A Counterfeiter's Paradise (2 page)

American counterfeiters had an early advantage over their European counterparts for one crucial reason: the British colonies in North America were the first governments in the Western world to print paper currency. Paper notes appeared in response to the severe shortage of precious metals that was a persistent problem of colonial life. The British government limited the export of gold and silver to the colonies, and although an array of foreign coins circulated—pieces of eight, reals, doubloons, mostly of Spanish and Portuguese origin—there weren’t enough to meet the demand. Colonists developed a range of different strategies to deal with the problem. Starting in the seventeenth century, American settlers tried using an Indian currency called wampum that consisted of beads of shell strung together on a thread, but widespread counterfeiting soon made it worthless. Since blue wampum was more valuable than white wampum, -Indians often dyed their shells to sell them at a higher price, and diluted the threads with pieces of stone, bones, and glass. Colonists also tried using food commodities as money: in the seventeenth century, Massachusetts adopted corn as its official medium of exchange, and in Virginia, tobacco circulated as the common currency.

Coins would have been more convenient, but the paucity of precious metals in North America made coinage difficult. Unlike Latin America, whose gold and silver deposits provided the Spanish and the Portuguese with more than enough raw material to mint their currency, British settlers in the Atlantic colonies found little to work with. Even when colonists acquired precious metals through trade, the idea of a coined colonial currency met with opposition from home. Massachusetts began minting silver coins in 1652, but by 1684 the British government had ordered the colonists to stop, citing their violation of the royal right of coinage.

A growing colonial population and an expanding continental market demanded more credit, and with precious metals scarce and the home
government hostile to coinage, paper money offered a solution. In 1690, the Massachusetts legislature started printing bills of credit to pay its debts. The authorities promised to retire the bills by levying future taxes payable in the new notes. But the colonists weren’t concerned: relieved to have something resembling a functioning currency, they treated the notes like money, and Massachusetts kept the credit engine going by printing new issues to supersede the old ones.

The colonists had discovered a loophole in British regulations. Paper money didn’t infringe on the home government’s monopoly on coinage, and since the Massachusetts bills of credit were not redeemable by the British Crown, they weren’t officially considered money. South Carolina started issuing bills of credit in 1703, followed by New Hampshire, Connecticut, and the remaining nine colonies over the next several decades. By 1764, the colonies had become so dependent on paper money that when the British Parliament passed legislation prohibiting bills of credit, it sparked an uproar, further souring relations between the colonists and their transatlantic rulers.

Paper money may have satisfied the colonial craving for credit, but it also exposed the economy to new vulnerabilities. Unlike gold or silver, which can be traded as commodities, notes have no market value aside from being a medium of exchange. Without anything “hard” to fall back on, paper can become worthless overnight, more useful as wallpaper or kindling than as money. Bills are only pieces of paper inscribed with a promise—the promise to be received for public debts like taxes, to be redeemed for a certain quantity of precious metals, or, as is the case today, to be accepted for all debts, public and private.

Paper money had other disadvantages. Excessive printing of paper caused inflation, which became an endemic problem in the colonies. The crude quality of most colonial currency also made counterfeiting relatively easy, and since many colonists were illiterate, spelling errors on fake bills often passed unnoticed. But in spite of its drawbacks, paper money
became an indispensable part of the American economy from its debut in seventeenth-century Massachusetts through the Revolution and beyond.

When the Continental Congress needed to generate revenue to fund the war against the British, it printed paper notes called continentals, whose value fluctuated with the public’s confidence in the promises of the new political leadership. In the early days of the Republic, debates over paper currency preoccupied prominent people like Benjamin Franklin and Alexander Hamilton, who tried to shore up the finances of a country that had few natural resources and little political or economic leverage. The decades before the Civil War saw the rapid proliferation of different currencies, as banks and a host of other state-chartered companies like insurance firms and railroads flooded the country with paper that constantly oscillated in value. By the time the federal government began regulating the money supply, there were more than ten thousand different kinds of notes circulating in the United States.

Paper helped entrepreneurs secure capital on credit and catalyzed commerce, but it also made the economy highly volatile and vulnerable to periodic fits of inflation. Perhaps the biggest beneficiaries of this financial chaos were counterfeiters, who thrived in a virtually unregulated economy that ran mostly on faith. These moneymakers were characters worth remembering—people like Mary Peck Butterworth, a housewife from Rehoboth, Massachusetts, who during the early eighteenth century ran a counterfeiting operation out of her kitchen with the help of a hot iron. Butterworth would cover a note with a strip of damp muslin and run her iron over it, transferring the bill’s design to the fabric, which she then imprinted onto a blank piece of paper. She made a fortune selling the notes to her husband’s friends. When the authorities learned of Butterworth’s activities and came to arrest her, they couldn’t find a shred of incriminating evidence, just an ironing board and a few burnt scraps of muslin in the fireplace. Another counterfeiter named Peter McCartney had less luck eluding arrest but earned a reputation as a talented escape
artist. According to one story, he once bet the chief of the Secret Service that he could break out of an Illinois jail. When McCartney showed up at the chief’s hotel room that evening, he told the astonished detective that he was calling to pay his respects and would return to his cell presently. “I merely wished to show that some things could be done as well as others,” the counterfeiter explained. McCartney eventually went to prison for twelve years. “He was not an ordinary man,” wrote Allan Pinkerton, the founder of the country’s first private detective agency, “and when he disappeared suddenly, it was as if some great wreck had gone down at sea.” The counterfeiter died in an Ohio penitentiary in 1890 at the age of sixty-six, having forged more than a million dollars.

Counterfeiters owed their success in large part to the patronage of their fellow citizens, who often didn’t discriminate between forgeries and the genuine article. They were grateful to get a note that could hold its value until they could pass it, regardless of its authenticity. The men who printed the genuine bills and those who counterfeited them were opposite sides of the same coin: both hoped to inspire trust in pieces of paper whose value relied entirely on the confidence that people had in them.

It was this faith that enriched three of the most colorful counterfeiters in American history: Owen Sullivan, David Lewis, and Samuel Curtis Upham. Owen Sullivan (c. 1720–1756) was an Irish immigrant whose extraordinary talent for earning people’s trust made him among the most notorious counterfeiters of the colonial era. After stints in Boston and Providence, Sullivan settled in a sliver of swampy land on the lawless border between New York and Connecticut, where he forged tens of thousands of pounds’ worth of colonial currency. David Lewis (1788–1820) was a charismatic counterfeiter and robber who prowled Pennsylvania’s Allegheny backcountry. His legendary acts of charity catapulted him to prominence as a populist folk hero, a Robin Hood who dispensed his ill-gotten gains to the poor while punishing the greedy. Samuel Curtis Upham (1819–1885), a Philadelphia shopkeeper and former California
gold prospector, sold counterfeit Confederate currency from his storefront during the Civil War. Upham’s “mementos of the Rebellion” proved enormously popular, and the influx of these fakes into the South drove down the value of Confederate currency, infuriating Southern leaders.

The biographies of these men tell the story of a country coming of age—from a patchwork of largely self-governing colonies to a loosely assembled union of states and, finally, to a single nation under firm federal control. Each responded to the political and economic realities of his era, propelled by a desire for profit and fame. They belonged to a class of criminal that overran America for much of its history, as integral to the country’s financial past as those who printed its many kinds of legal currency.

Moneymakers didn’t just infiltrate the money supply—they embodied the nation’s speculative spirit. The American economy rose and fell on a tide of paper credit, fueled by notes that tended to promise more than they could deliver. As long as everyone believed something had value—whether a colonial bill of credit or a stock certificate—it did. But when that faith faltered, mistrust spread throughout the system, triggering a panic. Americans had a confidence problem: they either had too much of it, taking risks as everything surged, or too little, fleeing the market as everything crumbled. By feeding America’s appetite for paper currency, counterfeiters helped stoke this cycle. They made fake money in a country where real money’s value was often just as imaginary, bluffing their way to wealth in the casino of American capitalism.

I
F YOU HAD SPENT THE SUMMER OF 1749
in Boston, you likely would have heard that a gardener grew a twenty-eight-pound melon—the biggest anyone had ever seen—and invited thirty of his friends over to help him eat it. You might have heard about the mulatto boy who had been bitten by a rattlesnake at Stoughton and died twenty-four hours later, or the Irishman in yellow buckskin breeches who had hired a horse and then absconded with it to Rhode Island. You certainly would have heard about what the North End merchants were selling that season: Choice Lisbon Salt, the Best Burlington Pork, a Good Brick House, a Healthy Strong Negro Man—and at the printer’s over on Queen Street, the latest selection from a fiery Calvinist preacher named Jonathan Edwards.

The printer couldn’t have picked a better time to publish the preacher, whose best-known sermon, “Sinners in the Hands of an Angry God,” warned parishioners that God could toss them into hell at any moment. After a summer in colonial Boston, everyone would have had a pretty good idea of what hell felt like. An oppressively hot sun singed the flesh, the air’s humidity smothered the skin like a damp blanket, and the sour smell of sweat mixed with the fish stink wafting down from the piers of the harbor. The inferno couldn’t have felt very far. An unchristian season, summer encouraged slothfulness, stirred lust, quickened the temper.

One day in late August, a local silversmith could be heard fighting with his wife. Their voices reverberated through Boston’s corkscrew streets and into the ears of inquisitive neighbors in houses of timber and brick listening through thin walls and open windows. The wife was drunk; the silversmith probably was too. The words were indistinct; perhaps they slurred their speech. Suddenly a phrase, howled by a woman hoarse with rage, could be heard clearly above the din: “You forty-thousand-pound moneymaker!”

The silversmith’s name, the neighbors would tell the authorities, was Owen Sullivan. Presumably this wasn’t the first time the couple had quarreled: both he and his wife drank heavily, and they were angry drunks. Lately Sullivan had been seen with large quantities of cash, which he spent lavishly, conspicuously, arousing envy and suspicion. When officers came to arrest him on August 28, 1749, they found more than thirty counterfeit ten-shilling Massachusetts notes on the silversmith—not £40,000 but still a considerable amount of money. The print on the forgeries was too black, making his bills easily detectable as fakes when placed alongside genuine notes. Discovered in Sullivan’s chest were printing materials, ink, and pieces of paper with his attempts to imitate the official signatures that appeared on the colony’s currency.