A Counterfeiter's Paradise (12 page)

A century later, executioners would invent a more humane method of hanging called the “long drop,” where a longer rope was used to break the convict’s neck, resulting in an instant death. But in the kind of hanging practiced in colonial America, death happened by strangulation and was relatively slow and painful. The cord would dig into Sullivan’s neck, searing the skin as the weight of his body pulled him deeper into its grip
and he gradually suffocated. The corpse would look nothing like the confidence man who had captivated the crowd minutes earlier. The tongue would be swollen, the eyes bulging in a cold stare.

Killing the moneymaker removed the root of the problem, but it didn’t stop people from using what he left behind to keep breaking the law. Long after Sullivan’s lifeless body was cut down, they continued passing his notes and printing money from his plates. The authorities did what they could to stamp out the remnants of the counterfeiter’s enterprise. In the summer of 1756, New York passed a law intended to punish the accomplices that Sullivan had refused to name at the gallows. “[I]t appears by the Confession of Owen Sullivan,” the act read, “that there are sundry Plates” held by his associates “in order to carry on that pernicious Practice” of moneymaking. Anyone found concealing plates, notes, materials, or other implements for forging the colony’s currency would be sentenced to death. Along with the harsher penalty came another push for enforcement, as Eliphalet Beecher, fresh from his big success, returned to the backwoods to track down the rest of the Oblong gang. While many of its members eluded him, he effectively scattered the Dover Money Club—he even captured the seasoned counterfeiters Joseph Boyce and his son, although the men later escaped. What Beecher couldn’t do, however, was intercept all the paper Sullivan had put into circulation, bills that would take years to work their way through colonial markets.

Sullivan’s posthumous paper trail didn’t just take the form of forged notes. Printers, hoping to cash in on his fame, published leaflets about him, bringing the events of his life to a wider audience. Within a week of the counterfeiter’s death, a copy of his gallows speech went on sale at Henry De Foreest’s print shop in New York. By the time the newspaper publisher Thomas Fleet reprinted the text in Boston, it had been expanded into a short autobiography, advertised as “[t]aken from his own mouth”—probably transcribed while Sullivan sat in jail awaiting trial. Curious colonists could learn about his childhood in Ireland, his harrowing voyage
to America, his adventures in Maine and Louisbourg—and, of course, the story of how he became a moneymaker. Readers would have found much to relate to: like many of his colonial contemporaries, Sullivan was an immigrant, a war veteran, and a businessman. He died at thirty-three after making a fortune and losing it all. When he stood trial in New York, Sullivan’s only possessions were a horse and saddle, together worth a total of £5. The man who had incensed governments and fascinated colonists by imbuing paper with value saw his wealth evaporate almost as quickly as it came. He ended the way he began, an Irishman with nothing to his pseudonymous name but a talent for earning people’s trust.

SULLIVAN’S CAREER LASTED
only seven years, but it coincided with a pivotal period in America’s monetary history. He started counterfeiting in Boston in 1749, the year that Thomas Hutchinson pushed a bill through the Massachusetts legislature mandating the elimination of the colony’s paper money within the next two years. Far from following Hutchinson’s example, other colonies kept printing currency, inundating Massachusetts with their notes. When Sullivan died in 1756, the outbreak of the French and Indian War had dramatically expanded the paper money supply, as colonial governments approved large issues to cover their military expenses. Hutchinson’s dream of weaning America off paper credit vanished under the flood of bills printed to fund expeditions against the French.

Americans couldn’t reform the messy colonial monetary system on their own; any meaningful policy change would have to come from En-gland. Historically, the imperial authorities had been reluctant to intervene. Aside from a few cases, they left the colonies’ paper currency alone. Citing Cicero’s maxim “Endless money forms the sinews of war,” England recognized that paper helped finance colonial wars against the French; it also stimulated local trade and facilitated tax collection. Around the
middle of the eighteenth century, however, stirred by creditors’ concerns about inflation, the mood among the London authorities began to shift. In 1750, the Rhode Island General Assembly, notorious for its abundant issues of paper money, voted to print another £50,000 in response to colonists’ demands for easy credit. Panicked by the move, Rhode Island’s wealthy merchant class petitioned the Crown for help. The result was England’s strongest statement on colonial money matters to date, the Currency Act of 1751. After decades of salutary neglect, Parliament now forbade the New England colonies to print paper currency except when war or other public emergencies required it. Most important, New England paper money would no longer be considered legal tender—that is, a kind of payment that cannot be legally refused.

The legal tender status of paper wasn’t a pedantic point; it lay at the heart of creditors’ anxieties on both sides of the Atlantic. They feared that debtors would pay debts contracted in sterling with paper money, whose value, unlike silver’s, could depreciate significantly. By prohibiting paper from being legal tender, the new law protected creditors from losing money on their loans. But Parliament’s greater ambition, to strictly limit America’s use of paper currency, had to be postponed when the French and Indian War started three years later. England, eager to wrest control of the American continent from France, didn’t interfere when its colonies printed paper notes to fund the war effort. The investment paid off. The conflict ended in 1763 with a definitive British victory: the French handed over all of their territory in North America east of the Mississippi except for New Orleans, ending a struggle that had lasted more than a century. Louisbourg, where Sullivan had served in the military seventeen years earlier, saw its ramparts demolished by British engineers, who used explosives to ensure that even if the French later retook the seaport, they could never again use its fortifications.

After the joy of the triumph subsided, a bad financial hangover set in. The war had invigorated the American economy: commissaries bought
provisions, soldiers spent money, and the army put thousands of colonists to work running supply routes and building infrastructure. Once the conflict ended, these revenue streams dried up. A simultaneous financial panic in Europe curbed the flow of credit to American borrowers, triggering a downturn that continued to deepen.

In a case of colossal bad timing, England resumed its efforts to restrict paper money just as the colonies were facing a serious economic depression. The Currency Act of 1764 extended the earlier policy to the colonies south of New England but included even broader language: paper money couldn’t be legal tender in payment of “any bargains, contracts, debts, dues, or demands whatsoever.” As with the last act, Parliament wanted to prevent American debtors from paying their British lenders in paper. But the law’s wording seemed to apply the ban not just to private debts but to public ones as well, like the payment of taxes. If enforced to the full letter of the law, this would have a crippling effect on the colonies. Without paper money, colonial governments wouldn’t be able to collect revenue to cover their expenses, as colonists couldn’t pay local taxes. Moreover, currency that couldn’t even be accepted for tax payments would become completely worthless as a medium of exchange.

Faced with potential disaster, colonists interpreted the 1764 law as concerning only private debts and continued to use paper money for public purposes. Fortunately for their sake, the authorities in London decided it wasn’t worth imposing a total ban on paper money, even if the text of the law appeared to demand it. The Currency Act was far from the only unpopular piece of legislation passed by Parliament in the 1760s; the taxes levied by the Stamp Act and the Townshend Acts provoked greater outrage. But it showed how little America’s transatlantic rulers appreciated paper money’s importance to the colonial economy. That ignorance would prove dangerous when Parliament insisted on meddling in matters that aroused strong feelings among colonists.

On a summer night in 1765, sixteen years to the month since Sullivan’s
first arrest in Boston, a mob broke into Thomas Hutchinson’s town house. They wrecked the furniture, shattered the windows, looted the wine cellar, and almost took the roof off the top of the house before the sun came up. The vandals wanted to punish Hutchinson, now the lieutenant governor of Massachusetts, because they suspected him of supporting the Stamp Act. They also remembered his role in ridding Massachusetts of paper money two decades earlier, an affair that had spawned long-standing grudges. The mob “threatened me with destruction then,” Hutchinson noted in a letter to a friend, “and have retained their rancor ever since.” Ten years later, when the steady souring of relations between America and Britain provoked the Revolution’s first shots, Hutchinson decided to stay in England, where he had been recalled a year before. A die-hard Loyalist, he penned a point-by-point refutation of the Declaration of Indepen-dence, which made him even more reviled on the other side of the Atlantic.

However much the rebels hated Hutchinson, they had a lot to learn from him. In seizing the American colonies from the British, they also inherited a volatile and disorganized financial system swirling with multiple currencies. Hutchinson had grappled with the minutiae of the colonial money problem and knew the perils of paper better than anyone. His loyalty to the Crown, however, ensured that America’s new leaders wouldn’t heed his warnings.

THE REVOLUTIONARIES’ FIRST EXPERIMENT
with paper came early. Faced with the mounting costs of the war with Britain, the newly formed Continental Congress needed a way to generate revenue. Isolated by a British naval blockade, it couldn’t borrow from abroad, and it lacked the authority to impose taxes—it could ask the individual colonies for money, but with no guarantee that its requests would be met. So, in June 1775, Congress decided to print paper money. Since the American revolutionaries did not have a plentiful supply of precious metals, it issued the bills,
called continentals, with the expectation that the colonies would later levy taxes payable in the notes. Congress also promised to redeem the continentals for silver or gold whenever their treasurers had enough coin to do so. Benjamin Franklin, by now sixty-nine years old and the world’s most famous American, was called on to design the notes. Franklin had experience printing Pennsylvania’s colonial currency, but the continentals required a new approach—the royal insignia that adorned many of the old bills, for instance, were out of the question. He took to the task with typical zeal. Never one to squander a potential platform for his views, the author of
Poor Richard’s Almanack
emblazoned the notes with emblems and mottoes intended to instill republican virtues of hard work and self-reliance. His $6 bill bore the Latin word
Perseverando
(“By Perseverance”), while his $1 bill read
Depressa Resurgit
(“Though Crushed, It Recovers”); images of beavers, eagles, and cranes accompanied the phrases. As both elegantly executed works of art and cleverly disguised propaganda, Franklin’s continentals were the most visually interesting paper money that America had ever seen.

Despite Franklin’s graceful designs, gross mismanagement of the currency soon resulted in a financial nightmare. Instead of introducing taxes to retire the notes, individual colonies—after 1776, they called themselves states—made continentals legal tender and threatened retribution against anyone who refused them. In January 1776, Congress condemned people who rejected payment in continentals as traitors; such individuals should be “treated as an enemy of his country,” the representatives resolved. But intimidation and patriotism weren’t enough to bolster the money’s value. As Congress continued to print the notes, the currency started depreciating rapidly. During one period in 1779, the continental dollar lost half its value in just three weeks; the precipitous drop made the phrase “not worth a continental” part of the new nation’s lexicon. In March 1780, Congress tried to solve the crisis by issuing a new dollar that was worth forty of the depreciated continentals. This well-intentioned effort to put the currency
on a stable footing impoverished the many Americans unlucky enough to be holding the old paper.

Although Congress made the mistake of printing too much currency, the continental’s collapse wasn’t entirely its fault. Under the new country’s first charter, the Articles of Confederation, the national government had very little power. Not only was it banned from imposing taxes; it couldn’t even prevent individual states from printing their own money, which they did throughout the war, greatly increasing the amount of inflationary paper in circulation. Neither could Congress effectively curb counterfeiting, which intensified when the British recruited talented engravers to forge the rebels’ money and drew on existing criminal networks to distribute the notes in an effort to undermine the American economy. After the British captured New York City in 1776, a notice appeared in the city’s newspapers advertising “counterfeit Congress-Notes” for anyone traveling to the other states. “[T]here is no Risque in getting them off,” the announcement added, “it being almost impossible to discover, that they are not genuine.” Although the British smuggled large amounts of forged continentals into the states and enlisted Loyalists to pass them, the campaign was considered too unseemly for their leaders to admit the operation’s existence. In a letter to George Washington, the commander of the British forces called allegations of counterfeiting “too illiberal to deserve a serious answer.” Washington didn’t need a confession to prove the enemy’s guilt, as his soldiers had already seized British warships with printing materials and piles of counterfeit continentals aboard.