They Were Money-Makers

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They Were Money-Makers


By: Anonymous

Date: May 21, 1887

Source: Corbis.

About the Illustrator: This illustration is part of the stock collection at Corbis photo agency, headquartered in Seattle and provider of images for magazine, films, television, and advertisements. The artist is not known.


The practice of creating and producing counterfeit money probably began shortly after the very first money was produced. It was especially prevalent at times and in places where money was created by more than one source, or when multiple types of currency were popularly used. In the United States, counterfeiting was particularly common during a period of time in the nineteenth century, when banks were responsible for production of their own legal tender and their own checks. According to the United States Secret Service, during the Civil War between one third and one half of all United States currency then in circulation was counterfeit, posing an enormous threat to the stability of the nation's economy.

The United States Secret Service has reported that there were more than 1,500 state banks, each producing their own currency, by the middle of the nineteenth century. The result was more than 7,000 unique types of bank notes being used by the general public. In addition to that vast quantity of legitimate currency, the Secret Service estimated that there were at least an additional 4,000 forms of counterfeit money in use at the same time. It was nearly impossible to distinguish genuine from counterfeit money, and the economy was quite fragile as a result. Due in part to the proliferation of counterfeiting, and in part to the lack of a national financial infrastructure, banks often failed, leaving people with legal tender that was worthless. In an effort to stabilize the economy by standardizing the monetary system, a national system of currency was adopted by the United States in 1863. It was hoped that the new currency would also discourage the practice of counterfeiting, but the desired result was not achieved. In fact, the rate at which counterfeit money was introduced into circulation continued to rise.

The United States Secret Service was created in July of 1865 as a branch of the United States Treasury Department, in an effort to investigate and ameliorate the problem of counterfeiting in America. The proliferation of counterfeit money, because it created an artificially large amount of circulating currency, made the economy of the country potentially unstable.

Shortly after the passage of the National Currency Act of 1863 (the act that created a single monetary system across the United States), President Lincoln ratified the National Bank Act, laying the foundation for a nationwide financial infrastructure. The goal of the legislation was to create a unified banking system that was organized under the federal jurisdiction of the Comptroller of the Currency.

The new banking system, involving the use of currency, United States government securities, and national bank notes, was quite effective. The economy stabilized, and the prevalence of counterfeit money in financial circulation dropped substantially.



See primary source image.


Between the end of the banking crisis and the ensuing Great Depression in the 1920s and 1930s, and the rise of technological sophistication near the end of the twentieth century, it was relatively difficult to produce successful counterfeit paper money in America for local use. It required considerable printing and engraving equipment, large printing plates, and significant artistic skill—as the renderings had to be hand-copied and etched into the production plates. The equipment was large and cumbersome, not portable, and difficult to hide or to disguise.

However, because the American currency design had been created and produced early in the twentieth century, and had remained unchanged for many decades, it became progressively simpler to successfully counterfeit American money for use internationally. Because many businesses outside of the United States accepted American money, yet were not as intimately familiar with its texture and appearance as American merchants would be, it was easier to pass counterfeit money abroad than within the United States. When the money was eventually returned to the American banking system, and reached the advanced scanning equipment utilized by the United States Bureau of Engraving and Printing, the fraud would almost certainly be detected.

With the advent of high-resolution printers and scanners, as well as sophisticated art and design computer software, the production of counterfeit money has experienced a renaissance and has taken on an air of near artistry. Since 1985, the degree of computer, software, and printer refinement has been such that it has been possible to create convincing-looking counterfeit money using relatively simple technology. In the late 1980s, the United States government stepped up its level of research on making American paper currency more difficult to counterfeit and successfully use. By the early 1990s, nearly $10 million worth of counterfeit money produced on easily obtained commercial and home office equipment was confiscated yearly, and the amount increased to nearly $40 million per year during the first decade of the twenty-first century.

Interestingly, many of the new "casual counterfeiters" are teenagers and young adults—high school and college students who are well educated and very bright, if somewhat lacking in worldliness and sophistication. Casual counterfeiters are those that do not develop a detailed plan and system in advance of attempting to fabricate money. They tend to stumble upon the idea when, in exploring the limits of their computer and peripheral equipment, they first attempt to scan and copy a piece of American paper money. If this is met with relative success, they may try to rapidly refine and perfect the copy, and then try to produce a two-sided copy. If the paper has the appropriate feel and the copy appears to be sufficiently clear and detailed, it is very tempting to try to pass the fraudulent tender. Rarely is the effort successful.

In an effort to stave off the flood of casual counterfeiters, the United States Treasury began producing redesigned paper currency in 1996. More recently, redesigned twenty-dollar bills were introduced in 2003, fifty-dollar bills in 2004, and ten- and one-hundred-dollar bills in 2006. Because of their greater value, the larger (larger than one or five dollars) bills are expected to be redesigned once or twice per decade.

Counterfeiting is a federal offense, carrying graduated penalties. An adult who is charged with simply making exact-sized color copies of United States currency can receive a fifteen-year sentence. If the money is passed into circulation, whether or not the attempt is successful, there is an additional potential fifteen-year sentence added to the one for manufacturing counterfeit currency. Each counterfeit bill that is tendered can carry a separate criminal sentence, as well as a fine of up to $250,000 in addition to replacement of the original costs (the amount of counterfeit money exchanged for goods or services). The Secret Service, as well as the District Attorneys in the jurisdictions in which juveniles have been arrested for casual counterfeiting, struggle with individual decisions on the legal consequences given to the youth. Most of the time, the counterfeiting is done in very limited amounts, with no forethought or appreciation for the severity of the offense. The general consensus seems to be that the newest currency has surpassed the capabilities of even the most sophisticated home computer, printer, and scanner systems, and will thwart youthful counterfeiters. In the interim, many juvenile counterfeiters will have earned criminal records and probation histories, and some will have faced jail or prison terms.



Paradise, Paul R. Trademark Counterfeiting, Product Piracy, and the Billion Dollar Threat to the U.S. Economy. Westport, Conn.: Quorum Books, 1999.


De Jager, Peter. "The New Money Laundering?" ABA Banking Journal 95, 12 (2003): 8.

Hamilton-Wright, Kimberly J. "Funny Money: Counterfeit Money Scams Persist." Black Enterprise 34, 3 (October 2003): 135.

Web sites "Secrets of Making Money." 〈〉 (accessed March 6, 2006).

United States Treasury Bureau of Engraving and Printing. "Anti-Counterfeiting Security Features." 〈〉 (February 26, 2006).

United States Treasury Bureau of Engraving and Printing. "The New Color of Money. Safer. Smarter. More Secure." 〈〉 (accessed March 6, 2006).