Wednesday, November 2, 2016

The Tax Man

Alexander Hamilton is enjoying the greatest revival of his reputation in history, primarily because of the overwhelming success of Lin Manuel Miranda’s Broadway musical, Hamilton. But the praise is by no means universal. Several scholars have pointed out (see the American Books Awards for 2016) that Hamilton’s darker side—such as his defense of his Schuyler in-law’s slaves—has been glossed over. Though I have not seen the play, others (see Robert Sullivan’s “The Hamilton Cult” in the October Harper’s) have pointed out that Hamilton’s role in the Whiskey Rebellion of 1794 was also given short shrift in the play. And it is that which William Hogeland addresses in his 2006 book, The Whiskey Rebellion. The role and portrait of Hamilton we find there differ considerably from the “cult hero” found in Miranda’s play, and it is critical to seeing what Hamilton was really about and where his priorities lay. To put it bluntly, Alexander Hamilton was what the French call an arriviste, an orphan born on the west Indian island of Nevis (later moving with his mother to St. Croix) who was determined to carve an exalted place for himself in the newly-developing United States by cozying up to power. In 1780, he advanced himself socially by marrying Elizabeth Schuyler, of the wealthy New York Schuyler family (who, not incidentally, owned slaves). He also made himself indispensable as chief of staff to the revolutionary war leader, George Washington (also a slave owner and a prominent speculator, buying up huge western tracts where the whiskey rebels were located). The merchant and speculator Robert Morris was also a friend and associate, figuring prominently in Hamilton’s thinking about debt and taxes.
            The situation in 1790’s America seemed critical to Hamilton and those like Morris who made up the “creditor” class. The federal government of the new United States had very little income and a lingering debt from its wartime expenditures. So did most of the states, and the holders of the debt were people like Morris who had either bought bonds directly or had bought up war-financing bonds from others at a huge discount when payment seemed distant. Now they wanted their bonds to be worth face value, with interest paid regularly. The problem was, neither the individual states nor the federal government had the funds to pay them. This was the impetus for the whiskey tax of 1791, as well as the resistance to it by the small farmers and distillers who would have to pay. Morris and Hamilton advanced a strategy whereby the federal government would obtain the funding to pay both its debts and those of the states (which it would assume) by imposing on ordinary people excise taxes—taxes on the sale of commodities. The first was to be the whiskey tax.
            Whiskey was critical to most small farmers, especially those in the west (meaning, at this time, the western part of Pennsylvania, Virginia, Maryland and so on.) It was not only a drink that made their hardscrabble lives bearable; it was also an economic necessity to them. This was due to the economics of transporting their products, like grain, over mountainous territory to eastern markets. Whiskey was more compact and cheaper to move, and Hogeland gives us these figures to dramatize the economics:

To haul twenty-four bushels of milled rye over the Alleghenies to eastern markets would have taken three pack animals. Six dollars might result from such effort…Reducing those bushels to two eight-gallon kegs of whiskey reduced transport requirements to a single animal…and [income] could approach $16 (p. 67).

To make matters worse, the tax was unfairly imposed. Hamilton followed Hume (embodied in the person of Robert Morris) in wanting wealth concentrated in the hands of the few moneyed investors who could finance big projects. In this regard, the tax was not only anathema to small farmer-distillers, but actually favored large distillers. That is, Hamilton structured the tax in such a way that big distillers, especially those located in towns and cities, paid a per-gallon tax on the whiskey they actually produced: 9 cents a gallon. Country distillers, by contrast, paid an annual flat fee based on the capacities of their stills. Thus, a farmer with a 100-gallon still, working full time, would be assessed 720 gallons in a four-month season, or $60 tax per year. The problem was, most small farmers didn’t run their stills full time; sometimes it was a week, or a month only, thus producing far less than 720 gallons. But they still had to pay the $60, whereas the big distillers paid only 9 cents per gallon produced, with an added discount of 2 cents on every ten gallons. In other words, Hamilton “had designed the law to charge small producers who could least afford it a higher tax,” which would (and did) end up, as planned, forcing self-employed farmers “into the factories of their creditors” (70), and consolidating the industry. As Hogeland sums it up:

Hamilton’s whiskey tax didn’t merely redistribute wealth from the many to the few, subdue rural economies, and pound the restless, defiant west. It also served as one of the heavier cogs in a machine for restructuring all of American life (69).

            No wonder the people resisted. And the resistance centered in what is now Pittsburgh, then known as “The Forks” due to its location at the forks of the Ohio River. More than one-fourth of the stills in America were located here, and it became ground zero for the Whiskey Rebellion that arose in response to Hamilton’s hated tax. Most interesting of all, this was a genuine people’s movement that drew on Oliver Cromwell’s English revolutions of the 1600s, the spiritual energy of Great Awakening of the 1730s and 40s, and the earlier Shays Rebellion— where a similar problem (paying off war debts) led the Massachusetts Assembly to impose more taxes on the poor so the state could pay creditors and speculators the full value of a $1 note instead of the 2 cents it was worth in 1780, and Daniel Shays to lead a crowd of debtors to seize the federal arsenal in Springfield in 1787. It also drew on the philosophy of barefoot philosophers like Herman Husband, who had published his ideas on blocking the concentration of wealth Hamilton favored by such things as: granting title to land based on actually dwelling and working on it (thus eliminating speculators); a state grant to each man in Pennsylvania of 300 acres, with 200 more for his wife, and 100 more to each child; abolition of slavery; and a progressive income tax. Husband saw this as the core of the New Jerusalem he was sure was rising in the west, and about which he preached.
            More alarming to the federal officials in Philadelphia, though, was the armed and violent resistance that arose very quickly. There had been “black-faced gangs” before, started in England to combat commons enclosures that outlawed hunting rights for the poor. In the colonies, and around the Forks, these gangs had served similar functions, attacking officials they saw as forcing them into penury, tarring and feathering when they saw fit. With the whiskey tax, this remedy went into high gear. As early as September of 1791, a gang led by Daniel Hamilton (no relation to the Treasury Secretary) seized one Robert Johnson, federal revenue collector for Washington and Allegheny counties, cut his hair to bare his skull, covered his nude body with hot tar and then poultry feathers, and left him alone in the forest. Before long, the rebels had organized meetings and attacked houses like William Faulkner’s where excise offices had been set up, threatening to tar and feather him, and burn his house and tavern as well. Faulkner quickly yielded and published his compliance in the Pittsburgh Gazette—he would not open the excise office. Even the barns of those who complied with the law by registering their stills were burned by the gangs who now called themselves Tom Tinker’s Men. The climax was reached when an armed militia attacked the most prominent home in the area, Bower Hill, owned by General John Neville—the man appointed by Washington to oversee whiskey tax-collecting near The Forks. Early on, General Neville had been burnt in effigy. Attempts were made to find a compromise to the tax crisis, but in truth, Alexander Hamilton really wanted an excuse to use force—to demonstrate the power and reach of the federal government, and to reassure creditors that the government could be trusted to pay them their interest. Accordingly, Hamilton implemented a plan to serve arrest warrants on distillers who had not registered their stills. Federal marshals were sent to serve the summonses, which required those served to travel all the way to Philadelphia for trial—a journey few could afford. The anticipated resistance would then justify military suppression by the federal government.
            As usual, Hamilton’s plan worked. Led by war veteran James McFarlane, a rebel force of 600 armed men mustered on the hilltop lawn of General Neville’s Bower Hill estate. McFarlane sent a messenger to the house to see if Neville would talk, but was told Neville wasn’t in (he was). When some of the more volatile rebels began setting fire to a few outbuildings, and shots were fired, the battle began. A white flag was soon raised in the house—the defenders were heavily outnumbered—but when McFarlane stepped out of cover to order his men to hold their fire, he was hit by a shot from the house, and killed. In response, the firing on the house accelerated, and the survivors inside surrendered. The enraged rebel militia entered the house, trashed it, and eventually set fire to the whole place. Though the Nevilles escaped and made it to Philadelphia, the rebels weren’t done. They quickly made plans to muster at a place just outside town known as Braddock’s Field. Over 7,000 armed men gathered, with some threatening to burn the entire town of Pittsburgh. Next, 226 delegates assembled in a Congress at Parkinson’s store, comprised of delegations from five Pennsylvania counties plus one from Virginia. Their talk centered on a complete restructuring of society along the lines Herman Husband had laid out, particularly redistribution of land.
            By this time, moderates headed by the lawyer Hugh Brackenridge and several state and national legislators, appealed to the federal government for amnesty in exchange for getting the rebels to submit. The appeal did result in a presidential commission sent west by Philadelphia, ostensibly to see if a compromise could be worked out, but in truth it was intended only to exacerbate the situation with a rigid position requiring unconditional surrender. Hamilton, Secretary of War Knox and Attorney General Bradford had meantime already decided on the use of military force to bring the west to heel once and for all. They sent orders to the governors of Pennsylvania, New Jersey, Maryland and Virginia to call up 13,000 militiamen ready to march, while President Washington issued the Militia Law Act commanding the insurgents to disperse on pain of suppression by force. By August 24, 1794, with Hamilton now acting as Secretary of War (Knox had to go to Maine to solve a personal conflict with some of his lands), plans for he and the President to lead the military invasion were cemented. The invading force left Philadelphia on September 30, and though Washington had committed himself to going the distance, he in fact limited himself to reviewing troops at Bedford, Pennsylvania, on October 18, and then turned back to Philadelphia. Alexander Hamilton was thus left in charge of the army with no one to rein him in.
            He quickly began what came to resemble a reign of terror. With an ill-equipped army of nearly 15,000 men, whose officers were billeted in luxury, while common soldiers had almost no supplies or even uniforms, Hamilton made theft legal by authorizing the quartermaster corps to “impress civilian property along the way.” Here is how Hogeland describes it:

Now families watched helplessly as bayonet-wielding soldiers—no longer freelancing thieves but officials, authorized by the president—commandeered hard-won winter supplies of grain, meat, firewood, and blankets on behalf of the government of the United States (218).

Then, by defining the whole population of the area as “insurgents,” Hamilton in effect suspended the Bill of Rights. Arrests without warrants or charges began, as did ruthless interrogations. Since the real leaders of the insurrection had already fled, the only people left to arrest were innocents—who, despite their innocence, had been caught on lists that characterized them as either treasonous or material witnesses, or who were simply “suspected” by a general in charge. Prominent among them was Herman Husband, by then a very weakened old man. November 13, 1794 became known as “The Dreadful Night,” when hundreds were yanked from bed, arrested, and forced to sit on muddy floors caked with ice, without food or drink for more than two days. These were the prisoners of General Anthony “Blackbeard” White, of New Jersey, “well known for mental instability” (221). They were then marched twelve miles to the town of Washington and held without charge for military interrogation.
            The endgame was swift. The rebellion was put down, or rather, dissipated when threatened by federal troops, and never rose again. Herman Husband was marched to Philadelphia and tried for treason, was quickly found not guilty by a jury, and, after being released on May 12, 1795, collapsed from exhaustion on his way out of town. Unable to get beyond a nearby tavern, the old man lay dying of pneumonia and succumbed on June 19. His wife Emmy buried him somewhere nearby, but his grave site remains unknown. Alexander Hamilton went on to more glory, including a short stint in command of the entire military—almost getting the war with France he had lobbied for—but not quite. Perhaps it was this frustrated martial ambition that led him to his fatal duel with Aaron Burr. George Washington fared better than most. Satisfied that the far west was at last truly opened and the squatters brought to heel, he found that his enormous land possessions there, which he feared he’d have to sell cheap, “increased in value by about fifty percent” (240). He also added whiskey distilling to his other operations at Mount Vernon, thus making money at that too.
            As for the whiskey tax, it was no longer challenged in public, but remained difficult if not impossible to collect. Small distillers simply engaged in covert dodges like smuggling and moonshining until the Jefferson administration abolished the tax.
            In sum, the “Whiskey Rebellion” used to come across as a somewhat insignificant sidebar in America’s founding story, with wild-eyed rebels justly put down. Now we see that it involved far more than that, really laying out some basic fault lines in American society—between rich creditors and poor debtors, between the working class and the financial class, between those who work the land and those who own it from afar, and between those who keep calling for a more equitable distribution of resources and those determined to keep wealth concentrated in the hands of a select few. It is a conflict that has been revived with a vengeance recently, and, if our current election is any guide, one that shows no signs of resolving any time soon.

Lawrence DiStasi


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