Dismantling the Confederacy
Through an unprecedented surge in the production of fake currency, Northern counterfeiters significantly contributed towards toppling the Confederate government.
In extreme brief, the US Civil War erupted in April 1861, following the secession of several Southern states from the Union, primarily to preserve the institution of slavery. Concluded in 1865 by Robert E. Lee’s surrender, this episode facilitated the drastic rise in counterfeiting.
Attempting an early institutional victory during the US Civil War, the Confederacy issued its own currency notes, featuring figures like George Washington, and enslaved peoples, the cornerstone of their society.
The printing of these dollars was, however, desperately poor quality, leaving them rife for replication. The professional minters resided in the North, forcing the Confederate government to repurpose newsprint. Though now accepted as legal tender, one man would subsequently discover exactly how simple generating his own currency would be, initiating an immense money laundering operation.
Is money real?
Only when we believe in it. Bear with me.
The system we rely upon today derives exclusively from collective trust, not any intrinsic value. Otherwise, the cash we exchange is reduced to chunks of metal or paper (or cotton polymers) with writing on. During the US Civil War, the worth of paper on which the Confederate notes were printed increased dramatically, only because it was believed they mattered.
Extending that same logic, anything might one day become priceless. In fact, during a brief craze in 17th Century Holland, tulip bulbs were traded as if more expensive than gold. Partly by understanding this vital concept, the damage inflicted by counterfeiters can be appreciated.
Even today, most existing ‘wealth’ is entirely hypothetical; physical cash accounts for less than 10% of all ‘money’ in circulation. Additionally, the pressures of lockdown and COVID have pushed an increasing number of transactions into the virtual scope. No longer do banks have to issue against the gold standard.
There is still a finite wealth, however, which the Confederacy was forced to contend with in funding their revolution. Printing more banknotes does not equate to printing more money but, perversely, the opposite, decreasing the actual value of each existing note through inflation. It would be this disease that ravaged the Confederate government during the Civil War.
How was the Confederate government toppled?
Hyper-inflation is always debilitating, especially during periods of strife. Germany’s Weimar Republic famously suffered 322% inflation in 1923, the peak of their post-WWI depression, forcing a complete overhaul of the Papiermark into the Reichsmark. More recently, Venezuela experienced continuous, extreme inflation from 2014 which spiralled into hyper-inflation from 2016, inflicting a major political crisis. By official estimates, the inflation rate increased to an astonishing 53,798,500% between 2016 and April 2019.
Why is this relevant? Well, it’s to reinforce exactly how destructive, both monetarily and psychologically, hyper-inflation (exacerbated by counterfeiting) was to a nation attempting to prove its independence.
Having seceded from the Union, printing its own currency illustrated the Confederacy’s legitimacy as a nation. The first iterations of their banknotes were reproduced in Northern newspapers, signalling a definitive break and capturing the attentions of one Samuel Upham, owner of a stationary shop in Philadelphia.
He would become the world’s most prolific counterfeiting, earning the nickname ‘Yankee Scoundrel’ and a $10,000 bounty on his head in the South.
His strategy developed rapidly. Upham recognised the initial popularity of printing these Confederate notes as souvenirs. However, owing to the poor quality of ‘real’ money in the South, his practise quickly graduated into counterfeiting, since his ‘souvenirs’ would be accepted as legal tender. Consequently, one could exchange, through Upham, Union dollars for a considerably larger batch of Confederate dollars.
This proposition was attractive to both Union soldiers and cotton smugglers, expanding Upham’s business until he grew more audacious in printing higher denominations, and dispatching orders in the mail.
After his work inspired other counterfeiters, Upham would even warn customers against purchasing ‘fake’ counterfeit money, from those ripping-off his ‘perfect facsimile’.
Just as these paper bullets shredded the Southern economy, so did the effectiveness of Upham’s business actually threaten his counterfeiting. Facing competition, he was compelled to slash prices, at one stage trading the equivalent of $20,000 Confederate notes for just $5. Through inflation, propelled by the sheer volume of illegal notes entering the economy, his scheme eroded the value of his own product.
To date, the UN estimates between $800 billion and $2 trillion counterfeit bills have been circulated globally. By his calculations, in just two years of activity, opting to retire in 1863, Samuel Upham alone printed $15 million in Confederate bills, all of which promptly became worthless in 1865.
Perhaps the greatest closing irony is that, thanks to their rarity and appeal as a collector’s item, Confederate dollars are now worth far more than face value.
Thanks for reading! My inspiration for this post, and a lot of my information, is owed to the Uncivil Podcast. Though it has been discontinued, its episodes are well-worth catching up on, and are fascinating in providing interesting stories from the US Civil War.
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