Why Banking In 19th Century America Was Like Crypto Today The Story Of Money

TITLE: Why banking in 19th century America was like crypto today | The Story of Money CHANNEL: The Story of Money Podcast | Financial Times DATE: 2026-05-08 ---TRANSCRIPT--- They would just come up with a plausible sounding name, create a bank note that was beautiful, and start issuing notes. And people would accept them. I mean, you know, you know, what are you going to do? Check every single note that comes across the store counter? I mean, people tried, but it’s kind of a fool’s errand. Today on the story of money. Why can’t we just print or issue our own money? Well, in fact, people are. Just think about cryptocurrencies. But there was a point in history where actually pretty much anybody with a state banking license could [music] in fact go out and print a note in America and call it money. And many did. We’re talking about the 19th century in America when the Federal Reserve, as we know it today, simply did not exist. [music] In fact, there wasn’t even really a dollar. And as a result, it was complete monetary chaos. And there was also a time when people were creating money all over the place in a way that’s got a lot of lessons for what we’re seeing today with digital currencies. Yes, because amid all that 19th century monetary chaos, once upon a time in America, there was this charismatic con man called James Brown. And he was the hardest working man in counterfeiting. And we’re going to be focused on him this episode because his story really kind of embodies what happens when anyone and everyone starts printing notes and calling it money. A slice of financial history that maybe also asks some profound questions along the lines of, well, what even is money?

So, welcome to the story of money from the Financial Times. A history show for finance geeks and a finance show for history nerds. And if you’re neither, well, we’re going to try and make you one. And I’m Robin Wigglesworth. And I’m Gillian Tett. [music] What happens next in the story of money? Nuveen has spent over 125 years helping clients answer this question. By investing in the growth of businesses, real estate, infrastructure, and natural capital, we continue to deepen our expertise across income and alternatives, so investors can confidently write the next chapter of their own portfolio stories. Nuveen, invest like the future is watching. Visit nuveen.com/future to learn more. Investing involves risk. Principal loss is possible. [music] With us today to tell the story of this mastermind 19th century con man, James Brown, is Stephen Mihm, professor of history at the University of Georgia, a columnist for Bloomberg, and most pertinently for our purposes today, the author of A Nation of Counterfeiters, Capitalists, Con Men, and the Making of the United States, which is a cracking title. Great to have you here with us today, Stephen. Thanks for having me. So, your book focuses heavily on the era between the American Revolution and the Civil War. So, that’s mid or late 1700s to the mid-1800s, and chronicles the exploits of these amazing counterfeiters during a time when the United States lacked a modern central banking system like we have today, and where the nation’s money supply was just incredibly decentralized and chaotic, if I can say so. And James Brown really stands out among all these counterfeiters, not just because of how he came onto the stage, because I love this passage from your book. You introduce him. I’m going to actually read it out here for people, because it’s so it’s so vivid. I really love this bit. So, it’s a hot summer’s day in 1829, Boston, Ohio, which is not the Boston on the East Coast, but Boston in Ohio, close to Cleveland, in fact. The road dark storm clouds gathering in the distance. James Brown steps out on the porch of the general store he owns, and then he’s, and I quote now, interrupted when a bolt of lightning comes coursing down out of the sky enveloping him in flame. The force of the blast rips his black suit into tatters, threw his body off the porch and onto the ground, and as one eyewitness recalled, tore his boots off his feet, hurling them over the roof of a neighboring sawmill. And as the thunder from the strike reverberated up and down the valley, the man’s half-naked body lay sprawled on the ground steaming from the blast and the smell of sulfur filled the sky. Which, wow, that is like that’s an entry scene. I wish I had something like that on this podcast. Great. And he survives it, too, obviously. Good thing for our story, really, otherwise, cuz it’d be a very short episode. a very short episode. So, yes, this is James Brown’s kind of entry into into lore, but also into reality. There’s a an enormous amount that we know about him, and unlike many kind of tall tales that are associated with the frontier, everything that you’ve just read is is actually quite correct and true. He acquired a reputation for things like this, for being unstoppable, because not only did he eventually come to and and and go on to great exploits as a counterfeiter, but he acquired a legend for himself for many other exploits as well. So, he’s he’s very representative, if you will, of the counterfeiter as a public figure and as a mythical figure, um, in America. So, why was counterfeiting or fake money, to use of vernacular, such a big issue back then? Because today we hear stories about the police doing busts on, you know, fake money and counterfeiting, but back then it was a lot more than just a few headlines in the newspapers, wasn’t it? Absolutely. So, counterfeiting for Americans between the Revolution and the Civil War was a fact of life. Quasi acceptable in some places, including, for example, the region where James Brown operated. And we’ll get to that. The reason it’s so common and so ubiquitous is that that money creation, the act of making money is decentralized, in private hands, and is relatively easy to do. Meaning that all you needed to do was basically get a charter from a state, which increasingly became very very easy to do. In other words, barriers to entry went lower and lower as time went on. And that charter as a bank, or a banking institution, would enable you to print your own money. So, instead of today, for example, banks giving loans in the form of creating deposits, you know, a checking account, for example, banks would create money that would then effectively circulate as IOUs. It would be distributed out in the form of typically as loans. A historian of this era once said that it was about as difficult to become a banker it was as it was to become a bricklayer. In other words, like these are roughly comparable barriers to entry to a profession. This was the free banking era, is that what it was called? Exactly. It’s eventually called the free banking era because not because it’s free, but because it’s it’s you basically you fill out a form and you get a charter. So, all the things that happened happening now, and I’ve got a kid graduating right now, is, you know, doing that SIE exam, security exams, getting an MBA, getting a flashy economics degree from whatever. None of that was required in those days. Absolutely not. In fact, it might have been a might have been a, you know, drawback for you. This idea that people could make their own money was tied up in a larger kind of democratic impulse that that things were accessible and should be accessible to a wide range of people or wide range of entrepreneurs. And so, imagine that a system in which you have thousands of banks, each of them making their own money that looks completely different from the other money in denominations of their choosing. $3 bills were quite common and were not necessarily fake. But, there are also $7 bills, dollar and 25 cent bills, you name it. Imagine working and living in that monetary system and imagine having that in your pocket. And then imagine what a counterfeiter would do with that. That’s basically why someone like James Brown thrived because if it’s hard enough to remember what the genuine currency looks like, it’s very easy to pass counterfeits. So, what I find fascinating is that we’re living in an age today where everyone’s worrying about what’s fake and what’s real because of AI, ironically. And of course, we just seen this cryptocurrency boom where lots of people are creating money. And again, this all sounds very familiar, but tell me a bit more about James Brown. Why did he get into the counterfeiting game in the first place? Yeah, what’s his genesis story beyond being get getting struck by lightning? So, what’s interesting is that James Brown is living in an area that at this period, 1820s, 1830s, is very different than what it is today. When you think of Ohio, you don’t think Wild West. But, in the 1820s and 1830s, it was the Wild West. It was the edge of the frontier. It was the place where western settlement had reached. It was an area where institutions, particularly legal institutions, weren’t well developed. James Brown worked in an area known as the Cuyahoga River Valley, which was known for its very sort of complex geography, full of hiding places, which is a really good setup for being a criminal counterfeiter. [gasps] We don’t know why he got into it, but we do know something about him. We know that he was astonishingly charismatic. He was someone who could probably talk his way out of almost any scrape and did repeatedly. People who met him described him um in this kind of invariably I mean it it doesn’t matter whether it was a prison warden, the local newspaper editor, his confederates, they all described him with this kind of odd man crush language as being like the most you know handsome, articulate, uh smooth operator you can imagine. These are all skills that play well if you’re going to be a criminal and particularly if you’re going to be a counterfeiter and I think he probably found his vocation early on. But what’s especially interesting goes to your point, Jillian, is in this area money is actually scarce. And by that I mean something very specific, not that people don’t have like wealth, but they actually don’t have cash to transact business. Why is that? Why was specie I guess the coins and and notes? Why was that scarce at the time? Because there were very few banks actually originally in this area issuing the money. Um money tended to flow from west to east just because of the the way the economic forces worked. And things like specie tended to disappear into people’s private stashes and hordes. Colonial America was somewhat similar. It was the periphery of the British Empire. It had very little actual cash and so counterfeiters flourished then, too. Well, this was kind of the 1820s and 1830s variation of it. And so, James Brown decided, apparently, along with a lot of others, to fix that. And fixing that meant counterfeiting the notes of legitimate banks and circulating them because people needed the money. And in more often than not, they were happy to accept something fake as long as it did the work that money is supposed to do. Hang on. They They They knew it was fake or suspected it was fake, but they still used it because it was just useful. That’s right. Especially when counterfeiters are tried or they attempt to try them and convict them, you know, locals will say things and sort of shrug and be like, “Well, you know, you know, that we It’s It’s sort of helpful in some cases. And also, and this is absolutely critical, the banks that were around in this era, many of them had a very dubious reputation. I’m talking about the legitimate banks. And that That helps explain why someone like James Brown and many others were able to ply their trade with such impunity. And one of the way of saying that is the line between a criminal and a banker was pretty blurred. It wasn’t clear-cut at all. Absolutely. It’s even more fascinating than that. And James Brown did this as well. Um you know, we’re Let’s say you’re a counterfeiter at this time and there’s a thousand banks out there and they have names like the Farmers and Mechanics Bank of Lawrenceville or the Drovers Bank of Gallipolis or whatever. Why should you go to the bother of imitating another bank? Why not just create a bank out of whole cloth? And that’s exactly what Brown did on a more than one occasion where they would just come up with a plausible-sounding name, create a bank note that was beautiful, and start issuing notes. And people would accept them. I mean, you know, you know, what are you going to do? Check every single note that comes across, you know, the store counter. I mean, people tried, but it’s kind of a fool’s errand. But what did they look like, yeah, these notes? Because they seem they they must have looked kind of the the business, right? Absolutely. Like, so, you know, whether it’s genuine or counterfeit or, you know, completely fictitious, meaning of an institution that never even existed, these are beautiful pieces of money. They’re collector’s items. You can easily spend a million dollars buying up collections of these. These are worth an enormous amount of money, ironically, today, uh including the counterfeits. The counterfeits are actually worth a lot. So, No, why? Yeah, so they would have been a good investment um in the 1820s if you’d held on to them. That really is creating money out of thin air. Exactly. There’s another kind of like echo effect of this whole interesting economy, but the notes themselves, you know, typically had portraits of beautiful women or uh safes like containing gold coin or just local scenes and vignettes. They also oftentimes contained uh pictures of from Greek mythology, interestingly. Wow. Women, safes with gold coins, and Greek mythology. And basically everything else you can imagine. I’m talking now legitimate bankers would like put pictures of their kids on them. I don’t know. If I had a bank of wiggles with I’d probably keep put my kids on there as well. Yeah. Oh, that’s a good dad. The ultimate good dad test is whether you create a bunch of banknotes with your kids on them or not. But that must have made him fantastically wealthy, didn’t it? It did. So, imagine this man, he’s he was extremely tall, very handsome, but you know, this was the this was his his reputation. He had mass a fairly sizable fortune, built a Greek Revival mansion basically overlooking this canal that connected Cleveland to the Mississippi River via some river. It’s basically a critical canal conduit that linked the Great Lakes with the Mississippi and the Gulf of Mexico. It still stands today. Great place to visit. Not one that most tourists know about coming to the United States, but definitely worth a visit. And, you know, all accounts suggest that he had amassed fairly significant land holdings, fairly significant portable goods, meaning luxury items, things like that. He was married, had a son who was also a counterfeiter. It’s lovely to see children following the family trade, isn’t it? Yeah. And he was a very accomplished one as well. His son pulled off some truly remarkable exploits as well. But the thing to emphasize about this, about these sorts of individuals, you know, aside from the fact that they’re playing in the boundary between legit legitimate and and fake, you know, that’s generated by this banking system, is that their operations were not actually local, even if they were based in a locality. They had criminal networks that spanned the entire country and even beyond the United States. So, this was a kind of roughly analogous to the drug trade, maybe, um, in terms of its operation, without the violence. I mean, there would be threats occasionally, but I had in all my research I never found a case of someone being murdered in connection with counterfeit money. So, obviously one of the reasons why this counterfeiting happened was there wasn’t actually a dollar in existence back then, and there wasn’t really a Federal Reserve or a central bank who could create the kind of money that people needed to transact and do their everyday life, was there? Right. Everyone in the world now knows about Alexander Hamilton and, you know, what he did for the United States, thanks to a musical, but he did create actually a central bank, the Bank of the United States. But what’s what happens to the Bank of the United States is that it never acquires the level of control and importance that the Federal Reserve would eventually get beginning in the early 20th century. And in addition, the Bank of the United States is allowed to expire in the 1830s. So, for this long period, if especially that 1830s through the 1860s, the United States has no central bank at all. Done. Zero. And this is goes in tandem with the proliferation of note-issuing banks. They basically state charter banking explodes after the the demise of this of the Bank of the United States. But today, this world is unthinkable. It is very hard to wrap your mind around. It’s also very hard to wrap your mind around that the dollar itself was not the super currency that it is today. I mean, this is just a very different time. So, that’s the ultimate libertarian dream in a way. It kind of is, actually. You know, and and oftentimes when I talk about this era, the people who get most exercised about defending it are folks who are libertarians because they this is this is this is the golden age, right? Yeah, no state monopoly on currency. It’s it’s Yeah, it’s a free-for-all, yes. The marketplace. No, and the crypto enthusiasts today are in many ways the kind of latter-day incarnations of a lot of this spirit. So, what was James Brown’s golden age? What was like when he was at in his absolute heyday, as it were? Right. So, it it’s really from the 1820s through the 1840s that James Brown goes from being a kind of marge, you know, secondary player in the counterfeit economy. We know that he was involved very early on because he surfaces in in in court documents, you know, as far away as Canada, New York City, Philadelphia. You know, these guys all knew each other. These were these were elaborate criminal networks. But in the 1820s, in 1827, he’s living in this area of Ohio that’s kind of a remote backwater, and this canal opens that connects the Great Lakes to the Mississippi. That suddenly puts him right on like one of the principal, you know, commercial conduits of this emerging Western economy. So, he’s there and suddenly there’s a lot of traffic moving through, you know, very close to his house, and he begins to form a criminal syndicate um that get goes by the name the Boston Bankers. Ah, great name. Yeah. It’s nice. It’s the local town. Boston, by the way, was the the center of the most conservative Boston, Massachusetts, was the center of the most conservative banking establishment in the nation, so this was a nice sort of way to to poke fun at that. It’s the ultimate brand leverage, isn’t it, you know? Absolutely. And so, this is a wonderful place to do business as a criminal because it has limited legal institutions. He’s well-liked by his neighbors. He’s elected justice of the peace, so, which is a great position to hold if you’re doing things that are nefarious um and you don’t want to be bothered. And the geography of the area it makes it very easy to hide the implements of counterfeiting. Counterfeiting is actually a kind of a capital-intensive operation involving printing presses and, you know, your plate engraving, and you need to be you need to be have a place where you can do that where no one is bothering you. And when you say geography, do you mean like there were mountains and caves and that kind of stuff or Caves, gullies, ravines. It’s the sort of place you can get lost in. It’s a heavily, densely forested place with a a lot of topographical changes that allow you to hide. So, right place, right time. Absolutely. And he now is sort of at the center of of a lot of transportation and movement of goods that are going from the Mississippi to the east, from north to south. So, he’s he’s actually right in this the emerging center of the national economy. And so, this is a you know, he couldn’t have picked a better area. And so, from the 1820s through the 1840s, he and his family, his brother was also counterfeiter, his wife seems to have been involved, although we know a lot less about her, and of course his son. So, what could possibly go wrong? Well, many things go wrong for him in the sense that he’s arrested many times, but um that that that is a small uh obstacle for someone of his of his caliber. Uh the thing about Brown and and many of these individuals is, you know, one, their ability to kind of corrupt local institutions was was pretty legendary. So, they would be arrested, and they would post bail, and then they would vanish for a while. And eventually, what ended up happening, and it happened in Ohio, where he was living, happened elsewhere, many counties actually just sort of turn this into a kind of informal tax, where you would never actually be prosecuted for your crimes, but you would pay a bail that would and then you would abscond for a while, come back, and life would continue as it had previously. I could I give a also a quick question. How much counterfeit money was uh compared to the real thing? Are we talking like 50 50? Are we talking like counterfeit was 10% of what was being used, or This is a great question. I think it really depends on where you are in the nation at this in the United States at this time. A place in a frontier area, you might see a significant plurality of it being counterfeit, yes. More established centers of commerce on the east, where there’d be a lot more familiarity with bank notes, the numbers would be much lower. But, having said that, Julian, like the the fear of kind of money of the awareness of kind of money is pervasive. I mean, there’s an entire class of magazines or periodicals that are issued weekly in the United States at this time, dozens of them called counterfeit detectors that are exclusively dedicated to helping people find counterfeits. So, the whole economy was haunted by fear of fake, essentially. That’s right. That’s right. I’m curious, did James Brown consider himself to a proper criminal, or was he some enterprising businessman taking advantage of a chaotic era in supplying a service or good that people wanted, which was something that could serve as money? I think he viewed himself as the latter, absolutely. The way that the counterfeit is so often defended themselves, including, you know, Brown, was to invoke that kind of like, how are we any worse than, you know, bankers operating, you know, with insufficient specie reserves, you know, you know, metallic currency reserves. How How is that any different? It’s all about confidence, and if people have confidence in my money, then what’s what’s the big deal? That sounds awfully familiar in a lot of ways. So, give us a sense of what his greatest hits were in terms of his most audacious efforts at fakery. The one that that that that really kind of sealed his his reputation was um a plan um that never came to fruition, but is is sufficiently crazy and audacious that it it it sort of speaks to his ambitions. He and his brother got up the idea that they would they would counterfeit the bank notes of the Bank of the United States. Okay, so this is the quote national bank, central bank, such as it was, before it expires. They’re going to go down to New Orleans, down the Mississippi River, and they’re going to outfit a ship, and they’re going to go overseas, potentially all the way to China, and basically, you know, go on a huge shopping trip using counterfeit American bank notes, because this would have been the only kind of note that the United States would have been recognized outside the borders of the United States. This is frankly a insane idea, and it’s like Oceans 11 of counterfeiting. It is. It is. And it’s And And it ends terribly. Like What ends up like they they get drunk and they get they start passing counterfeit money before they leave port. They get arrested and they’re thrown in prison in in New Orleans, and his brother, who’s part of this, the guy named Dan Brown, dies in prison. And it’s it’s kind of a tragic thing, but James Brown manages to get out of this scrape by turning the tables on an accomplice who was trying to screw them. And so basically, he he gets him back and and turns state evidence and gets off. And you know, returns home to Ohio, and this this this story of him attempting this is so over the top that that, you know, people people begin to kind of embroider his his reputation. And you know, this goes back to the lightning strike. He’s someone who’s already kind of gotten himself out of of what would normally kill other people. In this case, he even killed his brother. So, from there on out, you know, his his schemes kind of increase in complexity. At one point, he comes close to getting a very legitimate bank to basically print notes for him of their own bank and and hand it off to an accomplice. So, which wouldn’t even be counterfeiting, because in that case, it would be an actual legitimate bank issuing its own notes. They just happen to end up in the hands of a counterfeiter. Um In another case, his son, and I think he was involved in this scheme gets the brilliant idea to go to California after the gold rush and flip the usual monetary calculus because in California gold is is abundant but paper money is not but you need paper money because you can’t just haul around kilograms of gold everywhere. And so they they flood California with paper counterfeit paper money buying up gold and and and then flee the state. He just has this kind of a droid and and capacity for schemes that are fairly large fairly boundary pushing and then seemingly every single time gets off. Oh, one of the things I find fascinating apart from the fact you had Samuel Lane who was the local newspaper person who called him the Cuyahoga Valley Syndicate for fabricating expanding the currency and described him as the chief of the Bureau of Bogus Banking in the West if not America. It’s a great line. But the thing I love love is that at one point he actually is so audacious he hires some of the best most reputable New York engraving firms to print these fake notes. This goes to this idea if you’re a counterfeiter at a certain point why not just make your own bank and that’s exactly what he does is to create a plausible bank and to hire bank note engravers to create it. And really fundamentally are those notes counterfeit? It’s kind of a it’s kind of a metaphysical question because all they are are genuine notes of a fake institution which is different than counterfeit notes of a genuine an And then you’ve got him actually elected by villagers in the era that he was living as a justice of priest peace in

So, as you keep saying, the line between a criminal and a banker was completely blurred that it was like everyone saying, “You go for it.” almost in a kind of Robin Hood type way. Right. You know, bankers at this time, I’m talking legitimate bankers are, you know, enjoyed the same year reputation as Wall Street did after 2008. In other words, many people viewed them as as con men. And so, as you said, like if this kind of Robin Hood, the self-styled Robin Hood figure prays on them, people have a hard time going like, “Oh, that’s that’s, you know, they’re really you know, they’re doing terrible things.” It’s like, “Nah, you know, that’s a hard thing.” Well, you actually have a a quote from his I think it’s Hezekiah Niles. Um, that must be a good old biblical name. Hezekiah, I don’t know if I pronounce it correctly. Who actually said back then, “One speculates by law and the other against the law. I.e., one is a banker and one is a counterfeiter.” And there’s not much difference in terms of the impact on the economy. Obviously, law enforcement has a different view of this at this time and and and many respectable middle class people do as well, but this highlights this uncomfortable reality of what is money really. And this is what the career of someone like this really raises because if money is simply just a piece of paper that we trust and can kind of like hand off because it works, that is a different thing than the idea of money is something being intrinsically valuable that you can stockpile, hoard, reserve and and the like. And and the counterfeiters of this era, this golden age of counterfeiting, were kind of accidental philosophers of money, I guess you could say. That’s amazing because there’s actually a moment, isn’t there, in 1838 where he goes to the engraving firm Gurley and Burton and he says that he is the cashier from the quite legitimate bank Bank of Kentucky and he tries to get an enormous amount of money printed. I’ll give you a few examples of of other things that kind of play up this wild thing. So, there’s a there’s a group, it’s actually connected with the the Mormons, Joseph Smith and the Mormons have a have a community near Boston, Ohio. So, they’re not far from where James Brown is operating. They could try to get a charter for a bank called the Kirtland Safety Society, I think it’s called. I something to that effect. And the state turns them down, probably because they’re Mormons, right? And um they’re like, well, all right, well, then we’re going to create an anti-banking bank and they actually take the notes that they had commissioned, put anti-banking on it instead of banking and issue the notes. I mean, you know, it’s like these are That’s like Elon Musk kind of doing all of his flexes online and trolling people.

Yeah, exactly. It’s like this it’s like this like colossal monetary troll, an act of trolling. But and and the thing to remember about this era, and this is why, you know, these these counterfeiters had such a field day, is that you know, when we think of a bank, we and and particularly, God knows, a bank that issues its own money, it’s got to look respectable and have a respectable name, right? But any corporation, broadly defined, could have note-issuing privileges attached to it. So, there are many cases, especially in these states where it’s lightly regulated, where people are like, well, I’m going to found an orphanage to help orphans. I would like to have a note issuing capacity attached to my corporate charter. And then the orphans are left aside and they issue the money. You could see why someone like James Brown was kind of like, well, yeah, he’s counterfeiting, but you know, a lot of what’s going on is is kind of dubious. This is the era in the 1830s that that is known as the wildcat banking era and that that’s a specific phrase that refers to the fact that in western states like Ohio and especially Michigan, the regulation was so light in the bank charters were so easy to obtain that many people founded banks that were really basically corrupt. So so the distinction is that the free banking era is like the anybody can set up a bank, but the wildcat banks were sort of the really dodgy side of things. Like they they had a charter, but they weren’t really quite legitimate. Exactly. Well, the way this the money works here is you issue the notes and then you have to redeem them if they are presented to you, right? But the way the wildcat banks would operate would be to issue the notes, close down the bank and move it like to the to the wilderness and so you couldn’t find where you could get them redeemed because they had no intention of redeeming them. I I can see several movies in this like high jinks and capers and the whole works. Yes. Yeah. And of course one of the things that could also make a movie is because we do have a hero of sorts who enters the story in the form of Samuel Lane, a newspaper man, who begins to take exception to this and say, this is simply wrong. Every frontier town, it seems, you know, eventually gets someone like Samuel Lane. They’re the respectable East Coast transplant who comes in, looks around and realizes is that there’s a lot of funny business going on and they’re they’re appalled, right? I mean, they’re coming from areas where, you know, like New England especially uh that was uh very well-established and orderly. And so Samuel Lane is is someone who who’s who sets himself up as as Brown’s antagonist. He but but oddly enough also one of Brown’s kind of secret admirers. And by that I mean, he he was the one who contributed in in so many ways to the enduring legacy of Brown’s reputation in the region. He tries to basically go after Brown in the pages of his newspaper, writing about him, trying to expose him, pointing out all the ways that locals were corrupt and, you know, and of course Brown and his confederates do not like this. They they threaten him. They try to mob him. It’s a story you see repeated over and over of like the straight arrow eagle scout, you know, on the one hand against the charismatic con man. And the two men basically go to not go to war, but are in tense conflict with one another as this region starts to become more respectable and less like a frontier kind of wild west place. You know, more and more people are moving to the region, more and more people who are moving who are not counterfeiters. And there’s growing discomfort with the idea that that Brown is operating with such impunity. It’s kind of like, you know, when when the mafia was finally brought to heel in the United States. A kind of like, you know, enjoying this kind of reputation, but then at a certain point colliding with reality. And so It’s a bit like financial equivalent of gentrification, isn’t it, in town? That’s a Yeah, that’s a great way of putting it. It’s like, yeah, we we need banks, but we need real banks, not not people just printing money in in caves. So in this case, Lane starts doing this investigation and calling us out. And Brown then tries to fight back, doesn’t he? Yes, like a mob tries to to to go after him. There’s there’s, you know, people packing heat. They’re you know, firearms. Again, nothing ever breaks into open violence. It’s like, you know, a bribe and a one-way ticket or a temporary one-way ticket to go to another state. Because keep in mind, none of the states had any kind of like extradition, you know, arrangements with each other. So, once you cross state lines, you were free. So, it was pretty easy. If you could persuade someone to leave, this is straight out of those, you know, standard operating procedure for counterfeiters in the 1830s is send your witnesses or your accusers to another state with some money. Yeah. But so how did James Brown get his comeuppance, if anything? What was his downfall? How did his story end? James Brown, by the late 1830s, you know, he’s living life, you know, the high life. He has his mansion. He’s a successful businessman, if you will. Even those people like Samuel Lane are tormenting him in the pages of the of the Buzzard, that’s the local newspaper. That was a great name for a newspaper as well. It is, yes. Feeding on the carrion. Um, so what happens is uh in the in 1837, there’s a panic, uh a national panic uh as a a speculative bubble that’s in western land collapses. And with it, the wildcat banks are taken out, otherwise solid banks are taken out, the entire financial system collapses, and people don’t want to use paper money at all. Paper money becomes like a a like it doesn’t matter because no one is able to make good on the promises to pay that are adorned paper money, whether real or counterfeit. When that happens, people are more interested in coin, and James Brown, recognizing an opportunity, moves into counterfeiting coin. Counterfeiting coin is a very different kind of operation, although you can do it in the same kind of backwoods, caves, places that you make paper money. Uh but you have to do it somewhere that’s not in your own basement. You have to be, you know, somewhere remote, since it involves building fires and things like that. He makes coin. He starts trafficking in coin, acquires a reputation in that, but then he’s doing something that’s different than what he had done previously when it comes to the law. Counterfeiting coin in the United States is a crime that’s a federal crime. Counterfeiting bank notes is a state-level crime. Uh we’ve seen that state-level crime, counterfeiting, that’s pretty easy to navigate. Federal crime, that’s a different matter. And uh one of his accomplices basically rats him out, probably was bribed to do so, and he’s arrested. Uh there’s a federal raid of on his home in the mid-1840s. And he’s he’s he’s actually tried in federal court. And this is a very different venue, as many criminals have found over the years. Once you jump into that arena, it’s harder to bribe people and get rid of witnesses and all the rest. He’s actually convicted and sent to the state There’s no federal penitentiary at this time, so he’s sent to the Ohio State Penitentiary. And this is again one of those times where his career has this kind of cinematic flare to it, because he’s sent there, and then a a tragedy erupts in the in the prison. Uh there’s a cholera epidemic. And cholera, I mean, it’s a horrible death. I mean, these are people dying left and right. He is, at this point, basically been put in charge of the prison hospital because, again, he has amazing leadership skills. And the prison prison I mean, it’s it’s a kind of a funny thing because, you know, when I’ve looked at the prison register when he was admitted to the state prison in Ohio, and just like everyone else who meets him, like the the warden of the prison like writes in like, “Very handsome, engaging guy.” You know what I mean? Like He was charismatic. I mean, you know, Yeah. [clears throat] Harvard Business School could do a case study on his management skills. He clearly had he had very good way with yeah, with subordinates. And even the prison [clears throat] warden. Yes, prison warden. So, there a prison warden puts him in charge of the prison hospital, and he he basically nurses all of these inmates, you know, through this horrific epidemic. And, you know, after that, the folks in the governor’s office and, you know, fairly high-placed officials wrote the President of the United States, Zachary Taylor, it was like, “We think you should pardon him.” Oh my goodness. I mean, what So, he gets out? Yeah, he gets out. He’s pardoned. And he and he he leaves and he, you know, says, “I I’m not going to I’m not going to go back to counterfeiting.” Okay, so so this is July 1849. He’s been pardoned by literally the President of the United States. He promises never to go back to his old life of counterfeiting again. Right. What happens then? [snorts] So, sadly, you know, what happens is he he moves to Cleveland. He begin he and he does get back into counterfeiting, unfortunately. He just doesn’t have James, James. I know. So close. Yeah. And he becomes he has starts to have a drinking problem. Ugh. His wife leaves him and he begins a kind of very sad, slow decline. So, people who remembered him from the late 1850s, early 1860s, remembered him as as like still had that look, still had that kind of, you know, charisma, but was was more broken, old, aging. So, what looks like cool anti-establishment um Robin Hood style um criminality in his 20s and 30s starts to seem like just old has-been corruption. Absolutely. And you know, his last kind of glimmer in the his, you know, last appearance in the historical record comes at the end of the Civil War. And it’s the story of the end of counterfeiting generally, actually, because in the Civil War, the United States shifts to issuing a national paper currency, okay? So, this is the first true government-issued national currency. And simultaneously begins to tax state bank notes out of existence. So, the old monetary system that has sustained this counterfeit economy is eradicated. And in its place, the federal government now is very interested in protecting its currency from the counterfeiters who understandably now want to move into a national level. And they create an agency in the government that exist today that is known for protecting the president, but was originally founded to protect the currency. That’s the Secret Service. Huh, so the Secret Service started out as a anti-counterfeiting task force, is that right? That’s all it was doing. It was marvelously successful at this. Not so good, obviously, at protecting presidents, but that was not its job at this time. Details, schmetails, yeah. That’s yeah. Yeah, it it took multiple assassinations before the Secret Service took on that. But to go back to to 1865, you have the the the founder of the Secret Service, a man named William Wood. He was a kind of a ruthless law enforcement agent. He begins to build a national police force to take down the counterfeiters. And James Brown is actually arrested by the Secret Service on like a fairly minor charge. But that’s his last kind of appearance in the court records. And then he he falls off a canal boat, possibly because he was drinking, knocks himself on the head, and is is dead not long after. Do they think it was an accident, or was it a murder, or something? No, it sounds like it it was an accident. It was almost certainly an accident. banker finally ran out of lives. Yeah. Exactly. His nine lives had run out. And he’s dying at the moment when the entire counterfeit economy is is starting to wither under this what’s going to be a decades-long campaign to basically protect the currency. And a very successful one. And in many ways, as you say, he was a symbol of the whole rise and then the fall of wildcat banking in a bigger sense. Well, in today’s world, he probably would have been a brilliant derivatives trader and constructing all kinds of new financial innovations. Absolutely. He’d be Or a politician. Or or both, yes. There are many many individuals like this uh at this time. And they they have many characteristics in common. They tend to have this skepticism of authority, particularly when it comes to banking authority, that allowed them to do what they did. So, our lovable roguish anti-hero James Brown is now finally over. He yeah, his career ended in when he was arrested in 1865, and he sadly passed away in a drunken, presumably, accident in 1866. But after the break, we’re going to be discussing the legacy of this wild era of of banking and money in America and and what it tells us about money today. [music] The future of fixed income investing will continue to blur the lines between public and private markets. Nuveen’s credit platform was built to navigate this shifting landscape, channeling capital toward the businesses, infrastructure, and energy solutions that are shaping tomorrow’s economy, all while aiming to deliver the resilience and returns that portfolios seek today. Nuveen, invest like the future is watching. Visit nuveen.com/future to learn more. Investing involves risk. Principal loss is possible. [music] So, we’ve heard all about how James Brown was this charismatic frontier counterfeiter in 19th-century America. He amassed immense wealth, probably some of it real wealth, some of it some made up, uh and local political power by operating his own unchartered bank. He printed high-quality fake notes for for both real and entirely fabricated financial institutions. And his this success really demonstrates how cash-starved the American frontier was and how they relied on on public confidence in these notes, or at least sort of some sort of confidence in these notes to to buttress an entire economy. Kind of blurred the line between being a what was maybe for the era not legitimate banking, but semi-legitimate banking and just being a full-on criminal, essentially. I mean, Gillian, we’ve talked about this. We love talking about the nature of money. What kind of parallels do you see between this era of wildcat banking and today’s cryptocurrencies? Well, what I find truly fascinating is that until 150 years ago, you had this explosion of, if you like, homemade finance, homemade banknotes and coins in different parts of America. And as a result, you had this obsession with people worrying about whether something was real or fake and you couldn’t tell. But there was a real sense that anyone could go out and kind of create their money if they wanted. Then you had the state come in in the form of central bank and the secret service, or rather the other way around. And essentially, you took away people’s power just to create their own money. But we’re back now in a era that has so many echoes of this because of not the frontier mentality geographically, but the digital wild west and the fact we now have a new frontier in cyberspace where people can do whatever they want. So we’ve had the explosion of meme coins, cryptocurrencies, and now stablecoins where people are creating all types of money without central control or regulation much of the time. And once again, that creates questions about what is fake, what is real, and what can we actually trust? Because of course, the roots of the word credit come from the Latin credere, meaning to believe or trust. Mhm. Mhm. And I’d love to ask you, Stephen, I mean, how do you see the echoes today? It’s a great question and one that as I’ve watched the last things unfold since the book was published, you know, some time ago now, crypto has has come into its own and what what I find most fascinating about it it well, it’s two things. One is the one you’ve already touched upon, which is this kind of like democratization of money making and and and the fact that it’s utterly decentralized, you know, that the barrier to entry effectively is is almost entirely collapsed. The second though is the sentiment that many crypto enthusiasts channel that reminds me of my counterfeiters and bankers which is that well, we’re doing this because we can’t trust fiat currencies issued by governments any longer, right? And I’ve even seen like crypto bros who talk about like well, government is just basically a legal counterfeiter, right? They’re just they’re just issuing their own money without anything backing it. And I find that that’s fascinating to me that the same kind of rhetorical switch is is happening here in this kind of skepticism. This time though aimed at government-sponsored currencies that’s kind of justifying this this explosion of private currency. So It it is right. It’s a point that Niall Ferguson the historian sometimes makes about what he calls the oscillations between the tower and the square. At some point in history the tower and the sense of a king or government or an institution is in control just like a tower used to dominate medieval Italian towns. And then at another point in history, the square as in people power revolts against the authority of the establishment and creates its own mechanisms for control and freedom. And in a way the world cat banking era was a time of people power when ordinary people were creating what they wanted. There’s a good reason that you know, libertarians look at this earlier era the the you know, the free banking areas as a a kind of model because it is this democratization. It’s it’s something where there is no state monopoly and I I I think that that kind of ebb and flow seems to be with us and we are clearly clearly in the the right now, at least when it comes to to money creation. And yet one of the lessons from this period is that this kind of pattern of people power driving money is chaotic, uncertain, you don’t have trust, and trust is an essential ingredient to make markets and commerce actually work as people like Adam Smith wrote all those years ago. And perhaps the other lesson is that you can have periods of history of people power or democratization, but sooner or later the government central control tends to come in just to make sure you have a system that that can actually work. One should never ever underestimate the power of the state to wake up [laughter] and and and reassert its authority over something that is has not, you know, has been allowed to basically, you know, run run run wild. And I think all it takes is, you know, a kind of political will and also, you know, institutional power, and I think what we’re waiting for potentially is some kind of watershed event that discredits or or sows sufficient distrust to go to your point, you know, where credit and believing is no longer possible that the, you know, that that’s an opening for the state to come in and and and put an end to to this. So, James Brown uh to defend a rogue as hero a little bit, at least he was providing a service as we talked about, you know, there was a demand for this and people kind of knew it was funny money, but they still needed something. Can the stable coins is a real need or or service that they’re providing at all? Yes. I mean, I say that not that I would necessarily embrace personally, but they are a product of the growing unease that has has been with us actually for some time since the breakdown of the Bretton Woods system many years ago. Yes. As a historian, I tend to see things in decade or century-long chunks. And I sort of view everything from the early ’70s to the present as part of a continuum. And I think that we have to understand the stable coins, crypto A lot of this is emerging out of that that collapse. We’ve never actually fully grappled with the what happened when that collapsed. We we’ve been living in a kind of what may ultimately look like an interregnum, a monetary interregnum, you know, before something else comes in. So, we’re looking at basically a loss of trust in fiat currency slowly. And we’re also, by the way, of course, many people using stable coins would say there’s another need in the market that these instruments are fulfilling, which is the fact you need to be able to transfer money across borders cheaply. Mhm. And it it’s very expensive right now. And increasingly, countries want to do that without having to go through the central hub of the financial system, which is a dollar-based financial system. They don’t They don’t trust America in particular. Yes. And you know, not to let current events intrude too heavily on us, you know, but let’s face it, the centrality of the dollar to the international financial system, I think is in danger right now. So, two big burning questions. One, has a movie been made about James Brown? And if it hasn’t, who do you want to play it? And then secondly, do you have any of these counterfeited notes hanging by your bed or hanging on the wall in your house? But I wrote this book. I was a I was a graduate student and um I could not afford them. They’re quite expensive. Counterfeit absolutely these bank notes like the 1830s. It’s like $800, $1,000 for a single note. But on the question of a movie, no, no movie’s been made and I I’ve sometimes thought I mean, this is a funny thing to say. Actually, I watched a sort of forgettable Matthew McConaughey movie on a plane recently. But, I thought like, you know, he kind of looks like James Brown, actually. You know, because there’s this portrait of Brown and and sort of has that I don’t know. Kind of swagger, I guess. Yeah. And then, third question. Has anyone ever suggested to Elon Musk or anyone else that he create a meme coin based on these counterweight notes? Cuz that really would be history coming full circle. I don’t believe anyone has, but it’s a great It’s a great idea. Well, if Elon Musk is listening or any other crypto bros out there, you have your task ahead of you. Yes. Um and just remains for me to say a huge thank you to you, Professor Memford, a really fascinating discussion. I’ve learned so much I didn’t know about and it just goes to show there’s nothing entirely new under the sun. So, thank you from me. Thank you. Thanks so much. No, thanks from me as well. Professor Memford, this was fantastic. And that is all from this episode of The Story of Money from the Financial Times. I’m Robin Wigglesworth. And I’m Gillian Tett. And we’ll see you back here next week. [music] [music]