A Counterfeiter's Paradise (29 page)

Upham’s method had its advantages. Criminal moneymakers had developed ways to minimize risk through networks of smugglers, resellers, and passers. But Upham didn’t need to be cautious; he could sell his products openly, and could market them as aggressively as any other commodity. While steadily enlarging his catalog of Confederate currency, he attracted new customers by placing full-page advertisements in various Northern publications. A broadside from March listed seven different “mementos of the Rebellion” for sale: $5 and $10 notes, plus several “shinplasters,” fractional bills worth anywhere from five to fifteen cents, printed by Southern banks and companies. At the bottom of the ad, he reprinted testimonials excerpted from Northern newspapers like the
New York Tribune
. Under the heading “Notices of the Press,” these promotional blurbs praised Upham’s imitations for their high quality and low prices.

At first it seemed possible that Upham believed he was making innocent souvenirs. The endorsements included on his March flyer were careful to call the notes curiosities, not counterfeits. But as his business evolved from a modest retail operation into a high-volume wholesaling enterprise, there could no longer be any doubt about why people wanted his reproductions. At some point in his first few months of operation,
he had shifted from selling souvenirs to selling counterfeits. A flyer published in late May claimed he had sold 500,000 facsimiles in the past three months. His inventory had grown to include fourteen varieties of Confederate notes, shinplasters, and postage stamps—and, for a premium, the notes could even be printed on real banknote paper. Ingeniously, Upham also began fulfilling orders through the mail. For fifty cents, plus eighteen cents for postage, customers throughout the Union could have a hundred of Upham’s notes delivered. He had clearly outgrown the novelty market: no one needed a hundred souvenirs. Upham understood this—he added an article to his “Notices of the Press” from the
Richmond Daily Dispatch
denouncing his “well executed counterfeits.” Incensed reports from Southern newspapers made good publicity, since it meant Upham’s notes were having an effect. They so closely resembled genuine money that there was, as the
Dispatch
said, “no means of knowing to what extent they have been circulated.”

While Upham owed his success partly to the quality of his imitations, what really distinguished him was his skill as a salesman. Thanks to the Civil War, he could treat moneymaking like a legitimate business, applying the lessons he had learned in his previous ventures. His marketing campaign would have been unthinkable for earlier counterfeiters like Owen Sullivan and David Lewis, who had to stay underground to keep out of jail. Of course, Upham didn’t enjoy all the advantages of a legal trade; he couldn’t patent his product, for instance. By the spring of 1862, counterfeiters in Philadelphia and New York had begun making cheap reproductions of his notes, forcing him to cut prices. “Beware of Base Imitations!” he announced in his May flyer. “Each and every fac-simile issued by me bears my imprint.” His counterfeits, in other words, carried a personal guarantee that ensured their authenticity, a brand name that set them apart from the competition.

Upham faced lots of competition. Fake cash plagued the Confederacy from the beginning, supplied by Northern and Southern counterfeiting
gangs as well as foreign sources. Moneymakers in Matamoros, Mexico, funneled their bills into the South via Texas; counterfeiters in Bermuda and Cuba hid their notes in the hulls of the Confederate blockade-runners that regularly evaded the Union navy to get Southern goods to overseas markets. The demand for fake Confederate money was driven not only by the usual small-time scammers but also by cotton smugglers, who ran a booming trade in Union-controlled border cities like St. Louis, Louisville, and Memphis. They could order a thousand of Upham’s notes through the mail, sneak into the South to buy cotton with the counterfeits, and then return north to reap big profits. In 1862, cotton purchased in Helena, Arkansas, for fourteen cents per pound sold for more than three times that amount in St. Louis.

The biggest passers of counterfeit Confederate cash, however, were Union troops. They drew low wages, and fake notes obtained cheaply in the North offered an easy way to boost their income. They could use the money to buy provisions from Southern civilians, while also sabotaging the rebel economy. On their way to the battlefield, many soldiers from New England, New York, and New Jersey passed through Philadelphia, where they could stop by Upham’s shop on Chestnut Street to buy a bundle of forged bills.

Without the Northern army carrying his counterfeits, Upham could never have penetrated the Southern market to the extent he did. They made ideal passers: they traveled constantly and didn’t have to worry about being arrested. Moreover, a Southern merchant would presumably be more inclined to accept a bill from someone with a gun, even if he doubted the authenticity of the bill. In the summer of 1862, Upham’s notes inundated northern Virginia, sown by Union forces marching south from Washington. Their commander, Major General John Pope, had issued a series of orders intended to intimidate Southern civilians. With Lincoln’s approval, Pope essentially told his men to seize food from houses and farms—“subsist upon the country” were his exact words—rather than rely
on their own supplies, and gave them broad latitude in confiscating the property of anyone deemed disloyal to the Union. The soldiers embraced Pope’s message and pillaged the countryside. Their camps soon filled up with local livestock; freshly butchered meat provided a welcome change from typical military fare. Not all the troops took the Southerners’ possessions by force, however: many found it easier to exchange fake cash for what they wanted. A Southern journalist observed that Pope’s men were “fortified with exhaustless quantities of Philadelphia Confederate notes,” which they used to buy everything from horses to sugar to tobacco. When one of the Yankees ended up a prisoner in Richmond, the Confederates searched him and found something that accounted for the flood of forged bills: an advertising circular for Upham’s facsimiles.

Most Union commanders turned a blind eye to the counterfeit currency trade carried on by their troops. Their jurisdiction didn’t just include the battlefield but, more important, the military-occupied border cities where moneymaking and other illicit activities thrived. In Memphis, authorities apprehended a man named Nathan Levi with $800 worth of fake Confederate notes. Levi was released because, in the words of one Massachusetts newspaper, “confederate notes were not money, and hence there were no counterfeits in the eye of the law.” The military governor of Memphis at the time was William Tecumseh Sherman, a man who would later practice a more brutal kind of economic warfare, ravaging the Deep South in his March to the Sea. While not all commanders viewed counterfeiting as leniently, even those who disapproved of it appeared reluctant to discipline their own men. The same summer that Major General John Pope’s men spent fake money in northern Virginia, Brigadier General Samuel W. Crawford imprisoned two youths, ages ten and thirteen, for passing bad bills in Culpeper, Virginia. The boys traded with the soldiers, and in all likelihood sold them stacks of fake Southern notes. At their arrest, the younger one cried and wiped his nose with his sleeve while the elder protested: he swore they only passed the money off on rebels, and
said he knew at least one Union officer who did the same. They ended up in the town’s brick jailhouse with Culpeper’s other criminals.

The role of Union soldiers in circulating counterfeits drew enraged responses from Southerners. The
Richmond Daily Dispatch
had no doubts about who had brought Upham’s notes into the South: the bills appeared “wherever an execrable Yankee soldier polluted the soil with his cloven foot.” From the Confederate point of view, it made perfect sense that Yankees would take advantage of unsuspecting civilians. After all, they came from the grasping, acquisitive culture of the industrial North, where speculation and other predatory practices were widespread. The changes that had transformed Northern society in the past decades had left Southerners largely untouched: the Confederate states were mostly agricultural, with far fewer factories and banks. Their static, slave-based economy didn’t foster the kind of entrepreneurial capitalism that prevailed in the North, and they often vilified Northerners as morally bankrupt profiteers. Wartime counterfeiting helped reinforce this stereotype. A diarist writing from New Orleans remarked that the Union army consisted of “[s]peculators and thieves,” who “go to the battles with their pockets stuffed with counterfeit Confederate money.”

As spurious notes streamed across the border in ever-greater quantities, Confederate leaders started to see the North’s moneymaking operations as something more insidious than a handful of hustlers angling for a profit. They became convinced that the Union was waging a deliberate campaign of economic warfare against their currency. The signs seemed clear enough. If generals like Pope instructed soldiers to plunder Southern homes, surely they could also encourage their men to cripple the Confederate money supply by spreading counterfeits. Southerners focused on Upham in particular. His energetic salesmanship helped persuade the Confederates that Union officials were involved. For the Philadelphia shopkeeper to be able to advertise his forgeries in newspapers and send them through the mail meant the authorities must have given him
permission or, possibly, material support. How could the federal government not know?

ON MARCH 10, 1862,
fourteen days after the
Philadelphia Inquirer
-published the $5 note that launched Upham’s counterfeiting career, another fascinating item appeared in the paper. The editors barely found it newsworthy: they buried the story on the bottom half of the last page, with the shipping news. According to the
Inquirer
’s sources in Washington, federal detectives had recently arrested a printer who had been counterfeiting many Confederate notes of high denominations. The man didn’t put up a fight when the officers arrived; in fact, he was surprised to see them. He had expected the government to let him continue his trade, which, he explained, struck the rebels at their most vulnerable point, their currency. “How is this?” asked a detective. “You see,” the man replied, “these are better than the original article; the originals are worthless; they are unauthorized by law; so I am not counterfeiting. I have not attempted to pass them for money, and really cannot see how I am doing wrong.” “Ah,” said the detective, “of course you were not going to pass them, but you are going to furnish them to the enemy.”

The man conceded that a great deal of his forgeries had gotten across the border, but insisted that his intentions were patriotic. He hoped to destroy Southern confidence in Confederate money. When the detectives investigated further, they discovered he had indeed sent several hundred thousand fake dollars into the South. Unsure of how to proceed, they decided to release him but confiscate his printing press, and referred the case to Secretary of State William H. Seward. Seward couldn’t figure out what to do either, so he passed it along to Secretary of War Edwin M. Stanton.

The counterfeiter almost certainly wasn’t Upham. In March he hadn’t yet produced notes in such numbers, and the prices and denominations
provided in the
Inquirer
didn’t match those of his first facsimiles. But the report offers a rare glimpse into the federal government’s attitude toward Upham’s line of work. Not only did Union officials know about Northern counterfeiting of Confederate notes, they seemed profoundly confused about how to deal with it. The counterfeiter’s impassioned defense in the
Inquirer
—that Confederate money was illegal and thus free to be forged, and that in doing so, he wounded the enemy’s economy—was convincing. Upham himself could have made the same argument. And Seward’s -decision to entrust the matter to the War Department suggests he was swayed by it: since counterfeiting had the potential to be useful to the Union military effort, he forwarded the case to the man responsible for running the war. The
Inquirer
, however, never explained how Stanton settled the issue.

If Seward or Stanton had wanted to aid Northern moneymakers, there were plenty of ways to do so. They could furnish counterfeiters with Southern plates and banknote paper seized from captured blockade-runners, organize groups of soldiers and spies to spread forged notes throughout the South, or just agree not to interfere with anyone trafficking in fake Confederate paper. But, contrary to Southern claims, there is no evidence of any officially sanctioned Union policy to promote the counterfeiting of Confederate money. Federal authorities most likely found it easier to ignore the forging of Southern bills than to take a position either for or against it. Certainly by the time Upham began manufacturing bills in bulk, the government didn’t seem interested in preventing it.

Regardless, for a counterfeiting case to attract federal attention in the first place shows how involved Washington had become in monetary matters. Now that the government printed money, it took an active interest in protecting its paper from being forged. For both North and South, preserving the integrity of their obligations was a matter of national security: if too many counterfeits eroded faith in their currency, it couldn’t be used to fund the war. In the Union this task acquired a new sense of urgency in
early 1862, when Congress passed a law that, for the first time since the Revolution, made paper money printed by the government legal tender.

The legislation took effect on February 25, 1862, and represented nothing less than a revolution in American finance. It gave legal tender status to the demand notes already issued by the Treasury and to $100 million in additional bills called United States Notes. Both kinds of paper came to be known as greenbacks, from the colored ink on their reverse—Confederate Treasury notes, on the other hand, were called graybacks. Greenbacks weren’t merely promises to pay coin but money in themselves, legally indistinguishable from gold and silver in almost every type of transaction. Their value didn’t stem from their exchangeability into coin but from something more abstract: the credit of the United States. This was a bold expression of federal sovereignty. The introduction of demand notes the previous summer had planted the seed for a national currency; now those pieces of paper had become equivalent to precious metals simply because the government said so.