A Mostly-True History of Whiskey in America, Part II: The Whiskey Rebellion

In my Mostly-True History of Whiskey in America, Part 1, I focused on the drinking habits of the early settlers and founding fathers, but very little on whiskey in particular.

The reason is that early Americans were not really particular about what they drank. While alcohol was considered a necessity, early Americans were living at a near (sometimes below) subsistence level. When it came to alcohol, they fermented and/or distilled only what they had on hand after more basic needs were satisfied. Crops that grew well in the colonies included fruit trees; therefore, fruit ciders and the distilled product, brandy, were prominent alcoholic products.

In addition, trade between the colonies and the islands of the “West Indies” led to the rise of rum as a drink of choice among early Americans.  Rum was distilled in the islands and imported, but the colonies also imported molasses to distill their own.

Grains were used to make alcohol as well. One grain that was native to the new world was corn. The first recorded instance of European settlors using the new world crop of corn to make alcohol was in 1587, at the colony at Roanoke, Virginia. What precise beverage was made is not clear from the records, but historians believe it was likely fermented but not distilled – some form of corn “beer.” As disgusting as that may sound, it received rave reviews from its maker. How much longer before hipsters turn from overly-hopped IPAs to chunky corn beer is hard to predict, but seems inevitable.

Dutch and German settlors, particularly in Pennsylvania, brought rye with them, a grain that they were familiar with from the old world. Rye was a good crop since it grows well in harsh conditions, including in the mountains of Appalachia, and provides cover and feed for animals as well as grain for both food and distillation.

For this reason rye whiskey was the whiskey of choice in the early days of the United States. George Washington reportedly provided rye whiskey to the troops at Valley Forge, and distilled it at Mount Vernon when he retired from the Presidency.

This whiskey probably bore little similarity to what we now drink, and most of it would not meet the legal requirements to be labelled and sold as “whiskey” today (particularly as it concerns proof requirements and that it be aged in new oak charred barrels). The primary similarity between now and then was that both modern and early whiskey was a distillate of grain. That’s where the similarities stop. Modern whiskey has to be aged in charred oak barrels. Early records do not indicate that the whiskey was aged at all, much less in charred oak barrels. By all accounts, it was sold young and straight off the still – “white dog” in modern parlance.

As ongoing tensions with Great Britain continued after the Revolutionary War, rum supplies became scarce. That and a culture of breaking all ties with British traditions led to the rise of whiskey as the distilled alcohol of choice in the Fledgling United States.

As stated in the last post, alcohol was seen as a safer drink than water, but its popularity was spurred on by other reasons as well (besides the obvious). In cash-strapped areas, barter was common. Since whiskey was universally desired, easily exchanged, and largely (though not entirely) fungible, it became a de facto currency. This gave farmers an important source of extra income – one that was more easily transported to market (often in oak barrels) than the grain itself and that bore a greater value in distilled form than did the grain.

Whiskey also was popular to Native American tribes. With the British still stirring Native American hostility in the frontier, this commodity could literally save western settlors.

During George Washington’s Presidency, Secretary of the Treasury, Alexander Hamilton, oversaw the Federal government’s assumption to debts incurred by individual states to fund the Revolutionary War. Distilled spirits were viewed as a primary tax source for funding these repayments. This also was seen as a form of “luxury” tax, which was more true in the East than on the Western frontier for the reasons stated above.

Therefore, a tax was imposed on all distilled spirits, not just whiskey.  Distillers could pay a flat tax or a given amount per gallon. This led to great animosity from whiskey distillers in poorer areas for several reasons.

First, many Americans were philosophically opposed to a strong central government, and favored more local control – a theme that continues in American politics today. The assumption of the debt and imposition of the tax was a sign of too powerful a central government. It was not lost on the protestors, that Alexander Hamilton, who was behind the assumption and the new tax, favored a strong central government.

Second, related to the above, some states had paid off their debts and, even if they had not done so, the debts were not the same per person in all of the debtor states. Many citizens resented the notion that the central government would assume the debts of states and spread the re-payment obligation onto the citizens of the other states equally. For states, like Virginia, that had paid in full, they effectively paid their own state’s debts before being saddled with an equal portion of the debts of the other states.

Third, many Americans saw this tax as little different than the tax on tea that spurred the Revolutionary War in the first place; the drink was just different (and better).

Fourth, the option of paying a flat tax was only worthwhile to larger commercial distillers who could produce the volume necessary to make that an appealable option. Since farmers had no way to operate their stills year-round and on the scale necessary to make exercise this option, they had to accept the 9 cent gallon tax. By comparison, the larger distilleries, primarily in the developed East, could pay the flat tax and (according to Hamilton) reduce this to an effective rate of 6 cents per gallon. It also was not lost on the farmer/distillers that Alexander Hamilton was in favor of an industrial economy, which the tax favored, over a farm economy, which it harmed. This gave Eastern commercial distillers an additional price advantage in the market.

Fifth, in the poorer regions, whiskey sold for less per gallon than on the East Coast.  Therefore, 9 cents per gallon in Western Pennsylvania took a larger portion of the sales price than the same amount in New York (much less if that was reduced to 6 cents). This was seen as disproportionate by farmer/distillers.

Sixth, as mentioned above, whiskey was a form of currency in poorer areas. Whiskey was not produced as a luxury, but in order to have something to barter at all. For many farmers, this was more of an income tax than a sales tax (and certainly not a “luxury tax”), which was seen as unfair and beyond Federal authority.

Therefore, many distillers/farmers refused to pay. Eventually protests in Western Pennsylvania turned violent and George Washington was forced to summon troops and send them to quell the “whiskey rebellion.” This is the first time the central government flexed its muscles. It proved willing and able to enforce its will on local governments. Conspiracy theorists at the time believed that this, too, was pushed by Hamilton as part of his plans to increase the power of the Federal government.

Washington’s actions quelled the protests, but the tax continued to be hard to collect. Many distillers in Western Pennsylvania did not pay.  Nobody even bothered to try to collect the tax in nearby Kentucky, where whiskey production was booming – a topic for “part 3.”

While the rebellion was facially unsuccessful, it contributed to the rise of political parties in the United States, the Republicans of Thomas Jefferson, whose world views were more in line with the rebels’ at least so far as decentralized government and agrarian economies were concerned (in theory, if not practice), and the Federalists of Alexander Hamilton. Thomas Jefferson was elected as our third President and repealed the distilled spirits tax. The growth of a powerful federal government, however, was here to stay.

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