U.S. Department of the Treasury
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The management of the money resources of the United States has always been the primary function of the Department of the Treasury. Whether it is regulating national banks, determining international economic policy, collecting income and excise taxes, issuing securities, reporting the government's daily financial transactions, or manufacturing coins or bills for circulation, the one concern that still ties together the activities of the Department of the Treasury is money.
Though formally established as an executive department by the First Session of Congress in 1789, many functions of the Department of the Treasury were being carried out even before the signing of the Declaration of Independence thirteen years earlier. Over the decades, the functions of the Department have expanded and grown more sophisticated to meet the needs of a developing nation.
Today, the Department of the Treasury remains the premier financial institution of the United States with a full-time agenda of accounting, revenue collection, money production, and economic policy formulation
The history of the Department of the Treasury began in the turmoil of the American Revolution, when the Continental Congress at Philadelphia deliberated the crucial issue of financing a war of independence against the United Kingdom. The Congress had no power to levy and collect taxes, nor was there a tangible basis for securing funds from foreign investors or governments. The delegates resolved to issue paper money in the form of bills of credit, promising redemption in coin on faith in the revolutionary cause. On June 22, 1775 -- only a few days after the Battle of Bunker Hill, Congress issued $2 million in bills; on July 25, 28 citizens of Philadelphia were employed by the Congress to sign and number the currency.
On July 29, 1775, the Second Continental Congress assigned the responsibility for the administration of the revolutionary government’s finances to Joint Continental Treasurers, George Clymer and Michael Hillegas. The Congress stipulated that each of the colonies contribute to the Continental government’s funds.
To ensure proper and efficient handling of the growing national debt in the face of weak economic and political ties between the colonies, the Congress, on February 17, 1776, designated a committee of five to superintend the Treasury, settle the accounts, and report periodically to the Congress. On April 1, a Treasury Office of Accounts, consisting of an Auditor General and clerks, was established to facilitate the settlement of claims and to keep the public accounts for the government of the United Colonies. With the signing of the Declaration of Independence on July 4, 1776, the new-born republic as a sovereign nation was able to secure loans from abroad.
Despite the infusion of foreign and domestic loans to pay for a war of independence, the United Colonies were unable to establish a well-organized agency for financial administration. Michael Hillegas was first called Treasurer of the United States on May 14, 1777. The Treasury Office was reorganized three times between 1778 and 1781. The $241.5 million of paper Continental Dollars devalued rapidly. By May 1781, the dollar collapsed at a rate of from 500 to 1000 to 1 against hard currency. Protests against the worthless money swept the colonies and angry Americans coined the expression “not worth a Continental.”
Robert Morris was designated Superintendent of Finance in 1781 and restored stability to the nation’s finances. Morris, a wealthy colonial merchant, was nicknamed “the Financier” because of his reputation for procuring funds or goods on a moment’s notice. His staff included a Comptroller, a Treasurer, a Register, and auditors, who managed the country’s finances through 1784, when Morris resigned because of ill health. The Treasury Board of three Commissioners continued to oversee the finances of the confederation of former colonies until September 1789.
Hamilton and the Establishment of the Department of the Treasury
The First Congress of the United States was called to convene in New York on March 4, 1789, marking the beginning of government under the Constitution. On September 2, 1789, Congress created a permanent institution for the management of government finances:
"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That there shall be a Department of Treasury, in which shall be the following officers, namely: a Secretary of the Treasury, to be deemed head of the department; a Comptroller, an Auditor, a Treasurer, a Register, and an Assistant to the Secretary of the Treasury, which assistant shall be appointed by the said Secretary."
Alexander Hamilton took the oath of office as the first Secretary of the Treasury on September 11, 1789. Hamilton had served as George Washington’s aide-de-camp during the Revolution, and was of great importance in the ratification of the Constitution. Because of his financial and managerial acumen, Hamilton was a logical choice for solving the problem of the new nation’s heavy war debt.
Hamilton’s first official act was to submit a report to Congress in which he laid the foundation for the nation’s financial health. To the surprise of many legislators, he insisted upon federal assumption and dollar-for-dollar repayment of the country’s war debt of $75 million in order to revitalize the public credit: “[T]he debt of the United States…was the price of liberty. The faith of America has been repeatedly pledged for it, and with solemnities that give peculiar force to the obligation.” Hamilton foresaw the development of industry and trade in the United States, and suggested that government revenues be based upon customs duties. His sound financial policies also inspired investment in the Bank of the United States, which acted as the government’s fiscal agent.
The Treasury Building
In the first years of the American republic’s existence, the government was quartered in Philadelphia until the new capital city, as authorized in the Constitution, was built on the banks of the Potomac River. In 1800, the government moved to Washington, D.C., and the Department of the Treasury moved into a porticoed Georgian-style building designed by an English architect, George Hadfield. This structure was burned by the British in 1814, but was rebuilt by White House architect James Hoban. This building was identical to three others located on lots adjacent to the White House, each housing one of the four original departments of the U.S. Government: U.S. Department of State, U.S. War Department, U.S. Treasury Department and the United States Navy. The Treasury Building, to the southeast of the White House, was burned by arsonists in 1833 with only the fireproof wing left standing.
The present Treasury Building is a magnificent granite structure in the Greek Revival style; it was built over a period of 33 years between 1836 and 1869. The east and center wings, designed by Robert Mills, architect of the Washington Monument and the Patent Office Building, comprise the first part of the building constructed from 1836 to 1842. The most architecturally impressive feature of the Mills design is the east front colonnade running the length of the building. Each of the 30 columns is 36 feet tall and is carved out of a single block of granite. The interior design of the east and center wings is classically austere, in keeping with the Greek Revival style.
Later additions were made to the original wings, beginning with the construction of the south wing from 1855 to 1860 and the west wing from 1855 to 1864. The preliminary design of the wings was provided by Thomas Ustick Walter, architect of the dome of the U.S. Capitol, but architects Ammi B. Young and Isaiah Rogers refined the plans, designed the interior details, and supervised construction. While the exterior of the building was executed along the lines of the original Mills wings, the interiors of the later wings reflect changes in both building technology and aesthetic tastes. Iron columns and beams reinforced the building’s brick vaults; the architectural detailing became much more ornate, following mid-nineteenth century fashion.
The final addition to the Treasury Building was the north wing, built from 1867 to 1869. Its architect was Alfred B. Mullett, who subsequently designed the State, War, and Navy Building (now the Dwight D. Eisenhower Building) on the other side of the White House.
Similar in construction and decor to the south and west wings, the north wing is unique as the site of the Cash Room -- a two-story marble hall in which the daily financial business of the U.S. Government could be transacted. The room was opened in 1869 as the site of President Ulysses S. Grant’s Inaugural Reception.
The Treasury Building is the oldest departmental building in Washington and has had a great impact on the design of other government buildings. At the time of its completion, it was one of the largest office buildings in the world. It served as a barracks for soldiers during the Civil War and as the temporary White House for President Andrew Johnson following the assassination of President Abraham Lincoln in 1865.
The Development of the Department
Throughout the decades of American history, the Department of the Treasury has been a dynamic aspect of the government’s service to the people, expanding and developing to accommodate the nation’s needs. While the fiscal and collection functions have remained substantially constant for over two centuries, other incidental operations have varied greatly. Most of the functions assigned to Treasury by the Act of 1789 are still carried out by the Department of the Treasury, although the functions of the Comptroller have been assumed by the Comptroller General of the U.S. Government Accountability Office.
Many functions of the Federal Government, regardless of fiscal significance, were first placed under the jurisdiction of Treasury; other agencies or executive departments have since been created to administer some of these activities. The Postal Service, for example, was supervised by Treasury until 1829; the General Land Office, which was the nucleus of the Department of the Interior, was part of Treasury from 1812 to 1849. Operations associated with business were Treasury activities until the creation of the Department of Commerce and Labor in 1903; and the functions of the Office of the Supervising Architect of the Treasury were eventually established within the General Services Administration in 1949. The oldest seagoing armed service in the United States, the Coast Guard, remained in the Department of the Treasury until its transfer to the Department of Transportation in 1967. Other marine interests were administered by Treasury: the Coast Survey, the Lighthouse Service, and the Marine Hospital Service, from which the Public Health Service, and ultimately, the Department of Health and Human Services grew. The Bureau of Narcotics was part of Treasury until its functions were relocated in the Department of Justice as today’s Drug Enforcement Agency. The Bureau of the Budget, established in Treasury in 1921, was transferred to the Executive Office of the President in 1939 and now oversees the spending of federal funds as the Office of Management and Budget.
Treasury is an agency that has been sculpted by the history of the nation it serves, though its basic functions, assigned by Congress from powers granted to Congress in the Constitution, remain constant. The Department has adapted to the ever-changing realities of the nation’s development through periodic innovations and reorganizations. The Civil War, for example, had a great effect upon the activities of the Department of the Treasury: the loss of customs revenues from the seceded Southern states resulted in the establishment of the Bureau of Internal Revenue, as well as the printing of paper currency and the institution of the National Banking System. The growth of international trade after World War I and America’s involvement in World War II demanded an active role by the Department of the Treasury in the Bretton Woods Conference in 1944, which established the International Monetary Fund and the World Bank, and the leadership of the United States in promoting worldwide economic development.
Organization and functions
The Department of the Treasury is organized into two major components: the Departmental Offices and the operating bureaus. The Departmental Offices are primarily responsible for the formulation of policy and management of the Department as a whole, while the operating bureaus carry out the specific operations assigned to the Department. The basic functions of the Department of the Treasury include:
- Economic, international economic, and fiscal policy
- Government accounting, cash, and debt management
- Promulgation and enforcement of tax and tariff laws
- Assessment and collection of internal revenue
- Production of coin and currency
- Supervision of national banks and thrifts
The Departmental Offices are composed of divisions headed by Assistant Secretaries, a General Counsel, or Inspectors General who report to the Secretary through the Deputy Secretary, the Under Secretary for International Affairs, the Under Secretary for Domestic Finance, or the Under Secretary for the Office of Terrorism and Financial Intelligence. Most of these divisions are located within the Main Treasury Building in Washington, D.C. The bureaus make up 98% of the Treasury work force, which totals approximately 125,000 people.
The Secretary of the Treasury serves as a major policy advisor to the President, has primary responsibility for formulating and recommending domestic and international financial, economic, and tax policy, participating in the formulation of broad fiscal policies that have general significance for the economy, and managing the public debt. The Secretary oversees the activities of the Department which serves as the financial agent for the U.S. Government, carries out certain law enforcement responsibilities, and manufactures coins and currency. He also serves as the chief financial officer of the government.
The Secretary is a member of the President’s National Economic Council. He is the Chairman and Managing Trustee of the Social Security and Medicare Boards of Trustees. He also serves as U.S. Governor of the International Monetary Fund, the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the European Bank for Reconstruction and Development, and the North American Development Bank.
The Deputy Secretary, established by the Act of May 18, 1972, advises and assists the Secretary in the supervision and direction of the Department and its activities, and acts temporarily for the Secretary in his absence, sickness, or unavailability. The Deputy Secretary plays a primary role in the formulation and execution of Treasury policies and programs in all aspects of the Department’s activities.
The Treasurer of the United States, the only Treasury office older than the Department itself, was established July 29, 1775. The Treasurer was originally charged with the receipt, custody, and disbursement of government funds, though many of these functions have been taken over by a bureau of the Department of the Treasury. The Treasurer’s signature, along with that of the Secretary of the Treasury, is on all U.S. paper currency. The Treasurer also serves as one of the Treasury Department's principal advisors and spokespersons in the area of financial literacy and education.
On November 25, 2002, President George W. Bush signed the Homeland Security Bill which set into motion many changes for the Department of the Treasury. Under the reorganization of the Department, two of Treasury’s oldest bureaus, the U.S. Customs Service (1789) and the U.S. Secret Service (1865), as well as the Federal Law Enforcement Training Center (1970) were transferred to the Department of Homeland Security on March 1, 2003. Portions of the Bureau of Alcohol, Tobacco and Firearms (1972) were transferred to the Department of Justice on January 24, 2003.
- Alcohol and Tobacco Tax and Trade Bureau
- Office of the Comptroller of the Currency
- Bureau of Engraving and Printing
- Financial Crimes Enforcement Network
- Financial Management Service
- Internal Revenue Service
- United States Mint
- Bureau of the Public Debt
- Office of Thrift Supervision
This article was sourced originally from Treasury History Overview , U.S. Treasury Department, accessed January 6, 2008.