In continuing our series on the federal departments, we’ll pick up with the second department to have been formed, the Treasury Department.
History and Origin
The first conversation of a federal treasury originated with how the Thirteen Colonies would finance the Revolutionary War. Since Congress had no power of taxation, paper money was issued with later coin redemption – all in faith of American independence. Just days after the Battle of Bunker Hill, the first stage of the war, the Continental Congress issued $2 million in bills in June 1775. During the Second Continental Congress, a committee of five was established to oversee a de facto treasury, primarily with the goal of not growing the national debt in the face of a weak economic connection between the colonies.
When the Declaration of Independence was signed, the United States, now a sovereign nation, was able to secure loans from other countries.
1789 marked the First Congress, where the federal management of finances was permanently instituted. The Department of Treasury was named, as well as its secretary, the head of the department; a comptroller; an auditor, a treasurer, a register, and an assistant secretary.
The first de facto Treasurer of the U.S. was Michael Hillegas, who earned the title on May 14, 1777. However, the Treasury was reorganized three times between 1778 and 1781 and the $241.5 million of paper Continental Dollars devalued quickly. This led to the phrase “not worth a Continental,” as angry Americans protested the virtually worthless currency.
In 1781, Robert Morris was named the Superintendent of Finance. Nicknamed “the Financier,” Morris created the Bank of North America, established national credit between the U.S. and Europe, issued his own notes, and managed wartime supply chains. Morris’ vast mercantile network and personal wealth also helped secure decisive victories for the Continental Army during the Revolution. All of what Morris did eventually led to his own bankruptcy later in life.
But Morris’ work was so revolutionary in and of itself that it effectively laid the groundwork for the modern Treasury. Morris declined George Washington’s offer to be the first official Secretary of the Treasury. Instead, he suggested a fellow Founding Father.
Alexander Hamilton became the first Secretary of the Treasury on September 11, 1789. His first task: resolving the nation’s $75 million post-war debt. Hamilton leaned on federal assumption of debts of states who could not pay them back. Hamilton expanded federal taxation and tariffs and imposed an excise tax on whiskey – the latter led to the famed Whiskey Rebellions.
Hamilton created the First Bank of the United States, created the first official tax system, established customs, and established the U.S. Mint. Hamilton’s plan for the federal government to assume state debts paid off, as creditors were then bound to the government and foreign investment became more attractive. Moreover, the austerity and firmness of the fledgling nation helped assert its dominance overseas, garnering respect and recognition from other nations for the country as a whole.
One of Hamilton’s key achievements is also that of creating the Revenue Cutter Service to enforce customs. That service is now known as the Coast Guard.
Hamilton can be seen on the obverse of any U.S. $10 bill, with the Treasury on the reverse.
Oversight
The functions of the Treasury include producing all U.S. currency and coinage; collecting taxes and duties paid to the U.S.; managing federal finances and government debt, including the U.S. public debt; supervising national banks; investigating tax evaders; enforcing federal tax laws; and advising on domestic and international fiscal policy.
According to the Treasury Department’s website, the department is the “executive agency responsible for promoting economic prosperity and ensuring the financial security of the United States. The Department is responsible for a wide range of activities such as advising the President on economic and financial issues, encouraging sustainable economic growth, and fostering improved governance in financial institutions.”
Their website also says that the department aims to “encourage global economic growth, raise standards of living, and to the extent possible, predict and prevent economic and financial crises.”
Economic sanctions are also a prerogative of the Treasury, namely against foreign threats to the U.S.
The Treasury also serves alongside the Office of Management and Budget (OMB) in estimating the spending levels for the Executive Branch, the Joint Committee on Taxation for estimates on congressional revenues, and the Congressional Budget Office (CBO) for estimates on congressional spending.
In 2024, the Treasury Department clocked a $16.5 billion budget, with $12 billion earmarked for the IRS.
The Treasury Department is checked by and reports to several congressional committees, primarily the House Financial Services Committee, the House Oversight Committee, and the Senate Banking Committee.
Bureaus
The Treasury Department has several bureaus that oversee various aspects of taxation and regulation.
Alcohol and Tobacco Tax Trade Bureau (TTB): responsible for administering and enforcing laws on the production, use, and distribution of alcohol and tobacco; also collects excise taxes on firearms and ammunition.
Bureau of Engraving and Printing (BEP): designs and manufactures U.S. currency and securities.
Financial Crimes Enforcement Network (FinCEN): supports investigative efforts and global cooperation against domestic and international and financial crimes.
Bureau of the Fiscal Service: promotes financial integrity of the federal
government through accounting, collections, payments, shared services, and financing.
Internal Revenue Service (IRS): determines, assesses, and collects internal U.S. revenue; the largest of the Treasury’s bureaus.
Office of the Comptroller of the Currency (OCC): charters and supervises national banks.
U.S. Mint: designs and manufactures domestic, foreign, and bullion coins and distributes coins to Federal Reserve Banks; also maintains physical custody and protection of U.S. silver and gold.
Inspector General: conducts independent audits to help the Treasury’s efficiency, effectiveness, and prevention of fraud.
Community Development Financial Institution (CDFI) Fund: expands availability of credit, investment capital, and services in financially distressed communities.
Treasury Inspector General for Tax Administration (TIGTA): recommends policy to promote effectiveness of internal revenue laws and to detect abuse and fraud within the Internal Revenue Service (IRS).
The Treasury Today
The requested FY2026 budget for the Treasury clocked in at about $12.4 billion, a 29% decrease from the enacted FY2025 budget. While the IRS saw a $3.6 billion (31%) increase in funding for taxpayer services, enforcement services shrank by $3.6 billion (34%) and technology and operations shrank by $2.6 billion (37%).
As of late 2024, the Treasury has over 100,000 employees, with 98% of that staff working within its bureaus. The IRS is by far the most employed bureau, with 2022 data showing over 81,000 employees. In second place is the Bureau of the Fiscal Service boasting just 3,500 employees. While the figures fluctuate, the IRS’ numbers are consistently the largest of the bureaus.
The 79th and current Secretary of the Treasury is Scott Bessent (R-SC). An alumnus of Yale, Bessent made his billions as a hedge fund manager betting against foreign currencies. He also ran the London office of the Soros Management Fund (SFM), a privately held American hedge fund founded by George Soros in 1970. Bessent was an economic advisor and fundraiser for Donald Trump’s (R-FL) 2024 campaign.
Bessent was confirmed as secretary by the U.S. Senate in a 68-29 vote. He is the first openly gay person to head the department.
Bessent identifies the U.S. economy as a “barbell economy,” one with powerful raw material sectors, but one with a weakened middle class. His three-point plan for the president is modeled in the form of “Abenomics,” economic policies implemented by the late Prime Minister of Japan Shinzo Abe. The plan includes lower deficits, monetary easing, and fiscal stimulus. He has supported continuing Social Security, expanding nuclear power, the Big Beautiful Bill, the creation of Trump Accounts, and reducing government economic intervention. Bessent has opposed raising the federal minimum wage, the creation of a U.S. central bank digital currency, and the U.S. Senate filibuster.
