BULL STREET - The art of the Con

The Good Old Days

The fact there the penalty for forging money has always been severe, but during certain it was worst than others. Forgery of stamps was put under the category of treason and it was punishable by death. This was particularly true during the American Revolution because the British used phony American currency to destabilize the country’s economy. Fully 1/3 to ˝ of all currency during that period was counterfeit, most of done by British engravers.  At that time, money was issued by each colony and the bills were overly simplistic. Often they would be printed only on one side and the designs were uncomplicated making life overly easy for the counterfeiter.

As if that was not bad enough, later the colonies stopped the money presses and banks took up the responsibility. They were allowed to individually print money during that period and during that period, there were more than 7,000 banks. Think about the mess, there was no insurance on bank accounts and banks during that period were all state chartered. Moreover, bank inspectors had not come onto the scene at this point.

In this situation, we had a state bank that may have been in dreadful financial position issuing money at its hearts continent and that money was co-existing with money issued by all of the other banks around the country. Obviously some of the money issued by some banks was worth more than that issued by others due to the differing underlying financial condition of the various banks. The value of the money was really a function of the banks creditworthiness and the money they issued was based on the bank’s full faith and credit.  Because of the fact that these local banks were really the only game in town, several ratings services sprang up and they gave some indication of the how sound various banks were. However, they were really playing the game by the seat of their pants, because without their own auditors examining the bank’s books, their reports were more horoscopic than reality based.  However, rating the banks had become a great business and it was the only game in town.

Once a bank went under, every bit of the currency they had issued became worthless. Of course that lead to another problem, communicates were almost non-existent and news traveled slowly in those days. No one out in the field could be certain that the bank that had issued the paper they were using was in business or not at any given time. Thus, purchasing anything with this currency was not an easy task. At best, the local merchant would look what bank the currency was drawn on, how far away it was from his store and then feel it to see if it  felt real. After doing that rain dance, he would look up the issuing bank in the service that had rated it. More often than not, he would either rate the bank down; he would only give say 30 cents on the dollar, credit in his store on that bank or would decline to take it in altogether. For this reason, coins that had innate value were in great demand. However, these coins were usually of gold and had a higher value and when you got your change, you could only hope that it would be acceptable at the next place you visited. This problem was especially humongous for traveling salespeople, cowpokes and other that traveled a lot when working.


In a sidebar to the above, the banks that operated further and further away from where the money was being used was for the most part was an unknown quantity and there was no real obligation on the part of merchants to treat it as money in any fashion. This system was hardly workable, but in many cases in early America, the residents had more confidence in their local bank which had issued the currency than they had in that issued by the United States Government. They knew the bank’s president, they knew his family and they prayed with him on Sundays. This was about the best barometer they could find.

However, that created another problem, the printing of money was rather rudimentary during that period and local banks did not have the ability to purchase special dies and unique paper. Thus, when a bank had a high credit rating and became was good as gold in certain localities, counterfeiting would then follow closely on its heals.  At this time the bank had to police its own money and by the time that they even discovered a forgery, the counterfeiters had skipped town and gone on to another bank in a distant location.

I think it was George Washington who said, when referring to conditions during the Revolutionary War, “it took a wagonload of money to buy a wagonload of grain.” Now of course you can see why.  Paper money printed by the United States Government did not begin until the 1860s, but mint officials understood the counterfeiting problem and made the plates of this paper currency much more intricate. Forgers during this period did not have photomechanical equipment and could only do their forgeries the “old fashioned way,” by hand forging. Most did not have either the talent or patience to make passable bills and counterfeiting in this country stayed relatively static until just after the panic of 1929. Whatever counterfeiting existed of government currency was controllable.

However, modern techniques changed all of that and gave forgers the opportunity to make literally perfect paper money from the point of view of the engraving, but the problem for them remained within the paper. The government upped the ante and went holographic. This type of  printing complicated counterfeiters lives even more, however by this time, counterfeiting had become a big ticket item in crime and countries which had unlimited resources started to engrave each others currency just in case.

Today, to some degree, the counterfeiting of money is being replaced by the washing of checks. Why try to imitate the paper when it is a much easier job to wash all of the characters off a check and start from scratch with the real thing. Unbelievably, there are over-the-counter chemicals readily available to the bad guys that can erase all of the components of your check, if whether it is written by hand or by computer. In many cases the signature is left intact but that is not a critical element of this type of forgery. Among the household products that will do this job are acetone, benzene, carbon tetrachloride, and clear correction fluids as well as many others. What a great way to earn a little extra money while at home taking care of the house.

Check washing has spread dramatically and has become such an egregious problem that the government is considering ordering the printers to use special paper in the same way they do with regular currency. While this will cause the price of checks to rise dramatically, in the long run it is much cheaper than the alternative. Worse yet, the government has reported that any number of post office employees have chosen to act as scouts for the washers and pilfer envelopes that they know will be containing a large number of checks. This is most simply accomplished by stealing the monthly statements, which contain the endorser’s checks for a thirty-day period.

Recently a new technology was discovered that may well be that for a time, stop counterfeiting in its tracks. The government is very interested in a technique developed by two New York Doctors in which they hide information within DNA itself. “The basic idea is to take advantage of the enormous complexity of the human genome to hide a message that is itself written in DNA. The message was written as one copy per 30 million strands of human DNA. It’s a DNA needle in a DNA haystack and it’s virtually impossible to detect.”[83] Hiding an unbreakable code within the DNA is similar to what the Germans were doing during the war with their secret messages. They had found a way to make them literally microscopic and would encode and entire message in a period. When the person that it was addressed to received it he had the methodology to blow up the dot and read the message. The United States for most of the war didn’t even know that this was going on.

 

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