Book Review: The Whiskey Rebellion

Whiskey_Insurrection

Original, priceless caption from Wikipedia: “…an 1880 illustration of a tarred and feathered tax collector being made to ride the rail.”

And that was only the beginning of it!!!

For a history buff like me, this book was chock full of fascinating tidbits and context.  I wrote a draft of this post with all the details, but they are summed up nicely here.

I will say that in the late 1780s, our 3-year-old country was in the disarray you would expect: we had huge external debts to other countries that had financed the war, no central currency, no system of taxation, and therefore no means with which to answer the immediate problem of paying the debts.  Outside the cities, people did not have money anyway and were bartering mainly whiskey and livestock.  Rich city people were oddly operating as banks, lending money at 12% rates and then seizing the lendees’ property and farms upon default.  These same “bankers” also tried to create currency like “Mr. Morris’ Money” (no joke).  A total mess!

Then Alexander Hamilton came in as the first Secretary of the Treasury, and with the newly minted powers of the US Constitution, produced the Whiskey Act (and the Whiskey Rebellion as some credit him).

I will just add some choice details not mentioned in the Wiki article and my thoughts.

Alexander Hamilton:

  • Apparently believed in consumption tax, and saw the whiskey tax as a “sin tax”
  • Had a bizarre thirst for blood uncharacteristic of typical economists
  • Accused George Washington of being too affectionate with him
  • Studied everything about the process of whiskey distillation and included this topic in his economic plan presentation to Congress
  • Envisioned a military-industrial state with no small businesses, in which most people would work in big factories which solely supplied the army

The Whiskey Tax:

  • Was collected at the distilleries rather than the tavern, resulting in a harsh and regionally specific income tax on the frontier (big city distilleries got a break on the tax)
  • Required frontier distillers to travel to Philadelphia for trial if non-compliant (which was financially crippling as well as against the right to a local trial by peers)

The Whiskey Rebels:

  • Started out tarring and feathering anyone attempting to collect tax (as shown above)
  • Later formed an army, extra-legal court system, and secessionary flag
  • Ultimately surrendered to the US military but evaded the tax until it was repealed by the Jeffersonians in 1800

The US Military’s Rebellion Suppression, led by George Washington, included:

  • seizure without warrant
  • soldier quartering in homes, and theft of arms and food
  • arrest and prolonged imprisonment without bail or even charges read (for non-existent crimes)
  • drunken civilian manslaughter

Questions still plaguing me despite having read the “definitive resource”:

  • If Hamilton was a moralist wishing to tax the indulgent sin of drinking, why did he set it up to harm the vendor rather than the consumer?  Was he really for consumption tax (as some modern Republicans and Libertarians are), or was that a front?
  • Why did Washington allow such a sloppy and drunken army to conduct operations in conflict with the Bill of Rights?  Was he ashamed, since he rode back to the Capitol just as the army got to the frontier to wreak havoc?

So all in all this was a bizarre period in US history.  The Whiskey Tax in design and intention does not resemble anything that would really happen today, probably thanks to the lessons learned then.  It is amazing to me that the trial process associated with the tax and the US military suppression activity were flagrantly outside the protections of the Constitution approved just a few years before.  This counters the image of the enlightenment on which our democracy was founded.

The conclusion by the author of this book is that Hamilton thirsted for blood and war, and instigated a rebellion just to be able to put it down.  He sounds like a nut reminiscent of the bad guys in the modern dystopian literature.  Which is at the same time scary, and fascinating.

Also interesting is the idea of rebellion, which seems so old-fashioned now.  No one rebels anymore, we just evade at best.  Which was the outcome of the Whiskey Rebellion, probably the more clever strategy. Seems like now we evade first and rebel as a last result.

The Whiskey Tax evasion makes me wonder about modern distress-based tax evasion.  For example, the ACA fee for not buying health insurance can only be collected through tax returns (the way the law was written).  I have heard that you would need only to arrange your withholdings so that you do not get any returns, and then the government would not be able to extract the fee.  I am curious whether people will try this, and whether the law will be amended to address this.  Seems like a large oversight, allowing a legal method of evasion.

So that is one modern connection I made; overall a really good book if you like social and tax history.

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