A Counterfeiter's Paradise (32 page)

It didn’t take long for Upham to respond. Two weeks later, he ran his own advertisement in
Harper’s Weekly
, slashing his prices to match Hilton’s. By January 1863, however, Hilton had adopted a new pricing model: rather than charging the same amount for each note, he factored in its face value. He now sold “$500 in Confederate Notes of all denominations” for $5. While this wasn’t quite as good a deal as he had offered before, it showed that Hilton understood his customers. Someone trying to use the facsimiles as counterfeit money would be willing to pay more for a higher-denomination note. Hilton proved far more comfortable than Upham when it came to acknowledging the reason people bought his bills. In
Harper’s Weekly
he boasted that his notes were “so exactly like the genuine that where one will pass current the other will go equally as well,” a direct reference to passing counterfeits. On January 31, Upham countered with his best bargain yet: $20,000 in Confederate money of various denominations “sent, post-paid, to any address, on receipt of $5.” For the same price as Hilton, he was offering forty times the face value, plus free postage.

For all its strengths, Upham’s business model had a fatal flaw. The more counterfeits he sold, the less valuable Confederate notes became, depressing demand for his product. Of course, graybacks would depreciate without his help. But he hastened their decline, which would inevitably take a toll on his trade. By 1863, the future of his business looked grim. Hilton was forcing him to cut his prices even as the value of Confederate notes fell. Hemmed in by the flagging value of Confederate currency on one side and the competition of Hilton on the other, Upham couldn’t hope to continue much longer. His fortunes were tied to those of the Confederacy, a peculiar situation for a Northern patriot.

I
T WAS RAINING IN NEW YORK
on New Year’s Eve 1863, a hard, driving rain that pummeled the grimy streets. At the Astor House annual ball, guests danced under the glow of gaslights, the music rising above the rattling of the storm outside. U.S. Marshal Robert Murray stood less than a mile away, preparing to pull off the sting he had been carefully planning for a week. Murray’s men had been tailing Upham’s old competitor Winthrop E. Hilton around the clock, watching him commute between his office at Printing House Square and his home on Forty-ninth Street, compiling lists of his employees and business partners. Tonight, while the rest of the city was too drunk to notice, Murray would strike.

He split his men into two groups. One headed for Hilton’s main shop at 11 Spruce Street; the other raided a location a few blocks away, above a saloon at the corner of Ann and Gold streets. It was there that the officers found Hilton and an accomplice named Williams, along with lithographic stones for printing $100, $50, and $5 Confederate notes. At two in the morning, Murray and his team stormed a third site, an apartment on Park Row across from the Astor House. They knocked down the door and discovered a cache of machines for printing money, including a geometric lathe, an expensive contraption that engraved highly detailed designs onto a steel plate. They also found millions of dollars’ worth of freshly printed
Confederate notes and bonds. By the time Hilton’s lawyers began looking for him the next day, their client was confined within the brick walls of Fort Lafayette, an island fortification off the southern coast of Brooklyn. There would be no trial. Hilton was a prisoner of war.

Upham had left the counterfeiting business four months before, in August 1863. By that time, Confederate currency was in a free fall. Runaway inflation and deepening distrust of the Richmond government had driven the price of gold in graybacks up 500 percent in the past year. That summer, the Battle of Gettysburg dealt the Confederacy a painful defeat, and when the news reached the South, it triggered another steep decline in the money market. With graybacks falling and Hilton continuing to give him stiff competition, Upham decided to abandon his facsimile trade, and avoided his rival’s fate.

In an irony peculiar to the Civil War, federal authorities arrested Hilton not because he was a counterfeiter—forging Confederate notes was fine—but because they believed he was making genuine notes. They had recently unearthed evidence that the rebel government had hired Hilton to print its money, with his facsimile venture providing the perfect cover. The investigation began in December 1863, when New York City postmaster Abram Wakeman saw a suspicious envelope in the day’s mail. It was addressed to Alexander Keith Jr. of Halifax, Nova Scotia—a known Confederate agent. Wakeman seized the letter and forwarded it to Secretary of War Edwin M. Stanton in Washington. Inside the envelope was something even more suspicious: an encrypted message, coded in strange symbols. Stanton’s clerks at the War Department spent two days trying to decipher it before they gave the letter to a trio of young cryptographers from the telegraph office. These men were the Union’s best code-breakers—the “Sacred Three,” as they called themselves. It took them about four hours to crack the cipher. What they uncovered confirmed Wakeman’s initial hunch: the letter was a covert Confederate communication
from an operative in New York to his counterpart in Halifax, providing news on smuggling rifles into the South and other intrigues.

Two days later, another letter to the Halifax address appeared at the New York post office. The message had been encrypted with the same cipher, and the War Department cryptographers quickly decoded it. “Say to Memminger that Hilton will have the machines all finished and dies all cut ready for shipping by the first of January,” it read. “The engraving of the plates is superb.” The contraband would be shipped from New York to Halifax, from there to the Bahamas, and then brought into Florida by blockade-runner. “The main part of the work has been under the immediate supervision of Hilton,” the letter continued, “who will act in good faith in consequence of the large amount he has and will receive.” Determined to catch Hilton before he got the moneymaking materials to Halifax, Secretary Stanton ordered Murray to round up the printer and his collaborators. He also gave his three code-breakers a raise.

Murray’s sweep went smoothly. He arrested everyone, even the machinist who had built Hilton’s geometric lathe, a former Treasury Department employee living in New Jersey. The
New York Times
hailed the operation as “a great victory by our forces in the field,” sure “to discourage the rebel leaders.” To Hilton’s friends, however, it came as a shock. He was a loyal Union man, they said, and an early supporter of Lincoln. A native of New Hampshire, he had arrived in New York ten years earlier and made a name for himself as an honest printer. They couldn’t believe he would conspire with the rebels.

Although it would take months to learn the truth, they were right: Hilton was innocent. The first clue came in late January, when a Southern general in North Carolina saw a report of Hilton’s capture in a Northern newspaper and passed the article along to Secretary Memminger in Richmond. “The Treasury has no connection whatever with the matter,” Memminger replied, “but it would be well to leave the Yankee police
under their present impressions.” Hilton didn’t work for the South: his notes were counterfeits. What Memminger didn’t say, and perhaps didn’t know, was that Hilton had been the victim of an elaborate Confederate conspiracy.

The details eventually leaked to the
New York World
, which published a long account on April 29, 1864, drawing on information gleaned from secret government documents. In late 1863, the South dispatched a team of undercover agents to New York in order to put a stop to Hilton, whose bad bills were pouring into the Confederacy at an alarming rate. The Southerners came up with a clever plan. They would write an encrypted letter incriminating Hilton, knowing it would be intercepted and decrypted by Union officials. For the hoax to work they needed someone close to the counterfeiter, so they tracked down one of his employees: George H. Briggs, a former Confederate spy who had defected to the North. In a room at the St. Nicholas Hotel on Broadway, one of the agents put a gun to Briggs’s head and threatened to blow his brains out if he didn’t help them jail his boss. They also enlisted James S. Chalker, a customhouse official who despised Hilton and desperately wanted to see him behind bars.

The Confederacy had eliminated a major counterfeiter by tricking the Union into thinking his forgeries were in fact genuine—the same deception perpetrated by Hilton on a wider scale in the South. It was a brilliant tactic, using the counterfeiter’s logic against him. No doubt the agents would have targeted Upham instead if he had still been in business by the time they came North. His notes were certainly still coursing through the Confederacy, at least twenty-five different kinds in all. During the year and a half he spent counterfeiting, Upham made a lot of Southern money. In 1874, when a historian researching a book about Confederate currency asked him for specifics, he estimated he had printed about $15 million in bogus bills. If all of that ended up in the South, it would have made up almost 3 percent of the entire Confederate money supply—a significant
chunk for a single counterfeiter. In his letter to the historian, Upham refused to admit his facsimiles had been anything other than curiosities. He insisted that Hilton had been the counterfeiter, not him. The New Yorker had ripped off his designs, he claimed, and then sold “large quantities to bogus Jew cotton brokers and other scalawags, who passed through the Confederate lines and purchased cotton from the Rebel planters.”

More than a decade after their feud, Upham still hated Hilton. He had nothing to worry about: in the long run, the Philadelphian came out ahead. He was a better businessman, and when he ended his moneymaking venture, he had plenty to fall back on. In the fall of 1863, Upham sold his store at 403 Chestnut Street and opened a different kind of shop five blocks away. With no medical training whatsoever, he began hawking cures for almost anything. Upham’s Bay Rum alleviated dandruff, burns, sores, fever, and headaches; his “Tish-Wang” Chinese lozenges treated gonorrhea, syphilis, and a host of other venereal diseases. He styled himself a chemist and called his store a laboratory, marketing his remedies as vigorously as he had his counterfeits. He took out ads in newspapers and distributed circulars with endorsements from satisfied customers. He patented his treatments and took measures to discourage bootleggers. “Beware of Counterfeits,” one of his flyers warned.

Upham had moved from one swindle to another, from counterfeiting to quackery. He had nothing to recommend him but his talent as a salesman, which was considerable. His business thrived. He enjoyed an impeccable reputation, paid his debts on time, and had no trouble obtaining credit. Hilton, on the other hand, fell apart. By the end of the war, the authorities had released him and he became a printer again. But he struggled financially, and before long had ruined his credit by borrowing a large sum of money that he couldn’t repay. In the summer of 1870 he went through bankruptcy, and seven years later he went out of business.

Hilton had been good at counterfeiting but not much else. Upham proved more versatile, hardened by a lifetime of hustling. If he could make
a living peddling to the scrappy gold diggers of early San Francisco, he could do it anywhere. As Upham got older, he thought more and more about California. His memories of his time there were vivid, “so indelibly photographed upon the retina of the mind,” he told a crowd of fellow forty-niners, “that nothing but death will efface them.” He began writing about it: poems, songs, articles, and in 1878 a book,
Notes of a Voyage to California via Cape Horn, Together with Scenes in El Dorado, in the Years 1849–’50
. Upham didn’t sentimentalize his days in California. He remembered how difficult it was to get rich, how many had left disappointed or had died in the effort. But he couldn’t suppress his nostalgia for the most remarkable period of his life.

In 1876, America celebrated the hundredth anniversary of the Declaration of Independence by hosting its first world’s fair in the city where the document was signed. From May to November, millions of visitors descended on Philadelphia’s Fairmount Park to see the Centennial Exhibition. On the afternoon of September 9, Upham and the other members of the Associated Pioneers of the Territorial Days of California occupied one of the fair’s pavilions to commemorate another, smaller anniversary: the twenty-six years since California’s admission to the Union. Seven hundred people gathered in the wooden hall to hear songs, speeches, and letters of regret from absent dignitaries like President Ulysses S. Grant and General William Tecumseh Sherman. Upham wrote something special for the occasion: “Song of the Argonauts; or, the Days of’Forty-nine.” An opera singer performed it, intoning the wistful lyrics in a rumbling basso voice to a delighted crowd.

While Upham and his friends dwelt on the past, others at the exhibi-tion focused on the future. Not far from the forty-niners’ festivities was the show’s most popular attraction: the Corliss steam engine, a machine that stood almost forty feet tall. Its giant flywheel, churning pistons, and fluttering valves powered the other exhibits in Machinery Hall, and made quite an impression on those who saw them. Elsewhere in the exhibition
were other dazzling examples of American ingenuity. Thomas Edison demonstrated a telegraph capable of sending many messages simultaneously; Alexander Graham Bell unveiled an early version of the telephone; E. Remington and Sons displayed the first modern typewriter. These marvels drew many fascinated foreigners, who came away with a new respect for American engineering. Eleven years after the conclusion of the conflict that nearly cut the nation in two, the United States was a rising power on the world stage.