The Canadian Dollar
PROOF THAT YOU CAN CHECK - CANADIAN MONEY IS PRIVATELY MADE
Take a long look at the photographs above. Yes, they are privately-issued banknotes which were put out by private banks in Canada. Of the two pictured, the $5 is still legal to use, to spend, and may be exchanged at any bank in the country for a current $5 Bank of Canada note. There still is more than $6 million worth of this private-issue money in circulation in Canada today.
There are four kinds of Canadian private notes available, given that you have the money and the interest to try to collect them. These include (1) the issues of private banks which have gone broke, (2) issues from private banks which were fraudulent in the first place, (3) issues from banks which remain in existence either as entities of their own or through mergers and acquisitions of the issuing bank by another bank, and (4) the 1935 issues of the Bank of Canada. Of the notes pictured above, the $1 is of Type 1 and the $5 of Type 3, being that the Royal continues in business to this day as RBC. Numerous Canadian notes of the first type exist, mostly from the pioneering period as Western Ontario opened up. Banking and railroading pioneer Samuel Zimmerman, founder of what now is the city of Niagara Falls, operated three private note-issuing banks of his own, of which no less than two turned out to be frauds perpetrated on the public .
Private notes were issued by no less than 124 banks in Canadian history, in denominations from $1 through to $1000 and including the $3 and $4 notes which enjoyed some vogue in the 19th Century. You can't really say that something is "as phony as a $4 bill" because the things actually existed!
Note that we are speaking here of PRIVATE issues. There also were DOMINION Notes, which were promissory notes, payable to the bearer on demand in silver or gold coin, issued by the Treasury of Canada. Dominion Notes were issued in denominations from 25 cents (the 3 issues of the ever-popular "shinplasters", all the way up the scale.... and even included a rare and critical error on one of the $4 denomination.
As far as the actual CREATION of money went, the private banks did nearly all of it then, exactly as they do today. If you borrow $5 in created "money" from RBC, you owe RBC that $5 principle, plus accrued compound interest. You do not owe it to the CIBC, BNS nor to the Bank of Canada (even though you pay with their notes): you owe it to the RBC which CREATED it.
The desirability of a Government-owned CENTRAL BANK, the function of which would be to issue money for Government expense, was one of the main planks of the Social Credit Party in the 1934 general election. William Lyon Mackenzie King and the Liberal party recognised the power of this idea, especially in the middle of the Great depression, and stole the idea, making it appear as if it had been a LIBERAL party aim all along. The lie worked, as have so many Liberal Party lies over the years, and the Liberals won the election. True to their word (sort of) the Liberals then chartered the Bank of Canada in 1935, giving it the SOLE power of making banknotes in Canada. What the Liberals did not bother telling ordinary Canadians was that the SHARES in the Bank of Canada were owned by the same Chartered Banks who had been issuing paper money all along. The Great Depression then dragged on for another five tragic years.
But the Bank of Canada, as a PRIVATE bank, issued a series or circulating paper notes beginning in 1935 and including the beautiful blue $1 note with King George V and the now-rare $25 notes for the Silver Jubilee of the King and Queen.
Only in 1938 did the Government of Canada PURCHASE the shares in the Bank of Canada from the private banks which had been the shareholders to date, this at a handsome profit to the Banks. At last, Canada had its own Central Bank, which immediately began issuing the existing 1937 type of notes bearing the portrait of King George VI on their obverses and allegorical figures representing Agriculture, Industry and the like on the reverse sides.
During the Second World War which erupted suddenly in September of 1939, the Bank of Canada took upon itself the task of CREATING the money for the entire War Effort, putting into circulation billions in NEW MONEY with which Canada created a power Armed Forces, a war industry which actually outpaced Nazi Germany (which had 6 times Canada's population and an existing industrial base)..... and fed Canadians and Britain at the same time. All of this was accomplished by the Bank of Canada simply manufacturing the money for the Government to spend on the War Effort and, rather than regular interest rates, charging as little as .17 of 1% interest on the loans: just enough to cover the actual costs of bookkeeping, printing notes and bonds and so forth. Yes: the Bank of Canada financed World War Two at a SIXTH of one percent interest! War Bond drives, War Savings Certificates and the like, along with increased rates of taxation, simply kept the sheer AMOUNT of money in circulation from becoming excessively inflationary due to the fact that there were very few civilian products being made on which to spend the money. Inflation of the Canadian Dollar throughout the period of the Second World War was about 30%, reckoned from the seriously-deflated value of the currency at the outbreak of hostilities.
Beginning in 1944, the private banks were prohibited from issuing any more of their own money and the quantities in circulation declined very quickly. Today, the private notes are almost unknown except to collectors and historians.
Following the War, the Bank of Canada continued financing the Government through the transition to an economy of Peacetime.... and the most productive and positive decades in Canadian history. This only came to an end about 1974 when the Trudeau Liberals insisted on borrowing the money they required, not from their own bank, but once again from the Private Chartered Banks and the powerful international investment and mercantile banks which hold the vast majority of Canadian Government debt at this time.
And so the Government of Canada has gone full circle, falling once again into the trap of compound interest in the hands of private banks: exactly the dilemma from which the Bank of Canada was designed to rescue us!
As to your own dealings with the Chartered Banks, if you take out a loan, the old process is the same: a note in a ledger, being a note upon which you pay compound interest until it is paid off. They simply use Bank of Canada notes because they are the only notes now legal in Canada.... and they no longer have to bear the cost of printing their own!
-- 30 –
They are, in order, a Dominion Treasury Note, Private Bank issue and a Bank of Canada issue while it still was a Private Bank.
