When we think of counterfeiters, it usually involves shady characters in backroom operations, but what about when it’s done by governments? The history of counterfeiting includes numerous instances of countries making copies of another nation’s currency, usually in an attempt to disrupt an enemy’s economy or to support insurrection.
Here’s a look at some:
Great Britain: 1776-1781
During the American Revolution Great Britain employed several British loyalists in the colonies to counterfeit the Continental Dollar, the first paper currency issued by the US under the Articles of Confederation. The effort was at least partially successful, contributing to loss of confidence in the Continental dollar and leading to a provision in the 1789 US Constitution requiring all money to be made of metal coins, a regulation that largely remained in place until the 1860s.
The United States: 1861-1865
Confederate dollars were widely counterfeited in the North during the Civil War. Because the Confederate states lacked the technology to produce large amounts of sophisticated paper money, Confederate dollars were easy to counterfeit. How much of the counterfeiting was done by the Union government is open to speculation, but there’s no doubt that it turned a blind eye to the practice.
Bitter about territorial losses after World War I, an opposition wing of the Hungarian government began counterfeiting as much as 30 billion in French francs to fund an attempt to overthrow the existing parliamentary government and restore the Hapsburg dynasty. The postwar treaty of Trianon had cost the former Austro-Hungarian Empire over 70% of its territory and nearly 60% of its population, and nationalists planned to use the currency to finance their revisionist, militaristic agenda. But the quality of the paper used for the counterfeits was such that they were easily detected. Nevertheless, it took nearly three years to track down the perpetrators, who were high government officials. It was alleged that Austria and Germany participated in the scheme by supplying some of the specialized equipment needed.
The effort ended when several people were arrested in the Netherlands while attempting to procure several million francs’ worth of the counterfeit bills and the plotters were exposed.
Hitler’s government attempted massive counterfeiting of British and US currency during the Second World War. They had successfully duplicated the artwork and serialization of British notes by 1940 and planned to drop them over England to destabilize the country’s economy, but political rivalries caused the effort to be abandoned in early 1942.
Later in 1942, the forging operation was moved to the Sachsenhausen concentration camp at Oranienburg north of Berlin where imprisoned artists were forced to work on duplicating US currency. Other prisoners produced as much as £300 million in bogus British notes there and later at camps in Austria.
Overseen by SS Major Bernhard Kruger, some of the money made it into England and other parts of Europe and the Middle East via payments to Nazi agents working abroad. But the plan for massive drops over Great Britain never came to fruition and tons of the bogus currency were dumped into lakes around the Austrian camps, much of it recovered in the 1950s.
The quality of the German counterfeits was so good that they weren’t detected by the Bank of England, and enough had made it into circulation that production of British paper currency was suspended after the war until new designs could be introduced. The few remaining counterfeit notes are highly prized by collectors.
While the Nazis had perfected the artwork on US bills, at war’s end they had not been able to duplicate the paper and serialization of US currency, so no notes were ever released into circulation.
The Times of India newspaper accused Pakistan of forging large amounts of Indian currency around 2009, and Pakistan has been suspected of similarly counterfeiting US, Australian, and Singapore bills. The Indian notes were sold on the street in India and Nepal and are suspected to have been used to fund terrorist operations in India and elsewhere.
Contemporary Counterfeits: “Superdollars”
Twenty-first century technology has evolved to the point that a constant battle has emerged as governments try to stay a step ahead of counterfeiters. Given its status as an international currency, the US dollar is a prime target, both of criminals and rouge nations.
With national treasuries at their disposal, unfriendly governments are able to devote massive resources to defeating security measures incorporated in US currency. Prime suspects are North Korea, Iran, and Russia, although it’s difficult to prove in most cases. In particular, North Korean defectors have given credible evidence of counterfeiting US money by the Kim regimes.
Fortunately, US countermeasures have proven effective with minimal amounts of bogus currency making it into circulation, and extensive efforts are constantly being made to ensure that remains the case. Similar measures are being taken by other target nations such as Australia, Canada, the UK, and the European Union.
We’ll continue our series on Notorious Counterfeiters in the coming weeks. And we’ll follow with how collecting counterfeit money has become a specialty of its own.