United We Scam
At the outset of his book Mihm conveys the elemental strangeness of this era. Until the Civil War there was no national currency, no dollar issued by the federal government and used by everybody. Instead, there were dozens of currencies issued by state banks, railroads, canal and mining companies, and other enterprises, some used only in particular locales, many others flowing freely across state borders, from region to region. (Mihm's book is full of striking illustrations of these monies, and someone ought to mount them as an exhibition, for they comprise colorful depictions of the nation in all its workday busyness and allegorical richness, and testify to the artfulness of their skilled commercial engravers.) All these paper currencies were a good thing too. How else would this newly emerging and rambunctious market economy lubricate all the transactions people were dying to make? The demand for more money, new money, coins but especially cash that required only a printing press to reproduce in abundance (no arduous discovering and mining of precious metals), became virtually limitless during the boom years of the 1820s and '30s, and again after the country recovered from the collapse of the land boom in 1837 and the terrible depression that followed.
But this multitude of paper was also a bad thing. No one was minding the store. State banks, the main source of this great pandemonium of money, were chartered by their respective state governments, but the charters were essentially licenses to print because they contained no provisions for ongoing public oversight to ensure that the banks had assets on hand (gold especially) to back the notes they issued. There was even less supervision, if that's possible, of the script issued by railroad, mining and other industrial corporations. These currencies were often not worth the paper they were printed on. They might as well have been counterfeit. And there was the rub: if what passed for legal tender was often scarcely distinguishable from funny money, what was a commercial society resting on confidence to do?
Counterfeiters knew what to do, and they did a land-office business. Flourishing especially in border areas--the Vermont-Canadian backwoods was the main site of the industry's early period--where law enforcement, such as it was, was weakly developed (here and there counterfeiters were known to hold down day jobs as sheriffs or magistrates) and compromised by overlapping governmental jurisdictions, counterfeiting grew steadily in scope, geographic reach and organizational complexity. Like any ordinary business, it concerned itself with credit arrangements, finding reliable suppliers of raw materials, quality control, the supply of skilled labor, competitive rivalries, marketing and distribution. As the economy at large began to industrialize, so too did counterfeiting; technological innovations in engraving and printing made the counterfeiters' product more sophisticated and harder to spot. The industry also took advantage of the dispossession of skilled artisan engravers and printers, whose small workshops had been driven under by larger firms, to recruit its own labor and "sales force." The latter often consisted of casual and unemployed workers who became the industry's "shovers," passing on fake notes to unsuspecting storekeepers.
Yet counterfeiting was not simply an enterprise like any other. Mihm acutely notes that by bringing back to life the casualties of legitimate capitalism--ruined banks, unemployed engravers, dead currencies, discarded machinery--counterfeiting performed a kind of necromancy. Consequently the whole monetary system lived in a chronic state of anarchy as the anxiety about what should count as real value and what should not produced what Mihm calls a "categorical collapse," a sense of vertigo further undermining confidence in the "real" economy. This nurtured the growth of an urban capitalist demimonde inhabited by all sorts, an underclass of the semi-employed, drifters, upper-crust slummers, young clerks looking to escape their day jobs and of course criminal types, including confidence men, who made a mockery of all the cardinal virtues of bourgeois life. Counterfeiters moved among them. They became noxious to respectable society but heroes elsewhere in this capitalist dream world of easy money.
Theirs was not the prudential capitalism of the Protestant work ethic but rather the predatory, underground capitalism of the English sea dog, indifferent to the law, risk-prone in the pursuit of overnight wealth. And like those sea dogs, counterfeiters were the cultivators of a certain romantic aura. Mihm reports on how some of the better-known counterfeiters enjoyed reputations as lovable rogues who sported ruffled shirt fronts, gold watches and fob chains, the flashy regalia of this magical capitalism. They also fancied themselves exemplars of democratic self-invention. Stephen Burroughs, one of the most celebrated counterfeiters, proudly proclaimed in his memoir, "I am so far a republican, that I consider a man's merit to rest entirely with himself, without any regard to family, blood, or connection."
Their many victims, among them shopkeepers and legions of ordinary customers, naturally loathed them. A whole counterindustry of counterfeit detectors emerged, its main commodity being regularly updated guides to counterfeit currency, which many a storekeeper kept close by his side as he conducted his daily business. But even the detectors had a self-interest in a thriving counterfeit industry, since without it they would have been out of work, which Mihm observes made counterfeit guides less than reliable. Moreover, because the line between real and bogus currency was so hazy, legitimate banks were ripe for extortion by "detectors" who could easily ruin their reputations. What a world--like Melville's, like Sheppard's, like ours. Who can you trust?
Mihm explains that the particular dilemma of counterfeit currency was solved by the financial exigencies of the Civil War. The need to raise capital and pay soldiers compelled the Union to do what the Constitution had always empowered the federal government to do: issue a single national currency good as "legal tender for all debts public and private." Greenbacks, mainly denominated as five-dollar bills, went into circulation in the summer of 1861. Their appearance was also meant to restore confidence in the future of the national government and the financial underpinnings of the economy. Although God is now duly noted as the ultimate object of trust on the back of dollar bills, in the early days of the greenbacks real trust rested in the power and moral authority of the Union as it survived its most traumatic test and honored its pledge to make good on the paper issued in its name. Henceforth counterfeiting could be likened, at least metaphorically, to treason, and its golden age ended.
Nagging questions remain, however, questions that strike deep into the murkier regions explored by Melville and Bird and shadow the present as much as they did the days of Andrew Jackson. If capitalism is by its nature a game of confidence, at what point does speculation, the beating heart of capitalist investment and innovation, dissolve into pure chicanery, a kind of economic alchemy or gambling with loaded dice? Are fictitious value and slippery selves the currency of a normal market society, not merely its criminal underworld? Mihm might say no, so long as you have a watchman on duty--in this case a federal Treasury with the sole authority to issue and police a uniform national currency. Melville, Bird and a man named James Gordon Bennett would have disagreed. Bennett, the William Randolph Hearst of the antebellum era, was the publisher of the New York Herald, and he used the occasion of William Thompson's arrest to editorialize about society's true confidence men. Bennett was brutally, even demagogically, direct. Thompson was a petty swindler, he wrote, but "those palazzos" of the rich, "with all their costly furniture and all their splendid equipages, have been the product of the same genius in their proprietors, which made the 'Confidence Man' immortal and a prisoner at 'the Tombs.' His genius has been employed on a small scale in Broadway. Theirs has been employed in Wall Street.... Long life to the real 'Confidence Man'--the 'Confidence Man' of Wall Street--the 'Confidence Man' of the palace uptown."
Bennett would feel at home today. Everything is as he left it.