A Counterfeiter's Paradise (31 page)

Meanwhile, the Yankee scoundrel at 403 Chestnut Street showed no signs of slowing down. His tireless publicity blitz continued to infuriate Southerners, who met with regular reminders of his growing success. In July 1862, authorities apprehended a young man named William P. Lee in Elizabeth City, North Carolina, carrying more than $750 in forged money and one of Upham’s advertising circulars. Elizabeth City offered a natural point of entry for Upham’s product. A coastal town overlooking an estuary in eastern North Carolina, it was blockaded by Union ships, and Yankee sailors often came ashore to trade.

Despite the heavy Northern presence in the area, Elizabeth City officials managed to arrest Lee and deliver him to Richmond to stand trial. Lee wasn’t considered much of a threat. When he arrived in the Confederate capital, the
Daily Richmond Examiner
dismissed him as “an insignificant looking individual,” undoubtedly “the dupe of others.” The real
culprit was Upham, who let pawns like Lee take the risks while sitting safely in his Philadelphia shop. For the
Examiner
, this latest instance of Upham’s villainy proved beyond a doubt the existence of “a deep laid scheme on the part of the thieving, counterfeiting North through individuals, with the connivances of the Yankee Government, to undermine the Confederate currency.” The editors demanded that the government execute a convicted counterfeiter to “evince the proper spirit…in its efforts to preserve the currency of the country from Yankee pollution.” The authorities obliged a month later, by hanging Richardson. The sight of the Italian’s corpse dangling from a rope made for a much more effective symbol of Confederate strength than the eagles and emblems that adorned its money. If the government couldn’t legally compel anyone to take its notes, at least it could execute the criminals who forged them.

In August, while Memminger battled the rising tide of bad bills, Upham published his boldest broadside yet. He advertised thirty-five kinds of Confederate notes and stamps, and offered his customers a new service: the option to buy bills with the signatures omitted. This made his reproductions immeasurably more useful as counterfeits. All Treasury notes were signed by Memminger’s clerks to verify their authenticity. Now Upham’s clients could forge these inscriptions themselves in the spaces he left blank. He also erased the serial numbers from his facsimiles; those, too, could be written in to give the note the appearance of legitimacy. Upham’s August flyer showed how far his business had come from “mementos of the Rebellion.” Back in March, when a quick war seemed likely, it was conceivable that people would want keepsakes from the Southern revolt. Five months later, as both sides braced for a brutal conflict, they didn’t need any more ways to remember the war. The maimed and mangled bodies filling Philadelphia’s military hospitals were more than enough.

By the summer of 1862, the Civil War had become more than a struggle over secession. Lincoln’s plan to crush the rebellion by seizing Richmond had failed, thwarted by the South’s brilliant generals, Robert E. Lee
and Stonewall Jackson, who pushed the Yankees back toward Washington. In late August, Lee humiliated the Union army at the Second Battle of Bull Run in northern Virginia and, five days later, put the North on the defensive by invading Maryland. The surprising resilience of the South forced Lincoln to rethink the war. He needed to undermine the enemy’s ability to fight. This contributed to his decision to attack the cornerstone of the Southern economy, slavery. On July 17, 1862, Lincoln signed the Second Confiscation Act, providing for the liberation of slaves belonging to anyone involved in the rebellion. He soon planned to go even further with the Emancipation Proclamation, which threatened to emancipate the slaves of any rebellious state that didn’t return to the Union by January 1, 1863. A declaration against slavery would rally international opinion to the Union side, thus depriving the Confederacy of a possible alliance with Britain or France. Lincoln presented the Proclamation on September 22, after Union forces halted Lee’s advance through Maryland at the Battle of Antietam, an engagement that left twenty-three thousand men dead or wounded—the bloodiest single day in all of American military history.

Lincoln’s embrace of emancipation fundamentally changed the equation for the South. At first the Confederacy was fighting for its independence; now it would be fighting for its way of life. As the catastrophic consequences of a Southern defeat became more apparent, safeguarding Southern currency became more important. Counterfeiting didn’t just hurt the Confederate government—it undermined the struggle to save Southern civilization from annihilation. This sharpened the sense of panic provoked by the surge of fake bills in August 1862, and brought counterfeiting to the attention of the Confederacy’s leading politicians. On August 18, President Jefferson Davis addressed the problem in a message to the Confederate Congress. The defeats recently suffered by the North, he wrote, had caused the enemy to resort to ruthless tactics, like confiscating slaves and counterfeiting Southern currency. According to Davis, fake Confederate notes were “publicly advertised for sale” and
furnished to “the soldiers of the invading army” with the full “complicity” of the Union government. Later that same day, Memminger submitted a report to the House of Representatives that reiterated Davis’s concerns and singled out Upham’s role in the crisis: “[P]rinted advertisements have been found stating that the counterfeit notes, in any quantity, will be forwarded by mail from Chestnut street, in Philadelphia.”

These warnings prompted intense debate in the Confederate Congress about how best to confront the moneymaking menace. Hoping to make the most of the mood, Memminger sent Vice President Alexander Hamilton Stephens his recommendations. He wanted the authority to post currency experts at Treasury branches around the country and at “principal places of trade” to help people distinguish genuine money from forged. To Memminger’s considerable disappointment, Congress rejected the idea. The notion that counterfeiting was a Yankee ploy made lawmakers more concerned with preventing fake notes from coming into the country than with identifying those already there. On October 13, 1862, Congress enacted a law ordering death by hanging for any captured enemy soldiers found with counterfeit Confederate money. Four days later, Memminger vented his frustration to his subordinate B. C. Pressley, who had written him a letter urging better measures to combat counterfeiting. “I entirely concur in all views which you express,” the secretary wearily replied, “and have tried in vain to get the concurrence of Congress.” But, as the legislators had even refused him “the privilege of appointing experts to pronounce on the genuineness of Treasury notes,” he was “unable to act as both your judgment and my own would advise.” Once again, the secretary’s hands were tied.

ON CHRISTMAS DAY 1862,
firecrackers erupted all over Richmond—bright, sputtering bursts that left plumes of smoke lingering in the brisk air. John Beauchamp Jones could hear the explosions from his house. “[N]o
little gunpowder is consumed in commemoration of the day,” he wrote in his diary, a rare extravagance at a time when most Richmonders were narrowly scraping by. Jones worked as a clerk for the War Department, but even with a steady government paycheck he could scarcely support his wife and four children. The day before, he had sold his silver watch to buy a proper Christmas dinner and fuel to keep him and his family warm for a month. He consoled himself with the thought that his diary, filled with shrewd sketches of life in the capital, would someday become a best seller.

Jones was better off than many. He had a home, a job, and enough food to survive, although he lost twenty pounds during the war. Not everyone enjoyed the same advantages. Poverty, overcrowding, and crime racked wartime Richmond. “A portion of the people look like vagabonds,” Jones observed. They wore “dingy and dilapidated clothes” and some seemed “gaunt and pale with hunger.” Since Richmond had become the Confederate capital, the city’s population had soared, from fewer than forty thousand in 1860 to roughly a hundred thousand three years later. Many of these new arrivals were soldiers, and they brought their favorite pastimes with them. Gambling houses opened; prostitutes solicited johns on the sidewalk and rode through the streets in open carriages. Murders, muggings, and brawls became more frequent. As the war dragged on, the ranks of Richmond’s poor swelled: widows and orphans of dead soldiers, wives and children of those gone to fight, and refugees fleeing the fighting in the countryside.

What made life especially hard in Richmond was the skyrocketing cost of living. A Christmas turkey in 1862 sold for $11, an exorbitant sum for Jones and most others. The high prices were partly due to the shortages caused by the Union blockade and the large influx of people, which drove up demand. But they were also the result of a more pervasive and ulti-mately more poisonous problem: the weakness of Confederate money. Graybacks, after holding steady for months, had begun shedding their value in August 1862, a fateful month for Confederate currency. As Southerners saw their notes’ purchasing power disappear, Memminger naturally
took the blame. In his diary, Jones recalled hearing the publisher of the
Daily Richmond Enquirer
grumble about the secretary in December: “He says Mr. M.’s head is as worthless as a pin’s head.” Jones soon came to share the publisher’s opinion, denouncing Memminger as “headstrong, haughty, and tyrannical.” That the man responsible for running the Confederacy’s finances into the ground was “no Carolinian by birth or descent” but a German-born immigrant made it even worse.

To his credit, Memminger was acutely aware of the dangers of paper money. He repeatedly alerted the Confederate Congress to the hazards of inflation, which could be put off but never avoided entirely. “Like the moon’s attraction upon the ocean,” he told them, “the time of high-water is postponed for a certain period…but, although there may be delay, the event is certain.” Sometimes the legislators listened, periodically retiring large quantities of graybacks from circulation. But mounting expenses always forced them to authorize even more notes the next time, so that the overall volume of paper money continued to climb. The Confederacy’s dependency on paper credit was self-reinforcing: as the value of graybacks fell and prices rose, Congress ordered more Treasury bills to meet the government’s costs, further depreciating the currency.

Too much paper money wasn’t the only thing causing the decline of the Confederate dollar. The value of Treasury notes relied to a great extent on something neither Memminger nor the Confederate congressmen could control: the public’s perception of whether the South was winning the war. The better the Confederacy fared, the better chance it would keep its promise to exchange graybacks for specie, and thus the more desirable the bills. Some Treasury notes made this connection explicit, like the $5 bills that Upham first counterfeited, which promised their redemption six months after the ratification of a treaty between the Confederacy and the Union.

In the second half of 1862, the downturn picked up speed. On August 1, a gold dollar cost two Confederate paper dollars; by the end of the year,
it cost $3.25, an increase of more than 60 percent. This precipitous drop in value coincided with a series of events that changed the Southern view of the war. The Battle of Antietam took place on September 17, Lincoln introduced the Emancipation Proclamation on September 22, and by November 4, most Northern states had voted in the congressional elections, leaving the Republicans in control of Congress. Taken together, these developments demonstrated the Union’s will to fight. The North sacrificed thousands of men to eke out a narrow victory at Antietam, and then committed itself to waging total war by targeting the South’s core institution. Continued Republican supremacy in Congress ensured that Lincoln’s policies would remain in place, and eliminated any possibility of a negotiated peace. The consequences for the Southern money market were clear. A protracted struggle would prolong the redemption of graybacks, perhaps indefinitely. And, in the event of a Union victory, not only would Confederate currency be worthless but the entire economic system it was based on would be dismantled.

Upham posed a dual threat to the South’s ailing currency. He helped depreciate graybacks by inflating the money supply and, in defying the Confederate government so publicly, undermined its credibility. Southern newspapers and politicians tried to use Upham as propaganda, publicizing his enterprise as another example of the enemy’s depravity. “The people, among whom such a vice can be practiced, are not a people with whom we could
tolerate
association,” declared the
Daily
Richmond Enquirer
. “Such conduct but deepens the ditch which separates and increases the disgust which repels us.” While this technique might fan anti-Northern feeling, it could just as easily backfire. By loudly condemning Upham, Southern opinion-makers risked drawing attention to how successfully his counterfeits had infiltrated the Confederacy. Since perception mattered as much as reality, such an impression would only further weaken the currency.

In late 1862, as Confederate values plummeted, a challenge to Upham’s enterprise emerged. Winthrop E. Hilton was a New York City printer
whose shop stood on Printing House Square, a triangular cluster of buildings opposite City Hall that housed some of the North’s most powerful newspapers. The
New York Times
occupied an entire block at the southern end of the square, its ornate, olive-colored walls just opposite the smaller, less majestic headquarters of Horace Greeley’s
New York Tribune
. Wedged between these giants of journalism was Hilton’s office on Spruce Street, where he printed fake graybacks. Upham had never before encountered competition as formidable as Hilton’s. The New Yorker used the same stone lithography method as the Confederacy’s printers, resulting in almost perfect counterfeits. He had also learned Upham’s lessons of self-promotion, and on October 4, 1862, advertised his “perfect fac-similes of Confederate Treasury notes” in
Harper’s Weekly
. His rates were $4 per 1,000 bills, vastly underselling Upham, whose broadside a couple of months earlier had listed $40 per 1,000.