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  In his Money and Trade Consider’d with a Proposal for Supplying the Nation with Money (1705), Law argued that nations should establish central banks with the power to issue and supply paper money, which is “more qualified for the use of money, than silver,” being, among other things, “easier of delivery” and “easier kept,” so that, in his words, “the People may be employed, the Country improved, Manufacture advanced, Trade Domestic and Foreign be carried on, and Wealth and Power attained.” Law was eventually able to put his theories into practice in France, where, after years of hard work and hustling, he was appointed Controller General of Finances (preceding by some years the paper-cutting Étienne de Silhouette). Law established first the private Banque Générale in 1716, and then when the Banque Générale became the Banque Royale in 1718—in effect, the first French central bank—he pursued an aggressive policy of monetary expansion, printing banknotes and share certificates as if there were no tomorrow. There’s always a tomorrow. The Banque Royale rapidly boomed and then inevitably collapsed in 1720. According to the historian Niall Ferguson, “John Law was not only responsible for the first true boom and bust in asset prices. He also may be said to have caused, indirectly, the French Revolution by comprehensively blowing the best chance the ancien régime monarchy had to reform its finances.”

  The consequences of the paper money revolution, and the revolutions it caused, remain with us today, so much so that all our recent history might be said to be financial history: the true written record of our times lies not in books but in cash, shares, stocks, certificates, promissory notes and bills of exchange. Joseph Schumpeter argues that it was during the eighteenth century that capitalism was effectively discovered, or at least became “analytically conscious of itself,” and this awakening to consciousness came through paper. Trade, wage labor, capital accumulation: paper first enabled and then sustained all of the essential aspects of capitalism. And capitalism, in return, has enabled and sustained nations. Richard Doty, curator of the National Numismatic Collection at the Smithsonian Institution, in his book America’s Money—America’s Story (1998), claims that paper money is the very fuel and foundation of America’s superpower status: “Had there been no paper, we would now be speaking of the numismatic history of a much smaller, and a much lesser country.” Smaller and lesser countries that also converted to paper money during the seventeenth and eighteenth centuries included Great Britain, of course, with the Bank of England founded in 1694 with the purpose of managing and financing government debt by issuing promissory notes to depositors. And where Britain and America first trod, other nations soon followed. By the 1930s, with the final abandonment of the gold standard—which had meant that the amount of paper money in circulation had to be tied to the value of gold—paper money had triumphed. It was free.

  And everywhere has us in chains. Given its obvious usefulness, and almost universal adoption, it’s remarkable how many writers, thinkers and commentators have spoken out and continue to speak out against the very idea of paper money. Thomas Jefferson, for example, was famously the principal author of the Declaration of Independence, but he was also the sole author of a learned paper, “Notes on Coinage” (1784), in which he proposed a system of currency based on the dollar unit, with decimal fractions, which was adopted by Congress and is of course the currency system still in use in America today. Jefferson believed that paper money, unlike coins and good hard metal, created economic instability: English banknotes, he wrote, were nothing but “the ghost of money, and not money itself.” He opposed the establishing of a national bank in America—the First Bank of the United States, which was founded in 1791—and was delighted when its charter expired in 1811. Following a banking crisis in 1814 he wrote, “Providence seems, indeed, by a special dispensation, to have put down for us, without a struggle, that very paper enemy which the interest of our citizens long since required ourselves to put down, at whatever risk. The work is done.” The work was not done: after the war with England, the fledgling nation was in significant debt, and so the Second Bank of the United States was established in 1817. Again, Jefferson remained unimpressed. After another banking crisis in 1819 he exulted, “the paper bubble is . . . burst.” The paper bubble wasn’t burst. It never bursts. It always bubbles again.

  Paper-driven bubbles and bursts have characterized financial history ever since the early Chinese revenue-raising experiments. The process goes roughly like this: governments and rulers find that they need more money, and so press the button on the literal or metaphorical printing press and increase the money supply, inflation ensues, crisis occurs, and writers and philosophers line up to complain about it. Alexander Pope, in his Epistle to Bathurst (1733), lambasts “paper-credit,” “That lends Corruption lighter wings to fly.” David Hume, in his Political Discourses (1752), describes paper money as “counterfeit money,” “which foreigners will not accept of in any payment, and which any great disorder in the state will reduce to nothing.” Thomas Carlyle, in The French Revolution: A History (1837), despairs of “the Age of Paper” in eighteenth-century France, full of “Bank-paper, wherewith you can still buy when there is no gold left” and “Book-paper, splendent with Theories, Philosophies, Sensibilities . . . not only revealing Thought, but also . . . hiding from the want of Thought!” And then there is Karl Marx. In one of those typically dizzying passages in his early economic and philosophical manuscripts—in which he is busy frantically working out all his ideas about alienation and labor and suchlike, and all on paper, necessarily—Marx writes of money as “the universal confusion and transposition of all things, the inverted world, the confusion and transposition of all natural and human qualities.” Money, according to Marx, “transforms real human and natural faculties into mere abstract representations, i.e. imperfections and tormenting chimeras.”

  It is, above all, the chimerical aspect of paper money that seems most to worry its critics. Compared to, say, gold and silver—“Exemplary metal,” in the words of Geoffrey Hill in his poem sequence Mercian Hymns (1971)—paper money is light, flighty and insubstantial, like a spook or a sprite (Pope: “A single leaf shall waft an Army o’er,/Or ship off Senates to a distant Shore;/A leaf, like Sibyl’s, scatter to and fro/Our fates and fortunes, as the winds shall blow:/Pregnant with thousands flits the Scrap unseen,/And silent sells a King, or buys a Queen”). The word “credit” is itself of course derived from the Latin credere, to believe, and you don’t have to be a poet, or a philosopher, or, say, an anthropologist, to be able to work out that money requires the exercise of belief in order to function properly, though the anthropologist Mary Douglas does indeed helpfully identify money as a kind of belief system, and indeed “an extreme and specialised form of ritual” in her book Purity and Danger (1966). (In fitting tribute to Douglas, the novelist Will Self has suggested a new paper currency called “The Douglas,” which confers upon the bearer “the right to a ritual of some unspecified kind.”) If faith in the ritual of paper money disappears, then it simply doesn’t work. In order to fulfill its ritualistic role, paper money therefore resorts to all sorts of mystical garb and mumbo jumbo: serial numbers, authenticating signatures, scrolls, seals and images; those cupids and goddesses that Walter Benjamin describes as ornamenting the façade of hell. And there is no more splendid an example of ornamentation than the American dollar bill, with its vast array of symbols and images, including not only signatures, seals and serial numbers, but also a framed portrait of George Washington, a pyramid with an eye perched on top, a bald eagle, a cluster of stars, olive branches, and multiple announcements of its value (not only “1,” x 8, but also “ONE,” x 6, and furthermore, “ONE DOLLAR,” x 2). As if these images and symbols were not enough, the US dollar bill is also garlanded with words and phrases in English (“THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE,” “IN GOD WE TRUST,” “THE UNITED STATES OF AMERICA”) and in Latin (“E PLURIBUS UNUM,” “ANNUIT COEPTIS,” “NOVUS ORDO SECLORUM”). One can understand why people find it so alluri
ng and so fascinating: it is designed to allure and to fascinate. “ ‘If you don’t mind my asking, Robert, how did you get involved with the Illuminati?’ ” asks Vittoria Vetra in Dan Brown’s Angels and Demons (2000). “ ‘Actually,’ ” replies the Harvard University supersymbologist Robert Langdon, “ ‘it was money.’ . . . He reached in his pants pocket and pulled out some money. He found a one-dollar bill. ‘I became fascinated with the cult when I first learned that U.S. currency is covered with Illuminati symbology.’ ”

  Because of its strenuous and largely successful efforts to convince us of itself, it sometimes takes a grand gesture to remind us of the fact of paper money’s profound fictitiousness. When Bill Drummond and Jimmy Cauty—two former pop stars turned art provocateurs who called themselves the K Foundation, and who in 1991 had a memorable, profitable worldwide hit with the single “Justified & Ancient (Stand by The JAMs),” featuring country singer Tammy Wynette singing about 99 Flakes—burned a million pounds (approximately $1,625,000), in bundles of fresh-minted £50 notes, in a boathouse on the isle of Jura in 1994, the most common reaction, recorded in the book K Foundation Burn a Million Quid (1997), was not shock but disbelief: “You’ve really blown your credibility with this”; “It’s like burning people’s dreams in front of them.” Drummond and Cauty seem to have been seeking to account and atone for their past enterprises and endeavors: paper as the nightmare from which they were trying to awake.

  If for writers, philosophers and former pop stars paper money presents a disturbing and destabilizing challenge, for others it presents an obvious opportunity. In early 1861, for example, two opportunistic English con artists, William Burnett—aka Harold Tremayne, aka Bill Day, aka Bill Jackson—and his mistress, Ellen Mills—aka Ruby Tremayne, aka Ellen Day, aka Mary Day, aka Mary Williams, aka Emma Davey, aka “Flash Emma”—found themselves recently released from jail and staying at an inn, The Plough, in Whitchurch in Hampshire. Whitchurch, as it happened, was the home of many of the workers from a famous paper mill, Portal’s, in nearby Laverstoke. And Portal’s, by good fortune, was the supplier of paper to the Bank of England. As luck would have it, one evening Burnett and Mills met a man named Harry Brown, who was the assistant carpenter at the mill. Brown and Mills soon became lovers, and in April 1861, at Mills’s request, Brown risked his job by stealing some plain, unglazed banknote paper. At which point, the poor man’s fate was sealed: he had fallen into the trap; he was the mark, the patsy, the stooge, the sucker, the gull, the pawn, the pigeon and the chump. Burnett, through Mills, had him in his grasp, and he duly began to squeeze. He blackmailed Brown into stealing more sheets; the paper supply began to flow. Even when Brown was discovered by another worker at the mill, an assistant mold maker named Richard Brewer, Burnett was able to turn this to his advantage: he bought Brewer’s silence, and so acquired two inside men. All he needed now was some help in turning the precious paper into money.

  By the summer of 1862, after trawling the pubs and taverns of the land, Burnett had found his gang of accomplices: Robert Cummings, aged ex-con, and an electroplater and gilder, met at The Feathers on Smith Street in Westminster; James Griffiths, an engraver and copper-plate printer, met at The Bull’s Head in Birmingham; Henry Williams, another engraver, of St. Paul’s Road, Kennington Park; and George Buncher, who ran a butcher’s shop in Westminster, but who also acted as a receiver and fence for counterfeit money. Between them, Burnett’s posse of paper thieves managed to smuggle out hundreds of sheets, and produced thousands of notes of varying denominations. But their enterprise was short-lived: the theft of paper from the mill was soon discovered, and by the end of 1862 the police had rounded up the gang. The trial was held at the Old Bailey in January 1863—“Regina v. Griffiths and Others.” Ellen Mills had already been discharged at the committal hearing—it had been decided that she had been acting “under the influence of her husband or the man with whom she was co-habiting.” The forger, Griffiths—who may in fact have been the instigator and leader of the whole plot, the Keyser Söze—was sentenced to life imprisonment. The fence, Buncher, was sentenced to twenty-five years. Burnett received twenty years. Williams, the engraver, got off lightly with four years. Cummings was merely cautioned, and Harry Brown had turned Queen’s evidence and therefore escaped prosecution. Richard Brewer was acquitted. A leader article about the case of “the precious paper of Laverstoke” in The Times on January 13, 1863, concluded, “the truth is . . . the paper is the thing . . . the product was as much a piece of secret art as the paste of Sevres or Dresden. It has never been successfully imitated and, until now, has never been purloined.”

  Paper money is the embodiment of capitalism, so it’s perhaps hardly surprising that the purloining of paper money is or has been a capital offense. In England, the death penalty for banknote forgers was introduced in 1725, and between 1797 and 1829 more than six hundred people were hanged for forging or for circulating forged notes. The death sentence was repealed in 1832—saving Griffiths, Burnett and co. from almost certain death—but severe penalties continue to apply to purloiners, fakers, fabricators and knockoff merchants. In many countries it’s illegal merely to handle, never mind to produce, paper that’s similar to that used in currency production. (De La Rue, the company that prints banknotes for the UK and many other countries, uses specially manufactured paper, and complex intaglio print processes, and microprints, and watermarks, and ultraviolet features, and foil patches, and holographs, and any number of other security features to guarantee its products, but of course this doesn’t deter determined counterfeiters: in 2009, according to Bank of England figures, over half a million counterfeit notes were in circulation in Britain.) If governments wish to take up counterfeiting, however, it’s a different matter.

  Banknote forgery has always been a part, and continues to be a part, of economic warfare: in the eighteenth century Britain was producing forgeries of the currencies of several of the American colonies; Napoleon printed Austrian notes during his occupation of Vienna in 1806; and during World War II, in the famous Operation Bernhard, Nazi Germany managed to flood the UK with an estimated nine million counterfeit notes. During the recent Gulf wars, the ongoing so-called “war on terror” and the Arab spring, rumours and reports of counterfeit dollars, dinars and afghanis circulated like counterfeit dollars, dinars and afghanis. Pakistan floods India with forged notes. North Korea apparently specializes in bogus $100 bills. Governments have the advantage here over amateurs and crooks, because forgery is not as easy as it looks: photocopying doesn’t really work with money, and the traditional schoolboy method of soaking paper in tea, putting it in the oven and rubbing dirt into it is not a convincing aging process. (Though in his highly reliable history of forgery, Forging History: The Detection of Fake Letters and Documents (1994), Kenneth W. Rendell—one of the experts who helped unmask the Hitler diaries hoax—points out that many forged documents of all kinds are in fact of poor quality and stand up to little scrutiny. A forgery of an autographed note by John F. Kennedy, for example, of his famous remark, “Ask not what your country can do for you, but what you can do for your country”—part of his inauguration address in 1961—was written on genuine White House stationery, watermarked 1981.)

  Paper money, real or fake, is actually only one facet or component of the relationship between paper and money: there is also the complicated matter of account books, ledgers, and all the other ways that banks, building societies, insurance companies, small and large businesses, governments and individuals have of recording debts and credits and trade on paper. One of the first people ever to take his account books seriously was the great one-legged potter, inventor, industrialist—and the grandfather of Charles Darwin—Josiah Wedgwood. Having founded his own pottery in 1759, Wedgwood’s business went from strength to strength, until the early 1770s, when demand slumped and production costs increased. Wedgwood immediately undertook a kind of primitive cost accounting analysis, examining his books and ledgers, and discovered not only inefficiencies but also evi
dence of embezzlement; his prompt action preserved the business for generations to come. Paperwork had saved the day.

  In an unexpectedly thrilling article about paper-based accounting and business systems in the British Association of Paper Historians’ indispensable journal, The Quarterly (no. 61, January 2007), the appropriately named Andrew Gold trawls through vast treatises on accounting and company archives, and stationers’ catalogues of loose-leaf ledgers, to show exactly how “the account book is a good example of the versatility of paper.” Versatile, true, but slowly dying. Lamenting the demise of the great paper-based accounting systems, including the products of Twinlock, one of the giant stationery and office-supply manufacturers, Gold notes that “The site of Twinlock’s head office and factory is now the car park for a Tesco supermarket.”