The Campaign Against Counterfeits
The July 2004 issue of Common-Place features an essay by Stephen Mihm, entitled "Accept No Imitations: The Campaign Against Counterfeits, Past and Present." Mihm discusses how, from colonial times to the Civil War, "counterfeiters operated with impunity," becoming "folk heroes" because there was no central control over paper money issuance. Still, he says, the "system worked relatively well: the nation had a sufficient circulating medium to meets its insatiable need for credit."
Interestingly, Mihm recognizes that the evolution of central control was rooted in war:
Short of funds during the Civil War, the North turned to the printing presses to finance the war, issuing the money that quickly became known as the greenbacks. Within a few short years, the convergence of the country and the currency was complete, and the older system of the state-chartered banks and their notes was swept away in a flurry of nationalist legislation, replaced by a uniform currency issued by the federal government and a select number of so-called "national banks."
What Mihm doesn't discuss, however, is how central control itself entailed a vast system of government-sanctioned counterfeiting. For insights into how that system evolved, take a look at Murray Rothbard's History of Money and Banking in the United States.
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Comments (6)
From the essay:
"And now? A similar wave of cheap and easy-to-use computer hardware and software—color photocopiers and printers, digital scanners, and image manipulation software such as Photoshop—has flooded the market, enabling anyone with a bit of computer expertise and a criminal mindset to make their own money. Like the technological innovations of the past century, this equipment does not require extensive training to use, and is cheap and widely available for use at home, schools, printers’ shops, and a host of other venues.
Fig. 4. Front of a three-dollar bill privately issued by the Asiatic Bank of Salem, Massachusetts, November 1, 1864. Courtesy of the American Antiquarian Society.
The government’s response has been swift, if predictable. Seeing the writing on the wall—and fearing the printing in the wallet—the Treasury Department funded a National Research Council study in 1993 to investigate possible counterfeiting deterrents. The research team put safety features through countless tests, probing for weaknesses, trying to find ways to outwit the latest technology. The ongoing makeover of our money is a product of that first study, and will add about two cents to the cost of producing each note, a cost, the Bureau of Engraving and Printing assures us, that is to be defrayed by interest on government bonds held by the Federal Reserve. Fear not, taxpayers!"
What the author fails to explain is that the government has sent agents to each of the major manufacturers of printers, copiers and scanners to implement algorithms to detect currency and distort the images of such currency if a machine is used to duplicate it. It is all part of the government's scheme to continue to enforce its monopoly in the counterfeiting racket.
Published: July 10, 2004 3:26 AM
I would like to work out and express a thought that's been in the back of my mind, related to this issue though not in response to either the article cited or the blog entry here.
Regarding inflation and its moral aspects, it's been observed many times that the central bankers, in claiming the right to 'print' fiduciary media, thereby claim a privilege to counterfeit money--and that the phenomenon (counterfeiting) is equally bad (morally, not economically) in either case--by individuals or by the state (and the central bankers).
An inference I always make when I consider statements to that effect, is, that people who condemn fiduciary media as an ill ought to (by that opinion) condemn its issuers who are independent of the cartel just the same as of the cartel itself.
I'm puzzled by this idea. Perhaps I'm not sure enough why, to express myself clearly (let alone succinctly).
If the cartel ought to be dissolved, then it seems to follow that steps taken to break up the cartel do some good, in this respect at least.
Also: Suppose there's such an person who might potentially produce fiduciary media independent of the cartel--call him X. Let's examine the implications of whether or not a certain idea is believed by him, namely, that the cartel ought to have its privilege. Further suppose that X maintains the belief that fiduciary media is not a fraud.
I'm sorry, my brain has begun a post and can't quite endure to finish it. (I've gotten 'vague'.)
Please don't mind this post. Thanks.
Published: July 10, 2004 3:28 PM
I've posed the question to several friends as to whether or not counterfeiting government money is morally wrong; after all, it's simply worthless scrip, not a representation of anything of tangible value. A similar question would be, "would you spend money you knew was counterfeit if was 100% identical to the real thing?" None have come up with a satisfactory reason it might be wrong.
Counterfeiting private metal-backed currency (a rarity today) would be fraud, since such currency would be a legal title to real wealth being held in a bank somewhere. Government scrip is another matter, and I have yet to hear a convincing argument against the private production of scrip (dollars or what-have-you).
Published: July 11, 2004 11:22 PM
You've really never heard a convincing argument against counterfeiting counterfeitted money?
Published: July 12, 2004 5:06 PM
If every corner store were able to print there own money why would the supplyers accept the store owners money? if they could only spend that money at that store or maby in that city . how would the workers in anouther city going to live if they are given money thats only good in a city miles away.
Published: March 18, 2006 4:44 PM
Casey, the same scenario can be applied to ATMs (an analogy I'm taking from Jeffrey Tucker) and ATM cards. Why doesn't each ATM provider create their own type of ATM card? No one would use it. Normalization is a market phenomenon--one that statists want you to forget about. If someone started offering triangular ATM cards, they wouldn't be successful because they wouldn't be used.
Your scenario is unrealistic. It's a strawman easily combatted with common sense.
jeff
Published: May 10, 2006 8:04 PM