At the outbreak of the War of Independence, the Continental Congress decided to issue a national currency to fund the war in 1775. Nearly $250,000 was printed.
“The notes were backed by the ‘anticipation’ of tax revenues. Without solid backing and easily counterfeited, the notes quickly became devalued, giving rise to the phrase ‘not worth a continental,’” according to the Federal Reserve Bank of San Francisco.
Paul Revere made the first plates for the federal currency. The notes were redeemable in Spanish milled dollars, according to the U.S. Secret Service.
British-Backed Counterfeiting
Though counterfeiting had been around since the first settlers, it became a war strategy in the Revolutionary War.
In 1776, a printing press was taken out to the HMS Phoenix that was moored in New York Harbor and started an operation that became the first British-sanctioned counterfeiting operation.
“The British counterfeits (colonial currency) of continentals were excellent—so good, in fact, that in April 1777 the king’s counterfeiters ran an ad in a New York newspaper offering to sell their false currency to loyal subjects of the Crown at a rock-bottom price—the cost of the paper it was printed on,” Thomas Craughwell wrote in Stealing Lincoln’s Body (Cambridge, Mass.: Belknap Press of Harvard University Press, 2007: pg. 33).
The counterfeiters were so confident in the quality of their fake bills that they wrote in the ad, that the fake continentals “are so neatly and exactly executed that there is no Risque…it being impossible to discover, that they are not genuine.” (Lynn Glaser, Counterfeiting in America: The History of an American Way to Wealth, Philadelphia: Clarkson N. Potter, 1960, pg. 37-39)
Officials tended to agree. In 1777, New Hampshire Governor Josiah Bartlett wrote, “We have lately discovered a most diabolical scheme to ruin the paper currency by counterfeiting it, vast quantities of the Massachusetts bill & ours [in Rhode Island], that are now passing are counterfeit, and so neatly done that it is extremely difficult to discover the difference… by what appears at present, it is a Tory plan and one of the most infernal that was ever hatched.” (Josiah Bartlett to William Whipple, 1777, Gilder Lehrman Document Number: GLC 193 at Digital History Website, University of Houston)
Circulating Fake Currency
The British had a distribution network of “shovers” or people who used the counterfeit currency in the tories, colonists who remained loyal to the British government.
Two of the British shovers, David Farnsworth and John Blair, were arrested in Danbury, Conn., with $10,000 in counterfeit currency on them. One of their excuses to try and avoid prison was that they were petty criminals compared to other shovers who were circulating $40,000 - $50,000. (Glaser, pg. 40-41)
Aftereffect of British Counterfeiting
Though Great Britain lost the war, America nearly collapsed because of the counterfeiting. American currency was so devalued by 1779 that Congress decided that they couldn’t print any more.
The country then moved to using gold and silver coins because they were harder to counterfeit.
