When Lincoln was inaugurated in March of 1861, he rewarded Dix with a high-level military commission, and tapped Salmon P. Chase (who had been sworn in as the new U.S. Senator from Ohio only two days earlier) to serve as his Secretary of Treasury. Knowing that he had to raise money in order to fund the fight to reunite the Union, Chase turned to a mechanism that had been hotly debated in previous administrations, but never before implemented: an internal (income) tax. The Bureau of Internal Revenue, forerunner of the Internal Revenue Service, was established in 1862.
Also that year, the Bureau of Engraving and Printing was formed to print greenbacks – currency that wasn’t backed by specie. A year later, the National Banking System was created, and in 1865 the Secret Service was formed.
This new agency was charged with combatting a rampant problem during the Civil War era – fraudulent currency – by infiltrating counterfeiting operations and confiscating their printing presses. Lincoln signed the order creating the Secret Service on April 14, 1865. That evening he was shot and killed by John Wilkes Booth. It is a bitter irony that today we primarily associate the Secret Service with protection of our Presidents and other U.S. government leaders.
The Secret Service remained a bureau of the Treasury until 2003, when it was transferred to the newly created Department of Homeland Security.
Financing war has not been the only challenge that has occupied the Treasury Department. Throughout its history, there have been repeated debates about whether or not there should be a National Bank, and about whether to adhere to a specie standard (gold or silver) for currency or instead approve a currency that uses fiat money (which doesn’t have intrinsic value but is backed by government promise). Likewise, there have been debates over an income tax, which was instituted, then repealed, introduced again, then struck down as unconstitutional, and finally made pretty much bulletproof with the ratification of the Sixteenth Amendment.
And there’s often been concern about how to deal with the national debt.
Henry Morgenthau was Franklin Delano Roosevelt’s Treasury Secretary for the bulk of Roosevelt’s time in office. By inclination Morgenthau was a monetarist, preferring private investment over government initiatives and advocating for national debt reduction. But the country was in the throes of the Great Depression, so the Treasury Secretary worked with FDR on a double budget – balancing the country’s regular budget, but outside of that allowing large-scale emergency spending on the Civilian Conservation Corps, Works Progress Administration and other agencies that had been set up to provide employment and economic stimulus during hard times.
It was also during Morgenthau’s tenure that the Social Security program was launched in an attempt to soften the financial impacts for people who were caught unprepared for old age, disability, or loss of a spouse.