The Department of the Treasury
An overview of America’s oldest economic department, and how U.S. companies earn the right to do business abroad
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What follows below is a plain-English overview. For the Treasury’s own account of its history, see the official Treasury Department history page.
Congress created the Department of the Treasury on September 2, 1789 — one of the first three executive departments, alongside State and War — and named Alexander Hamilton its first Secretary. From the beginning, Treasury’s job was to give the young federal government financial credibility: collecting revenue, paying down the debts the states and Congress had run up during the Revolution, and establishing a national system of credit that other nations would trust.
What Treasury does today
The department that started as a small revenue office now touches nearly every part of the American economy. It manufactures the nation’s currency through the U.S. Mint and the Bureau of Engraving and Printing; it collects income and excise taxes through the Internal Revenue Service; it finances the government by issuing Treasury securities and managing the national debt; it regulates national banks through the Office of the Comptroller of the Currency; and it sets international economic and exchange-rate policy on behalf of the United States.
One office matters especially for how American businesses operate overseas: the Office of Foreign Assets Control (OFAC), housed inside Treasury, administers U.S. economic and trade sanctions. OFAC is the office that decides, in practice, where and how a U.S. company may lawfully send money, ship goods, or do business abroad — and the one that issues licenses when an otherwise-restricted transaction is allowed to proceed.
How U.S. companies earn the right to operate abroad
A U.S. corporation doesn’t get a blanket right to set up shop in another country just by existing — that right is built, country by country, out of a layered set of American and international legal instruments, many of them negotiated with the nation’s own allies:
Treaties of Friendship, Commerce, and Navigation (FCN treaties) — a class of bilateral treaties the United States negotiated with dozens of allied nations, mostly in the 19th and 20th centuries, that reciprocally guarantee each country’s nationals and companies the right to establish, own, and operate a business in the other’s territory. Many of these treaties are still in force today, and they are the legal ancestor of the modern E-1/E-2 “treaty trader” and “treaty investor” visa categories.
Bilateral Investment Treaties (BITs) — newer agreements, mostly from the late 20th century onward, that protect American investment abroad against expropriation and unfair treatment, and guarantee the right to move profits back to the United States.
The Constitution’s Foreign Commerce Clause (Article I, Section 8) gives Congress — not the states — the power to regulate commerce with foreign nations, which is the domestic constitutional basis for all of the above: it’s why these are federal treaties and federal licensing regimes, uniform across the country, rather than fifty different state rules.
OFAC licensing, in turn, is the practical last step: even where a treaty or trade agreement clears the way, a U.S. company’s overseas activity still has to clear Treasury’s sanctions rules for the specific country and counterparties involved.
Together, this is the framework — part treaty, part statute, part constitutional design — that lets American companies open offices, own subsidiaries, and move money and goods in and out of countries that are home to the United States’ foreign allies, while keeping that activity accountable to U.S. law.
Overview prepared for the Boston Made Reader. Sources: U.S. Department of the Treasury; U.S. Department of State treaty records.
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