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| The Last Hurrah of the $4 Note.
In much the same way as a light bulb burns its brightest just before it pops, so it was with the $4 note of the Dominion of Canada. In a period of less than two months in 1911, there were printed and issued a total of 66% of all those since 1900 - and 44% of all the $4 notes ever issued by the Dominion of Canada. Yet within a few months, this deluge was withdrawn so that within a couple of years, scarcely any were seen in circulation. And they have never been printed since. The $4 note wasn't really all that popular by the late 19th Century, despite the fact it corresponded to the old Halifax Pound; the American-style $5 was held to be more convenient. But the issue of this denomination for as long as it lasted was a matter of expediency for the Dominion government. Until Confederation, Canadian paper money consisted largely of notes of the various banks. There were various note denominations of the Province of Canada and overprinted Bank of Montreal notes from 1866 that were used in the new Dominion but figures show that neither issues were really very large and probably petered out within a few years. Having done so, only the smaller denominations were attempted to be replaced. Not that the government's wishes weren't otherwise. Not to put too fine a point on it, the ability to issue paper notes was a way to conjure wealth out of the air. The banks had the privilege and meant to keep it; the government wanted a share to support a very large debt, a debt that in part was due to the mess left by the failure of the Bank of Upper Canada, at the time the government bank. Not that the positions were as entirely adversarial as we might assume; the first three finance ministers of the Dominion were, during their tenure in office: Alexander Galt (major shareholder in the Eastern Townships Bank); John Rose (director of the Bank of Montreal) and Francis Hincks (director and soon to be president of the City Bank in Montreal ). It was not a day when "conflict of interest" had much meaning. It was Hincks who convinced his banking buddies that their interests were best served by allowing the Dominion government a share in the paper money issue. Consequently, the Dominion took over the issue of the country's $1 and $2 notes in 1870 while the banks were restricted to those of $4 and over. But by various artifices such as issuing odd denominations like $6 and $7 notes and locking away bricks of Dominion $1 and $2 notes as the required backing for their own issues, the banks partly succeeded in restricting the Dominion issues while increasing their own. A rather severe depression in the late 1870s and the failure of a number of banks forced a renegotiation between the two parties, the result being the Bank Act of 1880, effective as of 1 July, 1881 . By it, the banks were allowed to issue or re-issue only notes of $5 denominations or its multiples; at the receiver's option, up to $50 in $1 and $2 Dominion notes must be paid out by the bank (they had the right to refuse before - and usually did); the bank's cash reserve must consist of a minimum of 40% Dominion notes; the amount of Dominion notes outstanding at any one time was raised to $20-million, backed by 25% in gold and British-guaranteed securities.
Dominion of Canada , $4, Issue of 1882 A fairly large issue of 1,200,000 notes was printed by the British American Bank Note Company of Montreal , the face featuring the likeness of the Marquis of Lorne, the Governor-General of Canada at the time. It was also the first Dominion note that was not domiciled to a specific city; none would be henceforth. Overall, most of the color was green or black-on-green, a tint that forestalled counterfeiting. But the issue was somewhat unfortunate in that the notes were printed on rather thin watermarked paper and circulation soon caused them to tatter and tear along the watermark lines. It was also an over-optimistically large issue since it was 8 years - April of 1900 in fact - before the last of them entered circulation.
Dominion of Canada , $4, 1900 issue. "American Locks".
With a new supply of $4 notes required, an order was placed with the American Bank Note Company subsidiary in Ottawa . The design was completely revamped, only the green coloring remaining. The back showed the parliament buildings and the National Library from Nepean Point across the river and this design stayed for all the rest of the issues. The face showed the present Governor-General, the Earl of Minto, and his wife, the Duchess, and a view of the locks at Sault Ste. Marie between Lakes Superior and Huron. Unfortunately, the fact the ABNCo had used a view of the American locks went unnoticed until the entire rather modest issue of 420,000 notes had been printed and were in release.
Dominion of Canada , $4, Issue of 1902. "Canadian Locks". Upper figures 4. Design on back as last. Hastily, another issue was made up, also of 420,000 notes but this time correctly showing the Canadian locks. This was the 1902 "First Issue" with the numbers 4 at the top of the face and small FOURs at the bottom. Most of this issue apparently stayed in government storage for 9 years; in any case, the Receiver-General could report that 400,000 were on hand in the summer of 1911 (although some may have possibly circulated and been returned). The rate of circulation proved to the government that the $4 note was not popular and despite assurances to the banks that they would retain the circulating denominations (the government issuing high-denomination "bank legals" all along) of $5 and more, thought was given to shifting into this denomination. A Dominion of Canada essai $5 exists of 1906. But until necessary legislation was brought down, legislation that would have to get past the banks and the opposition in parliament, the government was stuck with the $4 denomination. But all indications were that the $4 was on the way out as soon as conveniently possible. Canada had something of an odd economy at this time in that there was a currency-bulge requirement each fall. With the opening of the west, this became even more pronounced. Western farmers preferred cash for their grain crops in these happy pre-income tax days yet almost as quickly as they received it, it wound up back in the banks as debts were paid, repairs and upgrades made, more land acquired and most of the excess deposited in a savings account. But as things were, both the banks and government were limited as to how much currency they could issue: the banks to a maximum of their fully paid up capital and the government by a set figure. By a Bank Act of 1890, in fact, a bank could be fined $100,000 should its currency issue exceed $200,000 beyond its authorized limit - and proportionately for less. Needless to say, banks kept within currency bounds. But it nearly came apart in the fall of 1907 during something of a bumper wheat year. The total value of banknotes in circulation reached $89-million, just $6-million below its limit. Faced with the possibility of not being able to "move the grain", banks that were heavily involved with the buyers in this trade were allowed to borrow Dominion notes through the Bank of Montreal, the government's agent, at very low interest rates, providing it was repaid quickly. In this way, $5-million more entered circulation. The problem was this money was in excess of that authorized for the government and had no legal backing. The "scandal" was uncovered in the next year by the opposition, causing great embarrassment to Finance Minister Fielding and the Laurier administration. Loudest of all in their condemnation of this "printing press money" were the banks even though that was - within reason - essentially their own goal. The matter was put to rest and the banks placated with concessions: an amended Bank Act permitted a bank's note issue to equal fully paid up capital plus their reserve fund (about 20% and more or less counted twice) plus a maximum of 15% of the two - but only between the dates of October 1 and the following January 31. This last overrun would be taxed on the basis of 5% per year (meaning that most would be at about 1%). Even with the tax, the banks stood to make good money - providing they were able to use their own notes.
Dominion of Canada , $4, Second Issue of 1902 with FOUR above, 4 below. (Printed and issued in 1911). Back as previous issues. But everything came to head in 1911. Not only was this a year of bumper wheat crop but the west was in the throes of a gigantic speculative boom (it would pop in 1912/13 to the ruination of many). Even so, there seemed to be enough currency on hand to accommodate the trade. Unless, of course, there was a plot afoot to derail the system - and circumstantial evidence shows that there was, the banks in concert setting in motion events that would force the government to raise the banks' currency limits even more. All was quiet on the Hill in late August, 1911, with parliament in summer recess - but not in the hustings since an election was in progress and Finance Minister Fielding was campaigning at home in Nova Scotia. But wind of the bank plot reached the ears of Finance Department officials in Ottawa and a hurried cable was sent by Deputy Finance Minister T.C. Boville to his boss. Within hours, Fielding had made his reply: determine how many notes were on hand in all the offices of the Deputy Receivers-General and how quickly more could be printed by the American Bank Note Company in Ottawa . The answer was 400,000 already on hand and the ABNCo able to produce a further 320,000 within ten days - and the sky the limit after that. Fielding gave the go-ahead, especially after all doubt was removed that something was indeed afoot. A request by Boville for an interview with the Bank of Montreal to discuss the situation was turned down, the Bank instead demanding special overissue privileges and threatening to import American notes if turned down. Boville did turn it down, pointing out that both actions were illegal. It was not the easiest thing for the American Bank Note Company to turn out these notes. Back in 1902, bankers had complained that the design made it hard for their tellers to count the notes in stacks; accordingly, the design was changed, two large FOURs appearing on the upper faces and smaller 4s at the bottoms. But with little demand for the notes, only essai plates had been made and in the meantime Boville had replaced J.M. Courtney as Deputy Finance Minister - and new issues have to be of appropriate design, pretty much by law. Consequently, the essai plates had to be immediately manufactured into the multiple printing plates. All things considered, ten days to finished printing was very good speed. And it was probably a good thing that most of the older 1902 issue was still in the vaults. There were all sorts of probes made on the government notes throughout September, 1911. From Victoria , there was an immediate demand for five times the usual numbers of $1 and $2 notes - with no advance notice given whatsoever. The Assistant Receiver-General in Toronto was plagued with large orders for notes which were then severely reduced or cancelled at the last moment. In mid-September, the Traders Bank of Canada informed Boville that they had overrun their authorized limit by $16,000, rather cheekily proposing that this be treated as a deposit on which they would pay 3%; Boville turned them down and ordered them to get their overrun in line or face a fine. But the largest demand was from Winnipeg , "the Gateway to the West" and the spout through which most of the western grain was funneled at the time. Even at the best of times there was a huge demand for currency notes by the grain buyers but now the banks there wanted only the $4 notes, the $1 and $2 "taking up too much space in the vault". The Assistant Receiver-General there strongly suspected that they were being hoarded and kept out of circulation to give the appearance of a problem that could be remedied only by increased overissue rights to the banks, farmers and grain buyers expected to make that demand since it was they whose business was being pressured. Near the end of September, a shipment of $152,000 in $4 notes was scarcely countersigned and cut apart in Winnipeg before demands for twice the amount were made. Then came October 1st, the date on which the banks could legally exceed their limit by 15%. Immediately, there were no more demands for $4 notes and very shortly many of those issued - and which were in excess to the required reserve - came flooding back to the government for redemption. In all, a total of 1,636,000 notes of $4 denomination - $6,544,000 worth - had been printed and issued in a period of roughly August 25 through October 1, 1911 . Yet they were never printed again and were little seen in circulation within a few years. On May 1, 1912 , its place was taken by a new Dominion of Canada $5 note with 4,000,000 printed at the very outset. The whole controversy took place at a very poor time for the Laurier administration: in the midst of an election campaign. And it may have been planned that way. Fought over the issue of a reciprocity treaty with the U.S. , a combination of Conservatives and Quebec nationalists defeated Laurier's Liberals on 21 September, 1911 . The new government of Robert Borden was much more sympathetic to the bankers' cause and the period of overissue expanded from September 1 to February 28 as of 1912. It was further expanded to include the whole year upon the outbreak of the First World War. But no one can say that the $4 note didn't go out with a bang.
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FebruaryThe Last Hurrah of the $4 Note The Silver Dollar Varieties of 1948
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