During the American Revolution, the Continental Congress had no power to levy and collect taxes, nor was there a tangible basis for securing funds from foreign investors or governments. Left with no real money, the delegates resolved to issue paper money in the form of bills of credit, promising redemption once the war was won. Congress issued $2 million in bills; on July 25, 1775 and twenty-eight citizens of Philadelphia were employed by the Congress to sign and number the currency, by hand. Congress then assigned the responsibility for the administration of the revolutionary government’s finances to Joint Continental Treasurers, George Clymer and Michael Hillegas, and then stipulated that each of the colonies contribute to the Continental government’s funds. Many of the states never fulfilled on this promise and the value of the Continental Currency began rampant inflation. 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.
After the US Government was formally reorganized under the US Constitution, Congress created a permanent institution for the management of government finances:
September 2, 1789
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’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.”
In the first years of the American republic’s existence, the government was quartered in Philadelphia until the new capital city (Washington, DC). The US Treasury was housed first in rented quarters in Carpenters Hall then the First Bank of the United States (our nation’s oldest purpose-built government building) on Third Street. 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: State, War, Treasury and Navy. The Treasury Building, to the southeast of the White House, was burned by arsonists in 1833 with only the fireproof wing left standing.
Many functions of the Federal Government, regardless of fiscal significance, were first placed under the jurisdiction of Treasury; 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; the Coast Guard, remained in the Department of the Treasury until its transfer to the Department of Transportation in 1967 (now part of Homeland Security, Why doesn’t anyone like the Coasties?)