- Date:
- 1789 - present
U.S. Department of the Treasury
What are the main responsibilities of the U.S. Treasury Department?
Who was the first U.S. secretary of the Treasury, and what was his significance?
How did the U.S. Treasury Department contribute to the Union’s efforts during the Civil War?
What role did the U.S. Treasury Department play during the Great Depression?
News •
The U.S. Treasury Department serves as the manager of the country’s finances. Its responsibilities include printing currency, collecting taxes, regulating the banking system, and advising the president on matters of economic policy, both domestic and international. As one of the first cabinet departments (along with the State Department and the Department of War), the Treasury Department has played a vital role in the history of the United States since its establishment in 1789.
Establishment and history
- The Alcohol and Tobacco Tax and Trade Bureau enforces laws regarding alcohol and tobacco production and use.
- The Bureau of Engraving and Printing designs and produces currency and other securities.
- The Internal Revenue Service, the largest division, assesses and collects taxes.
- The U.S. Mint designs and produces coinage.
While the Treasury Department was one of the earliest executive departments created, its legendary first secretary, Alexander Hamilton, was the first cabinet secretary ever approved by the Senate under the Constitution’s “advice and consent” provision. On September 11, 1789, Hamilton was unanimously approved by the body. The importance of keeping the country on strong financial footing predated Hamilton’s tenure; during the Revolutionary War period the Second Continental Congress established treasurer roles and mandated that the colonies contribute to the war effort.
It was Hamilton, however, who established the foundational financial principles for the new country. To deal with the nation’s heavy war debt and lack of international credit, Hamilton championed the federal government’s full assumption of state war debts, asserting that honoring public debt was essential to establishing national creditworthiness. His landmark Report on Public Credit (1790) established a way for the federal government to generate revenue through customs duties and excise taxes. To process revenues and facilitate government transactions, Hamilton spearheaded the creation of the First Bank of the United States in 1791. Additionally, he formed the Revenue Marine Service in 1790, an armed fleet commissioned to enforce customs laws and control maritime smuggling that later became the United States Coast Guard.
" height="20" alt="HEW Logo">
“The debt of the United States…was the price of liberty.”
As anyone who has seen Hamilton (the musical) knows, not all of his positions were well received by prominent government leaders, most especially the first secretary of state, Thomas Jefferson, and key congressional leader James Madison. Jefferson particularly disagreed with Hamilton’s wide-ranging view of the Treasury’s role in the nascent government. But whatever bitterness existed between the two, Jefferson conceded that it did not impact the operation of government, saying, “The pain was for Hamilton and myself, but the public experienced no inconvenience.”
The challenge of the Civil War
Even as it posed an existential threat to the country, the American Civil War served as the impetus for an unprecedented expansion of the United States’ economic and financial inner workings. Treasury Secretary Salmon P. Chase oversaw the modernization of the Treasury to finance the Union war effort, including the establishment of a national banking system. As the war dragged on, the U.S. government issued more than $400 million in paper currency (more than $13 billion in 2026 dollars) as part of the Legal Tender Act of 1862. Known as “greenbacks” because of the green ink used to print the bills, they could not be traded for gold or silver but instead were guaranteed by the government.
As part of the growth of the Treasury, Chase oversaw the creation of two key divisions: the Bureau of Internal Revenue (which would become the Internal Revenue Service) and the Bureau of Engraving and Printing. Each fulfilled key functions related to the war: The Bureau of Internal Revenue collected a new federal income tax to help cover the cost of the war, and the Bureau of Engraving and Printing created the greenbacks. Wartime paper currency, however, gave rise to a cottage industry in counterfeiting. By 1865 an estimated one-third to one-half of all U.S. currency was counterfeit. In one of his last acts before his assassination, Pres. Abraham Lincoln authorized the establishment of the Secret Service Division within the Treasury Department. (Presidential protection, which is most associated with the Secret Service today, didn’t become part of the service’s portfolio until after the 1901 assassination of Pres. William McKinley. The Secret Service remained part of the Treasury until it was moved to the newly created Department of Homeland Security in 2003.)
The Treasury’s role during the Great Depression
The 1929 stock market crash and ensuing bank runs and depression posed the biggest economic challenge for the government as a whole—and the Treasury Department in particular—since the Civil War. Pres. Franklin D. Roosevelt’s administration took a number of actions to shore up the country’s faltering finances.
The trusted destination for professionals, college students, and lifelong learners.
SUBSCRIBE
- Emergency Banking Act of 1933: Following Roosevelt’s nationwide bank holiday, the Treasury audited financial institutions to evaluate solvency, systematically reopening sound banks to halt catastrophic bank runs and stabilize the financial system.
- Gold Reserve Act of 1934: This controversial legislation transferred all monetary gold to the Treasury, ended domestic currency-to-gold convertibility, and authorized Roosevelt to revalue gold from $20.67 per ounce to $35 per ounce, thereby devaluing the dollar. This policy created a $2 billion paper profit for the Treasury, which helped fund New Deal economic recovery initiatives and led to the 1936 construction of the U.S. Bullion Depository at Fort Knox.
- Exchange Stabilization Fund (ESF): Established under the Gold Reserve Act, the ESF granted the Treasury secretary direct executive authority to deal in gold, foreign exchange, and credit instruments to stabilize the dollar without prior congressional approval, a significant expansion of the powers of the executive department.
Central to this flurry of action was Henry Morgenthau, Jr., who served as Treasury secretary from 1934 to 1945, making him the second longest-tenured person in that role. (To find out who was the longest-serving, keep reading!) Morgenthau was essential to the Treasury’s shift from a passive, conservative balancer of budgets to an active manager of the country’s economy. As such his Treasury Department oversaw the financing of New Deal programs and established the U.S. war bonds program.
The Great Recession
The Treasury Department was at the heart of yet another financial imbroglio in the late 2000s, when a crisis in the subprime mortgage market jeopardized the liquidity of credit markets around the world. The Emergency Economic Stabilization Act (EESA) of 2008 sought to restore liquidity to credit markets by authorizing the secretary of the Treasury to purchase up to $700 billion in mortgage-backed securities and other troubled assets from the country’s banks, as well as any other financial instrument the secretary deemed necessary “to promote financial market stability.”
But the Treasury’s actions were controversial, as the plan included the Troubled Asset Relief Program (TARP), which was seen by opponents as an example of “too big to fail,” an economic policy that provided taxpayer-funded bailouts to large corporations and financial institutions.
Consequential Treasury secretaries
While it’s unlikely that there will ever be a Treasury secretary as famous as Hamilton, a number of them—including Chase and Morgenthau, discussed above—have played pivotal roles in the economic stability of the country. These include:
- Albert Gallatin (1801–14): The longest-serving Treasury secretary in U.S. history, Gallatin streamlined federal budget accounting, eliminated internal excise taxes, and financed the 1803 Louisiana Purchase without compromising national debt reduction goals.
- Andrew Mellon (1921–32): As Treasury secretary during the Roaring Twenties, Mellon helped oversee a time of great prosperity, fueled in part by his work to lower income tax rates. However, as the Great Depression took hold, Mellon’s strategies fell out of favor. He resigned in 1932 under threat of impeachment.
- Robert E. Rubin (1995–99): Having spent much of his career at the Wall Street behemoth Goldman Sachs, Rubin ran the Treasury during a time of rare budget surpluses and worked to advance economic globalization.
- Henry M. Paulson, Jr. (2006–09): Paulson managed the federal response to the 2007–08 global financial crisis, crafting the Troubled Asset Relief Program under the Emergency Economic Stabilization Act to inject public capital into failing financial institutions and prevent systemic credit collapse.
- Janet Yellen (2021–25): The first woman to hold the office, Yellen oversaw economic recovery policies in the aftermath of the COVID-19 pandemic and worked on ways to ensure resiliency in the global supply chain, which had been devastated by the pandemic.
