On this day in 1789, the United States Treasury Department is founded.
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.
Hamilton had been elected to the Continental Congress from New York in 1782. He demonstrated a near-reactionary political philosophy and quickly became known as a determined proponent of a stronger national government. Hamilton published several papers with James Madison and John Jay arguing for the ratification of the U.S. Constitution that are now known as the "Federalist Papers." As the first secretary of the treasury, Hamilton established most of the centralized monetary institutions of the new nation, including the national bank, before resigning in January 1795. Hamilton then returned to the private sector and a law practice in New York City, but remained a close advisor to President Washington.
In 1800, Hamilton became embroiled in a bitter dispute when he threw his support behind President John Adams' reelection campaign instead of presidential candidate Aaron Burr's. After his defeat, Burr ran for governor of New York in 1804; Hamilton again opposed his candidacy. Humiliated, Burr challenged Hamilton to a duel on July 11, 1804, in Weehawken, New Jersey. Alexander Hamilton was shot in the duel and died of his wound the following day, July 12, in New York at the age of 49.