Great canadian economic historian system of money exchange

 According to Adam Shortt,5 the great
Canadian economic historian, the first regular
system of exchange in Canada involving Europeans
occurred in Tadoussac in the early seventeenth
century. Here, French traders bartered each year
with the Montagnais people (also known as the
Innu), trading weapons, cloth, food, silver items,
and tobacco for animal pelts, especially those of
the beaver.
In 1608, Samuel de Champlain founded
the first colonial settlement at Quebec on the
St. Lawrence River. The one universally accepted
medium of exchange in the infant colony naturally
became the beaver pelt, although wheat and moose
skins were also employed as legal tender. As the
colony expanded, and its economic and financial
needs became more complex

, coins from France
came to be widely used.
Because of the risks associated with
transporting gold and silver (specie) across the
Atlantic, and to attract and retain fresh supplies of
coin, coins were given a higher value in the French
colonies in Canada than in France. In 1664,
this premium was set at one-eighth but was
subsequently increased. In 1680, monnoye du pays
was given a value one-third higher than monnoye
de France, a valuation that held until 1717 when the
distinction was abolished and all debts and
contracts in Canada became payable in monnoye
de France.
Trade silver, beaver, eighteenth century
Manufactured in Europe and North America for trade with
the Native peoples, trade silver came in many forms, including
ear bobs, rings, brooches, gorgets, pendants, and animal shapes.
5. This section draws heavily on Shortt (1925a, 1925b, 1986).
France, double tournois, 1610
Originally valued at 2 deniers, the
copper “double tournois” was shipped
to New France in large quantities during
the early 1600s to meet the colony’s
need for low-denomination coins.
4 A History of the Canadian Dollar
An inability to keep coins in circulation in
French colonies in the Americas led to the minting
in 1670 of silver and copper coins designed
specially for the colonies.6 These coins could not
be circulated in France on pain of confiscation and

While apparently intended primarily
for the West Indies, a small number of these
coins are believed to have circulated in Canada
(Shortt 1986, 118).
Spanish dollars (piastres) also began to
circulate in the French colonies during the mid1600s owing to illegal trading with English and
Dutch settlers to the south, who used them
extensively. Because these coins were of uncertain
quality, an “arrêt” of 1681 required that foreign
coins be weighed. In 1683, foreign coins had to be
individually appraised. Full-weighted Spanish
dollars were stamped with a fleur-de-lys and were
valued at four livres, while light coins, depending on
their weight, were stamped with a fleur-de-lys and
a Roman numeral I, II, III, and IIII, with the
lightest coin assigned a value of only 3 livres.
Arguably, these overstamped Spanish dollars
(and parts thereof) represent the first distinctive
Canadian coins. They also foreshadowed the use of
Spanish dollars in what was to become British
North America.
The introduction of card money
In 1685, the colonial authorities in New
France found themselves short of funds. A military
expedition against the Iroquois, allies of the
English, had gone badly, and tax revenues were
down owing to the curtailment of the beaver trade
because of the war and illegal trading with the
English. Typically, when short of funds, the
government simply delayed paying merchants for
their purchases until a fresh supply of specie
arrived from France. But the payment of soldiers
could not be postponed. Having exhausted other
6. The units of account in France at this time and in the French colonies in the Americas were livres, sols, and deniers. As was the case with English
pounds, shillings, and pence, there were 20 sols to the livre, and 12 deniers to the sol. There were no livre coins. Other coins in circulation included the
louis d’or, the écu, the liard, and the double tournois. Their values varied widely over time with changes in their gold or silver content, government policy,
and inflation. For example, the value of the louis d’or ranged from 10 livres in 1640 to 54 livres in 1720 (McCullough 1984, 43).
France, 15 sols, 1670
In an attempt to address perennial coin
shortages in France’s North American
colonies, Louis XIV ordered the
production of three denominations in
1670, including the “double d’amerique”
(a base-metal coin), a 5-sol piece, and a
15-sol piece. The “double” was never
issued, and the others proved unpopular
since they could not be used to pay taxes.
Mexico, 8 reals, seventeenth century
Called “cobs” from the Portuguese cabo
meaning “bar,” these irregular-shaped
coins, struck in silver cut from large
ingots, were common in the European
colonies of North America during the
1600s and early 1700s.
A History of the Canadian Dollar 5
financing avenues and unwilling to borrow from
merchants at the terms offered, Jacques de Meulles,
Intendant of Justice, 

Police, and Finance came up
with an ingenious solution—the temporary issuance
of paper money, printed on playing cards. Card
money was purely a financial expedient. It was not
until later that its role as a medium of exchange
was recognized.
The first issue of card money occurred on
8 June 1685 and was redeemed three months
later. In a letter dated 24 September 1685, to the
French Minister of the Marine justifying his action,
de Meulles wrote,
I have found myself this year in great straits with
regard to the subsistence of the soldiers. 

You did not
provide for funds, my Lord, until January last. I have,
notwithstanding, kept them in provisions until
September, which makes eight full months. I have
drawn upon my own funds and from those of my
friends, all I have been able to get, but at last finding
them without means to render me further assistance,
and not knowing to what Saint to say my vows,
money being extremely scarce, having distributed
considerable sums on every side for the pay of the
soldiers, it occurred to me to issue, instead of money,
notes on cards, which I have cut in quarters . . .
I have issued an ordinance by which I have obliged
all the inhabitants to receive this money in payments,
and to give it circulation, at the same time pledging
myself, in my own name, to redeem the said notes
(Shortt 1925a, 73, 75).
These cards were readily accepted by
merchants and the general public and circulated
freely at face value. Card money was next issued in
February 1686. The authorities in France were not
pleased, however. In a letter to de Meulles dated
20 May 1686, they wrote,
He [His Majesty] strongly disapproved of the
expedient which he [de Meulles] has employed
of circulating card notes, instead of money,
that being extremely dangerous, nothing being
easier to counterfeit than this sort of money.
Letter to de Meulles, 20 May 1686 (Shortt 1925a, 79)7
Notwithstanding this admonition, the
colonial authorities reissued card money in 1690
because of another revenue shortfall. 

Again, the
cards were redeemed in full. However, given their
wide acceptance as money, a significant proportion
was not submitted for redemption and remained in
circulation, allowing the government to increase its
expenditures. The following year, with yet another
issue of card money, the Governor, Louis de Buade,
Comte de Frontenac, acknowledged the useful role
that card money played as a circulating medium of
exchange in addition to being a financing tool
(Shortt 1925a, 91).
While the authorities in France worried
about the risk of counterfeiting and a loss
of budgetary control, the colonial authorities
successfully argued that the cards served as money
7. The cards were, in fact, almost immediately counterfeited. See ordinance of de Meulles announcing the redemption of the card money, 5 September
1685 (Shortt 1925a, 73). If caught, the penalty for counterfeiting was severe; Louis Mallet and his wife Marie Moore were condemned to be hanged at
Quebec on 2 September 1736 for counterfeiting card money (Shortt 1925b, 591).

 6 A History of the Canadian Dollar
in Canada just as coin did in France. Moreover, the
Kingdom of France derived benefits from the
circulation of cards, since the King was not obliged
to send coins to Canada risking loss “either
from the sea or from enemies.” Reflecting the
mercantilist sentiments of the time, they less
cogently argued that if coins were to circulate in
Canada, some would be used to buy supplies from
New England, resulting in “considerable injury to
France by the loss of its coinage and the advantage
which it would produce among her enemies.”8
The concerns of the authorities in France
were not entirely misplaced. In the early 1690s, the
first signs of inflation began to be noticed as a
result of the excessive issuance of card money. 

Although cards continued to be redeemed in full
upon presentation, the stock of card money
increased over time faster than demand, causing
prices to rise. With the finances of the French
government progressively deteriorating during the
first part of the eighteenth century, owing
to European wars, financial support for its
Canadian colonies was reduced. The colonial
authorities in Canada consequently relied
increasingly on card money to pay their expenses.
In 1717, with inflation rising sharply, it was
agreed that card money should be redeemed
with a 50 per cent discount and withdrawn
permanently from circulation. At this time, Canada
also adopted the monnoye de France.9
8. Letter from the Sieur de Raudot, 30 September 1706 (Shortt 1925a, 157).
9. Acadia retained the monnoye du pays valuation for French coins until at least the mid-1740s (Shortt 1986, 169).
French Regime, 9 deniers, 1722H
In another effort to meet the need for
small change, the Compagnie des Indes
authorized the production of 9-denier
pieces, dated 1721 and 1722. These were
struck at two mints: Rouen, designated
by the mint mark “B” below the date,
and Larochelle, indicated here by the
letter “H.”
French Regime, playing card money,
50 livres, 1714 (reproduction)
Playing cards inscribed with a value and signed by the governor of New France were Canada’s first paper currency
and circulated from 1685 to 1714. No genuine examples are
known to exist.
A History of the Canadian Dollar 7
By failing to provide a replacement for card
money, the unintended consequence of this
monetary reform was recession. In an attempt to
remedy the situation, copper coins were introduced
in 1722, but they were not well received by
merchants. Notes issued by private individuals
based on their own credit standing also circulated
as money, a practice that pre-dated this event, and
continued periodically well into the nineteenth
century and, arguably, even to the present day.10
The government, again short of funds, also issued
promissory notes called ordonnances, which began to
circulate as money.
In March 1729, in response to requests
from the public, the government received
permission from the King to reintroduce card
money. These cards would be redeemed each
year for goods or for bills of exchange11 drawn
on funds appropriated for the support of the
colony that would be payable in cash in France.12
The cards, which were strictly limited, were
legal tender for all payments and replaced the
ordonnances in circulation.
Confidence in this new card money was
initially high. With the supply limited and convertible into bills of exchange payable in France, the
cards were an economical alternative to the transfer
of specie across the Atlantic. Gold and silver began
to accumulate in New France and stayed. The
government, however, remained financially
constrained and began to rely again on ordonnances
and another form of Treasury notes called acquits
to fund its operations.
With issuance tightly controlled, card
money traded at a premium for a time as the
government increased its issuance of Treasury
notes to pay for its operations. But as French
finances deteriorated and the redemption of
Treasury notes was repeatedly postponed, trust in
card money was also undermined.
10. See bons, Appendix B.
11. Bills of exchange (similar to cheques) were commonly used to finance foreign trade.
12. See memorandum of the King to the Marquis de Beauharnois, Governor and Lieutenant General of New France, and Sieur Hocquart [Intendant],
Commissary General of the Marine and Controller of the Currency, 22 March 1729 (Shortt 1925b, 583).
French Regime, card money, 24 livres, 1729
Printed on playing card stock, the size and shape differed
according to the denomination. This piece is signed by
Governor Beauharnois, Intendant Hocquart, and Varin,
the agent for the Controller of the Marine.
8 A History of the Canadian Dollar
By the early 1750s, the distinction between
card money and Treasury notes had largely
disappeared, and by 1757, the government had
discontinued payments in specie; all payments
were made in paper. In an application of Gresham’s
Law—bad money drives out good—gold and silver
were hoarded and seldom, if ever, used in

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