Canada – Currency

In the early days of the French régime, beaver skins served as a currency in Canada, and in 1669 wheat was declared a legal tender, at four francs for three French bushels. In 1774 moose skins were declared a legal tender, at the current market rate. It was customary for the troops to be paid in January of each year. Since money, for such purpose, was often late in arriving, the idea was conceived of issuing what was known as ” card money ” in bills of three values, four francs, forty sols, and fifteen sols. Issues of this card money were also made in 1691, 1692, and at intervals thereafter until 1714, when, as the amount had risen to about two million livres, and the redemption had not been regular, they fell into discredit. A settlement was however arrived at, and the issue of card money was renewed in 1717, and continued until 1759, when, by a decree of France, the payment of expenses for the colony was stopped. Various proposals were made to the French Government for a just settlement, but many obstacles were thrown in the way. The holders eventually had to accept stock in the French funds, which had then fallen to 24 per cent. below par in the London market, which stock at first bore interest at four per cent., and afterwards at 4 1/2 per cent. After the final withdrawal of the card money, the colonists were compelled to use what specie they could get in order to make their payments. This, however, was frequently not to be had, and it is recorded that they had often to give promissory notes, which were circulated from hand to hand.

One of the first Acts of the British after the acquisition of the Dominion, was to pass an Act in 1764, laying down values for such coins as were in circulation. This legislation was, however, repealed a few years later, the reason being that the coins were so clipped and worn that it was not possible to establish any relative value for them. In 1796 the Legislature of Upper Canada passed an Act for the better regulation of coins current in the province, and by this Act certain coins of various countries, including Portugal, America, Great Britain, Spain and France, were made legal tender at specified values. A similar Act had been previously passed by the Province of Lower Canada. In the year 1812, what were known as ” Army Bills ” were issued. This was the first authorised paper issue since Canada became a British possession. These bills were issued for the purpose of supplying money for the prosecution of the American war, and in August, 1812, the Legislature of Lower Canada passed an Act providing for the issue of bills to the value of 250,000 dollars. It was provided that they should be issued in denominations of 4.00 dollars and 25.00 dollars and upwards, and it was provided in the draft Bill that they should bear interest at the rate of fourpence per hundred pounds per diem. Various other Acts were passed authorising further issues. The amount stood finally at L 3,441,993 in 1817, in which year all these Acts were repealed, and liquidation took place. These Army Bills, though none too favourably received at first, seem to have become popular, and to have supplied a long-felt want.

In Lower Canada, in 1819, French gold and silver coins were admitted to unlimited legal tender. By this action, silver French coins were practically made the standard of value in Lower Canada, while, in Upper Canada, the Spanish dollar and its sub-divisions answered the same purpose. About this time another factor in the circulating medium made its appearance in the form of bank notes. The increase of these was constant and, in 1828, they had increased so in value that specie was a very uncommon sight. At this time there was a great quantity of American paper circulating in Canada.

In 1834 the United States passed to a gold standard, which had the effect of draining Canada of gold. Owing to the presentation of a great number of notes by the agents of United States banks in 1837, the Canadian banks were so depleted that many of them (at least, the Lower Canadian banks) were forced to suspend specie payments. Parliament was summoned to allow the banks in Upper Canada to suspend specie payments. This motion, however, was successfully opposed by Sir Francis Bond Head, and the banks were carried through the crisis.

About this time the issues of notes by private bankers and firms had reached alarming proportions ; so much so that, in 1837, an Act was passed by the Legislature of Upper Canada, limiting the issue of notes to authorised banks only, and a similar Act was passed by Lower Canada in 1839. On the two Canadas being united in 1840, an Act was passed repealing all past legislation dealing with currency, and creating as the new basis a pound currency. It was provided by a measure passed in 1851 that accounts might be rendered either in sterling, or in dollars and cents. This was, however, repealed in 1857, and it was made compulsory to render accounts in dollars and cents.

On December 10th, 1858, the first purely Canadian coins were struck at the Royal Mint in London ; they were of twenty, ten and five cent pieces in silver, and one cent in copper. The issue of these coins came as a great boon to the people of Canada, as, previously, the means for giving change were utterly inadequate. An Act respecting the currency was passed in 1868, which, conditionally on the United States adopting a basis agreed upon by an International Monetary Conference held in Paris in 1867 that the American five dollar gold coin should be made of the same value as the French gold coin of twenty-five francs, provided that the denomination of money in the currency of Canada should be pounds, shillings, pence, dollars, cents and mills, the pound, shilling and penny to have the same proportionate value as in the currency of the United Kingdom, and the dollar to be one-fourth of a pound currency, the cent to be one-hundredth of a dollar, and the mill one-tenth of a cent.

The equivalent of the pound currency was fixed and it was held that the British sovereign should be held to be equal to five dollars and four cents and one-third of a cent currency, and it was also provided that the half eagle of America should pass current and be a legal tender at the rate of five dollars. This measure did not come into effect, and in 1871 an Act was passed to ensure one uniform currency for the Dominion. This Act provided that the currency of Nova Scotia should be the same as the provinces of Ontario, Quebec and New Brunswick, and that the denomination of money in the currency of Canada should be dollars, cents and mills, the cent being one-hundredth part of a dollar, and the mill one-tenth of a cent ; that the British sovereign should pass current for four dollars, eighty six cents and two-thirds of a cent, and the half sovereign for one-half the said sum. It was also laid down that the gold eagle of America, while its standard of fineness should be maintained, should pass current in Canada, and be a legal tender of ten dollars.

A New Currency Act, repealing all previous legislation on the subject, was passed during the session of 1910. It provides that gold, silver and bronze coins, of specified weight and fineness, struck on the authority of the Crown for circulation in Canada, should be equal to and pass current for the following sums in the currency of the Dominion :—Twenty dollars, ten dollars, five dollars, two and one-half dollars, fifty cents, twenty-five cents, ten cents, five cents and one cent ; that gold coin should be a legal tender for any amount, silver coin for a payment of not more than ten dollars, and bronze for a payment of not more than twenty-five cents. The British sovereign and half-sovereign were legalised as currency, as were the gold coins of the United States of America, the five dollar, ten dollar and twenty dollar coins being declared to be a legal tender and to pass current in Canada for similar amounts. The Governor in Council may, by proclamation, fix the rates at which any foreign gold coins may pass current and be a legal tender. He is also empowered, by proclamation, to determine the size of and design for any coin ; to determine the weight below which coins, when diminished in weight through various causes, are not to be deemed a legal tender, and to make regulations under which such coins may be redeemed.

In the year 1901 a branch of the Royal Mint was established at Ottawa, and, at the present time, all coinages of the Dominion are manufactured at that establishment.