Treasury Secretary: Meaning, What They do, History

What Is the Treasury Secretary?

Key Takeaways

Understanding the Treasury Secretary

The Treasury secretary is a member of the President’s cabinet and fifth in the line of succession to President. As head of the Department of the Treasury, the Secretary is the President’s principal economic adviser, having a dramatic impact on domestic and international policies, with a particular focus on tax and spending policy. The Treasury Secretary is appointed by the President and is subject to confirmation by the Senate.

The Secretary of the Treasury is often considered one of the four most important cabinet positions, along with the Secretary of Defense, Secretary of State, and the Attorney General. The Treasury Secretary is also a member of the U.S. National Security Council, an organization tasked with advising and assisting the President of the United States on matters relevant to national security and foreign policy.

The Treasury Secretary focuses on fiscal policy, while the nation’s monetary policy is the responsibility of its central bank, the Federal Reserve. Legislation governs the Fed’s mission and its leadership is appointed by the President, but it is an independent entity and not housed in any branch of the federal government.

The U.S. Department of the Treasury is separated into two major parts: the departmental offices, responsible for drafting fiscal legislation, and the operating bureaus, responsible for carrying out said legislation.

Special Considerations

The Treasury of the United States issues the national debt in the form of Treasury securities. It collects the federal government’s tax revenue through the Internal Revenue Service (IRS). From 1862 to 1971, the Treasury issued the nation’s paper money, known as United States notes.

Since 1971, U.S. paper currency has been issued exclusively by the Federal Reserve, but the Treasury Secretary must still sign these notes for them to become legal tender. The Bureau of Engraving and Printing, which manufactures the notes, is an agency of the Treasury; the U.S. Mint, another Treasury agency, produces the nation’s coins.

Through the Office of Foreign Assets Control, the Treasury enforces economic sanctions against foreign countries, companies, and individuals.

History of the Treasury Secretary

The first Treasury Secretary was Alexander Hamilton, George Washington’s aide-de-camp during the Revolutionary War, who served from Sept. 11, 1789, to Jan. 31, 1795. His contributions to the Treasury’s development include the establishment of the U.S. Mint, the First National Bank—though its charter was allowed to lapse in 1811, and the full funding of the national debt—together with the assumption of cumulative state debts, which established the reputation of the U.S. as a reliable borrower.

Today, Treasury securities are considered among the safest investments in the world, and their interest rate is often used as a proxy for the theoretical risk-free rate of return.

Today, Treasury securities are considered among the safest investments in the world, and their interest rate is often used as a proxy for the theoretical risk-free rate of return.