United States Secretary of the Treasury

What Did Hamilton and Other Treasury Secretaries Really Do?

The U.S. Secretary of the Treasury is the chief financial officer for the federal government. In this capacity, his job (so far, no women have served in this office) is to oversee and manage the public debt, even though he has no control over spending and deficits. He collects taxes, even though he doesn't set tax policy. He prints money and manufactures currency, although he doesn't create the money supply. Nevertheless, Treasury Secretaries throughout our nation's history have played crucial roles. Understand the importance of many Treasury Secretaries, from Alexander Hamilton to Steve Mnuchin.

First Treasury Secretary Alexander Hamilton (1789 - 1795)

Alexander Hamilton
Lin-Manuel Miranda of 'Hamilton' performs onstage during the 70th Annual Tony Awards at The Beacon Theatre on June 12, 2016 in New York City. Photo by Theo Wargo/Getty Images for Tony Awards Productions

Alexander Hamilton was the first Treasury Secretary. His first task was to pay off the $50 million debt the U.S. had incurred to pay for the Revolutionary War. He also absorbed the states' debts. This responsibility established the new country as credit-worthy, allowing needed foreign direct investment to build the nation's economy.

Hamilton paid off the debt by issuing the first U.S. Treasury bonds, and by establishing the first taxes -- on liquor. He created the first federal mint, to issue a national currency. He also successfully argued for the first central bank of the United States, so the Federal government would have a safe place to store funds.

Hamilton's vision was for the federal government to have political dominance over the states. He also pushed the new country to move toward an industrial economy. He was in favor of tariffs to protect these new industries, and increasing liquidity to help start new businesses. 

Salmon Chase (1861 - 1864)

Thanks to Salmon Chase, we don't have to lug around sacks of gold coins.(Photo:Getty Images))

Salmon Chase was the Treasury Secretary under President Abraham Lincoln. He did two important things: he created the country's banking system and invented the paper currency in use today. Like many Treasury Secretaries, he helped fund a war -- in this case, the Civil War at a cost of $500 million. He did so, even though he was opposed to the war, and was an anti-slavery activist.

Chase created the first paper dollar bill in 1861, and made sure the phrase "In God We Trust" was stamped on it. In his memory, the $10,000 bill was printed with his face on it from 1928-1946. His name lives on in the name of JPMorgan Chase, since the Chase Manhattan Bank was originally named after him. (Source: Joshua Brown, The Reformed Broker, The Most Important Treasury Secretary You Never Heard Of)

Andrew Mellon (1921- 1932)

Andrew Mellon
Andrew Mellon (L), Secretary of the Treasury, received the honorary degree of Doctor of Law from Cambridge University. He was visiting his son, Paul Mellon (R), who was attending. Photo: Bettmann/Getty Images

Andrew Mellon first task as Treasury Secretary was to reduce the federal debt resulting from World War I. He said, “the people generally must become more interested in saving the government’s money than in spending it.”

He first proposed supply-side theory in 1924 in his book, "Taxation: The People's Business." He called it "scientific taxation." He said the rich would use tax cuts to hire more people. That would boost the economy more than tax cuts to the poor. 

In addition, lower tax rates would encourage more people to follow the law and pay their taxes. He cut the top marginal rate from 73 percent in 1922 to 24 percent in 1929. That lowered the debt. 

As an ex-officio member of the Federal Reserve Board, he favored interest rate hikes to curtail speculation in 1929. The Fed kept raising rates even though the economy entered a recession in August. That led to the stock market crash in October.  (Source: "Andrew Mellon," Federal Reserve History.)

Henry Morgenthau (1934 - 1945)

Treasury Secretary
Soup lines. (Photo: Library of Congress, Prints & Photographs Division, FSA-OWI Collection)

Henry Morgenthau was Treasury Secretary under both President Franklin D. Roosevelt and Harry Truman. He was co-author of the New Deal, an aggressive spending program designed to create jobs, set up social safeguards and end the Great Depression of 1929. Morgenthau oversaw the sale of war bonds to finance World War II. After the war, he proposed the Morgenthau Plan to prevent Germany from building up the economic strength to ever be a military threat again. It was very harsh. It suggested that Germany be divided into two states, its industries annexed by neighboring countries, and sharply reduce the standard of living. Truman opposed the severity of the plan, but the last part was implemented. A Directive banned assistance to German farmers, and prohibited the production of oil, rubber, merchant ships, and aircraft until 1947. (Source: United States Holocaust Memorial Museum, Henry Morgenthau)

Larry Summers (1999 - 2001)

larry summers
Larry Summers oversaw deregulation of the financial industry. Photo: Mario Tama/Getty Images

Larry Summers was Treasury Secretary for President Bill Clinton from 1999-2001. His oversaw the repeal of the Glass-Steagall act, which allowed banks to invest in risky assets like collateralized debt obligations. Summer also was a strong advocate for the deregulation of derivatives. This is one reason why government officials had no idea that the collapse of subprime mortgages would spread to general economy. They literally did not know how pervasive the use of credit default swaps and other unregulated derivatives had become. Read more about Larry Summers. More

Hank Paulson (2006 - 2009)

Former Treasury Secretary Hank Paulson
Hank Paulson, Treasury Secretary under President Bush. (Photo: Chip Somodevilla / Getty Images)

Hank Paulson was asked to become Treasury Secretary by President George W. Bush in 2006. He was reluctant to leave his position as CEO of Goldman Sachs, but his experience at the firm gave him intimate knowledge that would prove useful when the 2008 financial crisis hit. He spearheaded the bailout efforts, and used his personal relationships in the banking industry to force them to accept government ownership to shield the weaker banks with the credibility of the stronger ones. Prior to the financial crisis, he managed the Bush tax rebates in early 2008. He has been widely criticized both for doing too much, such as bailing out the banks, and for not doing enough, such as allowing Lehman Brothers to fail. Read more about Hank Paulson. More

Tim Geithner (2009 - 2013)

Tim Geithner
Tim Geithner oversaw the recovery from the 2008 financial crisis. (Photo: U.S. Treasury Department)

Tim Geithner served under President Barack Obama during his first term of office. A month after he took office, he launched the $2 trillion Financial Stability Plan, using funds from the TARP program. Prior to serving as Treasury Secretary, he was head of the New York Federal Reserve Bank. In this role, he was intimately involved in guiding the bank bailouts intended to soften the 2008 financial crisis. He also guided European leaders during the financial crisis. Many of them did not have his experience in global finance. Read more about Tim Geithner. More

Jack Lew (2013 - 2017)

Jack Lew
Current Treasury Secretary Jack Lew (Photo: White House)

Jack Lew's biggest challenge was to work with Congress to find the best way to reduce the national debt. Lew was selected by President Obama because he has a lot of experience dealing with budgets and administration. He was Obama's former Chief of Staff, Director of the Office of Management and Budget and Chief Operating Officer for Management and Resources in the State Department. He also served as OMB Director under President Clinton, where he helped negotiate a bi-partisan transition to a balanced budget.

Lew has also worked for Citi Global Wealth Management and Citi Alternative Investments (CAI), and was the chief operating officer of New York University. (Source: White House, Jack Lew)

Steve Mnuchin

Steve Mnuchin
Eli Miller, chief operating officer of the Trump campaign, and Steve Mnuchin, national finance chairman for the Trump campaign, arrive at Trump Tower, November 29, 2016 in New York City. Photo by Drew Angerer/Getty Images

Steve Mnuchin was Donald Trump's campaign finance chairman. As Treasury Secretary, he promises to reduce the Dodd-Frank regulations. He wants to return Fannie Mae and Freddie Mac to the private sector. (He didn't say whether the federal government will still guarantee its loans.)

Mnuchin will implement Trump's 5-point tax plan. He was co-author of the plan. He will also oversee the subsequent increase in the national debt. (Source: "Trump's Treasury Pick Says U.S. Should Get Out of Freddie Mac and Fannie Mae," Fortune, December 1, 2016.)

Mnuchin was chief information officer at Goldman Sachs. He also worked in mortgage securities. In 2002, he set up his own hedge fund, Dune Capital. It financed movies like "X-Men" and “Avatar.” He bought IndyMac Bank from the federal government when it failed in 2008. The renamed OneWest Bank had aggressive foreclosure policies. Five years later, he made a 150 percent profit when he sold it. (Source: " "Steven Mnuchin Is More Pragmatist Than Ideologue," DealBook, November 30, 2016.)

How the U.S. Treasury Department Works

U.S. Treasury Building with statue. The Treasury Department collects income taxes. Photo: Hisham Ibrahim/Getty Images

You have the U.S. Department of Treasury to thank for the I.R.S, the U.S. Mint, and the Bureau of the Public Debt. These Bureaus, along with nine others, are responsible for 98 percent of the department's functions. The remaining 2 percent of the work is done by the Secretary's office, but it is very influential in the global economy. The Treasury Department's 117,000 employees function with an $11 billion budget, and manage $358 billion in tax credits and debt financing.  More

Role of the Treasury Secretary

The Federal Reserve and Treasury Dept. set interest rates.
The Treasury Secretary is the country's chief financial officer. Photo by Alex Wong/Getty Images

The Secretary of the Treasury has several important functions. First, he advises the President on financial, economic, and tax policies, both domestically and internationally. He also participates in setting fiscal and budgetary policies.

The Treasury Secretary manages all the various functions of the Treasury Department. The most important is funding the public debt by overseeing the Treasury auction process. The one that is most important to most taxpayers is executing federal tax policy and collecting income taxes through the Treasury's Internal Revenue Service. The Secretary oversees Treasury's function of manufacturing coins and currency, which affects everyone.

The Secretary sits on many Federal government financial boards and councils. He is the Chairman and Managing Trustee of the Social Security and Medicare Boards of Trustees. He also sits on: the President’s National Economic Council, 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.