Currency, Counterfeiting and the Secret Service
Both the Union and Confederate States financed the Civil War by issuing currency in addition to taxation, bonds, duties and tariffs. The Act of July 17, 1861 authorized Secretary of the Treasury Salmon P. Chase to raise money via the issuance of $50,000,000 in Treasury Notes payable on demand. The U.S. government issued the first standardized version of modern paper money then called Legal Tender Notes. The first of these notes printed were issued directly into circulation and were also known as ‘greenbacks’ and had intricate engraving and scrolling like today’s money. This made it harder for counterfeiters to reproduce contemporary currency. During the Civil War counterfeiters still had to hand engrave their printing plates and the new elaborate designs adopted by the government made it a more difficult task. The new currency also used a unique kind of paper that was hard for counterfeiters to reproduce. In December 1861, economic conditions deteriorated and a suspension of specie payment led the government to cease redeeming the Demand Notes in coin. Greenbacks were eventually replaced by the more modern ‘Legal Tender Notes’ of 1862. The ultimate objective was to eliminate counterfeiting which had become common place for previous issues. However, the new system of paper money did not put the counterfeiters out of business although their rate of success went down. The physical number of counterfeit bills in circulation actually increased after the issuance of the new standardized currency. Many counterfeiters took large amounts of the bogus bills to the Confederate States because they were very desirable alternative to the southern population considering the severely devalued state of Confederate currency. After the Civil War, the Federal Government began cracking down on counterfeiters and organizing raids to disrupt their manufacturing. In 1865 the Secret Service was created to suppress mass counterfeiting of the nation’s currency. The Secret Service was given sole authority to investigate and destroy counterfeit money operations. They were specially trained on how to detect bogus bills and find underground printing shops. New security features like the unique blend of paper and specialized ink made it easier for agents to detect fakes. When they were involved in an investigation in Chicago they discovered the plan to steal Lincoln’s corpse and hold it for ransom. That is how the Secret Service became involved in protecting the President of the United States.