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U.S. Marshals Service

History -  Catching Counterfeiters: 

Counterfeiters also produced fake coins. Since 'real coins contained the true value in silver and gold, the counterfeiters could turn a profit simply by withholding some of the gold or silver from the coin. 

Generally, the counterfeiters. called "coneymen" in the vernacular of the day, specialized within the illegal trade. Printers and coiners manufactured the bogus money, which they then sold to passers. The passers exchanged the counterfeits for real currency or goods. Often, gangs of printers and passers worked together, generally infesting particular regions, but sometimes branching out into other parts of the country.  

By the 1860s, an estimated one-third of the currency in circulation was counterfeit.

Detecting the fraudulent money was relatively easy compared to catching the people responsible for it. The Treasury Department relied on the Marshals to pursue the counterfeiters on a national basis. Detectives were occasionally hired as "Special Agents" of the Department, but this was usually on a case-by-case basis when the evidence warranted the expenditure. Allan Pinkerton, for example, got his start in detective work by breaking up a major counterfeiting bank in Illinois. But detectives were expensive. 

Prior to the Civil War. the government did not want to spend the money on fulltime investigators. Consequently. U.S. Marshals and their Deputies developed many cases against counterfeiters. They requested permission from the Department of the Treasury to hire local detectives to work the case full time only after the Deputies had uncovered enough evidence to give promise of a successful conclusion.

In conducting these investigations, the main problem confronting the Marshals and their Deputies was not the spurious currency, but the lack of real money to pay their time and expenses. Despite a recognition in Washington of the scope of the problem, the Treasury Department consistently hedged on paying the Marshals in advance for their efforts.

In April 1846, for example, Marshal John McLean of Ohio reported his suspicions concerning a gang of counterfeiters in his district. "The state officers, not being paid. will not act efficiently in this business," he advised Secretary of the Treasury R.J. Walker, "nor can it be expected that the Marshal shall seek information on which to arrest these violators of the law without compensation." The Treasury Department remained unswayed.

In 1860, the problem grew to such large proportions that Congress appropriated a special fund for the investigation of counterfeiting. Unfortunately, the appropriation was only $10,000 and the Secretary of the Treasury jealously hoarded it for major cases.

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