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When large got small: Secret Service, agency that investigates counterfeiting, born out of 1860s Union Intelligence Service

Counterfeiting U.S. cash became easier with the standardization of small-size notes
By , Coin World
Published : 08/20/14
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Editor’s note: In her September monthly Coin World cover feature, Michele Orzano told the story of small-size notes and how they changed American paper money. This is one of a series of articles from this feature that will appear online at CoinWorld.com. 

Read other posts in the series:

The year 1929 introduced many changes to the American way of life. Perhaps the best known is the Great Depression, triggered by the Oct. 29, 1929, stock market collapse.

But another change occurred a few months before that and is still evident today for those who use or collect paper money. Small-size notes made their debut in the summer of 1929. The decision to downsize paper money and the immediate and long-term effects of the decision are interesting to explore.

Improving security

Whittling down the number of types of paper money the U.S. Treasury issued did simplify the printing process, but in some ways also made it easier for counterfeiters, who had to learn how to produce just one type of note instead of six. Not that counterfeiters weren’t in action before these changes. 

Today it’s the job of the United States Secret Service to investigate counterfeiting. But the U.S. Secret Service wasn’t formed until after the Civil War.

Many of its first agents came from the Union Intelligence Service, which was headed up by private detective Allan Pinkerton. 

In 1861, Pinkerton, the founder of the Pinkerton Detective Agency, was contracted by George Fenton, owner of the Illinois Central Railroad, to investigate the possibility of the railroad being taken over by Southern sympathizers. 

During his investigation Pinkerton uncovered an assassination plot on President-elect Abraham Lincoln’s life and he warned Fenton. Then Pinkerton and his operatives carried out an elaborate ruse to safely transport Lincoln through Baltimore. 

The uncovering of the assassination plot prompted Union Gen. George McClellan to hire Pinkerton to organize the Union Intelligence Service to obtain military information in the Southern states during the Civil War. In addition to his agents, Pinkerton himself conducted investigative work under the pseudonym of Maj. E.J. Allen. 

During the late 19th century, skilled engravers were the hub of the counterfeiting wheel. Counterfeiters generally required access to printing technology and skills not available to many individuals.

Nearly 100 years later, there began another change in life in America — access to desktop scanners and computers and color photocopiers. Those technological advances made it possible for “casual counterfeiters” to produce enough cash for a night out on the town.

More of Michele Orzano's story on small-size notes, including a look at the fight against counterfeiting since the 1990s, is on the way! Check back with CoinWorld.com for the latest, or better yet, let us tell you when a new post is up:

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