Secretary of the Treasury Alexander Hamilton took over a country burdened with war-time debt and without a system of revenue to pay back that debt and fund the activities of the new nation. The financial system he instituted is credited with setting the nation on a sound financial footing. His measures included tariffs on imported goods and an excise tax on domestically produced products. A strong federal government like that envisioned by Hamilton was not always popular. The first insurrection and challenge to the nation's military and fiscal authority occurred in western Pennsylvania. One of Hamilton's levies had been placed on whiskey produced within the United States. Distillers in what was then the west, both major producers and individuals, relied on the production of whiskey, and this set the stage for the first major Constitutional challenge to the authority of the national government.
Opposition began shortly after the passage of the levy in 1791. Conventions met in several Pennsylvania counties to put forth their grievances. They was successful in gaining a small reduction in the tax, but it was not enough. Just months later, a tax collector was tarred and feathered. Resistance also spread outside the state. Portions of Kentucky avoided the tax through intimidating tax collectors, and in 1792 Hamilton unsuccessfully argued for military intervention to stem an uprising over the tax in North Carolina.
There were more hostile anti-tax conventions in Pennsylvania in 1792, and by this point they were seen by Hamilton as as serious threat. Moreover, President Washington and Hamilton both viewed the unraveling situation with even more embarrassment, as the national capital was in the same state as the budding insurrection. The federal tax collector for western Pennsylvania was John Neville, a wealthy planter and a distiller who had initially opposed the tax but came around to the federal position. He was burned in effigy in 1793.
Everything came to a head in 1794. In May, subpoenas were issued for more than 60 distillers who had not paid the tax. The government at this time sent US marshal David Lenox to serve writs summoning those accused to come to distant Philadelphia. This led to outright conflict. The Battle of Bower Hill ended with the burning of Neville's house. This emboldened what was now a full-fledged insurrection, and there was talk of a declaration of independence for the western region. Another Convention met in August and appointed peace commissioners to meet with men appointed by Washington, who had advocated this conciliatory approach. Hamilton was not in favor of that, instead feeling that a strong federal military response was called for. Washington actually did both. While the peace commissioners met, he began military preparations. Washington demanded the disbanding of insurgent militias by September 1, 1794. A popular referendum on September 11 in the west on the subject produced mixed results, and those desiring peace lost out completely when Washington and Hamilton refused to halt the wheels of the military response.
Financing of the expedition flowed from the seat of the capital, Philadelphia. Money was tight. Just a month later, the Bank of New York, headed by Nicholas Low (who was also a director of the Bank of the United States brach in that city), would loan the federal government over a million dollars. But now, Hamilton required funding for the army he was marshaling to head west. On the 17th of September, Hamilton devoted his entire day to immediate preparations to send troops west. He wrote several letters, every one relating to the furnishing and preparation of the westward-bound force. These letters notified governors of the departure of troops, ordered supplies for the forces, and set all the wheels in motion. His correspondence was nearly frantic on this subject. To Rufus King, he wrote, "Governor Lee is at the head of the Virginia Militia & will command if the President does not go out. He is all zeal. Governor Howel with equal zeal was to march from Trenton to day with the van of the Jersey Militia consisting of 500 horse. Mifflin who at first shewed some untoward symptoms appears now to be exerting himself in earnest & with effect & goes at the head of his Militia." To Pennsylvania Governor Thomas Mifflin, he advised the day before, "Disagreeable Symptoms have appeared in the two most Western Counties of Maryland...Everything is doing to press forward the Jersey Militia to Carlisle...It is indeed of the highest moment, that the spreading of so mischievous a spirit should be checked...” Similarly, on the 17th he wrote to the governor of Maryland.
Militia were called up from New Jersey, Maryland, Virginia and Pennsylvania. In late August, President Washington had decided to send Pennsylvania militia general Henry Miller out west to determine the mood of those counties. By mid September, this move seemed more designed to lead a military expedition that had made up its mind. On September 15, Hamilton wrote him saying, "I have it in contemplation to propose it to The President to appoint you to the capacity of Quarter Master General to the Militia Army destined to act against the Insurgents in the Western parts of Pennsylvania... I presume you have funds in your hands adequate to the object—if not on your signifying it the sum requisite shall immediately be furnished." Miller in fact needed money.
With mobilization moving forward full force, Hamilton arranged to have more funds available at the Bank of the United States branch in Philadelphia. He needed the money not only for Miller, but to equip the New Jersey forces and others, and to otherwise finance the expedition (which would be the largest post-war military mission to date and the first since peace with England). This was, after all, a Constitutional crisis. To do this, he needed to transfer money from the Bank of the United States branch in New York to that in Philadelphia (which was under the direction of John Kean).
Autograph letter signed, a pay order as Treasury Secretary, Philadelphia, September 17, 1794, to branch bank director Nicholas Low in New York. "Sir, please to pay to John Kean Esquire or order on demand Fifteen hundred dollars value received and charge the same to account as per advice from, sir, your obedient servant, Alexander Hamilton."
This is the first pay order of Alexander Hamilton as Treasury Secretary that we have ever handled, and the fact that it directly relates to funding the federal response to the Whiskey Rebellion is all the more extraordinary. It is also worth noting that letters of Hamilton as Treasury Secretary, completely in his hand, are increasingly uncommon.
In the end, the rebellious westerners disbanded in the face of such a formidable federal response, and Hamilton had succeeded in demonstrating the power of the fledgling United States government.