In 1790, the Federal government of the United States assumed the debts incurred by the colonies during the Revolution, and the new government was deep ($54 million) in debt. Alexander Hamilton, the enterprising Secretary of the Treasury, proposed a bill which Congress approved in 1791 that established an excise tax on all distilled spirits.
The large distillers on the east coast, who produced alcohol as a full …time business venture could make a flat annual tax payment which 
worked out to about six cents per gallon. The smaller producers inland however, who only made whiskey occasionally, had to make payments of almost twice that amount each time they distilled a barrel. The government insisted that payment be made in cash – but for many farmers, whiskey WAS cash, as they operated in a barter economy and it was much easier to trade distilled spirits to the eastern markets than raw grain.
Pretty soon, when excise officers arrived in towns west of the Alleghenies to set up shop, they learned to not stay long unless they were looking to be tarred and feathered. Things came to an ugly head in 1794 when a large mob in western Pennsylvania marched on collector John Neville’s house in Washington County, had a shoot-out with him and his slaves, and burned his home to the ground. Neville escaped, but then the locals started talking about breaking away from the Union.
On August 7, George Washington invoked the Militia Acts and called out the troops. He personally led a militia force of 12,950 men towards Western Pennsylvania, warning locals “not to abet, aid, or comfort the Insurgents aforesaid, as they will answer the contrary at their peril.” By the time the militia reached Pittsburgh, the rebels had dispersed and could not be found.
The Whiskey Rebellion was over.
Three years later George Washington hired a Scottish plantation manager, James Anderson, and with his advice and assistance the Father of Our Country built his own whiskey distillery at Mt. Vernon, next to the gristmill. Five copper pot stills were erected, which soon produced a fine mash whiskey using Washington’s own recipe of rye (60%), corn (35%) and malted barley (5%).
By 1799, the distillery produced almost 11,000 gallons of whiskey. It had become the largest operation of its kind in America and the most successful business enterprise Washington undertook at Mount Vernon.
