What is the 'U.S. Treasury'

The U.S. Treasury, created in 1789, is the government department responsible for issuing all Treasury bonds, notes and bills. Among the government departments operating under the U.S. Treasury umbrella are the Internal Revenue Service (IRS), the U.S. Mint, the Bureau of the Public Debt, the Alcohol and Tobacco Tax Bureau, and the Secret Service, which is best known for its responsibility for protecting the president and vice president of the United States.

Key functions of the U.S. Treasury include printing bills, postage and Federal Reserve notes, minting coins, collecting taxes, enforcing tax laws, managing all government accounts and debt issues, and overseeing U.S. banks in cooperation with the Federal Reserve. The secretary of the Treasury is responsible for international monetary and financial policy, including foreign exchange intervention.

BREAKING DOWN 'U.S. Treasury'

The U.S. Treasury is the Cabinet-level department responsible for promoting economic growth and security. It was established by the First Congress of the United States, which convened in New York on March 4, 1789, following the ratification of the Constitution. The secretary of the Treasury is nominated by the president and must be confirmed by the U.S. Senate.

Establishment

The U.S. Constitution was ratified in 1789, replacing the Articles of Confederation, under which the U.S. had functioned during and immediately following the American Revolution. The Constitution provided for a much stronger federal government, and the establishment of a centralized Treasury Department was an important part of that. Alexander Hamilton was the first secretary of the Treasury and served until 1795. Among his major accomplishments while he was secretary of the Treasury were the federal government's assumption of the states' debts related to the American Revolution, provisions for the payment of war bonds and the institution of a system for the collection of federal taxes.

Internal Revenue Service

In 1862, President Abraham Lincoln created the position of commissioner of internal revenue and implemented an income tax to pay for the Civil War. That tax was repealed in 1872, but the office lived on. The income tax as it exists now began with the 1913 ratification of the 16th Amendment to the U.S. Constitution, and the IRS assumed responsibility for collection and enforcement.

Treasury Bills and Bonds

Borrowing by the Treasury is done through the issuance of shorter-term notes, called bills, and longer-term bonds. The bonds have a maturity of as long as 30 years. Treasury bonds are backed by the full faith and credit of the U.S. government, and as such are popular investments by governments, companies and individuals worldwide. The global market for the instruments was an estimated $12.9 billion at the end of 2015.

The Federal Reserve Bank buys and sells the bills and bonds to control the country's money supply and manage interest rates.

RELATED TERMS
  1. Treasury Yield

    The return on investment, expressed as a percentage, on the debt ...
  2. Treasury General Account

    The general checking account used by the Department of the Treasury. ...
  3. Treasury Secretary

    The Secretary of the Treasury is a member of the Presidential ...
  4. 30-Year Treasury

    A U.S. Treasury debt obligation that has a maturity of 30 years. ...
  5. 10-Year Treasury Note

    A debt obligation issued by the United States government that ...
  6. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with ...
Related Articles
  1. Insights

    What Are the Duties of the Treasury Secretary?

    The Secretary of the Treasury is one of the most powerful positions in the U.S. federal government.
  2. Investing

    The Treasury And The Federal Reserve

    Find out how these two agencies create policies to stimulate the economy in tough economic times.
  3. Investing

    Understanding Treasury Yield

    Treasury yield refers to the return on an investment in a U.S. government debt obligation, such as a bill, note or bond.
  4. Investing

    The Importance Of U.S. Treasury Rates

    U.S. Treasury bond interest rates affect more than just bondholders! It impacts the day to day lives of all consumers.
  5. Investing

    Introduction to Treasury Securities

    Purchasing bonds that are backed by the full faith and credit of the U.S. government can provide steady guaranteed income and peace of mind. Knowing the characteristics of each type of treasury ...
  6. Investing

    Buy Treasuries Directly From The Fed

    If you want government securities, go straight to the source. We'll show you how.
  7. Investing

    What is Treasury Stock?

    Treasury stock is a company’s own stock that it holds in its treasury for later use.
  8. Financial Advisor

    Top 4 Treasurys ETFs (SHY, IEI)

    Learn about the specifics of the top four U.S. Treasury ETFs and how investors can buy ETFs that invest in bonds along the yield curve.
  9. Investing

    China Dumps U.S. Treasury Securities in December

    On Tuesday, Treasury International Capital (TIC) data was released by the U.S. Department of the Treasury, which revealed that China’s holding of U.S. Treasury bonds in December has declined ...
RELATED FAQS
  1. Why are treasury bond yields important to investors of other securities?

    Learn about the wide-ranging impact of U.S. Treasury Bond yields on all other interest-bearing instruments in the economy ... Read Answer >>
  2. How are treasury bills taxed?

    Read about how the Internal Revenue Service collects taxes on treasury bills purchased from the United States government ... Read Answer >>
  3. When are treasury bills best to use in a portfolio?

    Understand the role that U.S. Treasury bills can play in an investment portfolio and why they represent one of the most liquid ... Read Answer >>
Hot Definitions
  1. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  2. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  5. Indirect Tax

    A tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. An ...
  6. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
Trading Center