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1871 – Uniform Currency Act

The story of currency in Canada follows a rocky road that begins during the French and British colonial periods. Before coins were introduced, bartering was used extensively to settle transactions. As trade increased, coins and paper currency became more prevalent. Different regions of what is now Canada used and valued various foreign currencies in different ways. Even when the decimal system was introduced, it was valued differently in different places. The Uniform Currency Act of 1871, passed shortly after Confederation, brought stability to the situation.

Starting in the 1600s, currency consisted of such items as coins, private paper, bills of exchange and card money. Currency was mainly needed to facilitate trade between regions; day-to-day commerce depended mainly on barter. English, French, Spanish and Mexican coins, among others, were commonly in use.

In 1813, Prince Edward Island used Spanish dollars to make ‘holey ’ dollars by punching the centres out. These were valued at 5 shillings. Between 1823 and 1856, the Nova Scotia government produced pence and half-pence. The Bank of Montreal issued one-sou pieces in 1835. Other banks located in Lower Canada issued one- and two-sous pieces. After 1841, when Upper and Lower Canada were united, copper pence and half-pence were issued by various banks. In the 1850s, colonial governments produced copper tokens, pennies and halfpennies.

However, this vast and confusing array of coins impeded intercolonial trade. Currency became an issue because valuation and convertibility was not uniform throughout British North America.

During the 1700s and 1800s, the pound sterling was the official unit of account in British North America. However, with the wide acceptance of Spanish silver dollars and the introduction of the U.S. dollar in 1792, growing trade links between Upper and Lower Canada and the United States favoured the use of ‘ Yankee’ dollars.

Following its establishment in 1817, the Bank of Montreal issued bank notes denominated in dollars. Other banks incorporated in Upper and Lower Canada during the 1830s and 1840s denominated their bank notes in both dollars and pounds. Growing trade across the Canada–U.S. border favoured the use of dollars over British pounds. Britain’s adoption of free trade in the 1840s had obliged the Canadas to trade more heavily with the United States: a reciprocity treaty was signed in 1854.

With the unification of Upper and Lower Canada in 1841, the move towards a decimal-based currency system began. In 1851, the Canadian legislature passed an act requiring provincial accounts to be kept in dollars. However, since the British government was still trying to maintain a currency system based on pounds throughout its empire, a revised Currency Act was proclaimed in 1854. Under this act, provincial accounts could use pounds, shillings and pence as well as dollars and cents.

But that was about to change. The Province of Canada revised the Currency Act in 1857. On January 1, 1858, all provincial accounts would be kept strictly in dollars. By 1865, Nova Scotia, New Brunswick, British Columbia and Newfoundland followed suit. Manitoba and Prince Edward Island converted to dollar-based accounting in 1870 and 1873, respectively.

This decimalization culminated with the passing of the Uniform Currency Act, which took effect on July 1, 1871. Denominations of currency in Canada were set as dollars, cents, and mills (a mill equalled one-tenth of a cent), and the British currency system was discontinued. The act established the decimal currency system uniformly across Canada, “from sea unto sea”. Different currencies in use in the various provinces were replaced with a common Canadian currency. Silver and copper coins of other countries were no longer legal tender. However, foreign gold coins such as the British gold sovereign and the United States gold eagle were still honoured.

The Uniform Currency Act established the decimal currency system in Canada. The new currency was seen as secure since it was backed by government bonds and gold. It created a common and consistent national currency, issued by the government through the banks, to be used across Canada.

Links

Currency Museum
Source: Bank of Canada
http://www.currencymuseum.ca/eng/collection/index.php

Bank Notes
Source: Bank of Canada
http://www.bankofcanada.ca/en/banknotes/index.html

Circulation Coins
Source: Royal Canadian Mint
http://www.mint.ca/royalcanadianmintpublic/index.aspx?requestedPath=/en-CA/Home/default.htm

A History of the Canadian Dollar
Source: Bank of Canada
http://www.bankofcanada.ca/en/dollar_book/index.htm

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