One of the most controversial political questions of the late 18th and early 19th century was the enactment of excise taxes on alcohol. As costs connected to the Civil War increased, the federal government once again considered excise taxes as a way of raising money. In 1862, the government decided to enact a federal excise tax on alcohol, the first tax of its kind since 1817. The new tax raised approximately 20 cents for every 100-proof gallon of whiskey. After the war, the government not only continued the policy, but actually increased the tax as a way to discourage production and consumption. Between 1865 and 1868, the excise tax spiked to about $2 per gallon (roughly equivalent to about $30 today). In response, distilleries throughout the nation went underground and as a way of evading the tax. Nowhere was this practice as common as Brooklyn’s 5th Ward, known at this time as Vinegar Hill. Starting in 1869, the newly created Bureau of Internal Revenue and U.S. soldiers began patrolling the Brooklyn neighborhood, searching for underground operations and smashing whiskey barrels, destroying stills, and arresting distillers. These raids on the 5th Ward would later become known as the Whiskey Wars, and this heavy taxation led to many of the same practices exercised by both distillers and the government during Prohibition in the 1920s.
The Whiskey Wars between distilleries and the federal government are best remembered and showcased through Brooklyn’s 5th Ward, but it was certainly not exclusive to this area. These wars evolved despite a congressional report in 1866 showing that such tax levels exceeded market rates and served as an inducement to fraud. As expected, the taxation of liquor (where many distillers didn’t have to pay taxes their entire lives, due to the removal of these taxes in 1817) did lead heavily to fraud.
Across the entire United States, post-war revenue officers were discovering distilleries in cleverly hidden places, such as the illegal distillery in a coal mine in Illinois, the over 30,000 gallons of grape brandy beneath a Los Angeles shed, vats of mash hidden in Philadelphia stables, primitive stills and moonshiners in the hills of Kentucky. Due to the Civil War and Reconstruction, these were taxes much needed by the government, and in addition to the alcohol taxes, the taxes imposed in 1862 paid upwards of 20-percent of the federal government’s revenue.
Underground operations thereafter flourished, oversight was less than useless, and distillers formed gangs, paid off police, and lived very lavishly. Brooklyn distillers, for example, were exceedingly fond of showing off numerous diamonds, thick and heavy chains, and large watches. They had connections to City Hall, and this cash and influence tiptoed thick corruption all the way to the White House.
During the late 1860s and early 1870s, it wasn’t an uncommon sight to encounter whiskey pooling in the street’s crevices near Brooklyn’s Navy Yard. At times, the air in Vinegar Hill would be ripe with scents of sour mash. Amidst the well-known illegal distilleries operating across the United States, and especially in the Irish and immigrant heavy 5th Ward, it wasn’t until 1869 when the Whiskey Wars began. In October of that year, there was a knife and fist fight occurring in an alleyway, and 100 army veterans on the scene came across nine illegal stills. The reports from these veterans, among other reports of stills in the 5th Ward, President Ulysses Grant ordered forceful raids into Brooklyn, and if necessary, the army and navy would have authorization to intervene.
Less than two months after the discovery of the first illegal stills, nearly 500 artillery men landed on the East River and began axing barrels and emptying underground tubs until the streets were running with rum. Over the course of the day, these artillerymen destroyed over 250 barrels of liquor, which at that time would have been worth about $5,000 in taxes for the federal government. The people in the neighborhood, who benefited from the distilleries, and the police, who were on the distillery payrolls, instantly grew defensive to the federal intervention. For example, during one raid in November of 1869, as troops were marching down Dickson’s Alley near the Navy Yard, locals began pelting the soldiers with stones, bricks, and other items launched from streetside windows. During a raid in 1871, as 1,200 troops marched in the streets, the soldiers made no arrests, which was due to insiders and double agents informing distilleries of upcoming raids. There was never a surprise raid in Brooklyn.
The distilleries formed violent, yet highly effective criminal gangs throughout Brooklyn. Unlike Manhattan’s Five Points, the code of silence was prominent in the 5th Ward. Infamous bank robber Willie Sutton once said, “a code of silence was observed in Irishtown more faithfully than omertà is observed by the Mafia... Nobody ever talked in Irishtown.”
Although it may sound like a classic Robin Hood tale, where the under-represented citizens of the 5th Ward were able to confront over-taxation from the government, not all was well in the area. For example, the 5th Ward was notorious for its fires and industrial accidents related to distilleries. Boilers exploded on a depressingly regular basis. People not involved with the distilleries complained about constant nuances and obstructions during the Whiskey Wars. More gravely, many distillers were implicated in the “swill milk” trade, as they would sell their mash to farmers, who then fed it to their cows. Babies who drank the milk of these cows died in the thousands during this time.
The Whiskey Wars would continue until 1871, and the Irishtown ring operating in the 5th Ward was finally suppressed after the killing of a revenue official, which sparked public outrage and extensive government action. The distilleries throughout the 5th Ward and Brooklyn were largely demolished.