In 1789, America was faced with a debt of $79 million, equivalent to about $2.4 billion today. The cause? The Revolutionary War (1775–1783).
Treasury Secretary Alexander Hamilton (1757–1804) suggested that the federal government assume the debt and pay it off through various taxes, like the Excise Whiskey Tax, which passed in 1791.
The legislation taxed domestic and imported alcohol, and it was immediately unpopular in areas like western Pennsylvania. Due to its structure, small producers like grain farmers often had to pay as much as 9 cents ($2.73 today) per gallon, while larger, dedicated distilleries paid as little as 6 cents per gallon ($1.82 today).
Despite the tax, farmers produced whiskey for a number of reasons. Due to the war’s impact on alcohol importation, it was difficult to acquire foreign spirits like rum. Meanwhile, beer was hard to store and transport across the Allegheny Mountains. In contrast, whiskey made from local corn kept well and allowed farmers to do something with surplus corn that would otherwise rot.
Tax payments had to be made in cash, but the use of cash was a rarity the further west in Pennsylvania one traveled, where people often paid for goods and services partly or wholly in whiskey. Whiskey was the informal medium of exchange. Many families only saw a few actual dollars during the year and paying the tax in cash could’ve severely impacted their ability to make other cash purchases.
Producers in western Pennsylvania had to ship their whiskey up to 300 miles before they could sell it, which further reduced their revenue. Distilleries located closer to cities didn’t have that extra overhead.
The tax wasn’t just unpopular due to the financial burden it placed on producers, but the thought of paying a distant sovereign and being dragged 300 miles to stand trial if you refused bore resemblance to the way colonists were treated by England.
Initially, many refused to pay. Some argued that the structure was unfair to smaller producers and that paying in money was too burdensome.
This made tax collection difficult. Famously, on September 11, 1791, Robert Johnson, a tax collector, was tarred and feathered on his collection route in Washington County. Later, John Conner, a cattle driver, tried to collect on the resulting warrants for two men that Johnson recognized during the attack. He was also tarred and feathered before being tied to a tree for several hours.
It came to a head on the morning of July 16, 1794, when a mob surrounded Bower Hill, the home of tax collector John Neville near Pittsburgh. The day prior, Neville had attempted to serve a distiller a summons to appear in court for refusing to pay his tax but was chased off the property. However, one of the soldiers hired to protect his property informed the mob Neville had already fled.
Enraged, the mob called for the soldiers to surrender and when they refused, the group set fire to the property and opened fire on Neville’s home. It was during this skirmish that the mob’s leader, Revolutionary War veteran James McFarlane, was killed.
Further enraged by the death of McFarlane, thousands of men marched toward Pittsburgh to capture the city shortly after the incident at Neville’s home. And while the mob was unsuccessful and the situation was ultimately diffused, government officials in Philadelphia decided something needed to be done about this string of violent events.
President Washington sent state and federal commissioners to try and resolve the situation. But when they failed, Supreme Court Justice James Wilson ruled that Pennsylvania’s western counties were in open rebellion.
Washington summoned more than 12,000 militia members from the surrounding states to fight the rebels.
There was little violence when the two forces met. The majority of the rebels had already dispersed, and only 150 were arrested. Two were charged with treason and sentenced to hang, but they were pardoned eventually by President Washington.
The moment in U.S. history demonstrated that the federal government not only had the support of the state government, but was capable of suppressing armed rebellion.
Many producers still refused to pay the whiskey tax and it was later repealed in 1802 during Thomas Jefferson’s presidency. Initially opposed to the tax, he used the collection difficulties to help justify its repeal.