The Whiskey Rebellion was an interesting episode in the history of alcohol taxation and regulation in the United States as well as setting various legal precedents with respect to federal tax law. It was prompted by the establishment of an excise tax in 1791 on all distilled spirits.
The purpose of this tax was to reduce the federal deficit, but it was nonetheless unpopular outside the temperance movement. This tax was particularly onerous in the frontier economy of western Pennsylvania, where distilled spirits (generically called whiskey) were actually used as a medium of exchange rather than paper currency. Thousands of farmers rebelled against the tax and actually defended themselves against attempted tax collections by armed rebellion, hence the term Whiskey Rebellion. This also marks the beginning of attitudes towards alcohol taxes that influence the popular culture of the Appalachians.
The Whiskey Rebellion, or Whiskey Insurrection, was a tax protest in the United States beginning in 1791, during the presidency of George Washington. Farmers who sold their grain in the form of whiskey had to pay a new tax which they strongly resented. The tax was a part of treasury secretary Alexander Hamilton's program to pay off the national debt.
On the western frontier, protesters used violence and intimidation to prevent federal officials from collecting the tax. Resistance came to a climax in July 1794, when a U.S. marshal arrived in western Pennsylvania to serve writs to distillers who had not paid the excise. The alarm was raised, and more than 500 armed men attacked the fortified home of tax inspector General John Neville. Washington responded by sending peace commissioners to western Pennsylvania to negotiate with the rebels, while at the same time calling on governors to send a militia force to suppress the violence. With 15,000 militia provided by the governors of Virginia, Maryland, New Jersey, and Pennsylvania, Washington rode at the head of an army to suppress the insurgency. The rebels all went home before the arrival of the army, and there was no confrontation. About 20 men were arrested, but all were later acquitted or pardoned. The issue fueled support for the new opposition Democratic Republican Party, which repealed the tax when it came to power in Washington in 1801.
The Whiskey Rebellion demonstrated that the new national government had the willingness and ability to suppress violent resistance to its laws. The whiskey excise remained difficult to collect, however. The events contributed to the formation of political parties in the United States, a process already underway. The whiskey tax was repealed after Thomas Jefferson's Republican Party, which opposed Hamilton's Federalist Party, came to power in 1800.