The Crooked Lake Review

Spring 2002

 
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Counterfeiting

A Rochester Way to Wealth

by

Gerard Muhl

It once was said that money is the root of all evil. George Bernard Shaw, however, noted that, "The absence of money is the root of all evil." To counter that evil absence, self-enterprising men and women in the Rochester area decided to take the problem into their own hands and make their own cash. Rochester, it seemed, was a hotbed of counterfeiting.

The first encounters with counterfeiting happened back in the dark history of our area. The U. S. Mint first began producing circulating coins in 1793, but it took over fifty years for them to produce a sufficient medium of exchange to keep business supplied and the economy running smoothly. Into this breach stepped the counterfeiter to do his civic duty.

When Orange Stone opened his inn in 1790, Brighton travelers would have paid their fare in worn British half-penny copper coins, in one-cent pieces struck by any of four States (one of which was Connecticut), or in silver Pieces-of-Eight and their fractional parts struck in Spain's New World colonies.

It has been estimated that nearly three quarters of British money in America at that time was light-weight counterfeits; State and Spanish coins were also counterfeited, but to a lesser degree. An 18th-century source for bogus coin was Machin's Mill near Newburgh, N. Y.

Better coin circulated in the major east-coast cities, but in pioneer areas like early Rochester anything that even looked close to the real thing was accepted. An early merchant would do business with some counterfeit money or he wouldn't do business. In an archaeological dig done by the Rochester Museum in the 1960's at the Stone-Tolan House, many bogus Connecticut cents and fake British half-pennies were uncovered.

The first suspected counterfeiter from Rochester was its first white settler, Ebenezar Allen. In 1811, he was living across the border in Canada where he was arrested and charged with being a bit too self-enterprising. He was believed to be striking Spanish-American silver Pieces-of-Eight containing about 20% silver instead of the 91% in government-issued coins. He was circulating these coins in Western New York where the American government gave Spanish silver legal tender status until 1857. On the eve of the War of 1812, he was acquitted by the British/Canadian court. Perhaps hurting the American economy at that time was not considered a crime by the English.

Up to the 1850s any bank in New York State could print and issue its own paper currency, and issue they did. The federal government didn't declare its monopoly in the currency business until the Civil War. In Rochester sixteen banks issued at the minimum $1, $5, $10, and $20 bills, thus sixty-four different notes were possible from our city banks alone. Notes from neighboring villages and nearby cities also circulated here. It was a situation made for the counterfeiter.

Our first bank opened in 1824, the Bank of Rochester, but by that time our village of under 10,000 citizens already recorded seven arrests for passing bogus bills. Numerous warning notices appeared in our one newspaper to be on the outlook for bad bank notes.

Rochester banks were early noted for fiscal conservatism and soundness. Up to the Civil War only one Rochester city bank failed, and that only when an employee illegally signed and passed tens of thousands of dollars in bank notes backed by the credit of that bank (Bank of Western New York). Generally Rochester banknotes were exchanged at par for gold and silver, even in distant cities. What a temptation to the counterfeiter.

By 1836, counterfeit Bank of Rochester bills were discovered in Ohio and Michigan as well as in Rochester itself. In 1843 John Wickoff was arrested in New York City for counterfeiting $5 Bank of Rochester notes. If they were his notes in Ohio in 1836 then it would mean that he was in business for at least seven years. He may also have been responsible for the 1840-dated Canal Bank of Rochester banknotes passing throughout the northeast at that time. Since Rochester never had a "Canal Bank," however, could these notes in fact be considered counterfeit?

Rochester seems to have been a center for passing and manufacturing counterfeit monies. Between 1821 and 1862 one hundred and seven area arrests were recorded in local newspapers for the passing of bogus coin or paper money. This of course was only the number apprehended, many more rogues and rascals must have gotten away with their crimes.

Especially when financial times were bad did Rochester citizens turn to making their own money. Nearly 25% of the 107 arrests for counterfeiting were made between 1857 and 1859, a period of economic recession. Of that number only six were women, and one a black man. All the rest were white males.

Many counterfeiters or passers were visitors to Rochester. Erie Canal boat captain Daniel G. Barber was one visitor arrested in 1861 for passing bad half-dollars (a half-dollar was a common days wage at that time). He seems to have buried a stash of counterfeit money behind the Spring House in Pittsford, and only spent one or two pieces on trips to the city. Unfortunately for him, a team of Irish workmen repairing the banks of the canal in that area found this illegal cache of over 200 silver half-dollars as well as other coins. Upon returning for his money for the last time, the sheriff was waiting for him.

Some counterfeiters and bill passers on the other hand were long-time members of the community and seemed even to be leaders. Orson Doty and his wife Jennie Eunice were arrested for passing bad bills in 1845. His wife was arrested for the same charge in 1865 along with the additional charge of prostitution. Cornelius Backus, son of a Gates minister, was arrested for passing in 1855. His father who was arrested for counterfeiting in 1842 seemed to have learned his lesson, but not the son. A medical doctor, Dr. Salisbury, was caught passing notes in 1848. Counterfeiters often had plenty of genuine currency and thus could make bail when charged. Once out of jail they would head for greener pastures. More than once, the newspapers of the time reported a counterfeiter had escaped and was believed heading out west to the gold fields.

Perhaps one source for the counterfeit bills passing in Rochester was Mr. G. H. Knapp. He advertized in the Rochester Daily Union of December 18, 1856, that from his rooms in the National Hotel he would offer classes in detecting counterfeit bills. He accepted no fee for his services. He gave merchants, attending his rooms, extensive free lists of the most frequently circulated bogus currency. He even offered a $25 prize to the patron who after his lesson could pick the most counterfeit bills from a table of hundreds of bills in a five-minute time limit.

Knapp seemed quite altruistic, until from other sources, it was noted that a Professor Joseph Woods was also touring the country at approximately the same time giving free counterfeit-detection classes. Woods and Knapp turn out to be the same person. Woods was a counterfeiter as was his father before him. After teaching what bad bills to look for, he would send assistants to the town a few days later to pass his notes. These notes would be accepted as genuine since the trusting resident did not find them listed on Professor Wood's handouts.

One group of counterfeiters and bill passers that is harder to document are those who were operating in Rochester but who were never arrested in that area. Prior to 1848, when he moved to Cincinnati, Edward R. Graham was printing counterfeit banknotes of four different banks from a printshop in downtown Rochester. Many years later he told his story.

In the early 1850s, Archibald McGregor, Clinton Barnes, and Thomas Janes moved their bogus-note-passing-cartel from Monroe County to Elkhart, Indiana. They had been buying their notes from a printer in New York City's Bowery, and passing them throughout Western New York State.

It was typical for "shovers," as bill passers were called, to buy their merchandise from wholesalers who established state-wide networks. Money wholesaler James Garfield of Troy, N. Y., gave evidence in federal court in 1866 that one of his customers was the Postmaster of Canandaigua. He noted that this particular man had over $10,000 of good money in the bank and was able to buy a hotel from his involvement in counterfeit money scams. Another customer of his in Rochester was passing between $5,000 and $10,000 a year in bogus cash. John Simms of Amboy near Syracuse gave testimony that as a money wholesaler he sold his product to an attorney, to a doctor, and to a hotel owner. Merchants were also known to purchase and pass counterfeit notes to help their bottom line.

By 1862, the New York Times estimated that 80% of the banknotes circulating in America at that time were counterfeit. One person responsible for many of those banknotes was Batavia native Harry Cole. Born in 1821, he began printing and passing notes in the 1840s. He was arrested for counterfeiting in the mid-1850s and spent a short time in jail. He next moved to New York City and then to Philadelphia where he resumed his illegal operations until tracked down by the newly formed Secret Service in 1879. He thus operated as a counterfeiter for almost forty years.

According to 19th-Century Secret Service agent Frederick Tapley, Rochester judges of the 1860s were not sympathetic to the methods used by the federal government to apprehend counterfeiters. In one case in 1866 the judge objected to the Secret Service coming to town and having undercover operatives attempt to buy bogus cash. Some of these operatives were themselves recruited after being arrested for passing bad banknotes and were cooperating with the Secret Service to get a lighter sentence. In at least one case, a Rochester judge stopped a trial and urged the jury not to convict a counterfeiter caught in a sting operation. The same judge advised the prosecutor not to call a key witness who had plea-bargained a shorter sentence and as part of the deal had to buy counterfeit notes from a passer. Needless to say, the counterfeiter walked from that court a free man.

By 1859 nearly 4,000 counterfeit notes of different banks were circulating in the United States. Of the 295 banks in New York State at that time only 45 were not represented by counterfeit bills. To counter this flood of bad money, publishers began selling books listing spurious notes. These publications were updated monthly by subscription. By 1852, a large-sized ad in the local Rochester newspapers noted that "Thompson's Bank Note Reporter" was on sale at the Reynolds Arcade News Room. In 1859, a competing publication, "The Descriptive Register of Genuine Notes" also began publication.

There were, however, constant charges of fraud and bribery laid at the door of some of the many more counterfeit detectors that sprang up. One Indiana banker paid $165 for the engraving and printing of $70,000 in bills. He then paid the New York publisher of a counterfeit detector $1,900 to "quote the money right." Trust in the currency faltered and soon no out-of-town bills would be taken except at a greatly discounted rate.

Rochester citizens were not only passing bogus banknotes but were making their own "legal tender" coins. In 1857 and again in 1862 local newspapers warned of counterfeit gold coins circulating freely. A man arrested in Albany in 1857 claimed that four gold "mints" were casting coins in Rochester. On September 9, 1845, four men and a woman were arrested one mile east of Palmyra for making and circulating hundreds of Mexican Silver dollars (legal tender in the U. S. until 1857).

Merchants throughout the area were complaining of counterfeit silver coin being passed on them. A committee to track down and arrest the counterfeiters was formed but seemingly was getting nowhere until the U. S. Marshals from Buffalo were called in. After the Palmyra arrests it turned out that two of the committee to apprehend the counterfeiters were themselves members of the gang. Before being shipped off to Auburn Prison for seven years one gang member escaped with coining dies for the Pieces-of-Eight. Soon counterfeit Mexican coins began showing up in other neighboring villages.

In July 1853, George Hoag's house in Penn Yan was searched at the complaint of his neighbors. Counterfeiting tools and dies were found but Hoag was nowhere to be seen. Later that year, Hoag, Charles Jenner, James Gilbert, William Wescott, and George Reed were arrested in a home in Rochester at South Avenue and Mt. Hope Avenue and formally charged with making counterfeit coin. They had made many different denominations, but when police rushed in they were making 1851 and 1852 dated 3 pieces. The U. S. 3 piece was only introduced in 1851 so merchants were not yet familiar with the attributes of genuine coins. These tiny, thin silver coins would also be relatively easy to make.

In January 1860, Robert Leeds was convicted of burglary and sentenced to Auburn Prison. When city police went to his rooms in the Union Block of South Avenue to remove his belongings for safe keeping they found sets of gypsum dime molds. Leeds was living there with two prostitutes who would circulate his lead coins in dimly lit barrooms while waiting for clients. Between 1860 and 1875, 149 houses of prostitution operated within what is now the Rochester inner loop roadway. Four hundred ninety-nine different women were arrested for soliciting. There was no shortage of people down on their luck in early Rochester who attempted to pass bad money.

Perhaps one of the larger coin counterfeiting operations was that of Albert and Henry Shaver. These two men operated their "mint" in a heavily wooded area of Oswego County and relied on travelers to pass their imitation U. S. quarter-dollars. Although the sheriff closed their operation in 1861, arrests were being made for several years later as travelers would release one or two "Shaver quarters" into circulation from their bags of product.

The nation's economy was turned around by the outbreak of the Civil War in 1861. Millions of dollars of war contracts poured into Rochester flour mills, shoe factories, clothing concerns, and nearly every industry large or small from buttons to rope. To pay for the war, the federal government issued demand notes not backed by precious metals. Fearing inflation, people started to hoard gold and silver coin. Even copper coins disappeared from circulation by 1862.

Upon the plea of merchants in 1862, the City of Rochester began issuing its own banknotes in denominations of fractions of a dollar. Over $250,000 of this paper money was issued in notes of 5, 15, 25, and 50. Merchants again could make change.

Even these city banknotes were not free from counterfeiting. The newspaper reported on September 13, 1862, that one day before the new 50 note was to be issued, a boy was arrested passing a counterfeit of that note. So many of these counterfeit notes began showing up that the city was forced to change their design to a more elaborate engraving.

To confuse matters even more, the federal government also began to issue fractional currency during the Civil War. By July, 1864, the counterfeits of these notes were abundant in Rochester at least until November of that year when Richard Delton and Charles Elletson were sentenced to Auburn prison for printing the notes.

Counterfeiting was a method many Rochesterians thought would make them rich, but for unmitigated gall there is the case of the 19-year-old man from Batavia. He posed as a counterfeiter to prey on the greed of others. He printed and sent letters to numerous Rochester residents inviting them to engage in the counterfeit money trade. For one dollar the unsigned letter offered to send $100 in "good counterfeit money." After a year, and after bilking many potential investors, he was arrested for having put the scheme into motion. He had no counterfeit money, but who would expose himself by going to the police and complaining of not getting his $100 in bogus notes?

The last major outbreak of coin counterfeiting in 19th-Century Rochester happened in the early 1880s. After a hiatus of five years, the U. S. Mint began making a newly-designed dollar coin in 1878. In 1881, Thomas Mahoney, William Cochrane, and Oscar Overton were arrested for passing 1878 U. S. silver dollars. William and James Howard, James Gordon, and Amanda Lucas were arrested for coining dollars in 1885. Finally, according to the Union and Advertiser, in 1888 a "gang of Italian counterfeiters" was arrested in Rochester for passing variously-dated silver dollars.

In early 1883, a number of merchants began complaining about being fooled by a new coin just put into circulation by the government. It was a new 5 piece without its denomination clearly being stated on it. Instead, its reverse side sported a large Roman numeral "V" for five. The coin was about the size of a five dollar gold piece circulating at that time. Joshua Tatum, a deaf mute from New York City, gold plated a number of these coins and traveled around making five-cent purchases. He would place one of his golden nickels on the counter. If the merchant gave him $4.95 in change, and most did, who was defrauding whom?

When arrested for his activities he was acquitted when it was shown that he never represented his coins as $5 gold pieces. Josh Tatum gave the English language a new expression. A popular retort on getting one's hand caught in the cookie jar was, "but I was only joshing." Tatum seems to have joshed some Rochester folk as a number of his coins turned up in that city.

The counterfeiting story now speeds into the 20th Century. By the turn of the century the federal government was printing all our currency, even that issued by National Banks. The Secret Service, established in 1865, was staying one or two steps ahead of the counterfeiter. The Federal Reserve by 1913 was regulating the issue of our coin and manipulating the nation's monetary policy. The scourge of counterfeiting would have to wait for the color copying machine and computer before it again would become a major problem. But every so often bogus money did show up.

It was reported in the 1930s that a deceptive liberty-walking type half-dollar was showing up in the Rochester and Buffalo areas. The coins of varying dates were made of a ceramic material infused with powdered metal. They were bright and shiny, had a good ringing sound when dropped, but also had a fatal flaw. When given a sharp blow they would break in half. Many a bus driver returned a handful of pieces to a potential rider after slamming these coins on the fare box. Although Buffalo police suspected craftsmen from nearby Lapp Insulator for making these coins; no arrests were made.

In the early 1950s Francis Henning from Trenton, New Jersey, came up with a scheme to keep him in money. A mechanical engineer by trade, he invented a one-to-one ratio die-cutting machine. He used a 1944 nickel as a model and cut a die with such detail that even the U. S. Mint officials were later amazed. For the reverse die he used a nickel struck after World War II. With near-perfect dies, he struck nearly 300,000 fake nickels and began passing them. He could make 3 for every coin he circulated.

Henning overlooked one fatal fact, during World War II the Mint put a large mintmark over Jefferson's home shown on the reverse of all nickels. Since the coin used to make his reverse die was made after the war, it had no mintmark.

Henning eventually moved to Buffalo, and then to Cleveland where he was busy making $5 bills when the police broke in. However, many of his nickels are still turning up in Western New York.

With inflation, coins are no longer profitable to counterfeit except to attempt to fool collectors by minting coins with rare dates. Consumer services exist to stop the spread of these dangerous deceptions.

The Bureau of Engraving and Printing in Washington and in Texas have also done much to foil high-tech counterfeiters. Micro-printing on bills, mylar-strip inserts, colored threads imbedded in the paper, watermarks, and ink that changes color when held to the light, are all methods used to keep our currency safe. Within two years new anti-counterfeiting devices will be added to our money offering yet new challenges to those bent on beating the system.

The story of counterfeiting will most likely never end but the era of the free-enterprising person working in his cellar, barn, or cave, and the romance associated with it has ended. This part of the American landscape has vanished, but few would wish for its return.

2002, Gerard Muhl

Illustrations

Photographs by Gerard Muhl [photographs will be posted shortly].
Early $5 and $2 U. S. gold coins.
These are gold-plated brass.
An 1835 Bank of Rochester counterfeit
Poorly cast U. S. silver dollar circulated by Italian gangs in Rochester. Note the cut marks where the coin was tested to see if it was silver all the way through.
1944 Counterfeit Nickel
Over 300,000 of this type were made with many being released in Western New York where the author received this one in change.
Below are two quarters received by the author in 2002 A. D.
Reverse of 1886 U. S. counterfeit silver dollar
These were often passed in dimly lit bars and to recently arrived immigrants unfamiliar with genuine coins.
Ceramic and metal-dust copies of U. S. Half Dollars.
They have a porous surface and will break if stuck hard.
Silver-plated quarter and half dollar of the
type circulating in the 1920s and 1930s.
Counterfeit 1840 Mexican 8-reale piece. These silver dollar-sized coins circulated as legal tender in the U. S. until 1857.
Made before 1844 these struck counterfeits are made of German Silver (contains no real silver).
1870s cast fifty cent pieces.
Note the "O" beneath the eagle, mintmark for the New Orleans Mint.
 
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