History of Canadian Paper Money, Part 1

Posted on 9/18/2018

Canadian currency is an excellent way to discover the country's rich history.

The population of Canada is ranked 36th in the world. Yet here at PMG, Canada’s notes are in the top ten when it comes to the most notes graded from a specific country. The long history of the nation, especially when considering the atypical establishment of its government, contributes to the collectability of Canadian notes.

In the 17th century, Canada (New France at the time) struggled with the fluctuation of power along with the proper backing to support its currency. Early money that circulated in Canada such as Playing Card Money, made people very weary of foreign government-backed money.

The “government issued currency” was hard to redeem and eventually became worthless as people soon realized that France couldn’t support its debts.

The Seven Year War was won by Britain in 1763—defeating the French—and France gave up its rights to New France. Soon after, to deal with a dynamic population of English and French, Britain split its land into Upper and Lower Canada with a constitutional act in 1791.

In the 1800s, currency started to circulate throughout Upper and Lower Canada by army bills used to pay for the War of 1812. These bills were hard to redeem and only had a short grace period; even more fleeting than the short life of Playing Card Notes. This would not suffice for an economy.

To fulfill the need of local trade, provinces, private banks and some municipals began to issue their own form of currency. Provinces issued treasury notes, but they were plagued with debt, and locals found them difficult to use. Municipalities such as Toronto and St. John supplied their own currency to pay for public works and to circumnavigate local private banks. Private Banks were the core of supplying the means of exchange to residents in the 19th century for Canada. Small banks began to dominate the area by being more stable than the debt-ridden government and soon grew to oppose a centralized government currency.

1850 £1 Newfoundland, Goverment Treasury Note
PMG graded Fine 12 Net
Click image to enlarge.

The Act of Union in 1840 combined upper and Lower Canada into a cohesive unit established as the Province of Canada.

In 1841, Canada tried to provide its own government issue but was thwarted by the private banks’ lobbying. The banks knew that if they allowed the government to provide its own currency, they would lose their power. Luckily for the private banks, there was much opposition to the idea.

Once again in 1860, Canada looked for a way to provide its own means of exchange but was dismissed. In 1866, Canada pursued making its own currency to help alleviate the mountain of debt it had acquired, but this time, the Montreal Bank allowed itself to distribute Province of Canada Notes.

The province had won a small victory of issuing its own currency, but shortly after in 1867, the Canadian confederation joined Nova Scotia, New Brunswick, Quebec and Ontario, turning into the Dominion of Canada. The province notes were still issued even after the confederation was formed, making the first issues of the Dominion ironically printed with Province of Canada on them.

1866 $1 Canada, Province of Canada
PMG graded Very Fine 20 Net
A Dominion of Canada note printed with Province of Canada.
Click image to enlarge.

The Dominion of Canada brought about serious changes for private banks and their note-issuing privileges. To find out the fate of the banks in these shifting times and to learn more about the history of the Canadian Dollar, look for part two of this article next month.

Sources

  • bankofcanada.ca/wp-content/uploads/2010/07/1841-71.pdf
  • Charlton Canadian Government Paper Money by R.J. Graham

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