Watch Benjamin Willis and Joseph Thorndike, contributing editors for Tax Notes Federal, discuss the Whiskey Rebellion, the first time the federal government used military force to quell a domestic uprising.
Here are a few highlights…
On federal military force and tax
Joseph J. Thorndike: The very first time that the federal government used military force to put down an insurrection or a riot, or some sort of domestic disturbance, was for the enforcement of a tax law. It was for . . . the suppression of the Whiskey Rebellion in 1794 when George Washington took 13,000 federal troops and climbed up on his horse for the first time since the revolution and actually marched them into Western Pennsylvania.
This was the first time that the federal government had tried to raise money by taxing something produced in the U.S. and consumed in the U.S. The tax was designed as part of Alexander Hamilton’s economic program. His plan was that the federal government would assume the debts of the states and [that would make them] federal debts, and then the federal government would fund this new, larger debt on an ongoing basis.
The key here is . . . Hamilton didn’t really intend to pay off that debt. What he really intended to do was to develop a class of bond holders, people who were lending that money to the federal government, who are invested both literally and figuratively in the success of that government [so that they] would be invested in making sure that the federal government continues to exist.
In order to make sure that we could pay that interest, that we could fund that debt, he thought the best way to do that was to raise money from other things, like these farmers on the Western frontier who were distilling whiskey. And so they create this whiskey tax.
This is a really burdensome tax for these little guys. And on top of that, the way it’s enforced is very burdensome. They have federal tax collectors with . . . the power to enter any building anytime they want . . . [and] if they find problems, they can levy ruinous fines on these people, and they can also confiscate their materials and not just the goods that they’re producing, but all of the things that they’re using to produce it.
Alexander Hamilton. Photo of an original engraving from the “National Portrait Gallery of Eminent … [+]
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Hamilton [believed that] . . . the country’s prosperity and territorial integrity and survival really depended on it being a commercial and industrial enterprise, not a nation of small farmers . . . He believed that that kind of industrial consolidation was a good thing for the country. The more traditional view of Hamilton is [that] he knew what needed to be done. The country was on tenuous financial footing . . . and I think that like most historical situations, the truth probably lies somewhere in the middle. There probably were difficult decisions that needed to be made, whether he needed to sacrifice the interest of the little guy as much as he did, or as completely as he did, or with as much reckless abandoned as he did. Well, maybe not, but it’s also undeniable that he achieved something quite significant in putting the U.S. on a solid economic fiscal foundation.
On using the U.S. history of military force to strengthen a political agenda
Joseph J. Thorndike: . . . I think that analogies with history are dangerous things and most historians resist them because the truth is that, because the situations tend to be historically unique, they are specific to the situation . . . Why they did it then and why you might want to do something now are really not related to each other in any meaningful way. There are too many independent variables . . . I don’t think history provides a moral license in any way. Even if the past event does appear to be morally clear . . . it doesn’t lend that moral legitimacy to the next event. You have to engage them each independently.