax collectors to monitor the output in cities and collect according, but in the rural countryside, distillers were paying according to their still capacity and it was assumed that the stills were running at full production, all the time. And that was the major problem, because most of these farmers weren’t running their stills anywhere close to full time. As Marissa mentioned, they would take some of their crop and turn it into whiskey. The reason for this was that the whiskey was easier to transport and it was much less likely that a bottle of whiskey was going to get damaged versus a bushel of wheat or rye. The trip to the city was a multiple day journey before farmers could try and sell their product so it’s much safer if you take at least some grains and know that you can make some profit. They also were able to make better margins on whiskey, which is another incentive for them to distill versus just selling the grains.
The other component with this is that many farmers were using whiskey to pay for different goods and services that they needed because they didn’t have a lot of cash on hand. It wasn’t like they could go to ATM just withdraw whatever they needed. So whiskey, over time, actually became a means of exchange. When the whiskey tax went into effect in 1791 it was met with some harsh criticism, and between 1791 and 1794 things escalated pretty quickly.
Now I wish I could say that at this moment that the angry farmers decided to let cooler heads prevail and went to the local officials and wrote letters to their congressman and that ultimately this work got this tax repealed. Unfortunately that’s not how this went down. So, when tax collectors would come out to the western parts of the US, they were usually tarred and feathered, their homes were burned down, sometimes with them still inside. Or some times they were beaten just because they were tax collectors and leading into 1794 things were really starting to get out of hand.
