The 225th Anniversary of the Coast Guard and Its Treasury Department Origins
By Nicole Scholet de Villavicencio
August 17, 2015
The article is based on a presentation given at Federal Hall in New York City as part of the 2015 Coast Guard Festival commemorating the 225th anniversary of the Coast Guard's founding.This article was originally printed in the Treasury Historical Association August 2015 newsletter.
On August 4, 2015, the US Coast Guard commemorated the 225th anniversary of its founding. During its 225 years of service, the US Coast Guard has been responsible for a variety of important missions; its duties were just as diverse when it was originally formed as the Revenue-Marine under the direction of Alexander Hamilton. And though it is now part of the Department of Homeland Security, the Coast Guard spent the majority of its existence under the jurisdiction of the Treasury Department, reflecting its key original function in “protecting the nation’s revenue.”
When the states ratified the US Constitution as their new form of government in 1788, they finally gave the federal government the power to collect its own revenue. This was largely done through the collection of import duties, which would make up 90-95% of the nation’s federal revenue through the beginning of the 20th century.
In April 1790, Alexander Hamilton, then the Secretary of the Treasury, officially submitted to Congress a “Report on Defects in the Existing Laws of Revenue” in which he proposes the establishment of a system of armed boats called cutters. The key purpose of these cutters would be to deter smuggling and ensure the collection of import duties by the US Customs Service, which was also part of the Treasury Department. The revenue laws that Congress had passed during its first year of existence were not being consistently followed. After all, during the Revolutionary War, smuggling had been a patriotic duty in order to undermine the British, and some merchants flaunted the new American laws to continue their smuggling practices. The new nation needed to ensure it was receiving revenue to responsibly finance the new federal government and pay off its Revolutionary War debt.
It was prior to the ratification of the US Constitution, just a year and a half before his April 1790 report, that Alexander Hamilton foresaw this future need and first articulated the concept of a revenue protection service in the Federalist Papers. This collection of 85 essays, which Alexander Hamilton supervised and co-wrote, furnished arguments as to why the US Constitution should be ratified and why a stronger federal government was needed. In Federalist No. 12, Hamilton explained that a national government must have funds in order to support itself, and that import duties would likely be the principal means for earning revenue. But in order to ensure the collection of revenue, Hamilton proposed that “a few armed vessels, judiciously stationed at the entrances of our ports, might at a small expense be made useful sentinels of the laws.” This visionary idea anticipated the future government’s needs before it was even created.
Now Hamilton’s April 1790 report went into even greater detail on establishing such a service, not only proposing the number and types of ships needed, but even providing specifics on the crew positions and their salaries. Congress followed Alexander Hamilton’s recommendations and in the resulting Tariff Act of 1790, it authorized “that the President of the United States be empowered to cause to be built and equipped, so many boats or cutters, not exceeding ten, as may be necessary to be employed for the protection of the revenue.” President George Washington signed the Tariff Act into law on August 4th.
Known at the time as the Revenue-Marine, the service was placed under the jurisdiction of the Treasury Department. Treasury Secretary Hamilton quickly went to work in organizing the service. He decided that each of the ten original cutters should be built in the region in which it was to protect, citing that the ships would be better built for the respective region’s waters using local knowledge and that doing so would also instill a sense of regional ownership. He thus had to engage in a flurry of correspondence to oversee the construction of these cutters throughout the country. Hamilton also gathered local recommendations on who to nominate as captains and officers for the ships, haggled on the ship-building contracts, and even determined the rations for the officers and crew.
By the spring of 1791, several of the cutter ships had been constructed and were ready for service. On June 4, 1791, Alexander Hamilton sent a poignant letter to these captains, reviewing their duties. And their duties would be numerous. Among the original functions of the revenue cutters were to patrol the coasts, to protect shipping from pirates and privateers, and to ensure that tariffs were not evaded.
Other cutter responsibilities included bringing supplies to lighthouse stations in service to the Lighthouse Establishment, which was also part of the Treasury Department and whose development was overseen by Hamilton. In an effort to gather statistical information on the country, Alexander Hamilton further requested that the ship captains send reports of the ship manifests collected and, in their spare time, chart the local coastlines.
As the country evolved, so did the cutters’ tasks. Beginning in 1793, the cutters enforced the policy of neutrality created by the Washington administration - and articulated by Alexander Hamilton - to not take sides in the European conflict that was brewing. The next year, the Revenue-Marine was given the mission of upholding the Slave Trade Act of 1794 that prohibited American ships from engaging in the slave trade and any ship from using the US as an exit port for the slave trade. Between 1794 and 1865, revenue cutters captured approximately 500 slave ships, and many of the slaves found onboard were subsequently freed.
The cutters were also the nation’s only line of defense at sea for eight years. Following the Revolutionary War, the Continental Army and Navy were essentially disbanded. It was not until the United States was on the brink of war with France in 1798 in what is called the Quasi-War that the US Navy and Army were truly established. Launching a protocol that would be followed for every major US war, the Revenue-Marine became part of the US Navy during wartime. Alexander Hamilton, at this time the Inspector General of the Armed Forces under George Washington, oversaw the temporary integration of the Revenue-Marine with the Navy and the construction of additional cutters.
Over the next two centuries, the US Coast Guard would continue to expand. But no matter what new responsibilities it was given, under the peacetime jurisdiction of the Treasury Department through 1967, this armed service would continue to fulfill its principal duty to patrol the coasts and enforcing the revenue laws that were so critical to the nation’s function. By studying these early roots of the US Coast Guard, we gain a broader view of the US Treasury’s origins. Responsible for more than just managing the nation’s finances, the US Treasury under Alexander Hamilton played an active and integral role in the development of early national policy and the economic growth of a new country.