The July 2004 issue of Common-Place features an essay by Stephen Mihm, entitled “Accept No Imitations: The Campaign Against Counterfeits, Past and Present.” Mihm discusses how, from colonial times to the Civil War, “counterfeiters operated with impunity,” becoming “folk heroes” because there was no central control over paper money issuance. Still, he says, the “system worked relatively well: the nation had a sufficient circulating medium to meets its insatiable need for credit.”
Interestingly, Mihm recognizes that the evolution of central control was rooted in war:
Short of funds during the Civil War, the North turned to the printing presses to finance the war, issuing the money that quickly became known as the greenbacks. Within a few short years, the convergence of the country and the currency was complete, and the older system of the state-chartered banks and their notes was swept away in a flurry of nationalist legislation, replaced by a uniform currency issued by the federal government and a select number of so-called “national banks.”
What Mihm doesn’t discuss, however, is how central control itself entailed a vast system of government-sanctioned counterfeiting. For insights into how that system evolved, take a look at Murray Rothbard’s History of Money and Banking in the United States.
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