As President Washington’s first term of office got under way, the United States was pretty much broke. The Revolution, while great for the soul, had been awful on the back pocket. War loans from the French and the Dutch were hanging over the government, there were other war debts still outstanding, and there were new bills being created as the government ramped up. And, of course, there was precious little money to pay for any of it.
In 1790, there wasn’t any income tax. There weren’t taxes on capital gains, nor were there taxes on estates, gasoline, phones, or cars that used too much fuel. But the one area where the government could collect some “money off the top” was imports. Goods coming into the States had to come through the harbors, so officials would be there to assess the duties on all the stuff shipped from Britain, France, the West Indies, and other places.
But guess what? People hated taxes in the 18th century, too. And because loopholes in the “tax code” didn’t yet exist, the Colonists-turned-Americans simply returned to the methods they used when circumventing the British tariff system. A smuggling racket was born (or reborn), whereby product was spirited into the country, beyond the eyes and, more importantly, beyond the reach of the taxing bodies that awaited it.
The government needed to do something, as it could only run on good will (and a mediocre credit rating) for so long. The newly-appointed Treasury Secretary, ultimately responsible for the money, had an idea. Alexander Hamilton suggested a small fleet of single-masted vessels, called “revenue cutters”, be built to patrol offshore and intercept vessels that seemed to be heading toward land, but avoiding the ports.
And on August 4, 1790, President Washington signed the bill creating the Revenue-Marine. And Hamilton’s penchant for precision meant he had most of the details of the service already on paper, right down to the number of muskets, bayonets, and foodstuffs each boat should carry.
The Secretary of the Treasury also created a rigorous code of conduct for the captains and crews, because the power these men wielded needed to be tempered, lest the public become inflamed against it. Hamilton said crews need “always keep in mind that their countrymen are free men and as such are impatient of everything that bears the least mark of a domineering spirit.” And the men were trained to “refrain from whatever has the semblance of haughtiness, rudeness, or insult.”
It was a success as the Revenue-Marine. It was a success when it became the Revenue Cutter Service in the late 19th Century. And it remains a success today…as the United States Coast Guard.