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Alexander Hamilton, who possessed a keen mind for finances, devised an elaborate plan to phase out the serious wartime debt that was eating away at the federal treasury. A key aspect of the plan was a tax on whiskey passed in 1791.
Western farmers who distilled their own liquor were particularly hard hit by Hamilton's whiskey tax. Not only were they taxed at a higher rate than larger distillers, they didn't have much cash in the first place because they lived in remote areas. This was especially true for western Pennsylvanians and farmers who lived in the Appalachian Mountains.
These moonshine-making folks didn't react well to the new tax. They believed that the federal tax was as unjust as Britain's attempts at taxation in the 1760s and 1770s. So, just as in those years, they refused to pay. The farmers also engaged in bitter protests and outright rebellion. They even assaulted tax collectors. In one instance, a mob caught a collector, cropped his hair, covered him in tar and feathers, and took his horse.
President Washington was deeply disturbed by this Whiskey Rebellion. He thought it was similar to Shays's Rebellion against taxation that had occurred before the ratification of the U.S. Constitution. Remembering how ineffective the Articles of Confederation government had been during that crisis, Washington was determined to demonstrate federal authority to collect taxes and keep order. In 1794, he amassed a militia of 13,000 troops for an expedition to western Pennsylvania. He even rode with them himself. This overwhelming force crushed the rebellion quickly and bloodlessly. Washington pardoned most of the perpetrators.
 | The Whiskey Rebellion set a precedent. It demonstrated the new constitutional government's willingness and ability to use military force to keep law and order. If an American didn't like a law and wanted to change it, he had to do so through peaceful, constitutional means. |
In spite of the federal government's Whiskey Rebellion victory, Congress eventually repealed Hamilton's whiskey tax in 1803. The government never raised much money from the tax anyway.
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