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The then Federalist run government implemented the tax to finance the costs of building up American defenses which followed the British seizure of ships in the West Indies. However, the tax proved to be an unfair hardship to those farmers who used whiskey in place of cash for commercial transactions. A revolt of Pennsylvania whiskey distillers in 1794 led to President Washington’s sending in troops, the first time federal authority was established by military means within state boundaries.
This use of governmental force to suppress the Rebellion brought to the foreground the longstanding differences between those who believed in a throng central government (Federalists) and those who believed most political power should rest within the states (Anti-Federalists which later became the Republicans). Whereas the Federalist imposition of the tax had most likely been a sincere act of national security, the opposition interpreted the actions of President Washington to be a transgression of the powers of central government.
They were “convinced that it was repression, not revenue that the Federalist had in mind, they construed opposition to the whiskey tax as a republican’s duty” (79). President Washington blamed the misrepresentations of the “combinations” (democratic societies) as playing an influential role in encouraging the Whiskey Rebellion and sees his suppression of the Rebellion as a constitutional right. Some historians have interpreted the conflicts as clashes between agrarian democracy and urban capitalism.
Others see it as a conflict over capitalism; the Federalists were commercially oriented, whereas the Republicans were suspicious of commerce. Historian Joyce Appleby in Capitalism and the Rise of the Republican Opposition makes the argument that both Federalists and Republicans were capitalists, their differences were a discussion over how the process of capitalism would express itself in America.
Would it be hierarchical, elitist, and authoritarian, controlled by the central government, or would it be more egalitarian, where autonomous men could be free to take care of their own business? Whichever interpretation is taken, one immediate result of the Rebellion was the Republican Party’s entry as a legitimate political movement, further hardening the divide between Federalists and Republicans and marking the rise of our two-party system.