The constitutional grant to the Federal government of the power to levy internal revenue duties was the cause for much objection. All sorts of evil consequences were pictured, such as the entire confiscation of property and imprisonment of individuals. Officials, consequently, were somewhat slow and cautious in extending the fiscal system to make use of internal taxes, and when it was attempted much opposition arose, both within and without Congress.

The failure of the import duties to supply sufficient funds, led Hamilton, the Secretary of the Treasury, to recommend the adoption of an excise tax, especially on whisky. Congress was not anxious to create the new Federal offices which the tax would make necessary, while in some parts of the country strenuous objection arose to the use of whisky as the base of the tax. It was considered so much of a necessity as to make the tax in the nature of a poll tax, which, therefore, fell with an unequal burden upon different classes of people. The tax was adopted, however, and imposed a duty of from eleven to thirty cents a gallon on spirits manufactured from foreign materials, and from nine to twenty-five cents a gallon on spirits from domestic materials. The opposition which arose, and which culminated in armed resistance in western Pennsylvania, known as the Whisky Rebellion, is familiar to students of American history. The unproductiveness of this tax led to an extension of excise duties upon carriages, sales of liquor, manufacture of snuff, sugar, and auction sales.

Early Tax Repealed. - This initial employment of the excise principle as an integral part of the Federal fiscal system was of short duration. The political party which came into power at the beginning of the nineteenth century believed in simplifying the administrative machinery to the greatest possible extent, and, furthermore, that the use of excise taxes violated the principles of democratic freedom. The chairman of the Committee on Ways and Means of the House of Representatives, under the new political regime, hastened to recommend the abolition of excise taxes on the ground that they increased the number of officers and placed increased burdens on the people. He contended, also, that they were obnoxious, vexatious, and hostile to the genius of a free people, and at the same time were expensive to collect.

The opposition contended that if reduction of duties were to be made it should come from the import taxes on such necessities as tea, sugar, and similar commodities, rather than from such a luxury as distilled spirits. A strong argument was further made for the retention of the fiscal administrative machinery which had been established. These considerations were of no avail, however, and the repeal measure passed in 1802.

Emergency Use of Tax. - The burden of the War of 1812 came upon the treasury, the returns from imports fell off, and no excise taxes were in existence. Much discussion occurred in Congress over the reestablishment of excises, but no agreement could be reached. In a special session in 1813, Congress levied light duties upon liquors, sugar, carriages, and auctions, as well as some stamp duties. These proved insufficient, and in 1814 the rates were raised and the duties extended to a few other commodities. The administrative machinery was so ineffective, however, that the returns were slow in coming in - many of the taxes were not collected until years after they were due. The war was scarcely over when strong agitation arose for the removal of the burden of the excise taxes. They continued to be used to some extent until 1817, after which, except for the payment of some duties which had previously accrued, they ceased to have any place in the revenue system of the country until war again called them forth.