The Whiskey Rebellion Series

Hamilton’s goal for the domestic debt remained making reliable payments to creditors and inspiring confidence in federal bonds as articles of investment and trade. Funding the debt would spring-feed a pool of capital, from which the federal government could draw and draw again, in nurturing a growing nation. Wealth would be concentrated in the hands of moneyed investors. Their ambitions would fund the nation’s ambitions.

In January of 1790, Hamilton filed his proposed plan, the Report on Public Credit. The report urged a three-part program: paying interest on, rather than paying off or voiding, the federal domestic debt; hugely expanding that debt by absorbing all the states’ debts; and raising revenues for interest payments on the expanded debt by adding to the customs laws new duties on imported wine and spirits, and imposing an excise tax on domestically distilled spirits.

The product Hamilton proposed to tax, distilled spirits, was not, he said, a necessity but a luxury item consumed by those who could afford to pay the tax. Throughout debate, his allies had invited the House to see a whiskey tax as a public-health effort. Hamilton presented a letter for the Philadelphia College of Physicians, who said that domestic distilled spirits, the cheap drink of the laboring classes, had become a ravaging plague requiring immediate treatment. It was easy to see a federal excise tax on whiskey as an innocuous luxury tax, easily passed on by distillers to drinkers, surely nothing to tar and feather anyone over.

This law would be a good thing for the country, Hamilton told Congress, because it made collection of public revenue dependent not on the goodwill of the taxed, as state revenue laws always had, but on the vigilance of federal officers. The people’s movement had always made itself arbiter of whether taxes could be collected. States hadn’t been lazy, Hamilton said, or weak; they’d been scared. Federal officers, he promised, wouldn’t be. This tax would be collected everywhere. The means to use force existed.

March of 1791, the Whiskey Tax became law. The tax redistributed wealth by working itself deeply into rural people’s peculiar economic relationship with whiskey. Many of Hamilton’s congressional opponents wouldn’t have understood that relationship. Hamilton did.

Alexander Hamilton knew that in getting the act passed was a very smart bomb on a target he’d been softening for years. The secretary of treasury was celebrating a victory, which some at the Forks had every intention of cutting short, in a long struggle over nothing les than the power of money in the lives of the American people.

Passed by the first Congress of the United States in March 1791 heralded the first federal tax on an American product.