First it was steel, then autos, and now those twin plagues of contemporary American business, inflation and foreign competition, have struck another venerable U.S. industry: counterfeiting.
H. Stuart Knight, director of the Secret Service, an agency that pursues counterfeiters when it is not busy protecting presidents, told a House subcommittee the other day that 20 percent of all fake bills that entered circulation in the United States last year were manufactured overseas. The import problem has become so serious that the service has asked the State Department for permission to open a permanent investigating office in Colombia, which is by far the chief foreign producer of illegal U.S. money.
In addition to the $1 million in Colombian counterfeit found in the United States last year, Knight said, the Secret Service and Colombian authorities seized $15 million in false U.S. currency at three printing plants in Colombia. One of the plants was a bilingual operation where phony U.S. and Colombian bills were being printed side by side, he said.
Knight noted that both foreign and domestic counterfeiters have shifted their modus operandi, apparently because of inflation, to printing more large-denomination bills than ever. The result was that last year, although the number of fake bills seized was nearly the same as the year before, the face value of counterfeit money recovered "amounts to a 20 percent increase over the same totals for fiscal year 1979, which was a banner year in itself."
In fiscal year, 1980, the Secret Service reported, $60.8 million in counterfeit U.S. currency was seized. About $5.5 million was found after it had entered the money stream; the remainder was captured at clandestine printing plants, 78 in the United States, three in Colombia, and a few others, mainly in Europe.
The impact of inflation shows clearly in the listing of the counterfeiters' most popular bills. Knight said that a long-time favorite, the $20 bill, is less attractive to counterfeiters today and that the number of fake $20 bills uncovered last year marked a 5 percent drop from 1979. The number of counterfeit $100 bills increased in 1980 by 69 percent over 1979, and false $50 bills increased by 40 percent.
Knight noted that production of $100 bills can be more profitable than printing the $20 version. But another Treasury Department official said the use of bigger bills can also increase a counterfeiters' chance of getting caught, because outside of certain subcultures a $100 bill is still an oddity to most people and gets closer examination than a smaller note.