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Paranoia Over Fakes Brings Call for Recall
 | By Fred L. Reed III, Bank Note Reporter
September 09, 2008 |
(Part 39 in a series...)
The money supply in the United States following the Civil War was a mess. Specie payments were still suspended, and the federal greenbacks, which had "won the war," were not only depreciated, they were also counterfeited at every turn. Improved printing methods, a federal police force, massive appropriations, more stringent penalties, and paid informants were not winning the battle with the fakers.
Somewhat lax sentencing and presidential pardons made the felony door revolve, putting koniackers back on the streets to ply their illicit trade with scarcely an interruption. As before, $10 fakes led the way.
Newspaper editor Henry Raymond wasn't the only voice calling for more severe sanctions for convicted boodlers (counterfeiters). U.S. Chief Justice and former Treasury Secretary Salmon P. Chase laid down the law literally in U.S. Circuit Court in West Virginia in summer 1868. Chase, with District Judge Jackson, was presiding in Parkersburg, W.Va. for a Federal Grand Jury considering counterfeiting presentments and other matters.(1)
In charging the grand jurors, Chase said: "It is to be regretted that the currency of the country now consists wholly, or almost wholly of paper; but it is not the less important on that account that the people should be protected, as far as possible, against counterfeiting. Whatever the currency of any country may be, payments must be made in it, and exchanges effected through it. It is practically the common measure of values.
"Whoever imposes a counterfeit dollar on the public," the Supreme Court chief justice continued, "robs successively all who take it in payment. Counterfeiting is continuous robbery, and it robs chiefly those who are least able to bear the loss. Occasionally men are defrauded by counterfeit money on large transactions, but the principal sufferers are laboring men, whom it is the peculiar duty of Government to protect from wrong.
"You will be vigilant, gentlemen, in your investigations concerning this class of crimes.& You will retire to your room, gentlemen, carrying with you, we doubt not, in your retirement, a profound sense of the serious obligations you have taken upon yourselves, to your country and to your God," Chase intoned.(2) Whether any indictments were returned is not known.
A "shover," or passer to fake $10s, Sarah Burns, who had pleaded guilty, was released on her own recognizance by U.S. District Court Judge Blatchford in June 1868 after assisting officials in rounding up the rest of the outlaw crew. It was evident, Blatchford opined, "that she had been the tool of those that thus far had escaped the ends of justice." Therefore the federal law dog suspended her sentence and released Burns.(3)
In fall 1868 Peter Campbell was arrested by Brooklyn officer Whritenour (sic) after passing a "ten dollar counterfeit greenback" on a Saturday evening spree at J. DeWitt's beer salon on Fourth Street in Brooklyn. Campbell was hauled before Justice Voorhies two days later, claiming his innocence of the matter. He offered to produce the man from whom he had acquired the tainted boodle as his wages. The judge carried over the matter until the following day. (4)
The case of the United States vs. James Archer was argued in U.S. Circuit Court in New York City Jan. 14, 1869. Carr was charged with passing counterfeit money. Testimony showed that Archer had attempted to pass a "bad $10 note" in payment at a hat store. Previous to that he had tried to spend the note at another store but had been rebuffed because it was bad.
Archer testified he knew the bill was no good, but since it belonged to a friend of his he thought "some one else could stand the loss better than its present owner." Archer's case was continued over by the judge.(5)
Presidential pardons of felons convicted of counterfeiting offenses continued to be a poke in the eye to a Congress desirous of finally getting a handle on the problem. On Feb. 17, 1869, the U.S. Senate unanimously agreed to Massachusetts Sen. Henry Wilson's resolution instructing the attorney general to provide for the information of the Senate "a list of persons convicted for violating the revenue laws, and for counterfeiting, stating the length of sentence to imprisonment, the amount of fine in each case, and who, of such persons, have been pardoned by the President [Andrew Johnson], when such pardons were granted."(6)
The attorney general replied quickly. Six days later on Feb. 23, 1869, the president pro tempore "laid before the Senate a report of the Attorney General, communicating, in compliance with the resolution of the Senate of the 17th instant, information in relation to person convicted of&. counterfeiting."(7) The report was read, ordered that it lie on the table, and be printed.
It's a wise father who knows his own son, according to an old proverb cited in an account of greenback counterfeiting in a 19th-century newspaper. Evidently that's not always the case, however, within federal bureaucracy. Take the case of "our paternal Government and one of its brood of bills which serve for current money." It seems a $10 note was alleged to be counterfeit and forwarded to Washington D.C. for confirmation.
"The Treasury Department for years has been making notes and yet is sometimes unable to pronounce upon the genuineness of the work of its own hands," a newspaper account noted. What a quandary? Some of the Treasury "experts" including the U.S. Treasurer turned thumbs up to the bill. The treasurer should know; his facsimile signature appears on its face. Yet, others within the Treasury Department demurred and turned thumbs down.
U.S. Treasurer F.E. Spinner took up with the former "but not so positively as to dispel all doubt." How many such equivocal notes "are there in the hands of innocent holders?" a Washington correspondent wondered.(8)
A couple days later Spinner was won over to the side of those who thought the $10 greenback was a fake. On July 28, 1869, U.S. Treasurer Francis E. Spinner determined that a peculiar $10 note was counterfeit. His decision differed from a pronouncement he had made a few days earlier when he ruled the bill OK.
According to the Treasury official, he had come to his change of mind on the matter in the interim by folding the bill in half and finding that it was short one-sixteenth of an inch on one end from the other.
"The plates of the genuine notes are all engraved at right angles," Spinner told a reporter, "so that by folding a note once and bringing the two ends together, the engraved edges will cover each other perfectly." Not so with this note, Spinner found. Besides, he said, the dots or periods after "F.E." in his signature "do not appear on the counterfeit, while in the genuine they are very distinct." How clever of him!
A man should know his own signature, but just in case he was wrong again, the Treasurer sent the note to New York for examination by more "experts," this time at the National and American bank note companies for their views.(9)
The sawbuck counterfeit plight worsened. In 1869 J.W. Jones & Co., 37 Nassau St., New York City published a large 22- by 29-inch poster, called Jones' United States Illustrated Chart [of] Genuine and Counterfeit Bills, which merchants could hang on the wall. Illustrated with crude woodcuts of the full range of greenbacks $1-$100 and $2-$100 Nationals, plus 50-cent Justice and 25-cent Fessenden Fractionals, this effort to simulate Naramore's photographic poster was doomed to failure. It remains an odd curiosity in the hobby today.
"New developments are making daily concerning the new spurious $10 greenbacks, specimens of which come to the United States Treasurer's Office EVERY DAY (emphasis added)," the Associated Press reported out of the nation's capital in early August 1869.
"When the first series was received General Spinner, on examination, came to the conclusion that they had been put out as a blind for future operations. Although very skillfully executed, they presented so many defects that experienced persons could detect them readily," the report continued. The various defects were made public. "Thus the public were notified of the imperfect dots opposite the figures '10' on each end of the note, the lack of distinct rows of figures in the left wing of the eagle, the want of a period after the letter 'E' in Spinner's name, and various other omissions."
Proving Spinner's bleak forecast correct. The fakers learned from their critics. They perfected their product. "Two specimens received to-day bear witness that they are new issues, for all the defects above referred to have been removed," the press report continued. It ended with the dismal conclusion: "[T]he general appearance of the note [is] so exactly like the genuine that it almost defies detection by professional experts."(10)
Later that summer the press reported under a harrowing headline that a "Counterfeit Panic" had gripped the nation over the supply of $10 greenbacks in circulation. According to an Eastern paper, this malaise was widespread. "Letters are received EVERY DAY (emphasis added) at the Treasury from parties in every part of the country, asking for information about counterfeit tens."(11)
This "dis-ease" was so suggestive that in many cases the correspondents enclosed suspicious bills for examination, which ultimately were pronounced by Treasury officials as quite genuine, indeed.
This paranoia was fueled by "instructions (from whom?)&to withdraw all ten dollar greenbacks from circulation&[to be] redeemed as rapidly as presented." (ibid.) This would be remarkable, if true. The New York Times was silent on the matter.
Has any BNR reader ever heard about a $10 legal tender recall in 1869?(12)
"Preparations," the account continued, "are making to photograph the counterfeit tens on an enlarged scale for banks, brokers and business men, as samples to enable them to detect the counterfeits by comparison with genuine notes." (ibid.) Here's another VERY interesting notion. Were enlarged photographs of bogus ten-spots ever taken and circulated for counterfeit detection as this report indicates? This author would like to hear of reported cases.
Laban Heath had been given permission to publish examples of Third Issue Fractional Currency (issued Dec. 5, 1864-Aug. 16, 1869) and Series 1862 (New Series 23) Second Obligation $10 U.S. Notes (Fr. 94) from government plates in editions of his counterfeit detector. These impressions, without overprinting or signatures (as applicable), were, of course, full size. (Later editions of the Heath detector published impressions of partial notes only.) And Robert Naramore had been given permission to publish photographic copies of Legal Tender Notes and National Currency in reduced sizes (see this column Part 37, BNR July 2008). The issuing of these permissions indicate the straits to which Treasury had been pushed in its war against the counterfeiters. So the notion of publishing large photograph detector notes is not bizarre, even if it were never undertaken.
The simple fact is that the counterfeiting situation was intolerable. It never seemed to get better, and at least as far as demonstrated with regard to the $10 denomination which is the purview of this series, two steps forward frequently landed a net effect of three steps to the rear.
The government, which had appropriated $150,000 to fight counterfeiting in 1867,(13) poured another $175,000 on the problem in 1868.(14) Remarkably, at the height of the crisis in 1869, Congress cut expenditures available to deal with its counterfeiting problem.
The appropriation authorized was a "mere" $100,000.(15)
On July 21, 1869, Treasury Secretary George S. Boutwell issued a notice than anyone possessing distinctive distributed fibers currency paper is guilty of felony. (16)
Finally, pushed by the intractable problem with counterfeit $10 notes, Boutwell shifted from a defensive strategy of trying to suppress the bogus notes, and went on the offensive. The New York Times reported this new tactic in its issue of Aug. 3, 1869:
"New Issue of Greenbacks"
"In consequence of the spurious issue of the $10 greenbacks, or legal tender notes" the Times reported, "Secretary Boutwell has concluded to have a new issue of all denominations of greenbacks, from $1 to the $1,000 note."
Plates for these new notes were then being engraved at the Bureau of engraving and Printing, the account continued. "The designs are entirely new. No likeness of any living man will be placed on any note. None of the former or present greenbacks were engraved or printed at the Treasury Department. The engraving, however, of the new issue, and the printing of the faces and the seals of all denoinations, will be performed in the Printing and Engraving Bureau, while the backs will be printed in New-York.
"There will be every possible caution to prevent frauds, including the taking of lead impressions for electrotype plates," the Times concluded.(17)
(To be continued...)
Fractional Currency Update
The last installment of this series described a neat Civil War era CDV and a similar periodical ad that poked fun at Lincoln's Fractional Currency and greenbacks. Inadvertently, I neglected to include the illustrations, so they are depicted here. For particulars please see Part 38 (BNR August 2008). Mea culpa.
A Personal Note
I welcome feedback from BNR readers. You can contact me at fred@spmc.org or by mail at PO Box 118162, Carrollton, TX 75011-8162. If you wish a reply, include a self-addressed stamped envelope.
End Notes
(1)"Chief Justice Chase. Important Charge by Him to the Grand Jury&," New York Times, Aug. 10, 1868; "Chief Justice Chase," NYT, Aug. 9, 1868.
(2) op cit., NYT, Aug. 10, 1868.
(3) "Law Reports: United States District Court, Southern District of New York," NYT June 13, 1868, p. 2.
(4) "Counterfeit Greenback," Brooklyn Daily Eagle, Sept. 28, 1868.
(5) "United States Circuit Court, Southern District of New York, Before Judge Benedict: Having and Passing Counterfeit Money," NYT, Jan. 15, 1869.
(6) Journal of the Senate, 40th Congress, 3rd Session, Feb. 17, 1869, p. 284; see also Congressional Globe, 40th Congress, 3rd Session, Senate of the United States, p. 1284.
(7) Journal of the Senate, Vol. 62, Feb. 23, 1869, p. 319.
(8) "From Washington: Curiosities of Currency," BDE, July 26, 1869.
(9) "From Washington, That Ten-Dollar Note," BDE, July 28, 1869.
(10) "Dispatches to the Associated Press, Washington, Wednesday, Aug. 4, The Counterfeit Greenbacks," NYT, Aug. 5, 1869, p. 1.
(11) "The Counterfeit Panic," BDE, Aug. 11, 1869.
(12) The Confederate officials during the war had suffered through currency recalls due to counterfeiting. One occurred on Aug. 20, 1862, when CSA Treasury Secretary Christopher G. Memminger recalled Hoyer & Ludwig $20s, $50s, and $100s of the Sept. 2, 1861, issue; see George Tremmel, A Guide Book of Counterfeit Confederate Currency, Whitman, 2007, pp. 6ff.
(13) Statutes at Large, 39th Congress, Sess. II, Chapt. CLXVI, An Act making Appropriations for the legislative, executive, and judicial Expenses of the Government for the Year ending the thirtieth of June, eighteen hundred and sixty-eight, and for other purposes, March 2, 1867, p. 455.
(14) Statutes at Large, Fortieth Congress, Sess. II, Chapt. CLXXVII, An Act making Appropriations for sundry civil Expenses of the Government for the Year ending June thirty, eighteen hundred and sixty-nine, and for other Purposes, July 20, 1868, p. 111; and Chapt. CCXXXIII, An Act making Appropriations and to supply Deficiencies in the Appropriations for the Service of the Government for the fiscal Year ending June thirtieth, eighteen hundred and sixty-eight, and for other Purposes, July 25, 1868, p. 173.
(15) Statutes at Large, Fortieth Congress, Sess. III, Chapt. CXXII, An Act making Appropriations for sundry Civil Expenses of the Government for the Year ending June thirtieth, eighteen hundred and seventy, and for other Purposes, March 3, 1869, p. 302.
(16) Paper Money, Vol. 15, No. 110.
(17) NYT, Aug. 3, 1869.
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