Accept No Imitations
The campaign against counterfeits, past and present
Part I | Part II | Part III | Part IV
While the new designs may seem exotic and strange, there is nothing particularly new about any of them. The use of special inks, complicated watermarks, complex designs, and denomination-specific safeguards (such as printing "20" dozens of times on a bill) has a long and illustrious history. In the early republic, bank-note engravers and mechanics filed scores of patents designed to frustrate counterfeiters using precisely these devices. Want some anticounterfeiting paper? A proposal from 1822 that calls for the use of paper dyed with blue indigo might be of help. Or would special inks be of interest? Any of the different two-toned black and green inks developed in the 1850s would be of use. Watermarks? They went into widespread use in the early nineteenth century, with the manufacturers of bank note paper taking the lead. All of these anticounterfeiting measures have a history, and a rather long one at that. And in the past, counterfeiters have always managed to circumvent these obstacles. Indeed, they have an incentive to do so. The most dangerous counterfeit—and the one that is most likely to pass without much trouble—is one that perfectly imitates some safeguard the public believes to be inimitable.
The greenback has become so synonymous with the financial strength of the United States both at home and abroad that radically altering the design is dangerous.It does not bode well for the Treasury Department. Yet one thing our government has going for it is that it need only protect a limited number of designs. Indeed, the strength of today’s money supply lies not with its diversity, but with its simplicity. With only six different types of bills in circulation, it is relatively easy to remember what face goes with what denomination, though more than a few people will struggle to remember when posed that question. Their amnesia is less a function a cultural illiteracy (or poverty) than a testament to just how secure they feel about the currency and how little they need to question the underlying value of these scraps of paper. We do not much read money any more. The bill is in our hands, it is green, and it has a number on it: that is all we need to know. Its virtue is its familiarity. Which is why the government has introduced the new anticounterfeiting measures over the space of close to decade, and in a series of very slow, staged steps. "The currency still has a familiar American look," states the Bureau of Engraving and Printing on its Website. "The size of the notes, basic colors, historical figures and national symbols are not changing," the Bureau notes reassuringly. "New features were evaluated for their compatibility with the traditional design of U.S. currency."
Fig. 5. Front of the one silver-dollar bill, series of 1896. Courtesy of the American Antiquarian Society.
That is debatable, given how they have tarted up Andrew Jackson. But the intent is clear: do not make radical changes or you risk shaking people’s faith in the paper in their wallets. The greenback has become so synonymous with the financial strength of the United States both at home and abroad that radically altering the design is dangerous. Such changes are only welcome when a nation wants a new start (Iraq, for example), or in the case of the European Union, when an entire region wants to carve out a new identity. But in general, preventing a few counterfeits is not worth the erosion of confidence that accompanies the wholesale revision of the symbols and signs that give our money its meaning. After all, in the absence of a gold standard, it is all based on confidence.
By contrast, the banks that issued notes prior to the Civil War worried little about what a change in the design of their notes would mean. If anything, a more expensive and artfully engraved note was taken to be symptomatic of the bank’s financial well being, while a poorly engraved or simple note could indicate a lack of resources and commitment. Individual banks and other note-issuing corporations did not have to shoulder the burden of national sovereignty; they had only to worry about their own interests and their own profit.
Despite all the counterfeiting, that system worked relatively well: the nation had a sufficient circulating medium to meets its insatiable need for credit. And while the system collapsed with some regularity—in 1818 and 1837 most dramatically—resulting in the suspension of specie payments if not national bankruptcy, it does not appear to have slowed down the pace of growth. Indeed, if anything, the sprawling system of state-chartered banks and the money they issued contributed to the nation’s economic ascent. The federal government played little role in any of this in the early nineteenth century, minting some coins and chartering the Bank of the United States, but otherwise steering clear of direct involvement in the monetary system. That process of disengagement only intensified after Jackson’s "Bank War" in 1832-33, which effectively transferred control of the money supply from the Bank of the United States to corporations chartered by the individual states. What prevailed in the early United States was not the most dignified monetary system, but it did work, in part because so many people were willing to suspend disbelief and accept otherwise worthless pieces of paper in the course of business. It was an era in which the distinctions between the real and the counterfeit had yet to coalesce.
Fig. 6. Back of the one silver-dollar bill, series of 1896. Courtesy of the American Antiquarian Society.
But eventually they did coalesce, which brings us full circle back to the efforts of the federal government to protect the currency from counterfeiters. Short of funds during the Civil War, the North turned to the printing presses to finance the war, issuing the money that quickly became known as the greenbacks. Within a few short years, the convergence of the country and the currency was complete, and the older system of the state-chartered banks and their notes was swept away in a flurry of nationalist legislation, replaced by a uniform currency issued by the federal government and a select number of so-called "national banks." The nation-state now had a vested interest in protecting the currency, and a new national policing agency was established to prosecute counterfeiters to the fullest extent of the law. Indeed, before the Secret Service began protecting the president, its members spent most of their time protecting the money supply from fraud, imposture, and insult. There is something telling about the fact that the greenback was considered a national symbol more deserving of protection than the head of state through much of the Gilded Age. That eventually changed, but even today, the job of protecting the money supply is central to the mission of the Secret Service.
By the early twentieth century, the Secret Service had largely succeeded in eradicating counterfeiting, and an era of almost unquestioned confidence in the greenback began. Little could those officers have imagined the present crisis of authenticity triggered by the proliferation of digital imaging. And so now the government has apparently come to the conclusion that a police force alone cannot protect the currency. It must harness technology as well. Today, as in the early republic, there is the hope that a splash of color, some watermarks, and a new look will frustrate the counterfeiting community. Perhaps, but as the bankers of the early republic could attest, it is one thing to make money more difficult to copy; it is altogether another matter to make it impossible to imitate.
Further Reading:
There is no serious history of counterfeiting in the United States, though Lynn Glaser, Counterfeiting in America: The History of an American Way to Wealth (New York, 1968) is not without its merits. Also helpful, if a bit earlier in focus, is Kenneth Scott, Counterfeiting in Colonial America (New York, 1957). On counterfeiting and the rise of the Secret Service, see David R. Johnson, Illegal Tender: Counterfeiting and the Secret Service in Nineteenth-Century America (Washington, D.C., 1995). For more on the rise of national monetary systems, consult Eric Helleiner, The Making of National Money: Territorial Currencies in Historical Perspective (Ithaca, 2003).
