by Steven Stoll
And yet, to political economists, if exchanges did not circulate money, they hadn’t happened at all. Recall that money travels, it holds and transmits value far and wide. This is why political economists considered barter primitive. Hamilton had read James Steuart on the subject. (I found Inquiry into the Principles of Political Oeconomy in a list of the books in Hamilton’s library.) Steuart was among the first to call barter a stage in the development of trade. Barter satisfied needs, he said; money satisfied wants. It proliferated production and consumption. “Before a guinea can travel from London to York, it may be the means of consuming a thousand times its value, and as much more, before it can return to London again. Every stop the guinea makes in its course, marks a want of desire to consume.” A free-floating conduit of value could buy anything anywhere. It could also be acquired and stockpiled. It could also pay a tax.38
Hamilton could not have separated households from land, regardless of what he thought about enclosure. If he was going to liberate the value of commodities from the tight grip of backcountry households, he would have to do it another way. He knew that while most things people made stayed close to home, whiskey traveled and money returned. If the United States could skim off some of that money, it would skim off some of the value created by labor and land in the western counties. Doing that might force people to conduct other exchanges with money, and that would make more and more value accessible. This multiplication of trade would unify the United States into a national economy and fill the treasury.39
The Pittsburgh merchant who complained about the paucity of currency said something else: “a Debt it is out of the question.” He meant that there wasn’t enough currency flying around for people to pay debts with it. After all, debt has no limit. People can owe more money at a given time than all the money that will ever pass through their hands. For debt to be paid in currency, there needs to be a great deal of currency in circulation. A tax is a debt that must be paid in gold or banknotes. Anything that siphoned away what little money existed would have been deeply threatening. To demand it from people who didn’t have it was unreasonable. To demand it from the production and exchange of the preeminent commodity in the backcountry was infuriating.
Hamilton argued that the tax would cost distillers a trivial sum—$1.50 a year for a family of six. Whatever the burden, he believed it could be passed on to consumers as part of the price. But he derived the annual cost by distributing whiskey consumption over the 4 million citizens of the United States. That assumed Pennsylvania whiskey was available everywhere and that all 4 million people (presumably including children and those held in slavery) could have bought it if they wanted it. None of this prevented him from asserting that the tax could not possibly lay a burden. Whiskey prices tell us otherwise. The tax made distilled spirits more expensive in Philadelphia, and that almost certainly affected demand.40
The cost of the tax, however, does not explain the rage over it. We will never know how smallholders felt about the power of local elites and whether or not they should have been taxed instead. But we do know the extent of the disparity. The richest people in Fayette County owned 50 percent of the wealth, while the poorest owned less than 1 percent. Visitors noticed the class system in the woods. One wrote in the 1790s, “Pennsylvania lands are now so rapidly rising in price, that within the last two years they have increased almost one-third.” A Methodist missionary writing about western Virginia in 1788 said, “The people are, many of them, of the boldest cast of adventurers, and with some the decencies of civilized society are scarcely regarded,” but he worried, “the great landholders who are industrious will soon show the effects of the aristocracy of wealth, by lording it over their poorer neighbours, and by securing to themselves all the offices of profit or honour.” County leadership correlated almost perfectly with wealth.41
If the farmers, graziers, and distillers of the Pennsylvania backwoods in the 1790s had only Hamilton’s tax to pay, they might not have risen up. One thing poorly understood about the Whiskey Rebellion is that property owners already paid local taxes. During the 1780s, 62 percent of the population owned property, either livestock, land, or both. Of these, 60 percent owned land and 40 percent owned horses, cattle, and sheep. (The other 38 percent of the total population owned no taxable property whatsoever—not even a horse. One man died with an estate consisting of little more than two coats, a hat, a pair of shoes, and a blanket.) Around 7,500 individuals paid county taxes. These same people recoiled at an unprecedented additional tax on a commodity that they relied on to furnish them with money.
Credit and debt added another stressor. Those who could afford to buy land often did not buy it outright. They borrowed from speculators and merchants. But with money always scarce and credit fluctuating and tightening, some households found themselves with obligations they could not meet. The political volatility of western Pennsylvania in the 1780s and 1790s came, at least in part, from a fear of foreclosure. From 1782 to 1792, 270 debtors faced imprisonment by the sheriff of Westmoreland County and 980 lost their property to repossession. Settlers or their children had come to a region known for its land abundance, only to end up as tenants or laborers with little if any property. Some owed rent to landlords. Others gave shares of their crops for the use of land. This is the entry into frontier poverty. Some households did not achieve sufficiency. This might not have described those who distilled whiskey, but it suggests that while the tax itself might not have been onerous as a dollar amount, it represented an incursion into intimate territory.42
Citizens in Westmoreland wrote their grievances before they strapped collectors to timber and coated them in tar. They petitioned against the bill in 1790, arguing that it took aim at a foundational practice. “In this new country, labourers are exceedingly scarce, and their hire excessively high and we find that liquor proves a necessary means of engaging their service.” In other words, where people have universal access to land, no one is available or much willing to work for anyone else. Households exchanged work, of course, but in cases where someone had to be paid, whiskey was as good as gold. “For these reasons,” they continued, “we have found it absolutely necessary to introduce a number of small distilleries into our settlements, and in every circle of twenty or thirty neighbours, one of these are generally erected … without any commercial views whatever. The proprietor thereof receives the grain (rye only) from the people, and returns the stipulated quantity of liquor.” If making whiskey was like minting money, this currency appeared and disappeared; it was created and soon destroyed. It did not float around for very long, transmitting the value of labor. By defending themselves with these arguments, the people did not persuade Hamilton not to tax them. They convinced him that he was right all along.
The petitioners also reflected on rye in its different consumable forms. Stills turned it into whiskey like mills turned it into flour. “Why we should be made subject to a duty for drinking our grain more than eating it, seems a matter of astonishment to every reflecting mind.” It’s a nice turn of phrase. They meant to make the tax look arbitrary. Yet everyone knew that the government chose whiskey because it was not at all like flour. It was not a dietary necessity, lasted much longer in storage, and had a much higher exchange-value.43
Another delegation meeting at Pittsburgh on September 7, 1791, felt a deep foreboding that something had gone wrong in the young republic. “Having considered the laws of the late Congress, it is our opinion that in a very short time hasty strides have been made to all that is unjust and oppressive.” They especially feared great fortunes that could influence power and “evade the Constitution.” They had all sorts of worries, conspiracy theories, and complaints of corruption—all signs that they already felt disaffected from the Revolution. Coming to the point, the petitioners attacked the tax as “obnoxious to the feelings and interests of the people in general,” as a fine on “a domestic manufacture,” and as “insulting.”
Then they said this: “Resolved, That there appears to
be no substantial difference between a duty on what is manufactured from the produce of a country and the produce in its natural state … The excise on home-made spirituous liquors, affects particularly, the raising of grain, especially rye and there can be no solid reason for taxing it more than any other article of the growth of the United States.” The way the Pennsylvanians looked at it, skimming part of the value from the finished product diminished the value of the raw material. Push the logic back another step, and the tax placed a duty on the field cut from the forest—the ecological base itself. All agrarians need land and labor to cost little or nothing and yet generate commodities that could be turned into money.
The importance of the two “accounts” comes clear here. If they did not depend on money, if they consumed here and bartered there, then not everything needed to be profitable in money terms. Stephen Gudeman explains it like this: “A house can use extra-marginal land to sustain itself and produce for the market because its expenditures are not accounted in the trading calculation: the home crop, raised with few monetary costs, is sold at a competitive price, because it receives a subsidy from the base.” This was the magic of it, the beauty and genius of it. The things not accounted for allowed the commodity to be sold for a competitive price. But what if the base and all that came from it were accounted for? What if every input had a price? Agrarian products might not be profitable enough to justify making them. To monetize any part of the production of whiskey brought it into doubt.44
An early historian wrote of the sense of violation. It was “as if flour and bacon were to become agents in replenishing an exhausted treasury.” This is why highlanders railed against the tax, declared it dead, and then resisted it with violence. This is why they blockaded the roads, digging craters in the turnpike so deep and so wide that nothing moved past them for weeks. Hamilton knew their limitations, but maybe he didn’t know what he was doing. Or maybe he did.45
* * *
THE CONSTITUTION CREATED A GOVERNMENT, but the tax on distilled spirits attempted to forge a territorial republic. This brings us back to Hamilton’s “map” of the United States. In a single sentence in The Federalist, No. 13, he asserted a stunning conception: “Civil power, properly organized and exerted, is capable of diffusing its force to a very great extent; and can, in a manner, reproduce itself in every part of a great empire by a judicious arrangement of subordinate institutions.” With that he predicted the postal service, national parks, military bases, and the Federal Bureau of Investigation. The sentence is remarkable because with the exception of frontier forts no such institutions existed. “State sovereignty is fully, flatly, and evenly operative over each square centimetre of a legally demarcated territory,” writes Benedict Anderson, and this also describes Hamilton’s imagined community. What James Scott writes about another place and time applies just as well to the secretary of the Treasury. He sought nothing less than “a fully governed, fiscally fertile zone … the complete elimination of nonstate spaces.”46
A writer can reveal much more than he intends in a word. Hamilton did that with empire. It comes from the Latin imperium, or “all-encompassing territorial power.” Any Atlantic elite would have had in mind the British Empire, the Roman Empire, and Napoleon Bonaparte’s empire. But in a more quotidian sense, the word described a group of states or peoples united and ruled by a sovereign government. Hamilton used the word in the very first paragraph of the first article in The Federalist to argue that an American empire divided into states without a powerful central administration wouldn’t be an empire at all. It would be vulnerable to domestic conflict and foreign attack.
For Hamilton, the Constitution had been anointed absolute ruler over an assortment of preexisting political entities, like New England towns, the Iroquois Confederacy (and perhaps fifty other indigenous territorial groups), the thirteen states, the Northwest Territory, and the residents of settlements in the mountains and on the lands claimed by Virginia and Georgia that extended into the West. Each had its own claims to autonomy from the full authority of the empire. He considered them all subject to the same law, although only certain people could vote, others were nonvoting citizens, and the rest had no political representation. Roads would connect them; a bank would mint their currency; and an army would patrol the frontier and enlist them as soldiers. Perhaps most of all, the secretary envisioned a liberal empire that bound citizens in a single division of labor, in which they would yield up a portion of the value they created in the form of taxes.47
It is easy to assume that every white male holder of property from Cape Hatteras to the Ohio River had the same idea of what independence meant. In a sense, backwoods settlers fought a different revolution than Hamilton did, a difference masked by a shared rhetoric and a common enemy. Hamilton assumed that the Revolution had secured the independence of the United States, but he confronted backcountry citizens who believed that they had fought for their own independence. Every revolution is based on a working misunderstanding. Just so, the Revolution turned inward under the Federalists, attacking political dissent in the cities and the autonomy of the backcountry. In Peter Onuf’s words, “American revolutionaries were thus compelled to develop a counterrevolutionary argument against the independence of frontier regions.” As far as Hamilton was concerned, citizens might be sovereign in the sense that they owned their persons and property within natural rights that no lawful government could deny them, but they were not independent. Those who argued otherwise he called “dangerous to the very being of government.”48
For their part, highlanders privileged survival and reproduction over conformity to abstractions like the national exigency. Every household in the mountains, yeoman or squatter, came into its subsistence and commodities at great cost in exertion and hardship. They expected institutions to acknowledge this fact, not coerce them into exceeding their natural limits. And where speculators took up vast tracts of land, whiskey making was a rational response to diminishing opportunities for a freehold. Agrarians often increase their manufacturing of craft and trade goods as available land declines. In this sense, the Whiskey Rebellion was the response of those who held to this moral economy against the claims of the liberal empire.49
Whatever sympathy Hamilton once expressed for those who used money whenever it happened to fall into their hands had vanished by 1792. By then, he had flipped the position he outlined in The Federalist. He would no longer wait for farmers and distillers to evolve into money-using, tax-paying, fully commercial citizens. Writing to Washington, he clenched his teeth. “Moderation enough has been shown; it is time to assume a different tone.” He would wield the excise as a spur to compel the backcountry into getting money. By insisting on the tax, Hamilton insisted on the means of paying it.50
Hamilton saw the West as backward; it needed a heave into the next stage. He would have agreed with Benjamin Rush of Philadelphia. Not only did the unruly settler of the western counties refuse to “surrender up a single natural right for all the benefits of government,” he “by no means extracts all from the earth, which it is capable of giving.” Extracting all the earth could give signified production for wealth rather than subsistence. It is inconceivable that Hamilton thought differently, but he made just one comment. In a report to Washington, he attributed backcountry resistance to an “indisposition, too general in that quarter, to share in the common burthens of the community.” For Hamilton, the burden of the community was always financial, so he likely meant that highlanders resisted turning their product into money, with which they would contribute their share of the national revenue. One way or another, he said further, “the resources of the community, in their full extent, will be brought into activity for the benefit of the Union.”51
We find another clue that Hamilton saw westerners as backward in his thinking about agriculture. He used the language of capital. When the protestors complained that a tax on anything made from the product of land was a tax on land itself, Hamilton threw their argument back at them. Obviously
! “Taxes are laid upon land as the fund out of which the income of the proprietor is drawn; or, in other words, on account of its produce.” But no one who broadcast rye in stumpy swiddens thought in terms of capital and interest. They consumed all or most of the value they created and spent all the money that came to them. But Hamilton assumed money, not subsistence, as the true product of land. It follows that he considered agriculture an investment like any other. As he concluded in his Report on Manufactures (1791), “The rent of the landlord and the profit of the farmer are therefore nothing more than the ordinary profits of two capitals belonging to two different persons, and united in the cultivation of a farm.” Here is the dissonance between economic cultures, the essence of the rebellion. In Hamilton’s world, the evolution of society meant that the ecological base would cease to sustain households with the food it generated. Instead, it would generate money. It would be cleared and cultivated for full-time commodity production.52
Taxation transmits power. It makes people behave in specific ways. It’s not merely a source of revenue. After all, if a government wants gold for equipping armies or building roads, it can mine it, hoard it, and store it. Why strike metal or print notes, circulate them, and then demand them back? Like centralized money itself, with its images of patriots and its symbols of prosperity, taxes combine State and Market. The combination seems to say that when we use these symbols to represent the value we create and when we pay taxes out of our fund of labor, we become citizens.
A century later and an ocean away, French colonizers imposed a head tax on every household in Madagascar. They actually called it an “education tax,” because it instructed the uninitiated in the civilizing process of earning money. Malagasy farmers learned that the colonial state would torment them if they did not pay up. So they sold rice to come up with the needed cash. But the glut of rice that resulted drove prices downward, forcing them to sell too much, leaving them with too little to eat. That compelled them to buy rice on credit. Debt, in turn, compelled them to plant market crops like coffee and pineapple. To make up for their shortfalls, they sent their children to earn wages on plantations. Some of the money paid for consumer goods and luxuries, creating a circuit of debt, wages, and consumption that fundamentally changed Malagasy culture. The colonizers declared their lesson a success.