Stephen Mihm's A Nation of Counterfeiters provides a fascinating history of counterfeiting in the United States from its colonial origins through its heyday in the antebellum period and its decline following the Civil War. By documenting how counterfeiters organized their operations and put their notes into circulation, A Nation of Counterfeiters makes an important contribution to our understanding of the antebellum monetary system. Mihm tells this history largely through the life stories of people connected with the “counterfeit economy” set in the context of contemporary social, political, and economic developments. In Mihm's hands, this proves an effective technique for shedding light not only on the counterfeit economy but on the society in which it operated.

The organization of the antebellum monetary system made it an easy target for counterfeiters. As the ranks of state banks grew, so too did the number of different types of notes in circulation—over 10,000 by the 1850s (p. 3). While most people would have routinely encountered only a subset of this total, few people became familiar enough with the notes' features that they could readily distinguish a genuine note from a good counterfeit. The contemporary estimates Mihm cites suggest that counterfeits were a significant component of the money supply (p. 6). Even if one considers these estimates high, the sense one takes away from the book is that losses from counterfeiting must have been substantially larger than the losses from free bank failures documented in work by economic historians.

According to Mihm's account, counterfeiters operated in competitive markets, and the complexity of counterfeit production and distribution networks rivaled those of other antebellum industries. After the notes were printed, they were sold to dealers throughout the country who in turn sold them to the “shovers” who put them into circulation. Prices rose along this supply chain. The counterfeiters received around $10 genuine per $100 counterfeit and the shovers paid the dealers from $20 to $30 per $100—the exact price was determined by the quality of the counterfeit and current market conditions. Notes could even be purchased on credit (pp. 89, 218–20).

Counterfeiting flourished during the antebellum period because law enforcement did not provide an effective deterrent. Like the regulation of paper currency, the federal government left anticounterfeiting efforts to the states. Given limited resources and jurisdictions, state and local governments were ill-equipped to deal with the problem. And despite the many arrests documented in the book, few counterfeiters ended up serving long jail terms. Naturally, counterfeiters gravitated to areas where they could pursue their operations with minimal interference. Dunham, Quebec, just over the Vermont border, emerged as an early center, but counterfeiting later shifted to the western frontier and the nation's growing urban centers (chapters 2–4).

Like law enforcement efforts, private efforts to protect the public from counterfeiting were largely ineffective. Though counterfeit detectors and related publications promised to aid in identifying counterfeit notes, they often made it easier for shovers to put counterfeits into circulation by creating a false sense of security, and counterfeiters used them to refine their designs (chapter 5). In principle, advances in engraving methods made notes harder to counterfeit. However, counterfeiters had little trouble obtaining copies of the elaborately engraved dies used in banknote plates or actual plates from broken banks. Even counterfeiters without engraving skills could adapt these to produce high quality counterfeits (chapter 6).

The book concludes with a discussion of counterfeiting's decline (chapter 7 and epilogue). The nationalization of the currency that started during the Civil War left only a few types of notes in circulation. As counterfeits of these emerged, the Secret Service quickly evolved into an effective national police force dedicated to suppressing an activity that was no longer viewed simply as a “nuisance” but as a “threat to national sovereignty” (p. 19).

Although Mihm's research findings will be of significant interest, many economic historians will find some of the book's interpretive themes less compelling. The most problematic of these is his claim that the distinction between genuine and counterfeit currency was ambiguous, or, put more strongly, that “distinctions between counterfeit money and real money had yet to coalesce” (p. 10). After all, some counterfeits circulated alongside genuine notes, many of which could not themselves be redeemed for specie. Mihm ultimately reduces the circulation of all paper currency, whether genuine or counterfeit, to a confidence game, a matter of “trust on the part of the person receiving it” (p. 11).

In my view, Mihm pushes this line of argument too far and ends up echoing the rhetorical positions of the counterfeiters and hard money advocates. As Mihm documents, generating “confidence” in a note and its bearer did play a role in getting people to mistake counterfeits for genuine notes. Yet, merchants showed that they recognized the distinction between genuine and counterfeit whenever they scrutinized notes tendered in payment. And they had good reasons for doing so. Banks and note brokers—the final arbiters of a note's value—would only take genuine notes in payment for the drafts used to pay distant creditors, and only at prices that reflected current information about their value. Mihm would have better served his readers had he dispensed with such interpretive themes and instead provided some additional background on how the antebellum monetary system functioned.

Fortunately, these themes can be easily separated from Mihm's research findings, which are based on an impressive range of archival and other sources. Thoroughly research and with a number of well-chosen illustrations, A Nation of Counterfeiters is an important contribution that will be of interest not only to financial historians but to anyone interested in the antebellum period.