ABSTRACT
Currency: With Britain gradually taking over French Canada (Nouvelle France), the French currency nominally valid hitherto was eliminated, even if French coins were still in circulation for decades. In Lower Canada, they were circulating in signifiucant amounts even up to the 1830s. In the New England Colonies, the pound of 20 shillings at 12 pence became the unit of account, as was common in the mother country. One of the most important coins in circulation, if not the most important one, was the Spanish dollar, i.e. the peso de ocho reales or the piece of eight (at 24.43 grammes of fine silver). The variations between the currencies of the different colonies “were determined by the different legal valuation each colony gave to that coin” (MCCUSKER [1978], p. 132), which was similar to the practice of the colonies forming the future USA. In Nova Scotia, held by the British since 1713, the currency was de facto identical with New England currency, “which for practical purposes may be identified with Massachusetts currency” (MCCULLOUGH [1984], p. 126), although the so-called ‘Boston money’ was the dominant currency (see pp. 399, 404). After 1749, “Nova Scotia began to break away from the New England currency bloc” (ibid., p. 130), especially since Massachusetts retired its paper bills and returned to the silver standard in 1750 with a rating of the Spanish silver dollar at 6 shillings Massachusetts currency. In contrast to this, it was generally equal to 5 shillings Halifax currency at Halifax as well as in the whole of Nova Scotia, which was regulated by law in 1758. Referring to its silver content, the Spanish dollar corresponded to only 4 shillings 6 pence. So, it was overvalued by one-ninth in Halifax, and a bill of exchange for 100 pounds sterling at par cost 111.11 pounds Halifax currency. This relation of 1 dollar = 5 shillings Halifax currency was the basis for the so-called Halifax currency system until the 1850s, when the original silver value relation of 1 dollar = 4 shillings 6 pence had already been invalid for a long time, because of the decreasing silver content of the Spanish dollar. So “the use of the 9:10 ratio became increasingly unrealistic and in commercial exchange it was compensated for by large premiums on sterling exchange” (ibid., pp. 130f.). The home government, however, outlawed the 1758 Currency Act in 1762, for it was contrary to the colonial Currency Act of 1707. As a result, Nova Scotia had actually no legal tender. From 1763 to 1777 provincial treasury notes were issued, which rapidly decreased in value. Thereupon, they were replaced by new Treasury notes, which again declined in value from the late 1780s (May 1792: 40% discount), because of the increasing debts of the colony (ibid., pp. 132., 135). With the Currency Act of 1787, a legal rating system for British silver coins based on the Halifax currency was introduced, but the (Spanish) dollar remained the most common coin in circulation. This status ended for two reasons. First, the Treasury notes were again withdrawn from circulation during the 1790s. Second, the doubloon as the most important coin of the West Indies, Nova Scotia’s most important North American trading partner, became overvalued by a rate of 4 pounds Halifax currency (March 8th 1819), thus demonetizing the dollar. Treasury notes, which recirculated after the War of 1812, provincial paper money as well as banknotes (from 1825) were of similar significance as means of payment, all of them were often provided with a changing
per 100 pounds sterling after 1819, but instead of this, the traditional par of 111.11 pounds Halifax currency per 100 pounds sterling remained valid. As a result, exchange rates had to be quoted with a permanent premium of 10 to 12% (ibid., p. 144). It was only with the 1834 Customs Act that a new official par of 25% was fixed and the doubloon became equal to 80 shillings Halifax currency or 64 shillings sterling respectively. In 1836, the sovereign was fixed at 25 shillings Halifax currency. Both coins became legal tender in 1842 just as the Spanish, Mexican and Patriot (South American) dollars, which were South American dollars but not US dollars, and which were theoretically equal to 5 shillings 2.5 pence Halifax currency but it was customary to equate them with only 5 shillings. “In keeping with this change the practice of converting sterling money of account to currency money by adding one-ninth to the sterling value was gradually abandoned in the 1830s and the more realistic system of adding one-quarter to sterling value was adopted. In the Blue Books the change was made in 1836. Commercial exchange rates continued in most cases to be quoted on the basis of the old par until after Confederation with the result that sterling exchange was always a nominal premium of from 12% to 15%” (ibid., p. 151). The Decimal Currency Bill was introduced in 1859 and became effective on January 1st 1860, determining that all government accounts had to be kept in dollars and cents. Although this action did not question the legal tender ratings of 1842, dollar rates were fixed for British coins for the first time in Nova Scotia. The sovereign, however, continued to be fixed there at 5 (Nova Scotia) dollars in contrast to Canada and New Brunswick, where it was equal to 4.8667 dollars. Because of this, Nova Scotia’s sterling exchange rates were clearly at a higher level than the Canadian ones in the 1860s. Only the extension of the Canadian currency system on Nova Scotia on July 1st 1871 removed the distinction between currencies, fixing the sovereign at 4.8667 Canadian dollars in Nova Scotia so that 75 Nova Scotia cents were then equal to 73 Canadian cents (ibid., pp. 156f.). In the Province of Quebec, which was divided into Upper Canada (today: Ontario) and Lower Canada (today: Quebec) in 1791, there were two systems of accounting that competed against one another during the first decades of British rule. At Quebec and in most parts of Lower Canada (as well as on Prince Edward Island and at New Brunswick), both accounts were kept and payments were transacted in Halifax currency, which was based on the rate of the Spanish dollar with 5 shillings Halifax currency, i.e. 11.11% above its sterling value of 4 shillings 6 pence sterling. In contrast to this, the payments in Montreal and in Upper Canada were based on the New York system, with a rate of 8 shillings sterling per Spanish dollar (77.7% premium against sterling), because New York merchants, who had brought their system with them, dominated Montreal’s trade since the British had taken over the town (ibid., p. 67). In order to balance the different systems, the traditional New England standard was introduced on January 1st 1765 (Ordinance of September 14th 1764) with a rate of 6 shillings per Spanish dollar. It corresponded to the maximum rate authorized by Queen Anne’s proclamation of 1704 and was called the New England or Quebec rating, but it was still valid in Halifax or New York (or short: York) currency (ibid, pp. 69-73). During the American Revolutionary War, the unpopular New England standard was abandoned in the Province of Canada and the Halifax standard was introduced in the whole colony in 1777. The most important coins in Canada then became French silver coins and piastreens (ibid., pp. 74s.), notes or bons issued by the merchants, government ‘army bills’ from July 1812 to 1817 (ibid., pp. 83-85) and, finally, US banknotes from the 1790s and especially after the War of 1812. In addition to this, there were notes of banks founded since 1817, which very rapidly became the dominant means of payment in Canada (ibid., p. 88). According to the Ordinance of 1777, gold coins were undervalued in Canada, and therefore they disappeared. Because of this, the Currency Acts of 1796 and 1808 for Lower Canada and that of 1809 for Upper Canada enhanced their value insofar as these rates persisted in Upper Canada until 1836 and in Lower Canada until 1842 (ibid., p. 81). In the 1820s, the British government tried to introduce British currency in Canada as well as in most of the other colonies of its empire, but this attempt failed, for three reasons. First, the British silver money was undervalued against the dollar; second, British silver was spent for buying bills on England from the government; and, third, “the extensive issue of paper money drove coins out of circulation” (ibid., p. 94).
