He later served as the Agent for the United States Department of War for the Southwest Territory (later Tennessee) in the 1790s.

General Washington selected him in November 1778 to be his spymaster, and charged him with compiling information to give him a snapshot of British capabilities.

[1] In 1793, Colonel Henley was appointed by President Washington as the Agent of the Department of War for the Southwest Territory, in Knoxville, Tennessee.

In this capacity, he was Superintendent of Indian Affairs, as well as quartermaster and paymaster for locally stationed troops and militia.

Tennessee's Constitutional Convention was held in his office at the corner of what is now Gay Street and Church Avenue in Downtown Knoxville in 1796.