Editing Alexander Hamilton (section)

===Whiskey as tax revenue===
{{see also|Whiskey Rebellion}}
[[File:Google Arts Project - Alexander Hamilton (1792 portrait) by John Trumbull.jpg|thumb|Hamilton in 1792, painted by [[John Trumbull]]]]

One of the principal sources of revenue Hamilton prevailed upon Congress to approve was an [[excise tax]] on whiskey. In his first Tariff Bill in January 1790, Hamilton proposed to raise the three million dollars needed to pay for government operating expenses and interest on domestic and foreign debts by means of an increase on duties on imported wines, distilled spirits, tea, coffee, and domestic spirits. It failed, with Congress complying with most recommendations excluding the excise tax on whiskey. The same year, Madison modified Hamilton's tariff to involve only imported duties; it was passed in September.<ref>Stockwell, p. 357.</ref>
In response of diversifying revenues, as three-fourths of revenue gathered was from commerce with Great Britain, Hamilton attempted once again during his ''Report on Public Credit'' when presenting it in 1790 to implement an excise tax on both imported and domestic spirits.<ref name=chernow342-343>Chernow, [https://archive.org/details/alexanderhamilto00cher/page/n361 pp. 342–343].</ref><ref name="Murray141">Murray, p. 141.</ref> The taxation rate was graduated in proportion to the whiskey proof, and Hamilton intended to equalize the tax burden on imported spirits with imported and domestic liquor.<ref name="Murray141"/> In lieu of the excise on production citizens could pay 60 cents by the gallon of dispensing capacity, along with an exemption on small stills used exclusively for domestic consumption.<ref name="Murray141"/> He realized the loathing that the tax would receive in rural areas, but thought of the taxing of spirits more reasonable than land taxes.<ref name=chernow342-343/>

Opposition initially came from Pennsylvania's House of Representatives protesting the tax. William Maclay had noted that not even the Pennsylvanian legislators had been able to enforce excise taxes in the western regions of the state.<ref name=chernow342-343/> Hamilton was aware of the potential difficulties and proposed inspectors the ability to search buildings that distillers were designated to store their spirits, and would be able to search suspected illegal storage facilities to confiscate contraband with a warrant.<ref name="Murray40">Murray, pp. 141–142.</ref> Although the inspectors were not allowed to search houses and warehouses, they were to visit twice a day and file weekly reports in extensive detail.<ref name=chernow342-343/> Hamilton cautioned against expedited judicial means, and favored a jury trial with potential offenders.<ref name="Murray40"/> As soon as 1791, locals began to shun or threaten inspectors, as they felt the inspection methods were intrusive.<ref name=chernow342-343/> Inspectors were also [[tarred and feathered]], blindfolded, and whipped. Hamilton had attempted to appease the opposition with lowered tax rates, but it did not suffice.<ref name=chernow468>Chernow, [https://archive.org/details/alexanderhamilto00cher/page/n503 p. 468].</ref>

Strong opposition to the whiskey tax by [[cottage industry|cottage producers]] in remote, rural regions erupted into the ''[[Whiskey Rebellion]]'' in 1794; in [[Western Pennsylvania]] and western [[Virginia]], whiskey was the basic export product and was fundamental to the local economy. In response to the rebellion, believing compliance with the laws was vital to the establishment of federal authority, Hamilton accompanied to the rebellion's site President Washington, General [[Henry Lee III|Henry "Light Horse Harry" Lee]], and more federal troops than Washington had usually commanded during the Revolution.<ref>[[#chernow|Chernow, 2005]], pp. 475–476.</ref> This overwhelming display of force intimidated the leaders of the insurrection, ending the rebellion virtually without bloodshed.<ref>Mitchell, I:308–331.</ref>