During the Revolution, in order to create a financial panic among the rebels, the British Government flooded America with fake Continental dollars. In New York Lord Howe advertised sales of counterfeit Continentals for “persons going to the other colonies.” Soon American counterfeiters refused to counterfeit the worthless notes (there is good in everything) and Congress solved the problem by recalling $20,000,000 in Continental currency and destroying it.
Taking a leaf from Howe, Napoleon, and Prince Ludwig, whose operations he studied closely, Adolf Hitler in 1940 launched the biggest and most carefully planned counterfeiting enterprise in history. It was called Operation Bernhard; its original purpose was to destroy the Bank of England.
The immediate supervisor of the project, reporting directly to Heinrich Himmler, was a German Secret Service major, Friedrich Walter Bernhard Kruger, formerly a textile machine engineer. The plan was to print a billion dollars’ worth of British pound notes of various denominations and dump most of them by plane over the British Isles. Most Britishers, it was hoped, would go on a spending orgy, bringing about the collapse of the currency.
The project was carried out with great thoroughness. British banknote paper, made of white linen, could not be obtained in quantity, so linen was imported from Turkey, dirtied by rubbing it on oily machines, and then laundered. An operation was set up in a fenced-off, closely guarded area of the Sachsenhausen concentration camp, near Oranienburg. From concentration camps all over Germany, Czechoslovakia, and Poland specialists were collected, shipped to Sachsenhausen, and pressed into service. Among them were dentists, engineers, engravers, stereotypists, a bank clerk, a printer, and a professional counterfeiter named Solomon Smolianoff, whose value to the enterprise was inestimable.
After a printing shop and photo and engraving sections were set up, the project got rolling in 1943. Watermarks were introduced into the linen, sheets were split in two, then cut in half, the text, denomination, and vignette of Britannia were printed, and finally the serial numbers were added. Forty per cent of the notes were of five-pound denomination; ten-, twenty-, and fifty-pound notes each made up another 20 per cent. On rare occasions 100-, 500-, and 1,000-pound notes were run off.
After meticulous comparison with genuine currency, the notes were divided into four classes: The best were to be used in neutral countries and taken by spies into enemy countries; the next best were to be used for paying off collaborators; the third class was to be dumped over England, and the fourth class, made up of the worst notes, was junked.
Early attempts at distribution met with a snag. Walter Funk, Minister of Economics, forbade the operation in countries occupied by Germany lest it upset currencies he was trying to stabilize. The drop over England was postponed as other uses were found for the money. It was handy for buying up arms parachuted by the Allies to Serb, Croat, and Italian partisans. Information about the whereabouts of Mussolini’s hideout, leading to his abduction from the hands of the Allies by Colonel Skorzeny, was paid for in counterfeit British notes. Phony money was the reward earned by the famous Albanian spy, Eliaza Bazna, valet to the British Ambassador to Turkey. Some of the money, to bolster the Nazi economy, was exchanged for gold in Italy and for francs in Switzerland.
The Bank of England learned of the enterprise in April, 1943, and launched countermeasures. It stopped the issue of notes of ten pounds and higher and began exchanging new ones for those already issued. The new ones had a tricky electrical safeguard — a narrow ribbon of metallic thread in the paper which conducted a particular pattern of electricity under special conditions known only to the Bank of England.
Because of complications arising on the military fronts, Operation Bernhard never reached its ultimate goal, though, thanks to Smolianoff, the counterfeits themselves were close to perfect. A total of $600,000,000 worth of British banknotes were made, $10,000,000 of which got into circulation. The effect on the Bank of England, despite the best of intentions, was troublesome but far from disastrous.
In 1944 Himmler gave Kruger a rush order to counterfeit American paper money. But time ran out before more than twenty $100 bills were finished and okayed by Himmler. The panic occasioned by Allied advances on all fronts drove the Nazis to destroy all plates and wads of spurious British money in outdoor incinerators. More bundles of notes were sunk in lakes and rivers in Austria. Kruger vanished for ten years and turned up as a storekeeper just outside of Hanover.
If there is another major conflict, it is expected that, along with the forging of passports, identity and ration cards, and military documents, the currency of enemy nations will be counterfeited on a vast scale. It is an accepted ruse of war.
Agents of the United States Secret Service, one of whose major jobs it is to nail the counterfeiter, regard him a great deal less tolerantly than the public. Apart from his effect on the monetary system, he is indirectly a recruiter of criminals. The Secret Service ranks him in the company of the kidnaper and dope peddler.
A worth-while counterfeiting operation in America today involves various specialists. A money man lays out about three thousand (genuine) dollars for equipment — photoengraving machinery, a single-color press, etching and routing machines. After a batch of money has been made, the money man sells it to a wholesaler for about eight cents on the dollar. The wholesaler sells it to retailers for twenty cents on the dollar. Passers buy it for thirty-five cents on the dollar.
Passers are the most vulnerable link in the entire operation. Many of them are known to police and Secret Service agents. They are the petty crooks whom shopkeepers will finger as the shover of a particular phony bill.
So the passer depends on his wife or sweetheart to do some of the work — the psychology being that a chivalrous bartender will not inspect a bill received from a lady as closely as that from a man. Should she be nabbed, if she has a clean record, she can indignantly claim that she is the dupe of some crook, and who can deny it?
But when a passer is far away from his loved ones, he must rely on strangers for help. A common procedure is for him to wander up to an idle young man with an alert look, offer him a cigarette, and chat awhile. Then, explaining he got stuck with a bogus banknote, he asks the young man — called a lobby guy in counterfeiting circles — to try to buy something with it. Should the lobby guy succeed, he is promised a great deal of change for his errand. If he gets nabbed, he is a first offender, can claim to be a dupe, and is relatively safe. But he is not so safe as the passer, who, at the first sign of suspicion on the part of the recipient of the money, darts to another corner of town. However, it is often a fine opportunity for a young man with an honest face and a charming manner to get a foothold in crime.
The paper-money creator himself, on whose skill the success of passers and their tools largely depend, has the ego, generally, of a top-flight artist. Extremely few counterfeiters are women; they are mainly small, uncommunicative men who think themselves far superior to coin counterfeiters — those shoestring operators whose margin of profit is so tiny they must do their own passing with a pocket full of change.
Whether counterfeiters are of high or low caste in the great scheme of things, they have furnished more bold, wily, and capricious oddballs than any other branch of crime.
A Russian gang in 1912 circulated half-ruble notes which were excellent reproductions of the Czar’s highly inflated currency, except that on the bottom of each note was the wry message, “Our money is no worse than yours.” Emanuel Ninger, a New Jerseyite who traced paper money on fine bond paper after it was soaked in coffee, was arrested when one of his fifties got wet from lying on a bar. He claimed to police that he was not legally a counterfeiter because he left the phrase “Bureau of Printing and Engraving” off his hand-drawn notes. Marcus Crahan solved the problem of getting nabbed with the curly — always embarrassing for a counterfeiter — by pointing to an ad he repeatedly put in the paper. It said he had found a bundle of money which the owner could claim on proper identification. The Secret Service was skeptical and he eventually got fifteen years.