Cocktails: Taxation

Fermented and distilled beverages were a tremendous source of revenue for the young republic. Alexander Hamilton paid off the war debt to the French after the Revolutionary War with an excise tax on whiskey and rum. The War of 1812 was also paid for by taxation; however, in 1817, after the war debt was settled, a forty-five-year hiatus of virtually no taxation accounted for an explosion of growth in the spirits and beer industry.

After the two wars with England, a high increase in taxes drove the small farm distillers of Pennsylvania and Maryland to the frontier territories that would become Tennessee, Kentucky, and Indiana, where they produced corn whiskey on a subsistence basis. Unable to cross the mountains to sell their whiskey in the big cities of the Northeast, many farmers floated their barrels of whiskey downriver on flatboats to New Orleans, Louisiana. The French in New Orleans were brandy drinkers, so the price for whiskey was low. That situation changed with the arrival of the Industrial Revolution. The first big change was the steam engine, which was outfitted to push flatboats upstream. Overnight the small farm distillers gave way to large businesses that were able to take advantage of the newly invented steam engine to move their whiskey north against the current to the big markets of the Northeast. With the opening of the Erie Canal, big-city markets were open to the big river systems of Middle America.