Today we often hear about counterfeit notes. The history of Counterfeiting goes back to the invention of money. Before the usage of metal money, people used commodities for their transactions. Then, around 600BC, people in Lydia started to use the first coins. With the expansion of trade, as the simple economic system gradually became more complex, many countries took steps to use the money for transactions. It is a long journey through various discoveries that have undergone many changes. So is counterfeit money production. This article explains the history of counterfeit money.
As mentioned, counterfeit money is not limited to banknotes. As we all know, long before the advent of coins and banknotes, people used commodities for transactions. At that time, ancient men and women used various fraudulent methods to inflate the value of the commodities.
An example of this is the shell/bead vines known as Wampum used by the Native Americans for transactions. These seashells are found in different colors such as black, blue, and white. Blue-black shells were considered more valuable in transactions, while white shells were less valuable. Hence, some people colored the white shells in blue or black to have a higher value.
With the introduction of coins, the production of counterfeit coins began. At that time, precious metals such as gold and silver were used to make coins. Those days, coin production was not as fully mechanical as it is today; sometimes, the ends of the coins did not match each other. Moreover, the shape of the coins was obtained by crushing the metal and because of this the coins did not become round. Those who reaped the gold and silver coins used these precious metals for various purposes. This led to a breakdown in public confidence in money.
For example, a coin worth a penny should have a pennyworth of silver in it, but as the coins became more and more in the hands of fraudsters, more and more edges around the coin were removed. Over time, face value and intrinsic value began to widen. Counterfeiters also made counterfeit coins by removing metals from gold and silver coins and mixing them with inferior metals.
The term counterfeiting stands for the practice of making coins from inferior metals and coating them with real metals to make them look like real coins. This counterfeit money was widespread in ancient Rome, a country where coins were first used for transactions. These fake coins were called Fourrée.
Fourrée was produced using several methods. The usual practice was to take a copper plate, cover it with a layer of silver, heat it, place it in the mold with the coin’s design, and make the coins by pressing hard. When the coin was heated well, and the mold was kept in place, they could be produced in actual coin form.
Another way to forge counterfeit coins was to make a coin and put silver on it. In this method, the coin is made by immersing it in silver liquid. Sometimes coins were made by applying the silver on a coin with a brush or by spraying silver powder. This further reduced the use of silver. So it was cheaper.
Ancient tactics to identify counterfeit coins
At the time, people used various tactics to identify counterfeit coins to protect public confidence in money. One method was to weigh the coins and see if they were actual weight. If the coins were not accurate weight, those coins were considered fake.
Another way to identify counterfeit coins was to drop the coin on a solid surface and listen to the sound. However, this method was not optimal for detecting counterfeit coins due to coin damage and breakage potential.
The best way to spot counterfeit coins was to use a method that would look at the type of metal inside the coin. If the coin was punctured or had faded to the inside, it was possible to see what kind of metal was inside. This is why old coins have chiseled strokes. Technological improvements used in coin production have also been used to prevent counterfeit coinage.
Mechanizing the coin production
To stop counterfeiting, people started to more sophisticated methods to produce coins. In 1662, England used machine-made coins to stop minting coins for specific purposes. This began with the carving of the rounded edges of the coins. It’s was a hindrance to counterfeiters.
Chinese people produced fake notes first. Later they were spread to Europe, America, and the rest of the world.
During the British colonial period, the United States used the pound, shilling, and pence as its currency. But their value varied from state to state. For example, the Massachusetts pound did not equal the Pennsylvania pound. All colonial pounds depreciated against the British pound sterling. Later, each of the colonies began to issue their currency. During the American Civil war, the Continental Congress began printing and issuing a currency called continental currency.
These currencies were denominated in dollars, and steps were taken to issue notes in the range of $ 1/6-80. Notes worth of $ 250,000 was printed to raise funds for war needs, and they were the most easily imitated. Great Britain has reaped the benefits of printing counterfeit dollars and releasing them into the US market to devalue the dollar.
As a result, its value dropped significantly. In 1778, the dollar value was 1/5 – 1/7 of the face value. By 1780 the value was 1/40. Thus the value of the currency depreciated so much that in 1779, Congress decided that it was useless to print this money any further.
Accordingly, they removed the old currency and even resorted to producing new gold and silver coins which was not easy to make into counterfeit money. By 1781, the Continental dollar had become so devalued that it had been thrown out of circulation altogether. The phrase “Not worth a continental ” came as a result of this incident. Although Great Britain lost the war, it also brought the United States to the brink of collapse through counterfeit currency. This explains how counterfeit money can affect a country or an economy.
Authorities in almost every country have put measures against it, but no one has been able to stop the production of counterfeit money altogether.
This is because various advances in technology are being exploited equally by legitimate financial authorities and counterfeiters. Today, there are times when the output of some counterfeit currency exceeds the value of real production.