How Fake Currency Has Been Used to Sabotage Economies

How Fake Currency Has Been Used to Sabotage Economies

Samuel Curtis Upham might not be a household name outside of American history circles. But the Philadelphia shopkeeper was very important during the American Civil War. He printed more than $15 million worth of fake currency to hurt the economy of the Confederate states.

Tacit Approval From the U.S. Government

It all began in 1862, when Upham purchased an electroplate from the Philadelphia Inquirer, which had previously been used to make a copy of a $5 Confederate note for a front-page story.

Upon seeing the success of the Inquirer’s story, Upham figured he could make some money for himself by selling souvenir copies of the note. He quickly went to the newspaper’s offices, purchased the electroplate, took it to a local printer, and made 3,000 copies of the $5 bills. He then sold the bills for a penny each. The fake money sold out in days.

So good was the quality of Upham’s souvenir bills that cotton smugglers from the North started using them to pay cotton farmers in the South.

It is alleged that the U.S. Secretary of War, Edwin M. Stanton, aided Upham’s work by providing him with high-quality banknote papers reportedly seized in a Union blockade.

Whatever the truth was, the quality of Upham’s bills improved dramatically, and the forgeries made their way into the heart of the Confederacy, carried by Union soldiers who used them to buy supplies.

Upham’s forgeries became so common in the South that the Confederate Treasury Secretary was forced to issue a report on them. Because of the uproar, the Union government was forced to investigate Upham’s activities. But he didn’t get in trouble because, even though it was illegal to copy another country’s money, the Union did not recognize the Confederate States, so Upham’s bills were not considered fake.

By the middle of 1863, Upham’s forgeries were causing massive inflation in the South. The situation became so bad that cotton traders stopped accepting Confederate money and only accepted gold or Union bills as payment. It’s been said in some quarters that Upham’s counterfeits hurt the South more than Union generals and their armies.

NAZIs Used Counterfeit to Finance War Efforts

In 1940, Nazi Germany attempted to collapse the British economy using similar tactics. The Germans used criminals to forge nearly £3 million in 18 months. However, the British were made aware of the plot and issued a series of safeguards to protect the pound.

After that plan didn’t work, the Nazis changed their strategy and decided to make fake money to pay for their intelligence-gathering activities.

The new plan, dubbed “Operation Bernhard,” used concentration camp prisoners to produce nearly £300 million in fake currency. Some of that money was used to find out secrets from the British ambassador in Turkey and pay for information that helped free Benito Mussolini.

At the same time as the Germans were making their forgeries, the U.S. was creating a unique currency for Hawaii called overprint notes. These notes were first issued in 1942 and were meant to ensure that if the Japanese invaded Hawaii, they would not get access to vast amounts of actual American currency. Since the overprinted notes were easy to spot, it would be simple for the U.S. to declare them worthless outside of Hawaii. This would stop the Japanese from doing anything to hurt America’s economy.

Wayne Jones

Wayne is an all-rounded cryptocurrency writer who has written for several publications in the fintech industry. Having graduated from the University of Essex Colchester, he developed a passion for blockchain technology and has been curious about how the blockchain can modify the traditional financial industry.