The Distilled Spirits Tax of 1791
In early 1791, to help pay off debt from the Revolutionary War, Congress used its new constitutional authority to collect taxes, duties, imposts and excises, and passed the first nationwide internal revenue tax—an excise tax on distilled spirits.
The excise tax on distilled spirits was a direct tax on Americans who produced whiskey and other alcohol spirits. The 1791 excise law set a varying tax rate, with smaller distillers often paying more than twice per gallon what larger producers paid. All payments had to be made in cash to the Federal revenue officer appointed for the distiller's county.
Large, commercial distillers in the eastern U.S. passed the cost on to customers. Smaller producers west of the Appalachian and Allegheny Mountains opposed the “Whiskey Tax.”
Frustration on the Frontier
While eastern farmers could readily transport their grain to market, westerners had to move their crops great distances to the east. Many frontier farmers distilled their surplus grain into more easily transportable whiskey; their grain became taxable distilled spirits under the 1791 excise law. Cash-poor, frontier residents also used whiskey to pay for the goods and services. Naturally, many westerners quickly came to resent the new excise tax on their "currency."
The law also required all stills to be registered, and those cited for failure to pay the tax had to appear in distant Federal, often 100s of miles away from the small frontier settlements.
The Federal government had little success in collecting the whiskey tax along the frontier. Some simply refused to pay the tax, and others took a more violent stand against it. Federal revenue officers and local residents who assisted them bore the brunt of the protester's ire.
The Whiskey Rebellion Begins
Despite President Washington’s plea and Congressional modification of the excise law, violent opposition to the whiskey tax continued to grow over the next two years.
Matters came to a head when a group of angry farmer, marched on the tax collector’s house and burnt it down.
Anti-whiskey tax violence quickly spread to other counties along the frontier.
President Washington Responds
The President issued a proclamation calling on the rebels "to disperse and retire peaceably to their respective abodes."
Unable to find a peaceful solution to the spreading rebellion, George Washington personally led the militia on a march west over the Allegheny Mountains.
On September 25th, the President issued a proclamation declaring that he would not allow "a small portion of the United States [to] dictate to the whole union.”
The End of the Whiskey Rebellion
In late October 1794, the federalized militia entered the western counties of Pennsylvania and sought out the whiskey rebels. By mid-November, the militia had arrested 150 rebels. A general pardon was issued for all those who had taken part, with the exception of 33 men named in the document.
Of the whiskey rebels who were arrested, many were released due to a lack of evidence. Only a few were tried and just two convicted of treason. In July 1795, President Washington pardoned the two convicted men.
While violent opposition to the whiskey tax ended, political opposition to the tax continued. Opponents of internal taxes rallied around the candidacy of Thomas Jefferson and helped him win the election of 1800. By 1802, Congress repealed the distilled spirits excise tax and all other internal federal taxes
The Whiskey Rebellion's Legacy
In the end, the Whiskey Rebellion served as one of the first tests of the new Constitution and the federal government's authority. It was also the greatest domestic crisis of President Washington's administration. The successful suppression of the Whiskey Rebellion helped to confirm the supremacy of federal law in the early United States and the right of Congress to levy and collect taxes on a nationwide basis.
Source: The Whiskey Rebellion #2
Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of the Treasury