Washington's Whiskey Woes

May 2, 2011William Hogeland

raised-fist-150Despite claims to the contrary, the Whiskey Rebellion was no anti-government crusade -- it was a battle for progressive taxation and regulation.

The seething social, political, and economic struggles over public and private finance that marked our founding period came to a head in the late fall of 1794, when President George Washington, back in the saddle for the first time since the Revolution, personally led nearly 13,000 troops into western Pennsylvania to subject its populace to a military occupation. Treasury Secretary Alexander Hamilton served as Washington's major domo for the operation -- and he took over full command when Washington turned back to Philadelphia. Under Hamilton's command, troops rousted citizens from beds in the snow and ran them to holding pens. They detained on no charge hundreds of people against whom the executive branch knew it had no evidence, administering searches and seizures of property and subjecting detainees to harsh conditions and terrorizing interrogations. After spending indefinite periods in privation and fear, most of the detainees were released -- inevitably, as there hadn't been evidence for their detention. The whole operation was conducted in the absence of warrants, any resolution of Congress, or legal suspension of habeas corpus.

Prosecutions were never the purpose of the arrests. Troops soon arrived at every home in the region and required every male over the age of eighteen to sign an oath of loyalty to the federal government. Not surprisingly, most complied. Such was the context in which the U.S. government established its sovereignty in what was then the restless, defiant, trans-Appalachian West.

The real issues sparking the 1794 suppression of western Pennsylvania have been trivialized, at first by Hamilton himself, as "the Whiskey Rebellion." Just as Hamilton hoped, historians and biographers have contentedly gone on marginalizing the democratic-finance movement that Hamilton dedicated his career to obstructing and tried to give the coup de grace in the suppression of western Pennsylvania.

But the resistance wasn't about whiskey, and Hamilton knew it. It was about public finance and national economics.

The resistance did begin in objections to the first federal tax on a domestic product, an excise on distilled spirits. That tax had been authored by Hamilton himself as linchpin to his comprehensive funding-and-assumption plan for supporting investment in the federal domestic debt and making that debt a national engine. But whereas Hamilton's famous political enemies in government -- the opposition party coming to be associated with Jefferson and Madison -- objected on general principles to Hamilton's activist approach to federal government, the ordinary people on whom his tax operated most painfully were objecting on other, more pragmatic grounds.

They'd hoped for a government that would protect them against what they saw as the avaricious merchant-class lending industry, and they saw the whiskey tax as a betrayal of those hopes, a continuation, even an amplification, of finance policies deliberately favoring elites and obstructing ordinary people's efforts to get their hands on political and economic power. The rebels began by making disguised attacks on tax collectors -- in the classic "regulation" style that the unenfranchised had long employed to promote more democratic public finance. Then they began raising what had been known in 1776 as "liberty poles" (the Washington administration now deemed raising the poles seditious). By 1794, when the western counties of Pennsylvania, along with some in western Virginia, in correspondence with sympathizers in Kentucky, were marching under a new flag and threatening secession from the United States, their goals went well beyond regulation.

They sought to form a new, western country, with direct access to trade on the Mississippi, cultivating a new kind of democratic republic in which ordinary people would thrive. The rebels were well armed and well organized, some of the toughest people America has ever known. Hunters, trackers, dirt-farmers, laborers, craftsmen and marksmen, they were rank-and-file veterans of the worst theaters of the Revolutionary war; their fathers and grandfathers had been harassing eastern government, both British and American, for many years. The prospect of their seceding and forming a government of their own, hostile to the U.S., was a terrifying one.

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And of course it wasn't realistic. In the end the rebels' ruthless illegality was overcome by Hamilton, using his own ruthless illegality, on behalf of President Washington, in the occupation of western Pennsylvania.

I've written in detail elsewhere, as have others, about how Hamilton's tax, which he sold to a financially naive Congress as an innocuous duty on consumption of a luxury item, was in fact carefully calibrated to cartelize the distilling business, favoring big merchants, eastern financiers, and federally-connected western cronies and putting small farmers out of business, all while using the tax revenues to pay interest (untaxed) to well-heeled investors in U.S. debt. Also widely discussed in Whiskey Rebellion literature (though not by Hamilton's biographers!) are Hamilton's eager anticipation of leading a military effort against U.S. citizens somewhere in America to enforce finance policy, and his manipulating, along with Attorney General William Bradford, the prosecution of tax resisters to create a pretext for bringing that plan to fruition in western Pennsylvania.

But in the context of today's debates over taxation and public debt, it might be more important to look at some specific things the so-called whiskey rebels objected to in Hamilton's polices. Hamilton biographers haven't done so, and taking at face value Hamilton's own tactical dismissals of his populist critics' objections, they have confused many of the most important issues in founding finance.

Although the rebels protested and ultimately mobilized militarily against a tax, they were neither inheritors of the Boston Tea Party nor forerunners of today's Tea Party movement. Unlike the Boston Sons of Liberty -- upper-middle-class men who objected to Parliament's taxing American's without representation, as well as to a bailout of a company deemed to big to fail -- the whiskey rebels wanted government not merely to observe the classic liberties of propertied Englishmen but to promote the equality of the less- and un-propertied. And unlike many in today's Tea Party, the rebels of the 1790's did not object to federal taxes per se. Their slogan wasn't "no taxation" or even "less taxation" but "equal taxation." They rightly identified the whiskey tax as what today we would call regressive. In their first of many unsuccessful petitions for repeal, they complained that the tax was unjust because it didn't operate in proportion to property. They saw clearly, in a way Hamilton's enemy Madison never would have, that the tax was designed to hit the poorest hardest, favor the east over the west, and end local efforts at popular finance.

Nor did they object to an activist federal government. They just wanted it to be activist on behalf of labor, not wealth. Anti-federalists did try pandering to the economic populists epitomized by the whiskey rebels, but one of the most important rebel leaders was the preacher and activist Herman Husband, the first to be arrested by Washington's troops and sent to prison in Philadelphia. Husband's sermons were anything but antifederalist. Like Paine, another radical democrat with high regard for the progressive power of government, Husband called for a national government that would use its might to ensure equality. Unlike some of their fellow populists (then and now) both Paine and Husband saw power invested largely in "states' rights" as likely to be socially and economically regressive.

The "madman of the Alleghenies," as Husband was called, envisioned a strong national government with social security; taxes on investment income; and slow, centrally managed inflation. Referring to the process by which democratic populists overturned the Pennsylvania government in 1776, he suggested that the rank-and-file militias might succeed in taking over western Pennsylvania. He was in his seventies when federal troops marched him over the Alleghenies and all the way to Philadelphia, where he lay in jail in awful conditions. Unlike many of those arrested, Husband was actually charged -- with sedition. But the jury found him not guilty.

No matter. Detention was punishment enough -- and for Americans, the occupation of western Pennsylvania was example enough. Husband had been terribly weakened by his ordeal, and he died on his way back to western Pennsylvania. His grave is unknown. The obscurity in history of one our most original and prescient thinkers on finance, government, and democracy is emblematic of the obscurity of the real causes of the Whiskey Rebellion, the cogent thinking of the men who became rebels, and the open conflict between Hamiltonian finance and American democracy.

William Hogeland is the author of the narrative histories Declaration and The Whiskey Rebellion and a collection of essays, Inventing American History. He has spoken on unexpected connections between history and politics at the National Archives, the Kansas City Public Library, and various corporate and organization events. He blogs at http://www.williamhogeland.com.

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