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EAC Reviews: Counterfeiting in the Early United States

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A Nation of Counterfeiters: Capitalists, Con Men, and the Making of the United States by Stephen Mihm (Cambridge, MA: Harvard University Press, 2007), 457 pp.

Counterfeiting was widespread during the early history of the United States. Some estimates from the time claimed that between ten and fifty percent of the circulating currency was counterfeit. Such high numbers were probably an exaggeration, but to put these early guesses into perspective, a U.S. government survey conducted in 1911, well after a standard federal currency was put into place, concluded that only one thousandth of one percent of the total paper currency in circulation was counterfeit.

Stephen Mihm’s A Nation of Counterfeiters: Capitalists, Con Men, and the Making of the United States chronicles a wild time in the early stages of American capitalism when countless banks issued thousands of bank notes that functioned as paper currency. Not surprisingly, this confusing array of monetary bills created the perfect conditions for counterfeiting, which often blurred the distinctions between the real and the false, the capitalist and the criminal, and the legitimate and the criminal enterprise.

Banks began issuing bank notes as an easy means of facilitating exchange without dipping into their precious metals holdings or other assets. The holder of such a bank note could show up at the bank that issued it at any time and demand the equivalent amount in gold or silver. With the bank’s backing, though, these notes were mostly meant to be transferred to someone else in exchange for goods or services, so that bulky gold or silver did not need to pass hands.

In order to discourage counterfeiting, the banks employed professional engravers to produce their notes, and each note was signed by an official at the bank. With each bank issuing its own form of currency, however, keeping track of the designs of each bank note was near impossible. And when Andrew Jackson destroyed the Second Bank of the United States, which at the time was the closest the U.S. had to a centralized bank, the number of banks and currencies proliferated exponentially. Counterfeiters seized on this opportunity. They employed engravers of equal if not superior talent as those who turned out the real thing, and in some cases, the engravers themselves produced both real and counterfeit bills, depending on who was paying the bill.

Mihm nicely weaves together anecdotes involving the colorful personalities of the counterfeiters, bankers, and detectives with informative passages about counterfeiting and the early banking system. He takes full advantage the fluid boundaries, false distinctions, and deep ironies that define the world of counterfeiting in the early U.S. to move his narrative along. At a time when there often wasn’t enough currency circulating to facilitate trade, counterfeit money actually provided a much-needed public service. As long as the person accepting the bill took it with confidence that he could pass it along to someone else, what did it matter if the note was real or fake?

The total value of bank notes issued almost always added up to more than what the banks had in reserve, on the assumption that all of the notes they issued would never be redeemed at the same time. In a practice that resonates today after the Madoff scandal and the recent banking crisis, some banks issued currency with practically no backing at all. These “wildcat banks” would eventually fail, especially in times of economic crisis, and leave anyone holding their notes out to dry. People openly wondered what made these banks any more legitimate than counterfeiters, since both parties issued notes without any backing. Ironically, counterfeit money could sometimes be exchanged with more confidence than the notes issued by these spurious banks, since it usually imitated notes from banks with solid reputations.

Many of the early counterfeiters congregated along the border between Canada and Vermont to help avoid the American authorities and take advantage of the different systems of law. Mihm shows how these counterfeiters ran a complex, professional network of producers, sellers, and buyers of counterfeit money that ran down the east coast. To distribute their counterfeit bills, these counterfeiters often employed horse thieves, who naturally used stolen horses to deliver their shipments. As a result, the area became a center for both counterfeiting and trafficking in stolen horses.

Counterfeiting followed the westward expansion of canals and roadways that opened up new areas of the country to commerce. In these new territories, counterfeiters took advantage of lax laws and enforcement, a less structured banking system, and a great need for a means of exchange. Eventually, however, counterfeiting settled in large cities, where urban anonymity made it easier to pass fake bills to unsuspecting shopkeepers.

Mihm describes an “economy teeming with notes neither totally real nor completely counterfeit” (239). When read together with Thomas Levenson’s Newton and the Counterfeiter (read the EAC review), one begins to appreciate the security of our present-day currency and realizes that the confidence we place in it is actually a recent phenomenon. While today’s would-be counterfeiters have moved on to employ more sophisticated tactics to take advantage of our complex financial system, Mihm’s book entertainingly chronicles a time when counterfeiting, a crime that was much more prevalent back in the early stages of capitalism than it is today, was the preferred method for “making” money.

Don’t forget to visit the Early American Crime Bookshop.


  1. Susan Koral wrote:

    A very enjoyable article. Do you give lectures to the public? I live in Norwalk, CT (Fairfield County).

    Saturday, November 28, 2009 at 2:41 pm | Permalink
  2. I am available for public lectures, but I haven’t given any in the Norwalk, CT area.

    Monday, November 30, 2009 at 10:44 am | Permalink

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