Reply #34: Today in History Break [View All]

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1789: Congress founds U.S. Treasury

On this day in 1789, the United States Treasury Department is founded.




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The institution’s roots can be traced to 1775, when America’s leaders were looking for ways to fund the Revolutionary War. Their solution--issuing cash that doubled as redeemable "bills of credit"--raised enough capital to fuel the revolution. but also led to the country's first debt. The Continental Congress attempted to reign in the economy, even forming a pre-Constitutional version of the Treasury. Neither this move, nor the signing of the Declaration of Independence, which enabled the U.S. to seek loans from foreign countries, proved effective. The debt kept mounting, while war notes rapidly deflated in value.

With the ratification of the Constitution in 1789, the American government established a permanent Treasury Department in hopes of controlling the nation’s debt. President George Washington named his former aide-de-camp, Alexander Hamilton, to head the new office. The former New York lawyer and staunch Federalist stepped in as Secretary of the Treasury on September 11. Hamilton soon outlined a practical plan for reviving the nation's ailing economy: the government would pay back its $75 million war debt and thus repair its badly damaged public credit.



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