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

The United States was the verge of becoming “a nation of counterfeiters!” rued the editor and publisher Hezekiah Niles in 1818. Niles decried the ubiquity of counterfeiting and fraudulent paper in the early republic; forgery, he lamented, “seems to have lost its criminality in the minds of many” (6).

Stephen Mihm’s original, colorful and inventive study uncovers a hidden and forgotten chapter of American history: how the early American economy functioned with a weak—sometimes non-existent—central government and no national currency. Antistatist sympathies of early Americans discouraged the creation of a national currency or central bank. Those responsibilities were effectively privatized, and state-chartered banks and corporations enjoyed the right to print money.

Bank notes were the “markers of the market revolution; they were capitalism incarnate” (15). In a society suffering from lack of specie or hard money, paper currency was popular, if not an outright necessity. Mihm points out that colonial North America was the world’s most tolerant society regarding paper money. Some even considered counterfeiting to have beneficial effects, a view which persisted well into the nineteenth century.

The popularity of paper currency, the lack of hard specie, and a weak national state resulted in private banks enjoying unusual power. By 1840, at least 711 banks issuing their own paper bills. Even when banks published “counterfeit detectors” to help law-abiding citizens, criminals took the guides and printed better phoney notes.

A privatized paper currency placed a great emphasis on trust and confidence. This worked with local, face-to-face economic transactions. But in an increasingly anonymous and geographically-dispersed economy, fraud and forgery grew rampant. Mihm argues that only a thin blue line separated real from counterfeit money. Sometimes such boundaries simply vanished. Banks that issued notes without the requisite financial reserves or assets were little different from counterfeiters, at least to many contemporaries. Bank and counterfeit notes alike required users to deem something valuable that had little intrinsic worth. Bankers and confidence men not only thrived in this system; they shared the same values.

Mihm presents a social history of the United States in which the netherworld intersects with public life in the early republic. Counterfeiters like Stephen Burroughs, Seneca Page and others worked out of Cogniac Street in Durham, Quebec for several decades. After 1830, New York and Philadelphia became counterfeit centers as corrupt printers and engravers were attracted to the lucrative business. By then, a national network of counterfeit crime had emerged, exemplified by family entrepreneurs like Daniel Brown and William Taylor whose influence extended to the Midwest and South. Some intermarried; others like James Brown were elected justice of the peace in their communities (Boston, Ohio).

Counterfeiting persisted for multiple reasons: weak punishments and frequent pardons of perpetrators; little cooperation among local, state and federal agencies; the absence of effective local police forces; the ability of counterfeiters to work out of Canada; the growing anonymity of cities and marketplace encounters; the need for and popularity of paper money in the west; the surreptitious use of discarded printing plates of bankrupt banks; and the simple willingness of ordinary citizens to pass counterfeit notes to others rather than turning them in.

This changed only with the Civil War. A reinvigorated federal government banned state-chartered bank notes and replaced them with a national currency. Mihm argues that this involved more than money. A true national currency demanded faith in a new concept: the nation. National loyalty now transcended faith in the market, private banks and individual citizens. Counterfeiting thus became a threat to nationhood and national security, not simply a nuisance.

Some fault Mihm for overstating the importance of currency to nationhood.¹ Others claim he conflates counterfeiters and paper money proponents, thereby adopting the antebellum criticisms of hard money advocates.² Personally, I wish Mihm pursued his argument that counterfeiters like Stephen Burroughs were the earliest American outlaws. At one point, he...