Sam Upham had never seen newspapers fly out the door faster than on February 24, 1862. All over town, people had their ink-stained hands gripped around copies of the Philadelphia Inquirer. Upham’s own store, a combination pharmacy, perfumery, and stationery shop, couldn’t keep up with the demand.

Upham finally stopped a customer purchasing the paper and asked what the fuss was over. It was about a “grayback,” the man told him—a picture of a five-dollar Confederate bill was printed on the front page of the paper. It was the first time many Northerners had seen one.

Upham grabbed the Inquirer to see for himself. The paper had made a strikingly detailed replica of the currency. It was how the other side in the Civil War—now a year old—kept their economy flowing.

Intrigued, he contacted the reporter who had written the story. He learned that the Inquirer had used a printing plate to strike the currency note for reproduction.

Upham had an idea. If it worked, he would not only undermine and upend the Confederate economy but make himself a good bit of money in the process. He offered to buy the plate from the reporter, then used it to run off 3000 copies of the bank note, printed on premium French paper.

He supposed he was now a counterfeiter. And if he was, he was doing it for all the right reasons.

When Southern states seceded, there wasn’t a lot of gold and silver to go around, and people were hoarding coins. To mount a successful attempt at an independent economy, the Confederacy ordered a run of notes from the National Bank Note Company in New York. These bills were high value and printed with fine copper plates. But two months later, the Confederacy issued another run of bills. Since the plate engravers generally lived in the North, the South was forced to cheaply produce this next run with a lithograph on white paper, the frequent handling of which would cause discoloration (hence the "graybacks" slang). States began issuing their own fractional currency to keep transactions flowing.

Upham considered all of this when he decided to infect Confederate circulation with his bogus bucks. A onetime gold prospector who had settled in Philadelphia to run his hybrid storefront, Upham figured he could monetize the Union’s sense of patriotism by selling commemorative items. One idea—a card that depicted Jefferson Davis when turned one way, but showed a jackass when turned the other—was an early hit.

After the Inquirer article, Upham decided to capitalize on replica money. Because the real thing was easily duplicated, Upham knew some people might take it upon themselves to use it as actual currency. As a form of insurance against any fraud claims, he added “Fac-Simile Confederate Note” to the bottom of each bill.

Upham sold the five-dollar notes for a penny apiece beginning in March of 1862. He sold out of his initial print run almost immediately. Another periodical, Frank Leslie’s Illustrated Newspaper, had a plate for a ten-dollar bill. Upham bought that one, too, and began running off larger notes for five cents apiece. He got samples of other denominations by offering to buy them for a premium.

His little store began issuing handbills that acted as a catalog for his wares. By May, he was offering 14 different denominations, along with Confederate stamps and other “mementos” of the Rebellion. While many proud Union allies bought them as collectibles—and newsboys sold them on the street for a modest profit—others saw opportunity. The bills made their way to Confederate occupants, who bought them for 30 to 40 cents on the dollar. Some used the bills for cotton purchases, which they would then smuggle back into Union territory. The biggest sellers were the $100 bills, which cost no more than a smaller denomination.

While Upham fondly referred to his inventory as “paper bullets,” he wasn’t being at all surreptitious about his fraud. In addition to advertising them as an amusement, he labeled each note with his name and mailing address. Of course, if people were to tear off portions identifying the bills as fakes, leaving a perfectly serviceable “bank” note, that wasn’t his fault.

The dilution of Confederate currency didn’t go unnoticed. President Davis bemoaned the fakes, while a Confederate paper, the Richmond Daily Dispatch, accused the Union of “scoundrelism” in pursuing the grayback black market. The Congress of Confederacy criminalized counterfeiting into an offense punishable by death and offered $10,000 if someone could deliver Upham to a Confederate court.

As fractured as the nation was, Federal agents couldn’t turn a blind eye to someone printing reams of money. Upham received a visit from authorities who were concerned he was counterfeiting both Confederate and Union dollars. The case was turned over to Secretary of War Edwin McMasters Stanton, who dismissed the possibility of any wrongdoing when he found out Upham was only targeting Southern notes—legally, it was none of their concern.

Stanton's blessing-by-omission served as tacit approval for Upham to continue fabricating bills.

From March 1862 to August 1863, Upham figured he put over $15 million worth of fake currency into circulation. As the war wound down and key victories in Gettysburg and Vicksburg were earned, Confederate states found themselves with a surplus of currency and an increasingly de-valued dollar. A pound of tea cost $35; in Richmond, Virginia, barrels of flour were going for up to $1000.

With Southern chances eroding, more and more Union currency was being used, and smugglers stopped having much use for Upham’s copies. As demand waned, he returned to his normal wares at the store, but he had made a lasting impression during the war. Mississippi Senator Henry Foote said Upham had done more to damage the Confederacy than General McClellan’s army had.

When Upham died in 1885 at the age of 66, he left an estate worth nearly $5000—much of it presumed to have come from his burst of activity counterfeiting. Fittingly, when Harper’s Encyclopedia published an exemplar of a “genuine” Confederate note in 1893, they used one of Upham’s.

Additional Sources:
True Crime in the Civil War; Creative Minds in Desperate Times; “Bogus Money Matters: Sam Upham and his Confederate Counterfeiting Business.” [PDF]