The Art of Making Money - Jason Kersten [23]
Diogenes would have been forgotten had he not gone on to become one of the greatest philosophers in Greek history. He gave us such pearls as “We have two ears and only one tongue in order that we may hear more and speak less,” “Man is the most intelligent of animals—and the most silly,” and “He has the most who is most content with the least.” Diogenes is considered the king of the Cynics—no surprise considering that prior to his reformation he spent a lot of time passing fake for real.
Diogenes and his father got off easy. Throughout most of human history, the typical punishment for counterfeiting has been death. Rome fed its counterfeiters to the lions of the Colosseum, while in various medieval European nations they were drawn and quartered, burned at the stake, or—in the Netherlands—boiled alive. In the early days of the United States, counterfeiters were hanged, and the crime was considered so heinous that the first American currency, the continental, even bore the ominous warning “ ’ Tis death to counterfeit.” Up until 1994, it was still a capital crime in Russia, and it remains so in Vietnam, China, and most of the Middle East.
Although the crime is nonviolent, it undermines the very basis of every economy—and therefore threatens governmental authority. One of the founding fathers of modern economics, the English-man Sir Thomas Gresham, best summarized the threat in what is known as Gresham’s Law: “When there is a legal tender currency, bad money drives good money out of circulation.” We’ve all heard that old philosophical query, “If all the money in the world were fake, what differentiates it from the real?” Without an agreed-upon and vigorously protected standard of “real” currency, modern trade would not exist. The heart of the world’s economy, which over the last hundred years has revolved around the American dollar, would suffer a terminal attack.
Such a fiduciary meltdown has come close to happening before. In the decades just after America won its independence, national mints did not exist. Each bank hired engravers to scratch bill designs onto copper plates, then printed however many notes they needed. Thousands of different kinds of bills were in circulation, and for counterfeiters it was a golden age. The only way people could tell a real note from a fake was by reading broadsheets, which printed pages of warnings describing false bills on a daily basis. Bills deemed credible one day could be banned the next, and the situation became so bad that by the end of the Civil War as many as half of all bills in America were counterfeit.
Up to its ears in war debt, and with only worthless paper to pay it off, the federal government decided to act. On the day of his assassination, Abraham Lincoln directed the secretary of the treasury to form an organization to hunt down counterfeiters and bring them to justice: the United States Secret Service. Initially staffed by Civil War vets and private detectives, the Service employed what were then revolutionary methods—undercover infiltration, heavy use of informants, and the playing of counterfeiters against each other to bring down large networks. At the same time, the Service harassed anyone who came too close to trampling on the sacred turf of U.S. currency design. In one instance, they confiscated the molds and cookies of a Philadelphia baker because he was selling cookies designed to look like an Indian-head penny, then threatened him with a fine and jail time if he baked them again. In another famous case, agents ripped a rug out of a department store window because it had been stitched to resemble a dollar bill.
The Service’s zealotry, along with the unification of all currency production under the Bureau of Engraving and Printing in 1877, produced dramatic results. By 1903 the amount of counterfeit currency circulating had fallen to one dollar out of every hundred thousand—a phenomenal reduction. The Service was so effective that in 1901, following the assassination