Publications and Research

Spring 2001

Reforming the International Financial System by James Powell Core Principles for Systemically Important Payments Systems and Their Application in Canada by Clyde Goodlet www.bankofcanada.ca—The Bank on the World Wide Web by Brent Eades See also: Tables A1, A2, and Notes to the Tables

Cover: Bank Note Reporters and Counterfeit Detectors

Canadians today make transactions using bank notes issued exclusively by the Bank of Canada. This was not the case in the nineteenth century. Consumers and merchants faced a bewildering array of notes issued by various authorities in many centres and featuring assorted designs and denominations. In such an environment, separating valid notes from discontinued or counterfeit issues was a challenge. From about 1826 until several years after the U.S. Civil War, monthly publications called Bank Note Reporters or Counterfeit Detectors provided indispensable guidance.

Booklets such as that featured on the cover, published by Willis & Co. of Boston, were issued by brokerage houses in most major U.S. cities. They were short-lived, disposable documents that were constantly reissued with up-to-date information—a feature that makes them rare today. These booklets listed solvent banks in Canada and the United States together with the discount rates allowed on the purchase of bank notes. They also identified known counterfeits, describing the particulars that one should look for, and pinpointed notes whose value had been fraudulently raised by changing the denomination. Other notes that figured prominently in the lists were those issued by fictitious or "phantom" banks. These notes were particularly insidious because they were of higher quality than counterfeits to escape immediate detection. They were usually printed by legitimate security firms or from the altered plates of genuine but defunct banks; some used names resembling those of authentic banks.

Phantom banks were a particular problem in Canada and in U.S. border states in the years immediately after the 1837 financial crisis, when the redemption of notes in gold or silver was suspended, removing a major means of authentication. The three notes featured on the cover are examples of notes issued by phantom banks. These notes circulated in Buffalo, N.Y., prompting an investigation that led to Montreal and, ultimately, to the denouncement of the notes.

The detector and notes form part of the National Currency Collection, Bank of Canada.

Photography by James Zagon.