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Canadian pound currency
| Unit | Plural The pound currency (symbol £) served as the unit of account within the Canadian colonies under British rule, specifically from the British conquest of New France around 1760 until its eventual replacement by the Canadian dollar in 1858. This system was prevalent across various administrative entities, including the French colony of Canada during its brief period under British military governorship, the subsequent Province of Quebec (1763–1791), and later both Lower and Upper Canada (1791–1841), culminating in its use within the united Province of Canada (1841–1867).
It's crucial to understand that this "pound currency" was not a tangible, circulating currency in the modern sense. No coins or banknotes explicitly denominated in "Canadian pounds" or its subdivisions were ever minted or issued by a central monetary authority. Instead, it functioned purely as an accounting framework, a theoretical construct for valuing the diverse array of foreign specie that actually circulated through the colonial economy.
The system was subdivided in a manner familiar to the British system: 20 shillings (s), with each shilling comprising 12 pence (d). However, these were merely nominal divisions. The actual value of these units was determined by locally established exchange rates against the foreign coins in circulation. These 'ratings' were anything but static, shifting over time and by region, creating a fascinating, if somewhat chaotic, financial landscape.
The most widely adopted and influential of these local valuations was the "Halifax rating," which was first established in Halifax, Nova Scotia during the 1750s. This rating declared one Spanish dollar to be equivalent to five shillings "Halifax currency." This valuation notably represented a premium of sixpence over the standard British tests conducted around 1703, which had determined that an average Spanish dollar coin's silver content was equivalent to 4 shillings and 6 pence sterling. The practice of overvaluing foreign coins in colonial contexts was a deliberate strategy. It was intended to encourage the circulation of these much-needed foreign coins within the colonies, preventing them from being immediately repatriated or melted down. Consequently, the Canadian pound currency, as an abstract unit, was never at par with the actual British pounds sterling. This divergence highlights the practical realities of colonial economies, often operating under their own rules, even if nominally tied to imperial standards.
History
In British North America, the ubiquity of Spanish dollars in daily commercial transactions was undeniable. These durable silver coins, minted primarily in Spanish colonial mints, had become the de facto international currency of the era, flowing readily through trade routes. To integrate these foreign coins into their existing accounting systems, which were predominantly based on pounds/shillings/pence, the various colonies had to assign a fixed valuation to the Spanish dollar relative to their local pound unit. This led to a patchwork of disparate valuations across the colonies, a testament to their individual economic pressures and priorities. For instance, in the mid-18th century, while one Spanish dollar was officially valued at 4 shillings 6 pence in Britain, it commanded 5 shillings in Halifax, 6 shillings in New England, 7 shillings 6 pence in Pennsylvania, and a staggering 8 shillings in New York. These variations, while seemingly arbitrary, reflected local supply and demand dynamics, as well as deliberate efforts to attract and retain coinage.
The financial stability of New France began to unravel dramatically during the Seven Years' War. The escalating military expenditures of the French forces, coupled with the sustained war effort, necessitated the colonial government's issuance of vast quantities of paper bills of exchange. This rudimentary paper money, issued without sufficient backing, became increasingly precarious. The inevitable blow came on October 15, 1759, when the French government decreed a suspension of payments on bills of exchange drawn on the colonial treasury. The news of this catastrophic financial collapse, though delayed until June 1760, plunged New France into immediate and profound financial panic.
Following the French failure to retake Quebec City, the British military governor, General James Murray, moved swiftly to stabilize the nascent British administration. He decisively forbade the circulation of the now-worthless French paper money and introduced the "Halifax currency" system to Quebec City. As General Amherst's army subsequently captured Montreal, effectively bringing all of New France under British control, he similarly implemented the "York currency" system in Montreal, with Burton following suit in Trois-Rivières. Both these systems valued the Spanish dollar at eight shillings.
However, the establishment of a unified monetary system was far from immediate. In 1763, Murray was appointed the civil governor of the newly formed Province of Quebec. He attempted to introduce a distinct "Quebec rating" of six shillings per dollar, effective January 1, 1765. This new rating, however, proved difficult to enforce. The existing Halifax and York ratings, deeply entrenched in local commerce, persisted alongside Murray's new valuation. This monetary muddle continued until 1777, when the Quebec rating was finally repealed, and the Halifax rating was officially adopted across the entire province, bringing a measure of consistency, if not simplicity, to colonial finance.
A rather ill-fated attempt to standardize currency across the British Empire occurred in 1825. An Imperial Order-in-Council was issued with the commendable, if somewhat naive, goal of encouraging sterling coinage to circulate throughout the British colonies. The directive aimed to make sterling coins legal tender at an exchange rate of 4 shillings 4 pence per Spanish dollar. Unfortunately, this rate was spectacularly unrealistic, failing to account for the actual market value and the colonial preference for the Spanish dollar. The consequence was precisely the opposite of what was intended: rather than promoting sterling, it effectively drove out the minimal amount of sterling-specie coinage that was already in circulation, as merchants would hoard the undervalued sterling or export it for profit. Remedial legislation was eventually introduced in 1838 to address this economic blunder, but it was conspicuously not applied to the British North American colonies, a decision likely influenced by the recent uprisings in Upper and Lower Canada, which understandably preoccupied imperial authorities.
By 1841, the Province of Canada, having weathered its internal strife, decided to implement a more robust and uniform monetary system. This new framework was explicitly based on the established Halifax rating. Under this system, the Canadian currency was pegged to the value of 4 U.S. dollars, which corresponded to 92.88 grains of gold. This revaluation had significant implications for the relationship with sterling: one pound sterling was now considered equivalent to £1 4 shillings 4 pence Canadian. Conversely, the newly defined Canadian pound was worth approximately 16 shillings and 5¼ pence sterling. This established a clear, albeit complex, conversion rate, and it was under this Halifax-based unit that the earliest Canadian postage stamps were denominated, marking a tangible step toward a more distinct Canadian financial identity.
The 1850s were characterized by a protracted and often contentious debate over the future of Canada's monetary system. The central question was whether to cling to the traditional £sd system or to embrace a decimal monetary system, specifically one aligned with the U.S. dollar. Local traders and merchants, driven by the sheer pragmatism of an ever-increasing volume of trade with the neighboring United States, expressed an overwhelming desire to integrate the Canadian currency with the American unit. This would simplify transactions, reduce conversion costs, and generally make life easier for anyone engaged in cross-border commerce. However, the imperial authorities in London, ever vigilant in their efforts to maintain control and uniformity across the empire, held a strong preference for sterling to be the singular currency throughout the vast British Empire.
In an attempt to bridge this ideological divide, the Canadian parliament passed an act in 1851. This legislation aimed to introduce an £sd unit alongside a system of decimal fractional coinage. The innovative aspect was that these proposed decimal coins would be designed to correspond precisely to exact amounts in relation to the U.S. dollar's fractional coinage, offering a hybrid solution. However, London, ever the meticulous gatekeeper, refused to grant consent to this act, citing "technical grounds." Their underlying hope, of course, was that this refusal would ultimately push Canada towards a purely £sd currency. Undeterred, or perhaps simply exhausted, a compromise was proposed to the Canadian legislature: a new currency system featuring three new decimal units. This rather elaborate proposal suggested that 10 "minims" would be worth 1 "mark," 10 "marks" worth 1 shilling, and 10 shillings worth 1 "royal." Under this convoluted scheme, a "mark" would have been valued at 1⅕ pence, and a "royal" would have been equivalent to two crowns or half a pound. One can only imagine the sheer joy this would have brought to the average shopkeeper.
Fortunately, this contrived and impractical blend of decimal and sterling currency was eventually abandoned. In 1853, a more sensible act of the Legislative Assembly introduced the gold standard into Canada. This crucial legislation allowed for government accounts to be kept in a more flexible manner, accommodating pounds, shillings, pence, dollars, and cents. This gold standard unequivocally re-affirmed the value of British gold sovereigns, setting them at £1 4 shillings 4 pence in local currency, consistent with the 1841 valuation. Furthermore, the American gold eagle was officially valued at 4.86⅔. While the 1853 act provided for these valuations, it did not immediately introduce new Canadian coinage. Instead, American gold eagles and British sterling gold and silver coinage were declared legal tender, while all other silver coins were explicitly demonetized.
The final nail in the coffin for the Canadian pound came in 1857, with an amendment to the Currency Act. This amendment decisively abolished the practice of keeping accounts in pounds and removed sterling coinage's status as legal tender. In its place, a new decimal coinage system was introduced in 1858, featuring 1¢, 5¢, 10¢, and 20¢ coins, all set at par with the U.S. dollar. This move was further cemented by the issuance of postage stamps with decimal denominations for the very first time in 1859. Despite these significant changes, British gold sovereigns and other gold coins continued to hold their status as legal tender, providing a lingering connection to the imperial monetary past.
The shift to a decimal system was not an isolated event in the Province of Canada. New Brunswick soon followed suit, adopting a decimal system pegged to the U.S. dollar in November 1860. Nova Scotia also decimalized and introduced a dollar in 1860, though with a slight difference: the Nova Scotians set their dollar's value at 4.86⅔ adopted by Canada, reflecting a subtle regional variation in their approach to monetary alignment.
Newfoundland embarked on its own path, introducing the gold standard in conjunction with decimal coinage in 1865. Distinct from the Provinces of Canada and New Brunswick, Newfoundland chose to base its unit on the Spanish dollar rather than the U.S. dollar, setting its value at 1 = 4s.2d.) over its Canadian (1 = 4/–) counterparts. Notably, Newfoundland holds the unique distinction as the only part of the British Empire to introduce its own gold standard coin – a Newfoundland gold two-dollar coin, which was minted intermittently until Newfoundland finally adopted the Canadian monetary system in 1895, a decision largely prompted by the severe Newfoundland banking crash.
The year 1867 marked a pivotal moment in Canadian history, both politically and monetarily. The Provinces of Canada, New Brunswick, and Nova Scotia united to form the federation known as the Dominion of Canada. With this political consolidation came monetary unification, and their three distinct currencies were merged into the singular Canadian dollar, laying the foundation for the modern Canadian monetary system.
Even after Confederation, the process of monetary integration continued. In 1871, Prince Edward Island transitioned to a decimal system, introducing a dollar that was pegged directly to the U.S. and Canadian dollars, and began issuing its own 1-cent coins. However, this independent currency was short-lived. The currency of Prince Edward Island was absorbed into the broader Canadian system shortly thereafter, when the island joined Canada in 1873, completing the monetary consolidation across the major eastern provinces.
Coins
During this transitional period, actual physical coinage issued by local authorities was primarily in the form of copper tokens, rather than standardized currency. Both Upper Canada (Canada West, which corresponds to modern southern Ontario) and Lower Canada (Canada East, now southern Quebec) participated in the issuance of these tokens.
Between 1835 and 1852, several prominent financial institutions in Lower Canada took it upon themselves to mint and circulate these essential small-value coins. The Bank of Montreal, La Banque du Peuple, the City Bank, and the Quebec Bank all issued 1- and 2- sou tokens, which were equivalent to ½ penny and 1 penny respectively. These tokens filled a critical void in the daily economic life of the colony, facilitating small transactions when official coinage was scarce or impractical. Similarly, in Upper Canada, the Bank of Upper Canada issued its own ½ penny and 1 penny tokens during the period between 1850 and 1857, reflecting the persistent need for localized currency solutions across the provinces. An example of such a token is the 1d (2 sous) bank token issued by the City Bank in Lower Canada in 1837.
Banknotes
While physical coins were largely localized tokens, banknotes played a more significant role in larger transactions. Notes issued by the various chartered banks were particularly interesting in their dual denomination system. These notes typically displayed their value in both dollars and the traditional pounds/shillings format. The conversion rate employed on these notes was consistently set at £1 = 1 = 5 shillings = 120 sous = 6 French livres. This multi-layered denomination was a pragmatic acknowledgement of the diverse accounting practices and preferences prevalent across the colonies.
A multitude of banks engaged in issuing these banknotes, with the Bank of Montreal notably leading the charge, having begun its issuance as early as 1817. For a more exhaustive understanding of these financial instruments, one might consult resources on Canadian chartered bank notes. The denominations of these banknotes were varied, reflecting the range of transactions they were intended to facilitate. Common values included 5 shillings, 10 shillings, 15 shillings, £1, £1¼, £2½, £5, £12½, and £25.
Beyond these larger denominations, a more ephemeral form of paper money, known as "scrip" notes, was also issued in 1837. These were small-value notes, primarily intended for minor transactions. The Quebec Bank issued scrip in denominations of 6 pence (12 sous), ¼ dollar (30 sous, or 1 shilling 3 pence), and ½ dollar (60 sous, or 2 shillings 6 pence). Arman's Bank also contributed to this temporary paper currency, issuing notes in 5 pence, 10 pence, and 15 pence (equivalent to 10, 20, and 30 sous). These scrip notes underscore the constant struggle for adequate circulating medium in the colonial economy, often necessitating ad-hoc solutions from private entities.