Valley Forged

Early American counterfeiters and
their heirs on Wall Street.

By Jamie Malanowski

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Moneymakers: The Wicked Lives and Surprising Adventures of Three Notorious Counterfeiters
by Ben Tarnoff
Penguin Press PC, 384 pp.

Den Tarnoff’s informative and entertaining new book Moneymakers is full of small bits of fascinating information about what it was like to print phony money in America in the years between 1750 and 1865. Among the things that struck me was that while counterfeiters needed markets and taverns and other centers of civilization in which to pass bad bills, they, unlike many other criminals, seldom set up shop in cities. Too many nosy neighbors attending to your spending habits, too many inquisitive constables wondering how your trash came to be filled with poorly printed money.

The first of the three counterfeiters Tarnoff tells us about is Owen Sullivan, who headquartered his operation in the Oblong, the remote and sparsely settled region on the disputed border of Connecticut and New York. Not only was it unlikely that a police officer would wander by and discover Sullivan, but if he did, it would be hard to tell if he even had jurisdiction. And with that Sullivan helped to establish, or at least uphold, one of the keys to counterfeiting success: if you’re going to operate outside the law, it helps if the law is confused.

Sullivan—almost certainly not his real name—was an Irish immigrant who combined personal charm and entrepreneurial drive in building a thriving counterfeiting operation in New York, Connecticut, and Massachusetts in the 1750s. This was the period when paper money was introduced in the colonies as a kind of official IOU, a temporary solution to the problem of how to pay men who volunteered for the militia. Thus began a long, fierce argument between the advocates of hard money and paper money. Paper money proponents liked the convenience; it simplified the act of exchange and greased the wheels of commerce. Hard money advocates preferred the legitimacy of coinage, the hefty metal wheels that in a commercial exchange preserved the idea that the value of all things could be expressed in some amount of rare and hard-to-extract minerals. Hard money advocates saw charlatanry behind the idea of pretending that a scrap of paper had value just because it had some inky Latin words on it; no wonder the Protestants among them compared paper money to the Catholic doctrine of transubstantiation, arguing that a thing doesn’t change its essence just because one says it does. Hard money men were also concerned about the vulnerability of paper to deceit, and rightly so. On the other hand, businesses were prospering, and there wasn’t enough precious metal to underpin so much industry. People wanted paper, and Sullivan gave them what they wanted—at least until they couldn’t spend it.

The innovation of paper money created Sullivan’s opportunity; legal ambiguity helped him succeed. Sullivan printed currency from New York, Connecticut, New Hampshire, Rhode Island, and Massachusetts. If enforcement was inconsistent, the law could be incoherent; officials of one colony didn’t know if they could prosecute a man for printing the money of another. Punishment was also irregular: counterfeiters in New York were hanged, but in Connecticut they were branded, had part of their ears lopped off, and were locked up—theoretically for life but for what was in practice a considerably shorter period of time.

After a seven-year run, Sullivan was apprehended by a posse led by a motivated businessman named Eliphet Beecher, who, availing himself of an informer’s services, tracked Sullivan into his Oblong hideout. Sullivan was hauled to Manhattan and, at the age of thirty-six, executed. From the picture Tarnoff paints of Sullivan’s life—living in a cave, furtively slipping in and out of Merrimack River Valley towns to palm off the phony bills—one wonders why a man of such ingenuity and drive would select this particular career. Tarnoff does speculate briefly on the sheer thrill that must have been realized whenever a false bill was passed; the more a bill was scrutinized before being accepted, the greater must have been the jolt.

Tarnoff’s second counterfeiter is David Lewis, a handsome, swashbuckler sort who became a folk hero on the basis of his audacious escapades passing bad money and then breaking out of jail. On the whole, Lewis seems less dedicated to counterfeiting than Sullivan; his resume also includes armed robbery and assault. But Lewis and his gang had two essentials in common with Sullivan: they lived in a period of financial invention, and functioned in a time of inconsistent regulation. Working in the rugged Allegheny Mountains of central Pennsylvania during the years following the War of 1812, these fraudsters prospered during the state-chartered bank’s heyday, when hundreds of new banks sprang into existence. Rare was the man in Erie or Wilkes-Barre who could say for certain if there really was a First Bank of Maryland, let alone what its notes looked like. Young men who are genial and handsome thrive in most environments, but in this atmosphere Lewis functioned especially well, until a posse caught up with him and shot him. But like the bank robbers of the Depression who became legends among people on whom banks had foreclosed, Lewis was celebrated. In the Panic of 1819, state-chartered banks collapsed in a heap, leaving behind notes that were now as worthless as the paper Lewis had printed. Lewis was the dashing young man who had taken on the slippery bankers at their own game, and had beaten them at it, at least for awhile.

Tarnoff’s third counterfeiter is different than the first two, if only because Samuel Curtis Upham was not only not a criminal but also, in Tarnoff’s word, a patriot. But like Sullivan and Lewis, Upham worked during a time of financial innovation and lax enforcement. In his case, the financial innovation was newly printed money from the newly formed Confederate States of America, and the lackadaisical enforcement was practiced by the federal government.

Upham was a Philadelphia shopkeeper who in 1862 got the idea to print lookalike Confederate bills and sell them as souvenirs of the rebellion; “Fac-simile Confederate Note” was printed on them in tiny type, along with Upham’s name and address. Whether or not Upham was sincere about being in the souvenir business, his name and address could be clipped off, and soon he was selling the bills in bulk, at a steep discount. Among the biggest buyers were Union soldiers marching into Virginia, Tennessee, and Louisiana, unwittingly using the bogus bills to destabilize the southern economy. On August 1, 1862, a gold dollar was worth two Confederate paper dollars; by January, it cost $3.25. True, Confederate currency values rose and fell with the army’s battlefield performance, but it’s clear from the umbrage the South took in Upham’s connivance where they thought responsibility properly resided. “Yankee scoundrelism!” the Richmond Daily Dispatch shouted. “Who is this man Upham? A knave swindler, and forger of the most depraved and despicable sort.” (If umbrage had been ammunition, we’d all sing “Dixie” before ball games.) But Upham got off easy; the Treasury Department just looked the other way. Of course, any Yankee soldiers who were captured carrying Upham’s facsimiles, which were often rendered more professionally than real Confederate graybacks, were hanged.

The Civil War, Tarnoff tells us, marked the end of the golden age of counterfeiting. While the Democrats were off rebelling, the progressive Republicans in Congress passed legislation that established federally chartered banks, created a federal monopoly on the issuance of paper currency, and assigned the Secret Service the job of stamping out counterfeiting. It largely has. Although counterfeit gangs backed by drug dealers continue to operate out of Peru, and North Korea has a factory outside of Pyongyang where it uses sophisticated intaglio printers to make bills so undetectable they’re known as supernotes, there’s only about $45 million worth of phonies among the $750 billion Federal Reserve notes in print. Think of them like the smidgen of rat poop the FDA allows in a hot dog.

The final blow to currency counterfeiters was delivered during the Depression by Franklin Roosevelt, when he took the U.S. off the gold standard. After that, money wasn’t worth something because of how much gold a country held in reserve, but because of the credit a country deserved based on the health and vibrancy of its economy. Seen in that light, however, it would seem that counterfeiting is not only not dead but thriving. What, after all, was the financial crisis of 2008 but the triumph of fraudsters who in a period of deregulation and financial innovation created counterfeit credit, validated counterfeit credit, and greedily sliced, diced, resold, and insured counterfeit credit, until they swamped the economy and drowned it in worthlessness? Wall Street scoundrelism! Knave swindlers! Like old Confederates, we take umbrage but seem powerless to punish.

If you are interested in purchasing this book, we have included a link for your convenience.

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Novelist Jamie Malanowski is the lead writer of “Disunion,” the series about the Civil War on the Opinionator section of the Web site of the New York Times. He is a frequent contributor to the Washington Monthly.  
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