In England, counterfeiting was a treasonous act. The American colonies differed widely in their attitude towards counterfeiting. New York, for example, applied the death penalty, while Connecticut limited punishment to six months in jail. During the Revolution, the British counterfeited state and continental paper scrip to depreciate the currency.

At the Constitutional Convention, Gouverneur Morris voiced concern that “[b]ills of exchange . . . might be forged in one State and carried into another.” Another delegate feared that the counterfeiting of “foreign paper” might embarrass foreign relations. Consequently, when Oliver Ellsworth moved to allow Congress the power to punish “counterfeiting the securities and current coin of the U. States,” it was unanimously approved. Yet in light of the Necessary and Proper Clause, it is not clear why there was a need for this power to be defined in the Constitution at all. Justice Joseph Story later declared in his Commentaries on the Constitution of the United States (1833) that “this power [to provide for the punishment of counterfeiting] would naturally flow, as an incident, from the antecedent powers to borrow money, and regulate the coinage; and, indeed, without it those powers would be without any adequate sanction.”

Nonetheless, there are three reasons why a separate delegated power to punish counterfeiting is appropriate. First, the Framers took pains to undo the British law on treason, which included counterfeiting and was often punished by parliamentary bills of attainder. Thus, the Constitution defines the crime of treason in terms that leave Congress no power to expand it. The Constitution also prohibits bills of attainder. But the Framers did want authority over the remaining formerly treasonous crime of counterfeiting to be left in the hands of the national legislature. Otherwise, having denied Congress the power to define treason, it might be inferred that the Constitution also denied Congress the power to legislate against counterfeiting.

Second, the Framers lodged all the incidents of the foreign-affairs power in the national government. Counterfeiting of foreign securities was a serious breach of international comity. The clause empowers Congress to deal with an important element of the nation’s international obligations.

Third, the clause betokens federal supremacy in the field of monetary policy. In The Federalist No. 42, James Madison includes the power over counterfeiting as among those powers “which provide for the harmony and proper intercourse among the States.” The implication is that, like commerce, the power over counterfeiting is exclusive and plenary. Justice Joseph Story was explicit: “this power would seem to be exclusive of that of the States, since it grows out of the Constitution, as an appropriate means to carry into effect other delegated powers, not antecedently existing in the States.”

In the hands of the judiciary, however, the power became limited and eventually superfluous. In Fox v. Ohio (1847), the Supreme Court upheld an Ohio law that punished the “passing” or “uttering” of counterfeited money. The Court reasoned that the actual act of counterfeiting was an offense directed at the federal government, whereas uttering counterfeited money was a “private harm” within a state’s police power. Moreover, the Court noted, England had distinguished between the two offenses, making counterfeiting a treasonous offense, but the passing or “uttering” of counterfeit coin was neither “treason nor misprision of treason.” As the Supreme Court of South Carolina explained in State v. Tutt (1831): “The offence against the Government of the United States consists in discrediting its currency. That against the State in defrauding its citizens. The offence against the State is certainly of the more palpable and dangerous character.” The result is that although the federal government has exclusive power to punish the actual act of counterfeiting, states have the concurrent power to punish the passing of counterfeited currency. The federal and state governments possess concurrent power to punish the possession of devices for making counterfeited money. Baender v. Barnett (1921).

In cases upholding the right of Congress to punish counterfeiting coinage, United States v. Marigold (1850), and counterfeiting foreign currency, United States v. Arjona (1887), the Court justified Congress’s power under the Coinage Clause, the Necessary and Proper Clause, the Commerce Clause, and the Counterfeiting Clause. In practical terms, there seems little if any activity that can be reached under the Counterfeiting Clause that could not also be reached by other congressional powers. The Court, however, does apply the First Amendment as a limit to legislation passed under the Counterfeiting Clause. In Regan v. Time, Inc. (1984), the Court struck down a portion of the statute permitting limited reproduction of United States currency “for philatelic, numismatic, educational, historical, or newsworthy purposes” as being content-based.

Congress passed the first anti-counterfeiting statute in 1790. The current federal prohibition on counterfeiting is found in 18 U.S.C. §§ 470–513 (2004), which generally provides for an unspecified fine or imprisonment of not more than twenty years, or both, for its violation.