HIST 192 Study Guide - Fall 2018, Comprehensive Midterm Notes - United States Constitution, United States Congress, Secret Society
HIST 192
MIDTERM EXAM
STUDY GUIDE
Fall 2018
1
Prof Gustavo Jimenez
Economic 170
09 October, 2014
Whiskey Tax 1791
1. What was the specific tax?
As part of the compromises that led to the adoption of the United States Constitution in
1789, the new Federal government agreed to assume the Revolutionary War debts of the
13 States. In early 1791, to help pay off the resulting national debt, Congress used its new
constitutional authority to "lay and collect Taxes, Duties, Imposts and Excises" and
passed the first nationwide internal revenue tax—an excise tax on distilled spirits.
Congress took this action at the urging of the first Secretary of the Treasury, Alexander
Hamilton. Unlike tariffs paid on goods imported into the United States, the excise tax on
distilled spirits was a direct tax on Americans who produced whiskey and other alcohol
spirits. “The 1791 excise law set a varying six to 18-cent per gallon tax rate, with smaller
distillers often paying more than twice per gallon what larger producers paid”
(http://www.ttb.gov). All payments had to be made in cash to the Federal revenue officer
appointed for the distiller's county.
2. Reaction from farmers/distillers?
Large, commercial distillers in the eastern United States generally accepted the new
excise tax since they could pass its cost onto their cash-paying customers. However,
smaller producers west of the Appalachian and Allegheny Mountains, then the Nation's
frontier, opposed the "whiskey tax.” Farmers felt the tax was unfair and an abuse of
find more resources at oneclass.com
find more resources at oneclass.com
Taing 2
federal authority. “Southern and western farmers, whose grain crop was a chief ingredient
in whiskey, loudly protested the tax” (www.history.house.gov). In 1794, farmers in
western Pennsylvania attacked federal officials seeking to collect tax on the grain they
had distilled into whiskey.
3. Symbolize the power of the federal government?
The federal government would assume responsibility for the states’ unpaid debts, which
totaled about $25 million. Hamilton wanted Congress to create a bank—a Bank of the
United States. The goal of these proposals was to link federal power and the country’s
economic vitality. This also “bring to the government’s support the country’s most
powerful financial interests, and encourage economic development”; and to “make the
United States a major commercial and military power” (www.inkling.com). Under the
assumption proposal, the states’ creditors (people who owned state bonds or promissory
notes) would turn their old notes in to the Treasury and receive new federal notes of the
same face value. Hamilton foresaw that these bonds would circulate like money, acting as
“an engine of business, and instrument of industry and commerce.” This part of his plan,
however, was controversial for two reasons. First, many taxpayers objected to paying the
full face value on old notes, which had fallen in market value. Often the current holders
had purchased them from the original creditors for pennies on the dollar. To pay them at
full face value, therefore, would mean rewarding speculators at taxpayer expense.
Hamilton countered that government debts must be honored in full, or else citizens would
lose all trust in the government. Second, many southerners objected that they had already
paid their outstanding state debts, so federal assumption would mean forcing them to pay
again for the debts of New Englanders. Nevertheless, President Washington and
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
As part of the compromises that led to the adoption of the united states constitution in. 1789, the new federal government agreed to assume the revolutionary war debts of the. In early 1791, to help pay off the resulting national debt, congress used its new constitutional authority to "lay and collect taxes, duties, imposts and excises" and passed the first nationwide internal revenue tax an excise tax on distilled spirits. Congress took this action at the urging of the first secretary of the treasury, alexander. Unlike tariffs paid on goods imported into the united states, the excise tax on distilled spirits was a direct tax on americans who produced whiskey and other alcohol spirits. The 1791 excise law set a varying six to 18-cent per gallon tax rate, with smaller distillers often paying more than twice per gallon what larger producers paid (http://www. ttb. gov).
