A Nation of Counterfeiters: Capitalists, Con Men, and the Making of the United States (review)

This engaging study explores the world of paper currency counterfeiting in the United States from the revolutionary period to the Civil War. It is part economic, part cultural history, and Stephen Mihm recounts the history of bogus money through the stories of various counterfeiters and their schemes. Drawing from cultural histories of early capitalism and studies of the institutional developments that marked the rise of the market economy, he also seeks to interpret counterfeiting’s significance in the broadest possible terms. To summarize his argument: the pervasive presence of counterfeiting in nineteenth-century America went hand-in-hand with the emergence of a capitalist market economy.

Throughout the United States counterfeiters and their products coexisted with the numerous state, private, and “wildcat” banks that had proliferated by mid-century. These banks could be just as fraudulent in their practices as the counterfeiters, leading to the paradoxical situation where a good counterfeit on a solid bank was preferred to the legitimate note of a “swindling institution.” At its core, counterfeiting revealed not only the inadequacies of the early American banking system, but the ambiguities of the nascent market economy. Counterfeiters played upon the public’s notions of “confidence” at a time when traditional norms of economic interaction were breaking down but new mechanisms to ensure reasonable behavior were not yet in place. In the final analysis, counterfeiting as an economic and cultural practice was the underside of the capitalist economy. It was, in Mihm’s phrase, “the ghost in the machine.” Not until the Civil War, when the federal treasury began issuing a standardized national paper currency, would the ghost be exorcised.

In fashioning his narrative, Mihm has assembled a wide collection of public and personal sources from newspapers, correspondence, and court records. Following an introduction and summary of the state of monetary affairs in colonial America, he recounts the adventures of the early nineteenth-century counterfeiters who operated out of the eastern townships in lower Quebec Province. The most famous of these townships, dubbed “Cogniac Street” by counterfeiters and their harried opponents, flourished as a center of counterfeit production from the post-revolutionary period through the War of 1812. Its proximity to Vermont, rough terrain, the presence of loyalist émigrés, and the unsettled political relations between the United States and Royal Canadian government made it an ideal location for producing bogus notes on American banks. By the 1820s, the center of production had moved to the Cuyahoga Valley in Ohio. Like Cogniac Street, it possessed the borderlands characteristics favored by the close-knit counterfeiting community. The newly opened Ohio & Erie Canal provided the transportation nexus that allowed it to export its wares all the way to New Orleans.

In the mid-nineteenth century, the counterfeiting industry moved from America’s rural borderlands to its burgeoning cities. In Mihm’s analysis, the production and “pushing” of bad paper in these urban settings reflected the dislocations that occurred as the artisanal economy gave way to wage labor and technological advance. The numerous “counterfeit detectors” published at the time further reflected the ambiguities of the new economic order. While intended to aid merchants in identifying bogus bills, the detectors turned out to be just as useful to counterfeiters. The publishers of these detectors also used their pages to discredit banks whose legitimate notes they wished to redeem at a steep discount. The blurring of lines between the questionable practices of “legitimate” businesses and the activities of the counterfeiters forms a principal theme in this study. Another concerns the federal government’s role in suppressing counterfeiting. At various points, Mihm argues that a government-issued paper money—as was the case in European countries—would have lessened the problem by providing a regulated currency. The Second Bank of the United States came close to achieving this goal before its demise in the 1830s. Only with the issue...