by Ben Tarnoff
On the other side of the water, not far from where Brock was standing, six thousand American soldiers were preparing to invade. Brock knew they were there, and wanted to attack. But his superior General George Prevost, the governor of British North America, insisted on a strictly defensive strategy and, as a way to enforce his will, sent Brock a relatively small number of men. His hands tied, Brock waited. The imminent American assault and the timidity of his superior weren’t Brock’s only problems; he also faced widespread defeatism at home. Despite Brock’s celebrated reputation, people in Upper Canada felt an American triumph was inevitable. “[T]he population, believe me, is essentially bad,” Brock wrote to Prevost. The Canadian militia shared the public’s pessimism; their gloom, combined with poor training and inadequate equipment, made them practically useless. On top of everything else, Upper Canada had become a refuge in recent years for criminals fleeing from the United States: “the most abandoned characters,” Brock complained, “seek impunity in this province from crimes committed in the states.” The lawlessness they brought over the border further sapped Canada’s ability to defend itself.
One of these émigré crooks was David Lewis, whom Brock had caught with counterfeit money and imprisoned at Fort George. Lewis’s arrest couldn’t have come at a worse moment. While typically an affable man, the British commander was also a firm disciplinarian—and the thought of Lewis swindling his men, added to his many other frustrations, pushed him over the edge. Brock threatened to hang Lewis on gallows so high that he could see his own country. Given the short distance across the river to New York, the general wasn’t exaggerating. An execution might help him maintain discipline in his camp, or at least give his troops a little entertainment to ease the anxiety of waiting for the Americans to make their move.
Fortunately for Lewis, Brock didn’t live to fulfill his promise. Shortly before daybreak on October 13, American batteries opened fire on British positions, provoking an artillery exchange across the Niagara. The flash of exploding shells in the gray dawn illuminated the water below, where boats of American soldiers paddled furiously to the opposite shore. They were headed for Queenston, a village about seven miles south of Fort George. Brock hadn’t expected them to land there, and now he raced to confront the invaders. While he was leading the charge, a ball from an American musket pierced his chest. He died almost instantly, and his men, shaken by the death of their beloved commander, gathered around the powerful frame lying lifeless on the battlefield. They carried his corpse to Queens-ton while their colleagues successfully repelled the attack. Upper Canada was saved, but the loss of Brock inflicted a major blow to the British effort.
The battle that killed Canada’s greatest general also saved Lewis’s life. He sat behind bars at Fort George for weeks after Brock’s death, until another stroke of luck set him free. In mid-November, the British started shelling the enemy across the river, and the Americans responded with their own bombardment. The barrage set fire to much of the British garrison, including the mess hall, and did enough damage to the walls of the jail to allow Lewis to escape. As the cannonballs fell and engine crews ran to extinguish the flames, he took advantage of the commotion to slip out of the fort.
Lewis was twenty-four years old when he fled Fort George. The boy from rural Pennsylvania had become a troublemaker early, spurning the example set by his brothers, who, like their father, lived decent, law-abiding lives. The youngest son took a different path. He enlisted in the army before the war with the British broke out, deserted, and later traveled north to Canada. Across the border he discovered the thriving expatriate underworld on the other side—the rabble of deserters, lowlifes, and jailbirds that Brock despised. It was also a haven for counterfeiters. Canadian-based engravers forged notes printed by American banks right above the border, drawing on a sophisticated network of smugglers to ship the product southward along roads, rivers, and canals into markets throughout the United States.
Like their colonial predecessors in the Oblong and elsewhere, counterfeiters understood the value of geography. From a moneymaker’s point of view, a poorly guarded border between bickering neighbors offered the ideal location to base an operation. The bad blood between Britain and the United States in the early nineteenth century—not to mention three years of conflict during the War of 1812—made Canadian officials ill-inclined if not outright unwilling to crack down on the counterfeiting of American currency. Despite occasional moments of cooperation between the two countries, their strained relationship, combined with the rough terrain and the perpetual shortage of law enforcement, meant that moneymakers ran a booming business in the Canadian townships.
One of these entrepreneurs was Philander Noble. Lewis met him while drifting up north, and they became close collaborators. An accomplished engraver, Noble had spent years between Vermont and Canada cutting plates and making fake cash. He took Lewis under his wing, mentoring the young deserter in the art of moneymaking. The apprenticeship proved important for Lewis: he began as a juvenile delinquent and graduated a master criminal.
The two men made an odd couple. Sixteen years older, Noble looked nothing like the tall, graceful Pennsylvanian. He was fat, bald, and a couple of inches shorter than his protégé. Like Lewis, however, he came from a small town with a frontier past: Westfield, Massachusetts, which for decades after its founding in the seventeenth century had the distinction of being the colony’s westernmost settlement. Westfield was a farming community, but Noble, rather than working in the fields, became an artisan. His nimble fingers earned him a living as a silversmith, a clockmaker, and an inventor. In 1800, at the age of twenty-seven, he wrote a letter to his congressman, William Shepard, complaining that he had been hired to create a machine for grinding gun barrels but was cheated by his employer. “I performed the task which cost me many a sleepless night as well as very close & intense thought,” Noble explained, and in return got only “a bare days wages.” Even more infuriating, his boss took credit for inventing the device. Noble pressed Shepard to pass his story along to the secretary of war—if not to get more money, then “at least to place me in a favourable point of light to the publick.”
For a young workman from western Massachusetts to think a high-level member of John Adams’s cabinet would care about protecting his rights to a gun barrel grinder gives a sense of Noble’s regard for himself. It’s unlikely that Shepard followed up on the request, and within a few years, Noble took his metalworking skills into a trade that afforded better opportunities for wealth and recognition. He moved to Vermont and started carving copperplates to counterfeit currency.
The summer of 1807 found Noble huddled in a cave with three accomplices, each man engaged in a different task: Noble engraved plates while the others prepared the ink, fed paper into the rolling press, and forged the official signatures that appeared on the notes. While the criminals worked, a posse of twenty-six local men beat a path through the wilderness looking for them. The hideout lay in the mountains near Plymouth, a town in central Vermont at the bottom of a steep valley. Getting there required traversing tough ground under the hot sun and crawling part of the way on their hands and knees. It took the men hours to find the retreat, and they approached loudly enough for the counterfeiters to hear them coming. Desperate to destroy the evidence, one of Noble’s associates hurled some tools out of the cave’s entrance—a precipitous fifteen-foot drop—and then leaped down after the debris to escape. He didn’t get far: the men grabbed him, along with Noble and the other two criminals. Inside the cavern was more than enough incriminating evidence: plates, a rolling press, paper, and lots of counterfeit bills, some still wet with ink. Noble’s handiwork, honed during his years as a craftsman, impressed even those who were happy to see him behind bars. After reporting the arrest “with sincere pleasure,” a Vermont newspaper couldn’t resist commenting on Noble’s superb technique: “The engraving is very handsomely executed, and the bills so well done as to deceive tolerable good judges.” The jail didn’t hold Noble for l
ong. Two years later, he resurfaced in Canada, arrested for counterfeiting once again.
THE MECHANICS OF MONEYMAKING had changed little in the almost sixty years between Noble’s capture in Vermont and Owen Sullivan’s first efforts in Boston. Both men inscribed copper sheets, and did it so well that they saw their workmanship praised by the same newspapers that demanded their arrest. But the financial universe that each engraver inhabited was completely different. Sullivan forged bills of credit printed by local governments. While a colony’s money often circulated outside its borders, there were only as many currencies as there were colonies: Massachusetts money, Rhode Island money, and so on.
The bills strewn on the floor of Noble’s cave in 1807, on the other hand, didn’t display government insignia; they carried names like Bank of Vermont, Bank of New York, and Bank of Columbia. In the first few decades of the Republic, these banknotes had become America’s de facto medium of exchange. They were denominated in dollars, the new nation’s official unit of currency, derived from the Spanish silver dollars that had circulated on the American continent for centuries. Foreign currency still made up the bulk of the country’s supply of coins, and although the U.S. Mint in Philadelphia had begun striking federal coins, it couldn’t produce enough to meet the demand. Banknotes helped solve the problem by substituting paper dollars for hard dollars. In theory (although not always in practice), the bank’s paper could be exchanged for precious metals at the banks, and while not technically legal tender, they served the same purpose as colonial bills of credit had decades earlier. Far from discouraging these institutions, state legislatures granted them charters, eager to stimulate their markets with infusions of capital.
Local governments had a practical reason for favoring this arrangement. The framers of the Constitution had hoped to put an end to the use of paper money by expressly forbidding the states to produce it. By chartering banks that printed the notes instead of doing it themselves, the states circumvented this ban. But there was another, even bigger loophole that let Americans retain their dependence on paper money: the distinction between banknotes and bills of credit. While the difference might seem minor, it was crucially important for the nation’s first generation of leaders. When the delegates met in Philadelphia to draft the Constitution in 1787, the country had three banks—the Bank of North America, the Bank of New York, and the Bank of Boston. Their notes were considered highly reliable: unlike colonial bills or wartime continentals, they could always be redeemed for coin. As strident a critic of paper money as Thomas Paine enthusiastically endorsed the use of banknotes. While bills of credit substituted the shadow of paper for the substance of silver or gold, banknotes didn’t raise any thorny metaphysical issues: they weren’t money, Paine wrote, but “hostages to be exchanged for hard money.” Instead of hauling around gold and silver, people could trade these useful hostages to make payments—IOUs that eased the flow of commerce without unhinging value from its foundation in precious metals.
Most of the Constitution’s drafters shared Paine’s sentiments. Although some delegates remained wary of banking, their arguments revolved around the constitutionality of granting bank charters, not on the potential effect of banknotes. No one on the convention floor seems to have seriously considered the possibility that banknotes would become a new form of paper currency even more volatile and complex than the colonial money it replaced. The final document to come out of Philadelphia, while strongly opposed to bills of credit, included not a single clause on banks or banknotes.
The silence was significant. It effectively postponed the debate over the nation’s financial future, although not for very long. The first controversy erupted in 1790, and while it didn’t deal with banknotes directly, it had serious implications for the fate of American banking. The argument centered on whether the federal government had the constitutional power to charter a national bank called the Bank of the United States. The Bank’s chief supporter was Alexander Hamilton, easily the country’s most sophisticated thinker on financial matters. He had been working on the idea for a while; in fact, he outlined it a decade earlier, as a twenty-four-year-old aide-de-camp to General Washington. In the winter of 1779–1780, when the British looked as if they would win the war, Hamilton was encamped in New Jersey with Washington and the ragged Continental army. The country was in an economic free fall: its soldiers poorly provisioned, unpaid, and close to mutiny; its citizens bankrupted by a glut of worthless continentals.
Hamilton’s recovery plan involved creating a kind of superbank that could bolster the nation’s finances, fund its flagging military, and restore public confidence. It would be a commercial bank owned partly by the government and partly by private investors, but also much more: it could borrow from foreign creditors, help collect taxes, and do anything else required to keep the state solvent. When Washington became president and appointed his old aide secretary of the treasury, Hamilton hoped to see his idea through.
As could be expected from the grumbling at the Constitutional Convention about the constitutionality of bank charters, Hamilton’s proposal prompted a fierce dispute. Each side imputed a different meaning to the Constitution’s silence on the issue. The Bank’s opponents—Thomas Jefferson and James Madison, among others—said the federal government couldn’t charter a bank, because its only powers were those specifically given by the Constitution; the states retained the rest. Hamilton disagreed, insisting that the federal government had the right to do whatever was necessary to govern effectively, so long as it wasn’t expressly forbidden by the Constitution. At issue wasn’t what the document said but what it left unsaid, and what the muteness meant. Hamilton submitted the bill in December 1790; Congress passed it the following February, and Washington, after much deliberation, signed it into law. The Bank’s charter lasted twenty years. The argument surrounding it, however, continued for decades, until the Civil War put a bloody end to the power struggle between the central government and the states.
Although Hamilton got his Bank, the federal government never had a monopoly on banking. States had already chartered their own banks, and they would soon charter many more. At first, these institutions tended to be conservative. Most were run by wealthy merchants with a passion for scrupulous bookkeeping: they didn’t issue more notes than they could redeem and lent money only on a limited, short-term basis. Someone who wanted a loan didn’t just walk in and fill out an application; the directors carefully reviewed every request before deciding whether to grant it. Rules were strictly observed and credit closely held.
In the last decade of the eighteenth century, the ground began to shift. Demand for more banks and looser regulations grew. Just as in colonial days, the pressure came partly from farmers, who resented the merchants’ monopoly on the money supply. But there were new voices as well: speculators, entrepreneurs, and investors who needed cheap credit to finance their ventures in an expanding domestic economy. Foreign trade, which for years had dominated American business, gradually gave way to profitable industries at home. Rivers that had irrigated farms for centuries now powered manufacturing mills; a construction boom in roads, bridges, and canals connected people and markets as the country pushed west, spurred by an influx of immigrants looking for land. The scale of American ambition had greatly increased since Benjamin Franklin’s era. But one problem familiar to Franklin remained: initiative was abundant and available capital scarce. The solution was to print more money, which is exactly what the new banks did. As a result, the once stable relationship between banknotes and precious metals started to unravel as banks issued bills beyond what they could convert into coin. The new economy would be funded on faith, not silver and gold; on the hope that a series of risky undertakings—American independence, republican government, free markets, and the settlement of the West, among others—would pay off.
When Noble wrote his congressman about his gun barrel grinder in 1800, the United States had 29 banks. By the time Lewis broke out of jail during the bombardment of Fort Georg
e in 1812, the number exceeded 90, and within the next four years, reached almost 250. A key event in this financial explosion—contemporaries called it “bancomania”—was the closing of the Bank of the United States in 1811. As the nation’s largest bank, it acted as a creditor to the smaller institutions scattered throughout the country and held many of their notes. By pressuring the state banks to pay their debts and redeem their bills, it helped keep them in line. For that reason, the Bank had many enemies, and after a heated fight, Congress voted not to renew its charter. The Bank’s dissolution removed an important constraint on the nation’s financial craze and opened the door to more banks and more paper.
Noble’s experience as an engraver on the Canadian border gave him everything he needed to make the most of the money mania. It was a good time to be a counterfeiter, and for Lewis, it was a good time to learn. Decades later, a seventy-nine-year-old James Madison was asked whether he thought the states had the right to create banks. Madison replied that they did, so long as the states didn’t make the banks’ bills legal tender. The Constitution’s authors, he explained, hadn’t predicted that banknotes would become such “a great evil” and, even if they had, faced so many other hurdles in drafting a document that everyone could accept that they might have avoided addressing the issue anyway.
IN 1813, AS AMERICA STRUGGLED to finance a war against a vastly superior enemy without the benefit of a national bank, Noble and Lewis decided to head south to Pennsylvania. It’s not clear when the two men teamed up; they had probably begun their partnership in Canada shortly before returning to America together. Lewis knew the way, since he had made the trip before, presumably to pass bad bills. But this time the counterfeiters weren’t just looking for more markets for their notes; they needed a new headquarters for their operation. The northern border had become dangerous. As Lewis had learned at Niagara the previous fall, fleecing soldiers was a hazardous business: it risked provoking field commanders like Brock, whose summary justice made civilian courts look plodding and feeble in comparison. The trip to Pennsylvania required traveling hundreds of miles, from the lake-dotted landscape of Canada to the green hills and valley streams of the Allegheny country where Lewis grew up. Their destination was the town of Bellefonte, only one mountain ridge away from Lewis’s birthplace on Bald Eagle Creek. Lewis wanted to keep his visit a secret. If he and Noble were going to scout the area for potential moneymaking hideouts, they would have to maintain a very low profile.