“I’d Grab a Rifle, Too!”
Some years ago I was in Moscow, visiting a facility that works with rare earth elements and nuclear materials.
While there, I met a senior director of the Russian Atomic Power Ministry, ROSATOM.
I handed him a business card that listed the publications I was writing for at the time, including Whiskey & Gunpowder.
As he examined it, I could see that he was translating the English in his head. Then he looked up at me and began to laugh.
“That’s a great name,” he said. “Whiskey and Gunpowder. It could be Russian!”
Then he asked, why whiskey? Why gunpowder?
I explained that the “Whiskey” part comes from the Whiskey Rebellion of 1791–94. During the presidency of George Washington, farmers in western Pennsylvania rebelled against the new federal government, particularly over a tax on the capacity of stills.
The ROSATOM director turned to an aide and held a quick conversation in Russian. The two began laughing.
The director turned back to me and said, “Those old farmers must have liked their whiskey, to rebel and fight over it. And against no less than General George Washington!”
By now, a small group had assembled, listening-in on the discussion.
I added a bit more, saying “The Whiskey Rebellion wasn’t just about whiskey. It was also about money. The farmers didn’t have much money, but the government wanted to tax them. They couldn’t pay the tax, and many farmers had nothing left but to resist.”
The group that was standing around became quiet.
“OK, yes,” the ROSATOM director said in all seriousness. “Now I really see why there was a rebellion. It’s one thing to fight about whiskey. But if it’s whiskey and money? I’d grab a rifle, too!”
That last line raised a laugh out of everyone. This guy may have been a director of ROSATOM, but he had the deadpan delivery skills of a comedian like Jay Leno.
Of course, every “rebellion” is about money and wealth on some level.
Money was certainly a factor in America’s decision to break from Great Britain, which led to the Revolutionary War.
And during the war, money issues sparked a series of incidents that threatened the derail the whole enterprise.
The country’s financial problems continued after we had established our independence, as the Whiskey Rebellion proves.
It all begs the question, at what point do issues of money become so oppressive that the citizenry feel the need to “grab a rifle”?
History offers some clues. So let’s dig in…
Most modern American schools — high schools and colleges — do an awful job of teaching U.S. history. “Colonial” history and the American Revolution are no exception.
Fortunate students might come away knowing some Revolutionary War-era names, dates, places, battles and other events. Sad to say, most current graduates don’t even know that.
There’s even less inquiry into the economic circumstances of the “13 Colonies.” America’s revolution was certainly political, but also deeply economic. That last angle actually reveals quite a bit as well.
As Sun Tzu noted over 2,500 years ago, “Wars are expensive. They cost much silver.”1
So how did the fledgling American government — comprised of 13 Colonies/states — pay for the war against Great Britain?
The Colonies were certainly not wealthy, by any means. America’s economy at the time was primarily based on small-scale agriculture, much of it dispersed around small cities, and smaller towns across settlements east of the Alleghenies.
There was some forestry — useful for shipbuilding — and small-scale manufacturing. But the British colonial model didn’t emphasize much in the way of manufacturers within North America. Those pursuits were reserved for the Mother Country.
American coastal cities were small, too, in terms of area and population. A “large” city might hold a few tens of thousands of people, even places like Boston, New York and Philadelphia.
For those reasons and more, money in the Colonies was in short supply.
Despite America’s British roots, there weren’t many pounds in circulation, nor much else in the way of French, Dutch, Spanish or other coinage. Little in the way of specie came through U.S. ports, which were under British control.
The Colonies couldn’t mine their way into wealth, either. The few gold or silver deposits in the coastal or eastern U.S. were just tiny geological anomalies at best.
Simply put, the American government was essentially broke and insolvent throughout the Revolutionary War.
Yet most people today don’t appreciate that fact, largely because of the mythology we’ve created around the war.
The actual fighting commenced on April 19, 1775, with the Battle of Lexington and Concord. British troops marched out of Boston to seize guns and gunpowder from the locals.
The confrontation involved farmers – organized as a “well-regulated militia” – emplaced along the route of march, shooting it out with the Brits.
That helped create a general American perception that the Revolutionary War was a series of skirmishes and fights between farmers and tradesmen, versus British “redcoat” troops.
But that’s not how it played out. The bulk of the Revolutionary War was based on classical European methods of combat. In other words, George Washington had to organize a real army.
George Washington’s “real” army.2
Washington had help from a brilliant German general, Friedrich von Steuben. Later, U.S. forces received assistance from French general Lafayette, as well as French soldiers and, in the end, even the French navy at Yorktown in 1781.
None of this was free, of course. The fledgling U.S. government needed to pay these soldiers, feed and clothe them, train everyone, purchase weapons and ammunition, acquire transportation to move them around, and much more.
So how does a broke, insolvent government pay its war bills?
The U.S. Congress, along with several states, issued pieces of paper, called “Continentals.” In other words, they issued a primitive form of American currency.
“Continental” scrip of $20, issued 1775.
Of course, this scrip wasn’t backed by anything tangible — not by gold or silver; not by bushels of wheat.… They were just promises by the revolutionary government.
Still, per acts of Congress, these paper Continentals were legal tender in that day and age.
Typically, Gen. Washington’s quartermasters would head out across the landscape to procure food, supplies, gunpowder, horses, wagons, etc.… and pay for it with Continentals.
Farmers and merchants were required to accept the paper as payment, even though it had no inherent value other than the promise of a new government that spent its first several years losing its war.
Or, to put it another way, the Revolutionary War was bought and paid for via out-and-out confiscation of goods and services by the new American government.
Eventually, more than a few American merchants and farmers resisted handing over supplies to the U.S. Army in return for Continental scrip.
In 1783, soldiers even mutinied over delays in being paid – even in paper – from a deadbeat Congress. One famous instance is known as the Newburgh Conspiracy.3
Congress was able to satisfy some of its debts to soldiers in the form of land grants in the west, beyond the Allegheny Mountains.
But the end of the war did not bring an end to the country’s money problems.
Post-war, the first guiding document for the unified Colonies was the Articles of Confederation. It tied the 13 coastal entities together into a nation, but with most political power resident in states, with a weak national government.
There were no provisions for a national mint, let alone the fact that the country lacked mines and mills to produce precious metal.
So even as the war ended, there was a constant lack of “real” money circulating in the U.S. economy, whether gold, silver or coinage from other nations
By 1786, things were at a boiling point. Fighting even broke out in Massachusetts over money and debts, an event known as Shay’s Rebellion.4
Shay’s Rebellion helped spur a general review of the American political compact. In 1787, a group of representatives came together in Philadelphia to revise the Articles of Confederation… and emerged with the U.S. Constitution.
The idea was to create a stronger central government; a “federal” government. But one critical point was lack of money.
Still, the states ratified the Constitution and in 1788 George Washington was elected as first U.S. President. He appointed Alexander Hamilton as Secretary of the Treasury.
Hamilton, in turn, convinced Congress to lay a tax on farmers’ stills, among other things… And this led directly to the Whiskey Rebellion.
(I discussed the Whiskey Rebellion during my recent talk at the online Sprott Conference. You can watch the video it here.)
The newly formed U.S. came out of the Whiskey Rebellion with the Coinage Act of 1792… a national mint in Philadelphia… and even coins!
(It’s worth noting that an original 1794 silver dollars is currently up for sale, expected to bid for over $10 million.5)
Among the rarest coins in the world. 1794 U.S. silver dollar.
By the mid-1790s, as the Whiskey Rebellion died down, the U.S. saw an end to the 20-year period of printing press confiscations, resentment, conspiracies and armed uprisings that stemmed from a lack of money.
The people had clearly shown that they’d only withstand so much financial abuse before they “grabbed their rifles.”
Fortunately, the country’s governing class drew proper lessons from the events of that era. The U.S. kept more or less to a gold and silver standard throughout the 19th Century; sometimes called “bimetallism.”
But those foundational memories from the 1790s eventually faded. Today, they’re part of that vast body of “history that nobody knows.”
For instance, the U.S. currently has its “dollar” system, unbacked by gold or anything else but the “full faith and credit” of the federal government. That, and the perception of U.S. military power (as I recently discussed here).
Meanwhile, the U.S. government is presently spending dollars by the trillions… Bailing out insolvent states, bad banks, failing businesses and in general showering “helicopter money” across the plains of the republic. It’s all allegedly in an effort to fight COVID; or rather, to fight the economic effects of the federal and state governments shutting down the economy due to COVID.
In many respects, we’ve now moved back to the days of “Continentals.” The government issues unbacked scrip that adds up to astronomical trillions… and people are obliged to use this as currency.
In a similar sense, we’re also back to the Revolutionary War days of “confiscation” of goods and services. That is, the vast Niagara of spending that flows out of Washington, D.C. is just made-up “money supply,” cranked out on the digital equivalent of a printing press.
This new federal monetary policy is simply old-fashioned “confiscation,” performed under cover of paying for goods and services…
It’s confiscation pure and simple, via currency that’s hot off the press at the Federal Reserve, with a quick stop at the Treasury Department.
I think that deep down, many Americans sense this… They see that the economy is unwinding, scarcity looms, and in turn many people are hoarding goods and buying guns…
Or call it reaching for their rifles.
Political class… Beware!
On that note, I rest my case.
That’s all for now… Thank you for subscribing and reading.
Managing Editor, Whiskey & Gunpowder
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5 1794 Silver Dollar Worth $10M for Sale by Middletown Dealer, app.com