|
The Whiskey Rebellion
Western Pennsylvania could very well have been the Province of Westsylvania, part of British Imperial Canada. To the east, along a line of demarcation that follows the northeasterly arc of the Alleghenies, would be what was left of the United States of America, a collection of small, Northeastern coastal states that rely for survival on their wits as traders and seafaring merchants. To the south would be the Confederated States, an amalgamation of political jurisdictions that had long ago seceded from the failed Constitutional Compact of 1789. To the west of this spot would be the very large Province of Ohio, another jurisdiction of Canada, extending all the way to the Mississippi River. Abutting the west bank of the mighty Father of Waters would lie the French Department of Louisiana. West and southwest of the French possession would be the United States of Mexico, extending across the high plains and Rocky Mountains to the Pacific Ocean and bordering Canada to the north. Mexico would encompass the territory of Texas and extend far down through the old land of the Aztecs and well into the lands of the lost Maya. Yes, indeed, things could be very different. Except that Mr. Alexander Hamilton, first Secretary of the Treasury of the United States, levied a tax on whiskey. If you taste the whiskey first, it helps to understand. Dark amber in color, not unlike some varieties of that fine Pennsylvania crude oil that seeps from the cracks in the Devonian shale and Carboniferous sandstone that make up the bedrock in these parts, the whiskey has a dry taste and is certainly not to be confused with those better-advertised, rather fruity beverages that are but sweetened imitations of the real thing. Pennsylvania rye whiskey goes down straight and warm, not quite bypassing the taste buds, but it hits you hard from the inside out. In its own inimitable way, this whiskey is rough and strong and uncompromising, like the men who first distilled it on the western frontiers of the British Empire in North America in the 1700s. In 1768 one man of the cloth called it "a perfect beverage, and a blessing from God for which people would take to arms." He was prescient, this pastor. In retrospect, the rye whiskey of the western frontier was a beverage that defined a fresh-born nation. And if nothing else, the whiskey and those who consumed it forced the nascent government of the United States to govern wisely, and even to issue honest money. Well, at least for a while. The Whiskey Rebellion: A Staple of the Frontier Economy Brewed and fermented spirits were a staple of the frontier economy of colonial America. Beer, for example, was available in almost all households and consumed at almost every meal. Beer-making provided a use for surplus grain, which could not otherwise be transported for sale in distant markets over the primitive roads of the time. Beer was safer to drink than most of the water that one could obtain from wells and streams. Beer had nutritional value, and in a world where most everything was scarce, one did not allow good carbohydrates to go to waste. Thus beer was a routine part of the diet of frontier families and a vital source of nutrition. If it made you feel better during the hard times, that was also a good thing. Whiskey as well became a staple of frontier life and diet. Like beer, it was made from the surplus grain that was not consumed locally and could not otherwise be transported any great distance for sale. Whiskey served as a medicine, a tonic, and an anesthetic in a time and place where there was no alternative. And distilled whiskey had commercial value, such that it was worth a man's while to transport it over the mountains, where it sold in Philadelphia for a price in colonial times that was the equivalent of about $25 per gallon today. In an environment in which money was scarce, whiskey not surprisingly became a store of value on the frontier. In western Pennsylvania, one estimate from the 1780s states that there was one still for every 15 residents. People used whiskey to pay bills and local taxes, and even to compensate their school teachers and clergy. Hence whiskey evolved into a form of currency in its own right, at least west of the Alleghenies. The Revolutionary War had left the American national government broke and insolvent, with a reputation for having issued worthless paper currency, called "Continentals. Congress passed laws that forced people to use these notes literally at the point of a soldier's gun. Inflation and bad debt, both of pandemic proportions, were ruinous to any semblance of a post-Revolutionary national economy. The Articles of Confederation, which lasted from 1777-1789, did little to remedy the sad state of monetary affairs in the young nation. The members of the Constitutional Convention of 1787 were forced of absolute necessity to address monetary affairs. The U.S. Constitution, finally ratified in 1789, specifically made provision for a currency based on gold and silver, as well as for a national bankruptcy law in order to address the oceans of bad debt that permeated every level of colonial society. But it was one thing for the Constitution to declare, as it did, that no "Thing but gold and silver Coin" could be used as legal "Tender in Payment of Debts." It was quite another for this sovereign edict to become reality. In the earliest days of the federal government under the new Constitution, Secretary of the Treasury Alexander Hamilton proposed that the national government raise its revenue by levying excise taxes. Among Hamilton's proposals for raising revenue was a tax on whiskey, that staple of life along the western frontier. For a variety of reasons, this "whiskey tax" immediately aroused the sentiment of many people that the new federal government was simply the replacement of the British King by swindling, moneyed, East Coast speculators and tyrants. The legislation that enabled the whiskey tax was reflective of the goals of Alexander Hamilton, with his desire to create a strong central government and a nation of industry. The tax placed the levy on the point of distillation, not at the point of sale. Hence many farmers and small-businessmen found themselves taxed on the capacity of their stills, which included the amounts of whiskey they consumed personally, let alone what they discarded due to waste or spoilage. The federal tax rate was lower on larger stills, thus favoring bigger businesses at the expense of small, family-run operations. And the federal tax had to be paid in, of all things, gold or silver coin, of which there were precious few during the best of times on the frontier. As a result, the new tax almost immediately destroyed the value of whiskey as a form of barter currency in its own right. But without whiskey to lubricate the wheels of commerce, the frontier economy soon began to grind to a standstill. Enforcing the Wealth Tax To enforce the whiskey tax, the federal government, then seated in Philadelphia, appointed tax collectors in every region of the country. Aside from a small stipend, the tax collectors' pay was based on commission, calculated against the total amount of tax collected. Thus, for the most part, when the tax collectors commenced their rounds, riding along the roads and trails of the western frontier to levy tax notices on settlers and their stills, they met the usual resentment that tax collectors have encountered since time immemorial. Tax collectors were often threatened, shot at, beaten up, robbed, or even tarred and feathered. On occasion, the tax collector returned to his homestead and found instead a smoldering ruin. The job of the whiskey tax collector was, to say the least, dangerous and thankless. As a consequence, federal tax collections on whiskey were minimal. When the whiskey taxes were not paid after collector's levy, federal marshals were instructed to issue writs of citation against still owners. In Pennsylvania, these writs were answerable within 30 days at the federal court in Philadelphia. For a resident of western Pennsylvania at that time, traveling 280 miles or more to Philadelphia would have required a 10-day ride across difficult, mountainous terrain in the best of circumstances. (On today's Pennsylvania Turnpike, things have improved marginally.) Due to the difficulty and expense of travel, most federal tax writs went unanswered. Thus the federal court in Philadelphia issued numerous contempt citations against individuals, as well as executions against their stills and other property. The contempt citations often led to citizens being jailed, their property being seized and sold (as often as not, to some out-of-town, swindling, East Coast speculator…), and evictions from their homes, all by federal authorities and in the name of the government of the United States. Thus, it is difficult to overstate the sense of unfairness, the resentment, and the bitterness that many frontier dwellers felt towards the new government. Within a very short time, it was costing the federal government more to administer the whiskey tax than the government was receiving in revenue. Even worse than the shortfall of revenue, however, was the failure of the new federal government to demonstrate its ability to enforce its tax laws. This was widely perceived, both domestically and abroad, as the beginning of the end of the Constitutional experiment. A number of influential people in western Pennsylvania began to advocate secession from the Commonwealth, as well as from the new federal republic. They proposed to set up a state called "Westsylvania." Some of the more zealous secession advocates made contact with emissaries from Britain regarding creation of an association with Canada. Others made contact with agents of France, regarding setting up a relationship with that nation's vast and mostly uncharted Louisiana holdings that included a significant presence in the Ohio Valley. When word of this seditious talk reached President George Washington, he was appalled. In the spring of 1794, President Washington appointed a man named John Neville as federal tax collector for western Pennsylvania. Neville was a former Revolutionary War general and a close acquaintance of Washington's. Neville set up his tax office at his family's farm, just south of Pittsburgh. On July 15, 1794, a group of local residents gathered at Neville's house to protest the seizure of a neighbor's property for unpaid whiskey tax. They demanded Neville's resignation, and also that he turn over his tax records to be burned. Neville's home was guarded by a unit of federal marshals. After a period of standoff, one of the farmers began to approach Neville's house under a white flag of truce, and he was shot and killed, presumably by one of the marshals. Word of the killing rapidly spread, and on July 17, a group of local militia mustered, marched on Neville's house, and burned it to the ground. Their intent was to deliver some frontier justice to Neville and his "murdering marshals." Neville and his entourage fled to Old Saint Luke's Church, on the site of an old British garrison dating back to the days of the French & Indian War, where the pastor offered them sanctuary until the pursuing militia dispersed. President Washington was outraged at what he considered a personal insult to his old friend and war comrade Neville. Washington and Treasury Secretary Hamilton decided that they had to make an example of these "western insurrectionists." Washington referred to the burning of Neville's farm as a "rogue, unprincipled challenge to authority" and resolved to crack down and bring discipline "to the lower classes of western Pennsylvania." The area was already well known to Washington from his younger days as a surveyor and from fighting for the British side in the region during the French & Indian War. Also, there was at least a reasonably good road on which troops could march from Philadelphia to Pittsburgh. The American Army of 1794 hardly merited the name. It had dwindled to a few hundred older veterans of the Revolutionary War, with outdated equipment and next to no supplies on hand. Washington was faced with the need to call out the militia if he was going to impose the federal will on the rebels of western Pennsylvania. Not trusting the reliability of Pennsylvanians, most of the militia called to muster were from Virginia and New Jersey. The Secretary of War was away on family business in Maine, so it fell to Hamilton to organize the expedition. Hamilton, whose tax policies had precipitated the matter, was desperate for success and viewed the confrontation with the whiskey rebels as his personal struggle to stop America from sliding into anarchy and ruin. President Washington actually led his army of 13,000 troops as they marched west from Philadelphia in August of 1794, the only time in American history that a president has actually served in the role of "commander in chief" in the field. The trek across Pennsylvania took the better part of a month, and many a hotel and tavern was thereafter able to place a sign on the door that "George Washington Slept Here." The ill-discipline, lack of proper equipment, and general lack of military professionalism in the ranks of the militia troops appalled both Washington and Hamilton, the latter a former artillery officer under Washington during the Revolution. To be continued… Regards, Byron King,
Byron King is the managing editor of Outstanding Investments and Energy & Scarcity Investor. He is a Harvard-trained geologist who has traveled to every U.S. state and territory and six of the seven continents. He has conducted site visits to mineral deposits in 26 countries and deep-water oil fields in five oceans. This provides him with a unique perspective on the myriad of investment opportunities in energy and mineral exploration. He has been interviewed by dozens of major print and broadcast media outlets including The Financial Times, The Guardian, The Washington Post, MSN Money, MarketWatch, Fox Business News, and PBS Newshour.
|
 |
 |
 |
