At One Point in Time, up to 50% of US Dollar Bills Were Estimated to be Counterfeit

The year was 1865, and just months earlier the US Civil War had ended with the surrender of the Confederacy. With the war over, the problem of counterfeiting had become rampant, with one third to one half of all American currency judged to be fake.

The reasons for this were twofold: first, spending due to the war had spiraled out of control, and second, the country had just shifted over to a uniform paper currency as opposed to the earlier system which had more than a thousand government-sanctioned banks handing out literally 10,000 different types of currency. With people unfamiliar with the new bills and thinking that this would fix counterfeiting once and for all, Americans were too trusting of anything that looked like the new federal currency.

To alleviate the problem of counterfeiting, the US Secret Service was established as a new division of the US Treasury. Interestingly enough, some of the first agents hired to track down counterfeiters were men who had been imprisoned for forgeries themselves.

Ironically, during the war, the Union had encouraged counterfeiting of Confederate money in hopes that by flooding the market with large amounts of it, it would decrease its value. Doubly ironically, the Union-created counterfeits were often higher quality than the originals.