In 1790, Alexander Hamilton proposed a whiskey tax of $0.11 per gallon to help pay off the debt the US had run up during the Revolutionary War. He believed this tax would be enough to pay off the $45 million worth of debt in a matter of years, but Hamilton was hoping that this would fund other projects that he had in mind, such as canals, roads, and his most lasting contribution, a central bank.

The problem

Among other issues, Hamilton’s whiskey tax didn’t collect taxes from everyone in the same manner. In cities distillers paid taxes based on the amount of spirit they produced. It was relatively easy for tax collectors to monitor the output in cities and collect accordingly.

But outside the city, rural distillers were paying according to their still capacity. It was assumed that the stills were running at full production all the time, but these farmers weren’t running their stills anywhere close to that. It was only a fraction of their crop that they would turn into whiskey once or twice a year, so the tax they were being assessed was far more than what they actually produced, creating a significant disparity with what the distillers in the city paid.

The reaction 

When tax collectors would come out to the western parts of the US, it was not uncommon for them to be tarred and feathered and their homes burned down. Sometimes they were beaten nearly to death, and by 1794 this was happening regularly.

What to do?

George Washington now had a decision to make. On the one hand, if the young nation allowed rebellion to gain any power, it risked the legitimacy of the new country, both internally and also on the world stage. At the same time, there was a hypocrisy in raising an army against your own people who had just finished fighting for their freedom to end unjust taxation. Could he really attack his new countrymen, some of whom he had led against the British only a few years before?

The resolution

While the farmers and rural settlers vowed to stand and fight, the conflict ended when Washington arrived in western Pennsylvania with 13,000 soldiers.

The Whiskey Rebellion is one of the first examples of the US divide between agricultural interests and urban interests, and marked a major power shift within the whiskey industry from small, local distillers to the larger, more urban based distilleries.