Chicago in 1842 was a growing frontier town of 1,200 hardy people and some two dozen businesses, packed along muddy rutted streets with cattle herded on them to slaughterhouses and reeking gutters filled with garbage. Robbie Fergus, an old Glasgow friend who had settled there, let the couple stay in one of his rooms and helped Pinkerton find a job at Lill's Brewery, at the corner of Pine Street and Chicago Avenue, working for fifty cents a day making beer barrels as a cooper.
Fed up with how little money he took home after a year of slaving away at Lill's, Pinkerton moved thirty-eight miles northwest to Dundee, a settlement of some three hundred Scots and their dairy farms on the scenic Fox River in Kane County, Illinois. Dundee had a few country stores, a post office, several blacksmith shops, a mill, and two small taverns. Pinkerton built a one-story frame cabin at the edge of the village on a grassy knoll near a wooden bridge spanning the river and became the town's only cooper. Waking each morning at four thirty and laboring seven days a week, he built the business up with eight apprentices on his payroll by 1847, offering quality work at a lower cost for area farmers fed up with Chicago's high prices for barrels and churns. In 1846, Joan delivered their first child, William. Five would follow. Pinkerton named them all without consulting her.
A life-changing event occurred in June 1846. Always looking for ways to save money, Pinkerton poled his raft to a small island on Fox River a few miles above Dundee to cut wood for his barrel staves instead of buying them. He discovered hidden in the island's forest later that night what would turn out to be a band of counterfeiters hammering out coins around a roaring fire. Pinkerton hurried back to Dundee and told Luther Dearborn, Kane County's sheriff, who together with Pinkerton staked out the campsite for a night. Dearborn eventually brought in a posse and arrested the counterfeiters with their bag of bogus dimes.
Pinkerton became a local celebrity after the bust. Dearborn began dropping by to solicit his advice on cases. The next month, two Dundee merchants, Henry Hunt and Increase C. Bosworth, talked Pinkerton into trying to catch another counterfeiter. Wildcat bank currency was a problem in the rural Midwest. Laws regulating the national currency did not cover the growing number of states and independent institutions that issued banknotes backed by their gold reserves. Unreliable currency flooded the region and counterfeiters made the problem worse by printing phony versions of the bills these institutions issued. Little money circulated in Dundee—a barter system covered most transactions—but one institution that did issue high-quality currency in Kane County was George Smith's Wisconsin Marine and Fire Insurance Company, which had secured banking privileges in that state and had a branch in Chicago. His bills were nicknamed "George Smith's money." The Dundee merchants wanted Pinkerton to catch the scoundrel who had passed at least two phony ten-dollar bills of George Smith's money in Dundee. Pinkerton, who had never seen a bill as high as ten dollars, met and began ingratiating himself with the man the merchants suspected was the counterfeiter—John Craig, a tall, well-heeled, and swarthy-looking
newcomer in his sixties who said he was from Vermont.
For a barefoot cooper in overalls, Pinkerton hatched an elaborate sting to try to catch Craig, eventually showing up with $125 of the merchants' silver as bait to buy fifty of Craig's bogus $10 bills. But the trap Pinkerton set ended up failing. The wily Craig, who always had surrogates do the dirty work so he could not be directly linked to the counterfeit money, eventually was arrested but he managed to escape from jail after bribing an officer. When Pinkerton visited the irascible George Smith in Milwaukee to be reimbursed at least for the time he spent running off Craig, the bank president griped but paid, warning that if the upstart cooper ever played detective again without his authorization, he wouldn't get a dime from George Smith. Pinkerton learned a hard lesson: always have a written contract before you take a case.
Pinkerton moved back to Chicago in 1848. He had become restless and Dundee had grown too conservative for his tastes. After chasing John Craig, he had taken a job on top of his cooper's business as a part-time Kane County deputy sheriff, but when he ran for sheriff on an abolitionist ticket in spring 1847 and the next year ran as a candidate on the Liberty Party ticket for the state's constitutional convention, Dundee's Baptist Church minister fiercely campaigned against him, accusing him of being a drunkard and an atheist. Pinkerton was not a drunkard but he was an atheist. He lost both elections.
In the five years Pinkerton had been away, Chicago had exploded to nearly 30,000 people, with new residential homes, business houses, hotels, and theaters being built, rail connections arriving, and ships lining up at the shores of Lake Michigan. Pinkerton, whose Dundee policing had made him well known around the state, became a deputy sheriff in Cook County, whose seat is Chicago. He built a two-room, clapboard frame house, painted white, on Adams Street near the lakeshore for his family. Pinkerton became the law enforcement agency's first detective, earning a reputation as a tough, fearless, and honest lawman, which in Chicago could be dangerous. While he walked up Clark Street one night to his home, a pistol-wielding thug he had likely once rousted shot him in the left arm.