A Nation of Counterfeiters: Capitalists, Con Men, and the Making of the United States, and: The Exchange Artist: A Tale of High-Flying Speculation and America’s First Banking Collapse (review)

Our picture of the early republic’s economic culture customarily features elements of a nation in the making: a unifying print culture and buoyant participatory polity, an elite willing to advocate an opportunistic economy, revived and expanding foreign trade, and a national government that promoted internal development and financial innovation. Stephen Mihm and Jane Kamensky join a group of more skeptical scholars who insist that we see a more contested, fragile economic culture. In these riveting studies, counterfeiting and wild paper speculation defined the identities of certain Americans, and these people helped define the outer limits of what kind of economic culture would be possible and tolerated. There were few obstacles in early America, once the strictures of oldstyle republican virtue and imperial political authority gave way to the emergence of a raucous era in which greed and deception bubbled up regularly from the soup of widespread entrepreneurial ambition. Both studies also keenly appreciate not only how illicit and deceptive economies worked in the early republic, but also how Americans created a culture that praised risk-taking and was reluctant to condemn its greatest economic outlaws.

In Mihm’s account, the illegality of counterfeiting was outweighed by Americans’ boundless entrepreneurial energies and constant shortage of specie. Given the country’s weak institutional authority and the colonial legacy of provincially issued paper money, the latter of which Mihm addresses only briefly, Americans of the early republic granted papermoney- making authority to a burgeoning number of private banks that had been chartered by states. Although most of these banks had minimal assets on hand to back up their loans, governments gave them full privileges to print notes with impunity and make sketchy promises about their future redemption. In short order, the flood of paper money washed beyond the walls of banks; improvement companies, insurance firms, mechanics’ associations, and all manner of entrepreneurs printed a mind-boggling variety of currency denominations in colors and designs that baffled credit-hungry Americans. Among the practitioners of this money-making craft in post-Revolutionary America was an underworld of counterfeiters.

One of Mihm’s most important contributions in this deftly told story is his portrait of the blurred territory—ideologically and in practice— separating legitimate banking and forbidden counterfeiting. In the early republic’s Janus-faced currency economy, legitimately chartered private banks issued mountains of paper money without providing adequate sinking funds, while floods of counterfeit paper money entered mainstream circulation, where many Americans happily fueled their entrepreneurial energies with the fake notes. Both kinds of currency rested on lies about how value is created and relied on a confidence game of extraordinary proportions. Yet despite many bank failures, periodic financial panics, and destroyed reputations of borrowers and lenders alike, private bank notes and counterfeit paper mingled in the pockets of countless Americans for decades.

Counterfeiters, of course, had no need for sinking funds or bank buildings. In Mihm’s fascinating narrative, we see sophisticated criminal networks of engravers, printers, distributors, and “shovers” who hid out in Canada or on the fringes of early national settlements, then trekked with migrants into the Ohio Valley during the 1820s and soon infiltrated eastern cities. Stealing the names of defunct private banks, or fabricating a plausible-sounding bank name to print on their fake money, counterfeiters flourished in their nests of illicit activity until private vigilantes hired by conservative bankers hunted them down.

Mihm skillfully sets the counterfeiting narrative alongside familiar larger ones about political economy and political culture, with the result of putting new twists on old arguments. For example, Mihm convinces us that in the titanic clash over the...