Bank of Canada Museum 1 Decoding E-Money This exhibition was conceived and produced by the Bank of Canada Museum. Money as a Reflection All artifacts and related items are part of the of Society 3 National Currency Collection of the Bank of Canada Museum. We would like to thank “Made Beavers” our friends in Communications, the Payment and the Fur Trade 4 Systems Oversight and Currency Research for their assistance in researching this topic and Foreign Coins as approving its content. Canadian Currency 6 The Centralization Please follow us on of Money: Banking Twitter @BoCMuseum and Paper Money 12 Pioneers of Electronic Payments 22 Money as a Reflection of Society Efficiency, security and convenience are the goals of any currency or payment method. A new form of money may meet all the right criteria to be a currency, but without your confidence in its usefulness, it will fail. If you use e-money, it’s because it is convenient and you trust it. Learn about the major Over the centuries, our society has used many currencies and faced many challenges with regard to efficiency, stages in the journey convenience, trust and, ultimately, acceptance–as many toward e-money challenges, in fact, as there have been currencies. in this catalogue. Bank of Canada Museum 3 Decoding E-Money “Made Beavers” Rupert’s Land, Hudson’s Bay Company, early fur trade period (1670–1820), 1 made beaver wooden tally stick (1966.160.1314) and the Hudson’s Bay Company fur traders—the legendary voyageurs—used tally sticks made of wood to pay indigenous hunters for their lots of furs. A stick would have a variety of lines or markings to indicate their value in made beavers. The native Fur Trade hunters could then take the sticks to a fur trading post to redeem that value in goods. During Canada’s fur trade era, exchanging beaver pelts for a rifle made sense because they both had practical values. However, increasing trade brought about a necessity to bridge European and Aboriginal economic Eastmain District (Quebec), Hudson’s Bay Company, c.1857, set of four made beaver brass tokens (1973.81.2.1; 2009.8.15,16 and 17) systems with a common currency. Trading The use of the made beaver as a unit of account carried over into the period when pelts for tokens that could later be traded for Canadian provincial governments and chartered banks were already issuing their a rifle required a strong trust between trading own money in the form of tokens and chartered bank notes. However, these forms of money were impractical in trade with indigenous hunters. The Hudson’s Bay partners. The Hudson’s Bay Co. used the Company (HBC) attempted to bridge the monetary gap. For a brief period in the late “made beaver” (a winter beaver skin) as a unit 1850s, it issued a set of four brass tokens for use in the Eastmain District, located of account in local trade for over 200 years. along James Bay in Northern Quebec. Because of their rarity, it is surmised that the tokens were not popular and that their use was short-lived. The obverse of the tokens sports the HBC logo with the motto Pro Pelle Cutem, which translates into “a skin for a skin.” The reverse bears the initials HB for Hudson’s Bay at the top, EM for Eastmain on the next line, followed by the denomination and, finally, NB (which was supposed to be MB for Made Beaver) at the bottom. Bank of Canada Museum 4 Decoding E-Money Made beavers The made beaver was the unit of account used by the Hudson’s Bay Company for commerce with Canada’s indigenous people during the fur trade. Consisting of a prime adult beaver pelt in good condition, the made beaver was a standard that both parties could understand and agree on to determine the relative value of other furs and the cost of goods. As a commodity, beaver pelts in particular were highly desired in Europe for the production of top hats. As a currency, made beavers bridged the financial gap between two distinct civilizations, each with their own monetary system. With most Canadians participating in the financial system either through the money in their bank accounts or the cash in their wallets, only one unit of account, the Canadian dollar, is required for the system to function within the country. Arctic District (Northwest Territories), Hudson’s Bay Company, Go beyond Canada’s borders, however, and 1946, set of six aluminum tokens (1962.8.1 to 5; 1964.43.413) it’s another world of currencies, exchange In 1946, the Hudson’s Bay Company issued a series of six tokens made of aluminum rates and banking tools. for use in its Arctic District (Baffin Island). The large square token was worth one arctic fox; the other tokens were used as percentages. The purpose of the tokens was to familiarize the Inuit with the decimal system, which had been in common use in Canada since Confederation. Bank of Canada Museum 5 Decoding E-Money Foreign Coins as Canadian Currency Prior to Confederation, Canada had little local and no national currency. As more merchants and settlers came to trade in the New World, a variety of gold, silver and copper coins that were legally approved as currency were circulated in the economy. Despite the confusing variety of coins, their legality and high quality ensured their acceptance. But people tended to hoard high- quality coins and their scarcity hampered the growth of the economy. Bank of Canada Museum 6 Decoding E-Money Great Britain, George III, 1819, silver crown (1974.151.485) After 1763, when New France was ceded to Great Britain, the official unit of account used in the colony was the pound sterling. A British crown— the largest silver coin in circulation at the time—in good condition with full weight was worth 5 shillings/6 pence (20 shillings equalled 1 pound), or $1.10 when converted into Canadian dollars. Unlike with today’s floating exchange rates, the Canadian dollar was pegged to the British pound at a ratio of 1:0.25. That is, $1 was equal to 1/4 pound, or 4 dollars were equal to 1 pound. This exchange rate was in effect until the 1930s. Spain, Charles III, 1771, silver pillar dollar (8 reales), Mexico City mint (1970.154.2) The Spanish-American dollar and its fractions were the workhorses of Canada’s monetary system from their first proclamation as currency in New France in 1662 until their last demonetization in 1872 in Prince Edward Island. The coins were accepted around the world because France, Louis XVI, 1789, of their high silver content and superior minting quality, which curbed silver ecu (1997.7.1) incidents of fraud and counterfeiting. Even under British rule, French coinage continued to pass as currency in From the time of Christopher Columbus in 1492 to 1927, about British North America. Many French coins that had been hoarded because 14.3 billion ounces of silver had been mined worldwide. Of that, of the disastrous bouts of inflation during the French regime were brought approximately 8.3 billion ounces (about 60 per cent) come from the out of hiding and circulated in Quebec. The older, more worn coins tended former Spanish colonies in Latin America. Spanish treasure fleets laden to circulate more than the nicer coins and were discounted in proportion to with gold and silver coins made thousands of transoceanic voyages from their weight. The presence of low-grade coins in circulation certainly the New World to Europe and the Far East. Spanish silver made its way to hindered the economy, but worn coins were better than no coins at all. Canada through trade between the United States and the Caribbean. Bank of Canada Museum 7 Decoding E-Money USA, 1871, Spain, Charles IV, 1807, silver dollar (1966.98.913) gold doubloon (8 escudos), Mexico City mint (2011.6.3) After the adoption of Canadian decimal coins in 1870, American silver In the early 19th century, a Spanish-American 8-escudo coin was worth coins were still found in circulation because they were widely recognized 3 pounds/14 shillings, or 74 shillings. Considering that the typical wage of and accepted. In fact, there was so much American silver in circulation in a soldier in Canada in the early 1800s was about 2.5 shillings (50 cents) a Canada that it became known as the Silver Nuisance in Canadian economic month, this coin would have paid a soldier’s salary for about two and a half history, and the federal government proclaimed a cap on the value of the years. Clearly, a gold coin of this size was worth a lot of money. So much so coins as legal tender. It also readjusted their exchange rate by 20 per cent so that, even though they were legal tender in places like Halifax, Québec City that it was more in line with the coins’ intrinsic value. To avoid great unrest and Montréal, these coins were probably seldom handled by the average among holders of American coinage, the government backed the efforts of person. They most likely wound up in the vaults of a bank as part of its a prominent Montréal merchant, William Weir, who arranged to have large reserves that backed the bank notes it issued. amounts of American silver removed from circulation and shipped back to the United States. American silver dollars, however, were exempt from the program as Canada had no large coins in circulation. France, Louis XV, 1742, gold louis (2014.28.6) The French gold louis was a real problem piece when it came to pegging Great Britain, Victoria, 1858, its currency value.