Not Worth a Continental

“That’s not worth a continental.”

I think I dimly remember someone using that expression back in the sixties.  And I’m sure that I have either heard it or have used it in a history classroom.  The expression refers to the highly depreciated value of the currency—called “Continentals” because they were issued by the Continental Congress during the Revolutionary War.  

Issued in denominations that would be strange to Americans today—the face values ranged from a sixth of a dollar to eighty dollars—they were needed by Congress to finance the war.  Since Congress printed an enormous supply of the bills, the currency dropped rapidly in purchasing power.  By the time production of the the bills stopped, the accepted value had declined to a thousandth of the printed value.  (Yes, the Continental Congress actually printed a three-dollar bill.)

Besides the out-of-control spending by Congress, there was another reason the bills had lost value, a reason that borders on art crime, the 9bills were being professionally counterfeited.  Almost as soon as the bills were announced, over a dozen counterfeiters leaped at the opportunity to produce bogus bills, secure in the knowledge that merchants couldn’t possibly detect a forgery since almost no one had seen the real bills.

Though these bogus bills contributed to the inflation by increasing the money supply, the combined efforts of the American counterfeiters paled in comparison to the professionally produced bills printed by the British government!  As soon as the Continental Congress announced the new bills, the British Navy recognized an opportunity to not only recoup a small part of the cost of prosecuting the war, but a method of destabilizing the rebellious colonial government.

Since the British Navy firmly occupied New York and its harbor, it hauled a printing press out to the HMS Phoenix, where the counterfeiting operation could be conducted securely.  Once in production, operating with the best of equipment, personnel, and supplies, the ship produced such high quality bills that the British advertised the bogus money for sale in New York newspapers, offering to sell the fake bills for only the price of the paper.  

The operation was so successful that not only did the bogus bills trigger inflation, but by the time the Continental Congress quit printing the bills, over half the currency in use throughout the colonies was counterfeit.  There were even documented instances in which legitimate bills were refused by merchants because they did not resemble the widely circulated British fakes closely enough.

After the Revolutionary War, the new Federal government stopped printing currency, relying on gold and silver coins.  Since there was not enough official bills, unofficially America continued to use coins produced by other countries—particularly the Spanish silver dollar, commonly called pieces of eight.  Since there was a shortage of smaller denomination coins, merchants cut the Spanish coin into eight pie-shaped pieces, hence giving rise to a quarter of a dollar still being called “two bits”.  Spanish dollars were still being accepted as legal tender until Congress passed the Coinage Act of 1857.

Because official coins were in short supply, regional banks issued their own money (a $50 BankNote from the Planter’s Bank of Tennessee for example.  There was an informal method of exchange between the banks, and the banknotes were in wide circulation throughout the country.  In addition, since thousands of banks across the country were producing their own banknotes, counterfeiters could not only copy the banknotes, but could print bogus money for fictitious banks.

During the American Civil War, the American government needed to spend more money than it could possibly acquire in gold or silver, necessitating the production of paper money again.  And once again, counterfeiters rushed to produce bogus copies of the new bills and pass them along before the public knew what the new bills looked like.  By 1864, once again, over half the currency in use in the North were actually counterfeit.  

Surprisingly, counterfeit bills were also widely in use in the South.  Since the public had lost faith in Confederate currency, they were eager to obtain the new Northern official bills.  Which brings us to the strange story of Samuel Upham, a Philadelphia shopkeeper who ran a small stationery store.

When the war started, Upham began selling envelopes emblazoned with flags, cashing in on the rise in patriotic feeling.  And when he noticed that customers were willing to pay for the few examples of Confederate money sent home by Union soldiers, Upham suddenly had a brainstorm.  While it was against the law to counterfeit American money, what law did it break if he were to print fake Confederate money?

To test the market, Upham took a real Confederate five dollar note and printed out 3,000 copies of it.  Selling them for a penny each, Sam sold all of them in just a few days.  The next batch he printed was larger—80,000 bogus bills.  Since Sam intended them to be souvenirs, not actually passed as counterfeit bill, on the bottom of each bill, he added a small byline:  “Facsimile Confederate Note—Sold wholesale and retail by S.C. Upham 403 Chestnut Street, Philadelphia”. (The bill at right is an Upham facsimile.)

To sell the “souvenirs”, Upham advertised them in the leading Northern publications such as Harper’s Weekly and the New York Tribune.  Upham’s notes were a tremendous success.  So much so that he began printing other denominations of Confederate money and stamps.

While it was illegal for individuals in the North to do business with the states in rebellion, a lot of businesses ignored the prohibition, particularly cotton buyers.  These businessmen bought large quantities of the souvenirs, cut the small bylines off the bottom of each bill, then used the souvenirs to pay for their purchases, realizing an enormous profit margin.

Upham was so successful that he raised the price of his souvenirs to a nickel each, but that the price increase did not slow sales.  By the time he stopped production, Upham had printed 1.56 million fake bills with a face value of $15 million dollars, netting Upham a profit of over $50,000–an amount worth over a $1 million in today’s money.

How much Upham’s bills had to do with the rampant inflation is impossible to calculate.  Upham may have even had unofficial assistance from the Union government, there is an impossible to substantiate rumor that Secretary of War Edwin Stanton secretly channeled high quality banknote paper to Upham to increase the quality of the bogus bills.  According to Senator Henry Foote, Samuel Upham did more damage to the Confederate cause than General McClellan and his army.  (Seeing how in most battles McClellan just barely managed to clutch defeat from the jaws of victory, Foote may have been correct.)

In 1863, Upham stopped production of his facsimile bills, possibly because demand for the bills had finally died out, or possibly because the Confederacy put a $10,000 bounty on his head.  Today, you can buy a “real” Confederate bill for fairly cheap—I have several.  Ironically, if you want an example of a Upham “souvenir”—they cost two to three times as much as a legitimate Confederate bill.