Welcome author Ben Tarnoff, and host Elias Altman, Associate Editor, Lapham’s Quarterly.

[As a courtesy to our guests, please keep comments to the book.  Please take other conversations to a previous thread.  - bev]

Money Makers: The Wicked Lives and Surprising Adventures of Three Notorious Counterfeiters

Elias Altman, Host:

Massachusetts issued the New World’s first paper currency in 1690. With poor soldiers returning from a failed campaign against the French in Quebec, the colony found itself short on silver and copper coins to pay the men for their service. To solve the problem, the government printed bills of credit—promises of payment once the colony had collected more taxes. These slips of inked paper, deeds to a future fortune, quickly spread, offering a convenient medium of exchange for all thirteen colonies, whose reserves of precious metals were scanty and often concentrated only in the hands of the rich.

The bills of credit began to function almost as if they were the hard currency that they were standing in for, and it didn’t take long for the two to grow dangerously disproportionate. The first attempt to convert all bills of credit back into silver or copper coins in 1750–1751 proved impossible: the Massachusetts treasury simply ran out of hard currency. To make up for the shortfall, they printed more bills. The gulf between the demand for paper currency and the supply of precious metals widened. The only thing that could bridge the gap was confidence—a confidence in both the promise of the paper and in the reliability of the person handing it to you. This confidence proved to be a lucrative belief to exploit—if you were the right sort of man. The three counterfeiters Ben Tarnoff tracks in Moneymakers were such men par excellence.

The first counterfeiter Tarnoff deals with is Owen Sullivan (c. 1720-1756), a liquor-loving Irish immigrant whose life unfolds like a Thackeray novel: he ran away from home at the age of thirteen; sold himself into servitude to pay his way to America; learned engraving while fighting the French in Maine; began printing bills in Boston around 1749; and became a highly successful counterfeiter for seven years, as he crisscrossed the colonies, each of which had their own distinct bills, printing paper money in the woods and disseminating them in taverns. When he died in 1756, the French and Indian War had begun, necessitating more bills of credit to fund the effort. Matters only got more complex after the Revolution.

The drafting of the Constitution in 1787 marked a turning point in American financial history: the document stipulated that only Congress should “coin Money, regulate the Value thereof, and of foreign Coin.” It disallowed individual states from printing paper bills; they could only mint hard currency, silver and copper coins. The fact remained, however, that there was not enough hard currency to go around, and so the de facto medium of exchange in the first decades of the republic became banknotes, pieces of paper issued by state-approved banks that could be exchanged for the hard currency that the banks supposedly had in their vaults. There was little regulation. The number of state banks grew from 29 in 1800 to 250 in 1816.

In this chaotic environment, the charming and roguish David Lewis (1788-1820) thrived as a counterfeiter. In Sullivan’s day, a counterfeiter could copy only thirteen types of bills; Lewis on the other hand had hundreds to choose from, so he printed bills from banks across state lines, banks no one had ever heard of, even banks he made up. Amid the Panic of 1819—a repercussion of the government’s attempt to re-regulate the currency, thereby creating a credit crunch—Lewis, traipsing across Pennsylvania, emerged as a Robin Hood figure. If a bank could print money that had no intrinsic worth, why couldn’t he?

Finally there was Samuel Upham (1819-1885), an enterprising New Englander who become a profitable (and essentially legal) counterfeiter in Philadelphia at the start of the Civil War. Upham began printing facsimiles of Southern currency in his newspaper as souvenirs, keepsakes of the little war, but soon enough poorly paid Northern soldiers were bringing them to the South as a way to buy food and lodging from townspeople. The effect was unmistakable: the fledgling Southern economy was being undermined, inundated by a flood of false bills. A diarist in New Orleans remarked that the Union soldiers were just a bunch of “speculators and thieves” who went “to battles with their pockets stuffed with counterfeit Confederate money.”

In the summer of 1861, Lincoln’s Secretary of the Treasury, Salmon Portland Chase, drew up a plan to raise funds for the war effort: the Treasury would borrow around $250 million from both Wall Street financiers and average Americans by issuing a series of twenty-year bonds, interest-bearing notes exchangeable in three years, and lastly “demand” notes that could be redeemed at any time. These last notes came in small denominations, and they quickly became a medium of exchange. The following year Congress passed a law that gave legal tender status to all “demand” notes in circulation, plus another newly minted $100 million. These “greenbacks” were no longer promises of money, they were money. Why? Because the U.S. government said so. No longer necessarily backed by gold or silver, “greenbacks” were imbued with value by being the credit of the U.S. The decisive move came with some opposition—after all the Constitution was vague on the legality of such federal power—but since defending states rights’ at the time was about as wise as speaking German fluently during World War II, the plan went ahead. The greenbacks and other national currency gradually displaced the state bank bills, eventually becoming the only paper money in the U.S., paving the way for the modern American dollar.

With each counterfeiter working during a different period of American history, Tarnoff tells not only of their fascinating and devious lives but also of how the country has always, to a certain extent, operated on a faith-based economy, one in which the demand for money exceeds the reserves on hand, resulting in huge booms and equally large busts. The Industrial Revolution and Westward expansion floated on a sea of debt—new railways, new land, and new factories were built with money borrowed on the confidence that the enterprises would inevitably succeed, and that debts would be honored. This doesn’t always happen, a fact in which we’ve recently been painfully schooled. And as Tarnoff in Moneymakers makes clear, it’s also a lesson we’ve been taught a great many times.

90 Responses to “FDL Book Salon Welcomes Ben Tarnoff, Money Makers: The Wicked Lives and Surprising Adventures of Three Notorious Counterfeiters”

BevW February 12th, 2011 at 1:56 pm

Ben Welcome to the Lake.

Elias, Welcome to the Lake and for Hosting today’s Book Salon.

Ben Tarnoff February 12th, 2011 at 2:00 pm

Thanks. It’s good to be here.

Elias Altman February 12th, 2011 at 2:00 pm
In response to BevW @ 1

It is my pleasure.

dakine01 February 12th, 2011 at 2:01 pm

Good afternoon Ben and Elias and welcome to FDL this afternoon.

Ben, I have not had a chance to read your book so forgive me if you answer these questions in it.

Why/how did you come to select these specific counterfeiters to write about?

Did they all die of natural causes? Especially the first two, dying in their early/mid-thirties makes me wonder

Elias Altman February 12th, 2011 at 2:01 pm
In response to BevW @ 1

It might be helpful if you began by telling us a little about what paper bills of credit were in colonial America. How did they differ from today’s dollar bills minted by the Federal Reserve?

Ben Tarnoff February 12th, 2011 at 2:02 pm
In response to Elias Altman @ 5

Bills of credit were America’s first experiment with paper money. They were the earliest public paper currency in the Western world, first printed by colonial Massachusetts in 1690 to pay off expenses incurred in a failed expedition to conquer Quebec. Bills of credit were in theory secured by future taxes. They were also in many cases made legal tender, which made them receivable not only for public debts (like taxes) but private ones as well. In this latter sense they were identical to today’s Federal Reserve Notes. One crucial difference, of course, is that FRNs are printed by the federal government, whereas bills of credit were printed by thirteen individual colonial legislatures.

Ben Tarnoff February 12th, 2011 at 2:04 pm
In response to dakine01 @ 4

When I first started researching the topic, I found no shortage of colorful characters to look at. I whittled down the list by singling out counterfeiters who intersected in interesting ways with the eras in which they lived. They came to understand the political and economic landscape of their particular period better than most criminals of the era, which made them useful windows onto the financial evolution of America as a whole.

As for your second question, many counterfeiters didn’t die of natural causes! Many died violent deaths. The first profiled in my book, Owen Sullivan, is executed in New York in 1756. The second, David Lewis, died of gangrene in a prison cell after being shot by a posse pursuing him through the woods. Only the third, Samuel Upham, died of natural causes.

Elias Altman February 12th, 2011 at 2:07 pm

Ben, in your book you talk about the ways in which the lower and higher classes reacted to different proposals for how paper money could and should be used. For example, lower and middle class citizens in Boston in the 1750s wanted more bills of credit in circulation so that they could use the paper as a means of exchange. How did bills of credit seemed to pose a threat to the existing social order. How does this tension develop over time?

Ben Tarnoff February 12th, 2011 at 2:08 pm
In response to Elias Altman @ 8

The struggle between the pro- and anti-paper money camps is remarkably persistent throughout American history. Very roughly, you have creditors on one hand and debtors on the other: creditors want the value of their loans tied to an inflexible “hard” currency, while debtors want an inflationary currency that makes their debts depreciate. Precious metals tended to be concentrated in the hands of the wealthy. Paper, on the other hand, was more plentiful: it let ordinary people participate in the buying and selling that fueled local markets. An entrepreneurial class buoyed by paper credit clearly unnerved traditionalists, who favored a fixed currency. This tension between paper and coin, and the class interests arrayed behind each, is a constant through the centuries. Glimmers of it are visible in today’s tussles over the Fed.

eCAHNomics February 12th, 2011 at 2:13 pm


I have not yet had a chance to read the book, which sounds fascinating. But I have some elementary Qs, which you may choose to answer or not.

This sounds waaay too easy to me. What precautions were taken against counterfeiting? It sounds like not much, especially in the case of the south where a simple newspaper coupon could be mistaken for the real thing. So why didn’t counterfeiting run rampant? Or if it did, how did you choose among the counterfeiters those you wrote about.

Finally, did some common denominator make these three stories fit together, even though they occurred over wide spans of time? This is a variation on dakine01′s Q, so perhaps you’ve already answered it.

perris February 12th, 2011 at 2:14 pm

I believe the very first person to inform me that “all money does is represent confidence” was “Ira Fistell”, a radio host

I do wonder how confidence in gold evolved so, what is gold but a thing everyone wants, sure it can’t be destroyed but in reality nothing can.

I do not understand why gold enjoys more confidence then any other commodity

I personally believe a monetary system should be based on an hours payed living wage.

that’s something that really can’t perish

Elias Altman February 12th, 2011 at 2:17 pm
In response to perris @ 11

Well, Perris, you may have friend in Benjamin Franklin, who once said, “The riches of a country are to be valued by the quantity of labor its inhabitants are able to purchase, not by the quantity of silver or gold they possess.”

Ben Tarnoff February 12th, 2011 at 2:17 pm
In response to eCAHNomics @ 10

You’re right: counterfeiting was too easy for many early Americans. The first counterfeiter profiled in my book, Owen Sullivan, explains in his printed confession that he came to counterfeiting because it offered an “easy way of getting money.” So to answer your question: counterfeiting did run rampant. By the time of the Civil War, when the federal government finally took a stronger hand in regulating the nation’s currency, it was estimated that between 1/3 and 1/2 of all paper money in circulation was counterfeit.

As for how I chose among the counterfeiters, there were two criteria: 1) they had to have exciting stories that would lend themselves to engaging narratives, 2) they had to link up with the broader financial history of America in an illuminating way.

Elias Altman February 12th, 2011 at 2:22 pm

How were some of the early debates about paper vs. hard currency framed in colonial Massachusetts? As Perris points out, gold enjoys a very privileged place in our value system.

perris February 12th, 2011 at 2:23 pm
In response to Elias Altman @ 12

now money is based on debt, whence for every paper dollar produced there is a vigorish (the prime)

which seems very ponsyish to me, there is more money owed then money exists.

and if that’s then it behooves an economy have a crash of sorts as we just had so “money evaporates”, thus equalizing the ponzyness of a monetary system that produces paper based on debt


I know our government and not the fed still mints coin, how is this distributed since this there is no debt associated with it?

perris February 12th, 2011 at 2:27 pm
In response to Elias Altman @ 12

Well, Perris, you may have friend in Benjamin Franklin, who once said, “The riches of a country are to be valued by the quantity of labor its inhabitants are able to purchase, not by the quantity of silver or gold they possess.”

I have always made the point, wealth comes from labor, labor does not come from wealth, if all the labor disapeared from the planet but there were still wealth, that wealth would soon evaporate

yet if all the wealth disappeared but labor remained there would soon be wealth again

believing wealth creates jobs is the same thing as believing the rain creates the ocean, it’s the other way around

Ben Tarnoff February 12th, 2011 at 2:27 pm
In response to Elias Altman @ 14

As the first society in the Western world to use a public paper currency, colonial Massachusetts became the site of a particularly heated debate on this subject. What’s fascinating is the strong moral component that often accompanied this debate. For the hard-money camp, paper money represented an intrinsically deceitful medium by substituting the substance of gold for the shadow of paper. Many of the Founders believed this, George Washington among them.

Paper’s opponents denounced it not only as financially unsound but as supernatural. One Protestant minister in colonial Massachusetts compared printing paper bills to the “Popish Doctrine of Transubstantiation” — the idea being that faith couldn’t transform paper into gold any more than it could change bread into the body of Christ. This was the exact same argument used by an Illinois Congressman in 1862, against the passage of the Legal Tender Act during the Civil War. Resistance to paper, and devotion to coin, has a long history in American life.

Elias Altman February 12th, 2011 at 2:34 pm
In response to perris @ 16

Well, Perris, the first first time that any type of centralized governing body attempted to mint some sort of national currency was in June 1775, when the Continental Congress issued bills called Continentals in order to fund the Revolution. Ben, what were some of the short and long-term effects of this decision?

Ben Tarnoff February 12th, 2011 at 2:36 pm

The short-term effects were disastrous. Isolated by the British blockade and deprived of the authority to tax, the Continental Congress needed a way to raise revenue for the Revolution. So it printed paper money in the form of “continentals,” beautifully designed by Benjamin Franklin, which were made legal tender in the states. Excessive printing of the notes produced inflation. The continentals lost their value rapidly, threatening the war effort. After the Revolution had been won, the fiasco with the continentals were so severe that virtually none of America’s leaders advocated a return to paper currency. The Constitution they produced in 1787 came out firmly on the side of a hard currency under national control.

Elias Altman February 12th, 2011 at 2:41 pm
In response to Ben Tarnoff @ 19

Yes, I was going to ask about the Constitution. It says that the Congress shall have the right to “coin Money, regulate the Value thereof, and of foreign Coin.” So, this refers only to hard currency. Furthermore, the individual states were refused the right to print their own bills of credit. How is it that paper bills of one sort or another quickly found themselves circulating again?

perris February 12th, 2011 at 2:44 pm
In response to Elias Altman @ 18

I suspect at the time notes among a society were common, I would promise my apples when harvest arrived for your wood during the winter months

when the government issued these notes it might have seemed like the same kind of barter, extending this courtesy to their government

the short term benefit, the government could borrow from labor and invest in whatever they needed to invest, in this case some kind of confrontation

the long term benefit would obviously be creating a monetary system that they would control

one of the long term liabilities would be the very same thing that was an asset for the government, that they would control and therefore abuse that monetary system, as we all know, absolute power corrupts

Ben Tarnoff February 12th, 2011 at 2:45 pm
In response to Elias Altman @ 20

The way paper money found a way to return to America, despite the Framers’ best efforts to prevent it, was through the notes of private banks. The states discovered a loophole: even though they were prohibited from printing paper money themselves, they could grant charters to banks to do it for them. The number of note-issuing banks skyrocketed in the first few decades of the republic–contemporaries called it a “bancomania.” In 1800, there are 29 banks in the US. In 1812, there are ninety. By 1816, there are two hundred and fifty. Not only are there more banks, but the banks were printing more paper money. From 1811 to 1815, face value of notes in circulation almost doubled. As you can imagine, this gave the country’s counterfeiters endless advantages.

perris February 12th, 2011 at 2:47 pm
In response to Ben Tarnoff @ 22

in this scenario a bank could issue whatever they wanted and default, creating a legal counterfeit scheme

eCAHNomics February 12th, 2011 at 2:47 pm

Let me ask the gold Q a somewhat different way. When Nixon took the U.S. off of Bretton-Woods, the gold issued hotted up again. I asked: Why gold? Why should the world economy be vassals to South African (then an apartheid state) gold mining practices? That was a more dramatic way of framing the issue, since S. Africa was widely disliked. But more generally, why place world or a country’s economy at the mercy of some yellow hunk of metal that comes out of the ground, and the cartel or the oligopoly that digs it up?

Is it bc “money” is inherently a central govt job, the bulk of the central govts in world history have been monarchies, and the monarch decided it would be gold, which then, by historic accident, became the de facto “gold standard.” Or some other reason altogether?

One history of money book I read decades ago pointed to salt as money in very early times, being both relatively rare, a precondition for choosing the standard, but widely enough available to be useful in the souks, or organized markets.

PeasantParty February 12th, 2011 at 2:49 pm
In response to perris @ 23

Wow! Sounds like 2009!

mzchief February 12th, 2011 at 2:50 pm
In response to perris @ 23

{ Welcome Ben, host Elias and salon attendees. }

It would be interesting to examine the Bank of North Dakota based upon that statement.

Ben Tarnoff February 12th, 2011 at 2:52 pm
In response to eCAHNomics @ 24

It’s true that the value of gold relies entirely on convention. Sure, it’s scarce, but so are many metals. The value of gold depends on our faith in it–just like paper money. There’s no rational reason for us to be “at the mercy of some yellow hung of metal that comes out of the ground,” as you say. But many generations of Americans, from the colonial era to the present day, have believed that gold provides a natural, God-given measure of value. The current noises among certain conservatives about returning to the gold standard speaks to how persistent that belief is.

eCAHNomics February 12th, 2011 at 2:53 pm
In response to PeasantParty @ 25

Yep. History repeats. “Shadow banks” in 2008.

The 50 years following the 1930s regulations in the U.S. are relatively rare in financial stability in the history of the U.S.

Ben Tarnoff February 12th, 2011 at 2:56 pm
In response to eCAHNomics @ 28

Financial volatility has definitely been the rule rather than the exception for most of our history. The relative tranquility of the financial sector after Depression-era reforms is rare by historical standards: the 19th century boom-bust cycle feels much closer to where we are today.

Elias Altman February 12th, 2011 at 2:56 pm

Ben, when you get a chance, I wondered if you could talk a little about Shays Rebellion, which is one of those “key terms” taught in the first-half of American history classes. What was its relationship to the currency crisis underway in the mid-1780s?

PeasantParty February 12th, 2011 at 2:56 pm

This subject is so very interesting, especially in light of today’s economic problems.

With the GOP yelping as you stated above, are there other things you see in correlation with the value of money today?

Also, I’d love your thoughts on the IMF and their calls for a different standard than the dollar.

eCAHNomics February 12th, 2011 at 2:57 pm
In response to Ben Tarnoff @ 27

I worked on Wall St, as an eCAHNomist, as you might have guessed. I can assure you of the faith-based aspect of the gold standard, as during that period, as analytical or as sarcastic as I got, I could get nary a soul to question their ‘belief’ in gold.

On edit, I changed ‘hung’ to ‘hunk’, but you got the point.

Ben Tarnoff February 12th, 2011 at 2:57 pm
In response to Elias Altman @ 30

Shays Rebellion was an uprising of farmers in western Massachusetts in 1786. Saddled with high taxes and crushing debt, the rebels forcibly blocked foreclosures of their lands and shuttered courthouses. Among their complaints was the severe shortage of currency that made it impossible for them to pay taxes or debts. After the crisis with the inflationary currency printed by the Continental Congress, money was scarce, and creditors were demanding debts be paid in gold and silver. The Massachusetts rebels wanted the government to print paper money and make it legal tender–so they could use it to pay their debts, among other things. Shays Rebellion belongs to that centuries-long struggle between creditor and debtor, between coin and paper. In the 1870s, a populist coalition called the Greenbackers launched a campaign similar in many respects to the one led by Shays.

eCAHNomics February 12th, 2011 at 2:58 pm
In response to Ben Tarnoff @ 29

The sad part of the story is that we know we don’t need to suffer such extreme volatility, but as it benefits the rich, I guess we MUST suffer it for their sake.

Elias Altman February 12th, 2011 at 3:02 pm

Ben, could you describe the way that counterfeiting networks operated? Are they a diffuse band of vertically integrated entities, similar to the way terrorist cells operate with little or no central body? Who is necessary to make a counterfeit economy work?

Ben Tarnoff February 12th, 2011 at 3:04 pm
In response to PeasantParty @ 31

There are many parallels between past and present debates surrounding the currency. One constant is how often moral language accompanies fairly technical debates about monetary policy. Among the anti-Fed hard-liners in the Republican Party, there is a sense that printing more money to stimulate the economy, and even the very idea of a legal-tender paper currency itself, is somehow immoral–that it represents cheating. There is a legitimate concern here: that inflation will devalue the dollar, although that danger seems distant at present. But the vitriol directed at Bernanke suggests something more ideological, even metaphysical, is driving the debate than simple economics.

As for the calls for a different reserve currency, it’s certainly not a bad idea. The globalization of the dollar as a reserve currency partly contributed to Nixon’s decision to take us completely off the gold standard in 1971–too many foreign countries were exchanging their dollars for gold at the Treasury window. The more control we can have over our currency, the better.

papau February 12th, 2011 at 3:06 pm

Both coin and paper money only have value because the state accepts them as payment for taxes. Gold would have little value otherwise – except for the fools that think there is a greater fool also believing the value will go up if there is inflation (actually because Gold is in jewelry which in turn is wanted so it does have some value – likewise wanted for some minor industrial uses – but the worlds Gold supply is good for a few centuries of new sales – and that is before there is any re-cycling).

The Bank of England ran its economy based on a couple of broken branches from a tree – if the King says they have value – they have value.

eCAHNomics February 12th, 2011 at 3:07 pm


Have you done any work on current counterfeiting of USD? Periodically, one reads a story about large operations taking place in various rogue nations. You mention in A to my first Q that historical estimates were that 20-30% of bills were counterfeit. Sometimes one sees a story of similar magnitude in US paper currency today, drug-trade related. Not to mention the arithmetic that if you divide the U.S. paper currency outstanding by the pop of the U.S., every man, woman, child & infant holds over $1000 in cash. Hypotheses used to center around US cash dollar being used in hyperinflation countries, but as those have dwindled, what’s the new hypothesis?

If that takes you too far afield from your book, don’t bother answering. Or perhaps there’s some historic example that you did investigate that might provide insight?

eCAHNomics February 12th, 2011 at 3:08 pm
In response to Elias Altman @ 35

Great Q!

Ben Tarnoff February 12th, 2011 at 3:08 pm
In response to eCAHNomics @ 34

Financial volatility doesn’t always benefit the rich. Certainly they’re in a better position to endure such abrupt losses of value, since they have a bigger cushion to fall on. In fact, the issue of volatility is a complicated one: without such an abundance of paper currency and credit, it’s unlikely America would’ve grown as rapidly as it did in the 19th century. The speculators and entrepreneurs who stoked the boom-bust cycle did have a constructive role: they helped build canals, railroads, the real infrastructure of the country. In the recent boom, on the other hand, we built comparatively little, aside from a bunch of empty homes in Florida and elsewhere, and piles of worthless financial instruments.

Ben Tarnoff February 12th, 2011 at 3:09 pm
In response to Elias Altman @ 35

The most important member of the counterfeiting enterprise was the engraver. He was at the center of a large, diffuse network of accomplices: printers who helped him secure the press and materials needed to produce the notes; regional distributors who could wholesale the notes or transport them into new communities; gangs of individual passers who spent the fakes in taverns or stores. This fairly simple model was capable of creating elaborate criminal web spanning several colonies/states. Early American law enforcement was rarely up to the task.

eCAHNomics February 12th, 2011 at 3:09 pm
In response to Ben Tarnoff @ 36

Ron Paul speech was replayed on cspan1 today, peddling his tripe about gold. FYI.

mzchief February 12th, 2011 at 3:10 pm
In response to Ben Tarnoff @ 36

Scuttlebutt is that the central banks are committing the physical form of lying as they have tungsten bars electroplated with gold but are representing them as pure gold. That’s bad for faith-based economy.

Ben Tarnoff February 12th, 2011 at 3:12 pm
In response to eCAHNomics @ 38

Counterfeiting has declined significantly since its historical peak in the 19th century. Current estimates for the amount of fake cash in circulation are about 1 per 10,000 notes, both at home and abroad. But counterfeiting now takes place all over the world–with as much as 60 percent of Federal Reserve Notes held overseas, counterfeiting has gone global.

You talk about “large operations taking place in various rogue nations.” The big example of this recently was North Korea, where the government allegedly forges American bills and then launders or wholesales them abroad. Printed with highly sophisticated presses, the North Korean fakes are so difficult to detect they’re known as “supernotes.” Still, the volume of these fakes is still relatively small: about $45 million, according to a recent government estimate, not nearly enough to pose a serious threat to the American economy.

eCAHNomics February 12th, 2011 at 3:14 pm
In response to Ben Tarnoff @ 40

they helped build canals, railroads, the real infrastructure of the country.

Only bc the USG gave them huge incentives to do so.

The diff bt now & then is not that the rich don’t own the USG (they do in both cases) but now the rich don’t have to do anything ‘real’ to get every downside protection from the USG they desire.

Ben Tarnoff February 12th, 2011 at 3:15 pm
In response to mzchief @ 43

Actually, banks have been misrepresenting their reserves for a long time. In Michigan in the 1830s and 40s, stories circulated about “wildcat” banks whose reserves consisted of kegs full of broken glass with a thin layer of gold coin sprinkled on top. The intention was to inspire confidence–to persuade people the bank could keep its promises to redeem a piece of paper for a certain quantity of gold. In this respect, wildcat bankers were a lot like counterfeiters–neither had any intention of honoring those promises.

mzchief February 12th, 2011 at 3:18 pm
In response to Ben Tarnoff @ 46

So when there is lying and a break down in trust– “pop” “poof” goes the bubble economy.

Elias Altman February 12th, 2011 at 3:18 pm

Ben, what were some of the ways that state and federal law enforcement agents responded to the threat of counterfeiters?

eCAHNomics February 12th, 2011 at 3:20 pm
In response to Ben Tarnoff @ 41

The ‘engraver’ was what prompted my first Q. I don’t know much about early U.S. history, but wasn’t this an up & coming profession? Did guild-like orgs limit the supply of engravers?

Also, your general A to Altman makes the counterfeiting org sound much like an illegal drug org today.

DWBartoo February 12th, 2011 at 3:21 pm
In response to eCAHNomics @ 34

It is not merely the rich, the “financial” class, who demand their “pound” of flesh, the rest of the ruling class, the “political” class also demands an equally ludicrous homage, eCAHN.

Ironically, at this time, the human species must face and acknowledge a truth; either we are to allow, permit, and endure, a very few, relatively, to control all of humankind until both humanity and the planet itself are “finished” … or human beings decide that we’ve had quite enough of this patent nonsense.

As long as the money mongers and the political class (which includes the media) can say, “The federal budget is just like your household budget” and be “believed”, even when it is simply NOT true, things will continue as they are …

Yet, someday, somewhere, an economist will have the courage to say, “It need not be this way, an economic ‘system’ should maximize the potential of everyone, wasting no one, and human beings have the fundamental right to change ANY existing ‘system’ to something that serves the needs of all and not a frightened, sociopathic few.”


Ben Tarnoff February 12th, 2011 at 3:22 pm
In response to Elias Altman @ 48

One of the reasons counterfeiters thrived in early America was because law enforcement did such a poor job of capturing and convicting them. In early America, nothing resembling a professional police force existed. Enforcement was local and amateurish–dismantling a large regional counterfeiting enterprise exceeded the talents, resources, and manpower of most constables or justices of the peace.

Over time, law enforcement became more sophisticated. It really wasn’t until the Civil War, with the establishment of the Secret Service in 1865, that an effective, broad-based campaign against counterfeiting begins. It comes from the realization that only a centralized effort could cut through the maze of different jurisdictions that counterfeiters had been manipulating to their advantage for centuries. With a more vigorous federal role, counterfeiters didn’t stand a chance.

eCAHNomics February 12th, 2011 at 3:23 pm
In response to Ben Tarnoff @ 44

Thanks. It was DPRK I was thinking of. Thanks for putting it in perspective. I was intuitively guessing that’s what the A is. Biggish for N. Korea, but smallish for U.S.

Ben Tarnoff February 12th, 2011 at 3:25 pm
In response to eCAHNomics @ 49

Engraving and silversmithing were indeed common professions in early America. They were craftsman, and often very talented–although many of them realized that counterfeiting offered a far more lucrative outlet for their talents. The parallels between the organization of counterfeiting ventures and today’s drug dealing enterprises are fascinating. It shows that illicit organizations tend to mirror legal ones–and illegal markets are subject to the same rules and pressures as legal ones.

jumperno64 February 12th, 2011 at 3:25 pm

One thing I take away from the fiat vs hard money debate is the ease of whimsical spending that can take place under fiat regimes. I too question the need to be shackled to a piece of yellow metal but I do think that governments need discipline. Politicians are so willing to spend spend spend. Its not like we are getting schools and bridges with the money either. Can anyone say military industrial complex? Can you say “investing with leverage.”

Fiat money is very convenient when you need to finance a war. All of the authors examples involve wars in our country’s early years.

Lets just say that I see the merits of both sides arguments.

Oh and eCAHNomics

I worked on Wall St, as an eCAHNomist, as you might have guessed. I can assure you of the faith-based aspect of the gold standard, as during that period, as analytical or as sarcastic as I got, I could get nary a soul to question their ‘belief’ in gold.

I seriously doubt that any current bank or investment house would want a gold standard. It would make their business of leverage and fractional banking difficult. It might actually get bankers to learn how a bank is supposed to function again ie safe bets.

Ben Tarnoff February 12th, 2011 at 3:27 pm
In response to DWBartoo @ 50

You’re absolutely right that the analogy between personal finance and national finance is misguided. I’ve heard Republican lawmakers compare the raising of the debt limit to asking the credit card company for more cash after maxing out your Visa–this metaphor isn’t just misleading, it’s potentially dangerous.

mzchief February 12th, 2011 at 3:29 pm
In response to Ben Tarnoff @ 53

Along those lines, this turned up recently as a controversy: “Tradable Fraud, Goldman’s Facebook Deal, Phantom Bank Earnings & What Happens When Its The Banks That Walk Away From Homes” (by Reggie Middleton on 01/25/2011)

eCAHNomics February 12th, 2011 at 3:30 pm
In response to Ben Tarnoff @ 53

It shows that illicit organizations tend to mirror legal ones–and illegal markets are subject to the same rules and pressures as legal ones.

Or, what’s the diff? (snark)

Or put more intellectually, as you did, there are only a few ways that enterprises, legal or ‘illegal’ can organize themselves.

Ben Tarnoff February 12th, 2011 at 3:30 pm
In response to jumperno64 @ 54

“Fiat money is very convenient when you need to finance a war.” It is, and that’s one of the reasons that the Crown didn’t interfere with colonial finance for so long. They recognized that the bills of credit printed in Massachusetts and elsewhere helped fund the more or less continuous wars against the French colonies. It wasn’t until wealthier colonists in Rhode Island petitioned the Crown to intervene after the legislature got a little carried away with money printing that things began to change: first with the Currency Act of 1751, and then the Currency Act of 1764, which curbed the use of paper currency in the colonies.

eCAHNomics February 12th, 2011 at 3:33 pm
In response to jumperno64 @ 54

Oh for sure.

Just another example of hypocrisy. As much as I railed against the silliness of the gold standard in the 1970s, and as much as my masters defended it, not for a second did I think it was anything other than defending last quarter’s profits.

Once that motivation switched, so did the Wall ST. patter.

Elias Altman February 12th, 2011 at 3:35 pm

As far as counterfeit money undermining an economy, one of the men you deal with is Samuel Upham, who printed Confederate bills, essentially legally, in the North–first as souvenirs. But they quickly found their way to the other side of the Mason-Dixon line. How much of an impact did counterfeiting have on the South and was there an effort on the part of the Union gov’t to create bogus bills?

DWBartoo February 12th, 2011 at 3:36 pm
In response to jumperno64 @ 54

Such discipline as governments need, and monetary policies are not the ony areas of excess or corruption, must, ultimately, come from the governed.

And the responsibility for administering such discipline cannot, ever, be fully invested in representatives of the governed … as history, even our own, recent past will attest.

Banks AND governments are most happy with digital transfers, currently, it makes many “things” far easier, than moving bullion around, jumperno64, just as you suggest.


Ben Tarnoff February 12th, 2011 at 3:39 pm
In response to Elias Altman @ 60

Samuel Curtis Upham forged Confederate money from the safety of his Chestnut Street storefront in downtown Philadelphia. After the war, he estimated that he’d printed a total of $15 million Confederate notes. If all of these ended up in the South, they would’ve made up almost 3% of the entire Confederate money supply–a significant amount for a single counterfeiter. Upham’s fakes certainly contributed to the depreciation of Southern money, but because of overprinting and mismanagement, Confederate currency would’ve depreciated without his help.

As for the question of Union involvement in Upham’s enterprise, there’s no firm evidence either way. The South believed adamantly that the federal government supported Upham–that the North was waging a kind of economic warfare against them by undermining faith in their currency. But the likelier scenario is that the Union government simply turned a blind eye to it. As you say, Confederate bills had no legal status in the North–they were printed by a government emphatically not recognized by the Union.

eCAHNomics February 12th, 2011 at 3:39 pm
In response to Ben Tarnoff @ 55

Although it is largely true that large debtors (USG) own the creditors, while small debtors are owned by their creditors (e.g., developing nations that used to be ‘owned’ by IMF & WB).

Until, of course, that pattern ceases to be true. Many developing nations have figured out how to show the finger to IMF & WB.

Meanwhile, U.S. comeuppance may (or not) happen in our lifetimes.

eCAHNomics February 12th, 2011 at 3:44 pm
In response to Ben Tarnoff @ 62

Do you have reproductions of real vs. counterfeit notes in your book? Was it easy to tell the difference if one looked carefully?

DWBartoo February 12th, 2011 at 3:44 pm
In response to Ben Tarnoff @ 55

It is not merely the Republicans, Ben, another Ben, Bernanke, et al, and most Democrats are saying and doing very dangerous things, as well, unneccessary and very destructive things, that harm many people and are setting us up for another “too” big fall/fail which will be called an “act of God” and something … “no one could have …” etcetera ad nauseum.

Surely, SOME of them must know better?

Frankly, the ruling classes are behaving very badly and “banking” on the ignorance, and inculcated fears, of the populace … worldwide.


jumperno64 February 12th, 2011 at 3:45 pm

Interesting topic Ben. I hope your book sales go well. This, I believe, is a well timed book for the the current world situation. Maybe “helicopter Ben” can get a future chapter.

Good luck!

Elias Altman February 12th, 2011 at 3:46 pm
In response to eCAHNomics @ 64

Also, Ben, what was the process like to engrave and print these bills? Did you need a lot of space and equipment?

Ben Tarnoff February 12th, 2011 at 3:47 pm
In response to eCAHNomics @ 64

There are reproductions of both real and counterfeit notes in the book, but not any placed side by side. I’ve been giving an illustrated lecture where I show people a genuine colonial New Jersey note alongside a fake one. You can clearly tell the difference, because in the counterfeit the stem of the sage leaf is missing. In many colonial cases, it’s fairly easy to distinguish the genuine from the fake–the quality of the engraving tends to be pretty poor. But into the 19th century, as printing becomes more sophisticated, it gets a lot harder. By the middle of the 19th century, I had a hard time telling them apart.

Ben Tarnoff February 12th, 2011 at 3:48 pm
In response to jumperno64 @ 66

Thanks for your kind words. I hope you enjoy the book!

Ben Tarnoff February 12th, 2011 at 3:50 pm
In response to Elias Altman @ 67

Early counterfeiters used copperplates. This meant they engraved the design of a note in reverse onto a piece of copper, then inked the plate, and ran it through the bed of a printing press. As you can imagine, this process took a fair amount of skill–that’s why counterfeiters tended to be former silversmiths or engravers. By the middle of the 19th century, a new money-printing method has been developed, using interchangeable sets of steel dies. This makes printing cheaper and faster, and counterfeiting easier.

PeasantParty February 12th, 2011 at 3:50 pm

Our stock market goes wild when the price of oil goes up. Maybe with the shrinking commodity, the BLACK gold will replace the metal. I hope not, but for what seems like a way to destroy our economy, oil prices surely bring us to the bottom.

Ben and Elias, your work and time is very much appreciated. I hope to buy the book, especially since you offered your research and insights here at FDL!

eCAHNomics February 12th, 2011 at 3:51 pm
In response to Elias Altman @ 67


I live in an historic house (1817) and as a result have visited a lot of historic sites. The reproduction ‘presses’ (back in the days when the ‘press’ was physical) was a piece of mechanical equipment about as tall as a person with a lever convenient to use by the right arm and perhaps 2 or 3′ square. So very small indeed. And that was a newsprint press. Presumably a note press could be much smaller.

Ben can add descriptives too.

Ben Tarnoff February 12th, 2011 at 3:52 pm
In response to PeasantParty @ 71

Thanks. I’m glad you’ve enjoyed the conversation.

BevW February 12th, 2011 at 3:53 pm

As we come to the end of this Book Salon,

Ben, Thank you for stopping by the Lake today and discussing your new book and the history of money.

Elias, Thank you very much for Hosting this great Book Salon.

Everyone, if you would like more information:
Ben’s website and book.

Elias’ website

Thanks all,
Have a great evening!

Elias Altman February 12th, 2011 at 3:54 pm

As we’re coming to the close of this wonderful discussion, I wanted to ask you, Ben, a very general question that brings together a lot of the themes people have brought up so far. The American economy experienced a boom after the War of 1812—in no small part owing to the flood of banknotes injected into circulation—and then went bust in 1819 when attempts were made to rein in the inflationary currency. So too in the late 1820s: the Second Bank of the U.S. regulated the economy by printing its own bills and redeeming the notes of other banks for coin, but this monitoring ran afoul with bankers wanting easy credit; in 1832 President Andrew Jackson closed it, prompting some 600 state banks to once again print an excess of money, resulting in the Panic of 1837. Is there an end to these paroxysms? Isn’t there some way to reach a fine balance?

eCAHNomics February 12th, 2011 at 3:55 pm
In response to Elias Altman @ 75

Thanks for that summary.

DWBartoo February 12th, 2011 at 3:57 pm

Excellent Book Salon.

Thank you, Ben and Elias.

Ben, your book is engraved on my mind, I look forward to reading it with great pleasure, and hope that it does very well in the marketplace.


mzchief February 12th, 2011 at 3:58 pm

Thank you Ben and Elias for being the impetus for a very interesting salon!

Ben Tarnoff February 12th, 2011 at 3:59 pm
In response to Elias Altman @ 75

It’s easy to infer from the history of American finance that there’s something natural or inevitable about the boom-bust cycle. Certainly in the 19th century our economy lurched from prosperity to panic with even greater violence than it does today. A common comparison at the time was between steam and credit: in both cases, you need just enough to keep the engine going, but not so much that it overheats and explodes. What’s clear is that this balance can’t come from within–that is, the markets left to their own devices don’t find some point of equilibrium. Government is the only force that can act to ensure stability. Exactly how it does that without interfering with the more constructive aspects of finance is open to debate–but without a meaningful government role, the boom-bust cycle is likely to continue forever.

PJEvans February 12th, 2011 at 4:00 pm
In response to eCAHNomics @ 10

eCAHN, the precautions they took weren’t the greatest, and some of them they instituted but never fully implemented (good ideas, bad execution, IOW).

(Why yes, I do have some early counterfeiters on my tree. One of them became a judge later on….)

DWBartoo February 12th, 2011 at 4:02 pm
In response to PJEvans @ 80

So, “money” may be found on family trees as well as money-trees?

A notable heritage, PJ.


PeasantParty February 12th, 2011 at 4:02 pm
In response to PJEvans @ 80

LOL! I’ve got American Scotch makers in my tree. :-P


DWBartoo February 12th, 2011 at 4:05 pm
In response to PeasantParty @ 83

A spirited heritage, eh, PP?


mzchief February 12th, 2011 at 4:10 pm
In response to DWBartoo @ 84

{ heh he heeheeheehee }

eCAHNomics February 12th, 2011 at 4:22 pm
In response to PJEvans @ 80

From Counterfeiter to Judge. Sounds like a book title to me!

papau February 12th, 2011 at 4:28 pm


Gold and silver are all we ever hear about as “non-fiat” money – but I would like to go back to using sticks.

King Henry I, son of William the Conqueror, ascended the English throne in 1100 A.D., when taxes were paid in kind, so he invented “stick money”.

The record production was used to get the “in kind that was to be paid as tax”, via medieval European scribes using notches on sticks or “tallies” (from the Latin talea meaning “twig” “stake”), but to prevent alteration or counterfeiting, the sticks were cut in half lengthwise, leaving one half of the notches on each piece, one of which was given to the taxpayer, which could compared for accuracy by reuniting the pieces. Henry adopted this method of tax record keeping in England – but then by the time of enry II taxes were paid two times a year. The first payment, made at Eastertime, was evidenced by giving the taxpayer a tally stick notched to indicate partial payment received, with the same lengthwise split to record, for both parties, the payment made. These were presented at Michaelmas with the balance of taxes then due.

AND THEN THE STICKS BECAME MONEY – tallies were issued by the government in advance of taxes being paid in order to raise finds in emergencies or financial straits. The recipients would accept such tallies for goods sold at a profit or for coin, at a discount, and then would use them later, at Easter or Michaelmas, for the payment of the taxes.

Sadly sticks were replaced in 1694 by the government issuing paper ‘tallies” as paper evidence of debt (i.e. government borrowing) in anticipation of the collection of future taxes. Paper could be made easily negotiable, which made them the full equivalent of the paper bank note money isued by the Bank of England beginning in 1694. By 1697 tallies, bank notes and bankbills all began to circulate freely as interchangeable forms of money. BUT Wooden stick tallies continued to be used until 1826.

AND THE FAMOUS STICK MONEY IS OF COURSE the Tally Stick, worth £25,000, that one of the original stockholders in the Bank of England used to purchase his original shares – he bought shares in the world’s richest and most powerful corporation, with a stick of wood.

So when I hear stories of fiat money versus paper money, I have to smile. It is all based on the government being willing to accept the object as a payment of taxes.

DWBartoo February 12th, 2011 at 4:35 pm
In response to papau @ 87

Your last line, papau, is what, specifically, as you imply, legitimizes a “currencey”, and encourages people to “collect” that currency … that they may pay their taxes …


PJEvans February 12th, 2011 at 6:02 pm
In response to DWBartoo @ 82

This incident
(Captain Greenman is my ancestor. Twice. So is his son Edward.)

DWBartoo February 12th, 2011 at 6:28 pm
In response to PJEvans @ 89

Thank you, PJ, that was most fascinating.

How long has your family lore recounted that story?

“Twice.” … Consanguinity be far more common that most realize.


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