First Secretary of U.S. Treasury

The First Cabinet as a cigar label, 1920s.

The First Cabinet

Washington nominated members of his cabinet based on proven merit and diverse abilities. His cabinet also presented a balance of northern and southern interests. On September 11, 1789, Washington nominated Hamilton to become the first Secretary of the Treasury and Congress approved his appointment the same day. He started work immediately. By September 19th, he had already written and published his first report to Congress as Secretary of the Treasury. 

In addition to Hamilton, Washington's First Cabinet included Thomas Jefferson as Secretary of State, Henry Knox as Secretary of War, and Edmund Randolph as Attorney General.

Portrait of Alexander Hamilton by John Trumbull, 1792.

First Secretary of the Treasury

During his time as the first Secretary of the Treasury (1789-1795), Alexander Hamilton engaged all his energy, knowledge, and experience in laying the foundations of America’s financial and economic systems. Great challenges awaited the First Secretary of the Treasury—dealing with the national debt accumulated since the onset of the Revolutionary War and saving the country from financial collapse. Hamilton believed that establishing a modern financial system would promote economic growth.

First Report to Congress, September 19^th, 1789

This document is the first report of any kind issued by any department of the new Federal government established under the Constitution.  Hamilton wrote, printed, bound, and distributed it to Congress just eight days after his appointment as first Secretary of the Treasury, likely still a record! He reported on government expenses, calling attention to the need for strong national credit.

Hamilton felt that in order to be trusted and respected, the government should honor its debts, both foreign and domestic. He envisioned that a well-managed national debt would strengthen the union, encourage other countries to lend to the U.S., and promote economic growth. Hamilton may have already been thinking about federal assumption of the Revolutionary War debts of the individual states, which would become part of his Report on Federal Credit of January 1790.

This is an example of a 6% bond, made out to John Hancock. It is signed by Hamilton and Oliver Wolcott, who would succeed Hamilton as the nation’s second Treasury Secretary in 1795. The payment authorization is attached. It is very rare, and it is shown here along with an engraving of Hancock.

Report on Public Credit

As Secretary of the Treasury, Hamilton presented several monumental state papers that forged a national financial system. In the Report on Public Credit of January 9, 1790, perhaps his most famous report, Hamilton proposed that the new national government take responsibility for all state and national debts remaining after the war. This was a truly revolutionary concept. Approximately $75 million of obligations traded at just fractions of their face value. Few expected payments on those decade-old obligations. The fledgling United States certainly did not appear to be able to pay its debts, but herein lies Hamilton’s genius. Where others viewed the national debt as a threat to republican government, Hamilton believed it could be “a national blessing.”

He said that the Revolution was fought to create a new nation, not individual states. Thus, he proposed assuming all the state debts in exchange for new U.S. Treasury bonds. His funding plan increased the nation’s credit overseas, making it cheaper and easier for both the government and private enterprises to obtain foreign financing. Finally, funding would also create a form of liquid capital that would help the economy to allocate resources more efficiently. Congress approved the “assumption” of this old war debt and the new U.S. Treasury debt took the form of a 3% bond, a 6% bond and a 6% bond that deferred paying interest until 1801. 

The Bank of the United States in Philadelphia was the first building completed by the new government while Washington was still in office. It was a handsome and dignified building by architect Samuel Blodgett, 1797. 

Creating the Bank of the United States

Passing the Assumption Bill in Congress was the first major step in building the creditworthiness of the federal government at home and abroad and placing all thirteen states on equal ground. Establishing the First Bank of the U.S., the Mint, and a stable and uniform national dollar currency further strengthened the economic foundations and encouraged investing and enterprise.

Just as an individual would need a checking account, the government needed a bank to process revenues, make payments, and turn to for loans. In his Report on the Bank, Hamilton proposed the establishment of a bank to address those needs of the new government. In his recommendations as to the organization of the first Bank of the United States, Hamilton relied on his knowledge of European financial systems. He envisioned an independent bank, where decisions would not be influenced by the government or foreign stockholders. 

Hamilton's Report on Manufactures powerfully articulated the reasons for encouraging manufacturing in the U.S., including economic independence for the new nation. The Report also included specific proposals, outlined by Hamilton in great detail. His recommendations for very modest tariffs were passed by Congress within six months of his completing the Report on Manufactures.

Bank of the United States Today

Here are two images of the restoration of the first Bank of the United States, today part of Independence National Historical Park in Philadelphia. This exciting project will take time, but the end result will be a wonderful addition to our understanding of the early days of the nation and the visual thrill of the first building erected by the new government. 

Society for Useful Manufactures (S.U.M.)

In the summer of 1778, days after the Battle of Monmouth, Hamilton, Washington, and Lafayette happened to have lunch by the Great Falls of the Passaic River. Hamilton recognized the potential of the tremendous water power from the falls to create a manufacturing location. His vision came true years later with the establishment of the Society for Useful Manufactures, located in Paterson, New Jersey. Paterson became extremely successful in the 19th century.

Hamilton played a critical role in establishing the S.U.M. at the Great Falls of the Passaic River. He envisioned this as a pilot project, a center for innovation and manufacturing, and an incubator of other manufacturing startups. Hamilton wrote the corporate charter with all the necessary powers to put his vision into practice and urged Governor William Paterson to secure passage by the New Jersey legislature, thus laying the foundations of Paterson as the first planned industrial city in the nation. 

This Paterson ribbon celebrates the Centennial of the city.

USCG Cutter Hamilton.

Father of the U.S. Coast Guard

Hamilton organized a highly functional Treasury Department with employees throughout the Union. As part of the Treasury Department responsibilities assigned by Congress, Hamilton was in charge of all the light houses, beacons, buoys, and piers throughout the new nation. He established a system of ten cutters to ensure revenue protection and guard against smuggling. Over the years, Hamilton's innovation became known as the U.S. Coast Guard.