Wednesday, November 11, 2015

Veterans Day: The Whiskey Rebellion

This Veterans Day, I chose to depict two veterans:

The first, a soldier in one of the first federal forces mustered under the constitutional United States.  The second, a Revolutionary War veteran who he was sent to fight.

The very first United States veterans, soldiers who had fought against the British in the American Revolution, were also the first veterans to be institutionally screwed over.

Paid in I.O.U.s during the war (I.O.U.s accepted on the hope/faith that the Colonies would be victorious), those who returned to their farms or found new land to work discovered themselves high and dry when Pennsylvania (previously a bastion of democratic economic policy) insisted that they pay taxes on their land, but refused to accept the I.O.U.s as payment – a decision enacted by lender, war profiteer, and predatory inside-trader Robert Morris*, the first and last Superintendent of Finance of the United States.  Morris, with the goal of driving up a huge national debt that would force a reluctant congress to enact federal taxes with his bank serving as its operating arm (and middleman), concocted a scheme in which insider speculators would buy the now seemingly worthless I.O.U.s from the veterans for pennies on the dollar and cash them in at face value, resulting in government payouts that would cripple the national coffers and inevitably lead to a universal federal tax, disproportionately paid by the just-swindled non-financial class.  This federal tax (which was to include poll taxes, limiting the poor’s ability to vote in those states too progressive to not insist on land ownership requirements) was not designed to support infrastructure, cover the costs of the military, or do much at all for the public good, but was first and foremost intended to pay the regular six percent interest on Morris’s and his friends’ bonds, which would ever after, by design, account for the majority of the national debt.

The veterans, many of whom had turned to farming, saw clearly how the financial institutions of our fledgling country were stacked against them and rigged so that those making the rules were the ones who benefitting from them, and they wanted none of it.  Opposed in the first place to a binding constitution that was sure to wrest from them their sovereignty and place it into the hands of either conformity-insistent New Englanders, fiscal consolidators in New York, or despotic Southern aristocrats, they simply opted out.  Some, like the settlers in what is now eastern Tennessee, officially seceded, creating the Republic of Franklin.  Kentuckians raised hell in a decentralized and ultimately strategiless fashion like we always do.  Others, like those in western Pennsylvania, simply found their own currency to use, free from the machinations of speculators and market manipulators and beyond the reach of new laws against states creating legal tender:


Farmers, long in the habit of distilling their excess grains, found that whiskey served as a workable medium of exchange.  Unlike grain, it didn’t spoil – it could last virtually forever.  It was easily portable, its quality could be immediately measured, and people always had use of it, both recreationally and medicinally.  Also, because western farmers were prohibited from shipping their grain down the Mississippi to eager customers in New Orleans, it was the most financially feasible way to get their crop to the Eastern ports.

Morris’s protégé Alexander Hamilton*, desiring a national economy similar to and therefore competitive with that of Britain, wanted to remove the individual farmer from the equation, consolidating agricultural business into a small group of conglomerates with previously independent farmers working as tenants and employees, thus driving up prices across the board.  He desired the same for manufacturing… including the manufacture of spirits.  So he proposed and saw enacted an extremely unpopular tax (a tax rescinded as soon as the more democratic-minded Jefferson took office): a tax on the manufacture of whiskey.

Favoring big business, Hamilton offered the large commercial distillers in the east a sweet deal: a flat yearly rate, further discounted by about 25% if it were paid in cash.  The farmers, however, were not permitted this offer; they had to take a per-gallon rate at an estimated 9 cents per gallon (the selling price of which was anywhere from fifty cents to a dollar).  Not an exorbitant amount (roughly 9-18%), EXCEPT that they weren’t taxed for the gallons that they produced.  They were taxed based on their CAPACITY to produce, based on the yield of their stills.  Since these farmers were not full-time distillers, using it only as a supplemental income, this meant that the tax could, for many families, exceed the total cash-equivalent yield of their whiskey.  For those who were still capable of producing, they would find their prices drastically undercut by the commercial distillers who reaped the benefits of Hamilton’s overtly regressive tax.

Add to this that the tax must be paid in coin, and you had a huge and crushing problem.  These farmers, having eschewed the financial system that swindled them and having little access to its yields anyway, didn’t have coin.  Barter and whiskey were their dealings, and with fines for unregistered stills that exceeded yearly incomes and no way of paying the taxes, they were, by design, screwed.  Farms would be foreclosed and scooped up by the eastern financiers, working towards the Hamiltonian vision of the country's resources and output being controlled by a few influential businessmen.

As had been the case in the lead-up to the Revolution, the region, aggrieved and despairing of the rights it had fought for (without pay, thanks to Morris, who steered the wartime funds to his bond-holding cronies) only a few years earlier, banded together to thwart the attempts of what they deemed an outside government to collect a tax they considered exploitative and unfair.

When a U.S. Marshal came to serve warrants on those who hadn’t paid the tax, the farmers protested his arrival at the tax inspector’s mansion and demanded to see him (likely to cover him in feathers as they did with most captured tax officials).  The tax inspector shot one of the protesters, and the farmers mustered more than five hundred armed men in response, burning the mansion.

Long story short, George Washington called on state militias to provide a national force, thirteen thousand strong – the first ever in our constitutional nation to be deployed against its own citizens (though certainly not the last; at least in this instance they were fighting for the principle of national sovereignty rather than the interests of monopolists and mine owners).

Faced with these overwhelming odds, or, perhaps, wary of killing young men whose lives and situations were separated from their own by little more than a decade, the farmers disbanded, preventing what could have become a very bloody confrontation during our nation's early unstable years.

*Whereas Morris was a greedy, swindling toad who did all he could to stymie democracy, exploit the country and its people both, rigidly enforce a class system by removing economic and political opportunities from those not already possessing them, and do his best to prolong the fighting and dying of soldiers in the Revolution in order to better his financial returns, Hamilton was at least motivated by ideological principle rather than lining his own pockets. 

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