25 October 2012

Whiskey Tax 1791

The Whiskey Rebellion by William Hodgeland, 2006, Excerpts

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. 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 product Hamilton proposed to tax was distilled spirits. 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.

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 in a long struggle over nothing less 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. 

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