|
|
Vol. 8, No. 11 November, 2009
" Canada : Democracy's Strongbox" "Emergency Change of the U.S. Civil War" "Old Bank Buildings as They Now Look"
Above: Russia . Copper roubles struck 1770/1 at the Sestoretsk arms works to back the excessive number of paper roubles in circulation. They were huge (77mm) and heavy (1020 grams or more than 3 ½ pounds). Most in existence today are considered collectors' issues since they were later struck as "novodels". (Russian restrikes from the 19th century). The Mid-Island Coin Club, Dues: $12 per year Mailing Address: Mid-Island Coin Club, c/o West Coast Stamp & Coin, Executive Officers: President: Felix Stawski
The meeting of October 8 was attended by 33 members and guests, including our guest speaker, Ron Greene, who delivered an illustrated talk on chartered bank notes. At the November meeting, it will be determined which local service organization will be the beneficiary of the proceeds from our annual Christmas party/ fundraising event. For the past two years, it has been the "7-10 Club" who, among other services, provide free meals to those in need, no questions asked. Mid-Island Coin Club is determined to give assistance where it is most needed, where the most bang for the buck is to be found. If you have another organization in mind, please bring it up at the upcoming meeting. As a segue to the last paragraph: since the auction in December will be entirely of donated items, with the club foregoing all forms of commission and the like, it might be a good idea to pass such donated items to Rob at the November meeting, giving us plenty of time to have them listed. "Regular" auctions for fun & profit will resume in January. Please, be generous with your donations and generous with your bids. It's all in a good cause. Members of the executive, please note: Felix has called an executive meeting for 5:30 p.m. at the A.B.C. Restaurant prior to the general meeting. It had to come. Those who have purchased the 2010 edition of the Charlton catalogue will note that it is now in two volumes, the first covering regular coinage and varieties while the second is now devoted exclusively to NCLTs. There is actually a kind of "mechanical" reason for having done so. A combined edition of the two would have pushed the page number beyond the point where the comb-binding machine would have worked problem-free. The variety section of this edition (pages 247 through 413) ably covers the entire Victoria 5-cent series with lots of enlargements. Some day, of course, there will be a huge catalogue of varieties in its own right which will in turn hive off the "regular" catalogue. **************************************Back to top **********************************
Canada : Democracy's Strongbox.
With the establishment of the Bank of Canada in 1935, this country became one of the last in the Commonwealth to enter central banking. New to the job, the Bank was quick to avail itself of the vast experience of the Bank of England and this manifested itself in the mentorship - and close friendship - between Montagu Norman, director of the Bank of England since 1920, and the Bank of Canada's young governor, Graham Towers . By early 1936, Britain began purchasing and holding "earmarked" gold in the vaults of the Bank of Canada, an operation permitted under the regulations of the Bank, even though the Canadians may have wondered why the gold store became less than temporary. For Britain , the vaults of the Bank of Canada held great advantage. Britain could - and did - purchase considerable gold bullion from the Mint (almost across the street) at an advantageous price while this gold store was, geographically speaking, just down the very secure road from the Federal Reserve Bank of New York, where the Bank of England had frequent transactions. By the end of 1936, Britain had cached 3,304 gold bars, each worth (at $35 US per ounce) $14,000 US at the time, in the vault; by the end of 1937, the amount reached 4,748 bars. By early 1939, prudent Bank of England officials were making inquiries of Canada as to the feasibility of the "earmarked account" consisting not merely of gold purchased and held in Canada but of the possibility, if necessary, of expansion to include transshipped wealth from Britain itself. The outbreak of war was a possibility that many British officials seriously considered, in which event their chief source of supply would be the United States who would deal only on a cash-and-carry basis. It would also be prudent if Britain 's national gold stores were safely abroad, and the "earmarked account" in the vaults of the Bank of Canada was most highly favoured. Thus it came to pass. The visit of George VI and Queen Elizabeth to Canada in the spring of 1939 proved to be an ideal cover for the transfer of British gold reserves. The Empress of Australia which conveyed the royal couple was escorted by two "empty" warships of the Royal Navy. Except they weren't empty. Together they carried £30-million in gold bullion to Canada . Discretely docked in Quebec City , the bullion was surreptitiously transferred to a waiting train at dockside, sped to Ottawa and the bullion trucked to the Bank of Canada under cover of darkness, the whole operation guarded by the R.C.M.P. and in the care of bank officials from both nations. By this time, gold bars were being stacked like cordwood in the cavernous vault. But there was more to come. A lot more. With the threat of war in the air, and immediately after its outbreak, some nations were already making arrangements for their gold reserves to be shipped to London for safekeeping. Among these were Belgium , the Netherlands and Norway , most of gold eventually being stored in Ottawa . Immediately upon the outbreak of war, shipments were stepped up. On 16 October 1939 arrived a sort of "gold convoy" in Halifax , the preferred port from then on. Five fast warships arrived, carrying a total of £10-million of gold.
Now code-named "Operation Fish", the transfer of gold became even more frantic, to the point that ships were sometimes loaded to the point of structural damage. Most important was that all such ships be very fast, the better to elude the U-boats. Secrecy was such that even today logbooks of the British and Canadian navies - and even the R.C.M.P. - fail to mention their participation. A notable shipment was received in Halifax in June 1940. This convoy consisted of the Revenge (£40-million); the Antonia and Duchess of Liverpool (£10-million each); and the Furious (£20-million). None were insured since in the event of loss of even one of these ships, no compensation could be made anyway.
Deck of the H.M.S. Emerald in Halifax Harbour , about 1 July 1940. But the all-time biggest shipment of gold aboard a single carrier arrived in Halifax at this same time. Aboard the Emile Bertin , reputedly the fastest liner in the world, was an unbelievable 254 tons of gold, much of France 's gold reserves, that country now succumbing to German invasion. The gold, equivalent at the time to about US $305-million, was lost to the allies when the Emile Bertin 's captain was ordered to carry it to Martinique by the new Vichy government in France . The captain complied, slipping out of Halifax harbour. Churchill, the recently appointed prime minister of Britain , was fully determined to seize the gold on the grounds that Vichy France, as a puppet government of Hitler's, was now the enemy. He was dissuaded by Roosevelt who observed that the American people, studiously pursuing a lucrative policy of neutrality, would never stand for what - in their eyes - would be an act of piracy. Needing American friendship more than the gold, Churchill had to let the gold go. Almost certainly it later wound up in Hitler's coffers. But the Republic of France had already been maintaining its own gold "earmarked account" at the Bank of Canada - 10,581 bars of it already stored there. Churchill tried to persuade Canada to release the cache to the allied cause but Canada , maintaining that the gold was in safekeeping for the legitimate government of France , refused to hand it over. There it remained until after the war. And the gold kept coming. To date, the largest transfer of wealth in the history of the world arrived in Halifax Harbour about 1 July 1940 aboard the Emerald . Aboard were 2,229 bullion boxes, each containing four bars of gold with a total approximate value of £30-million - but this was dwarfed by an accompanying shipment of 500 boxes of marketable securities with a value of some £200-million. Only a couple of weeks later, this record was shattered with the arrival of five warships in Halifax carrying gold bullion to the value of £192-million and securities to the amount of "several hundred million pounds". In gold alone, the Bank of Canada stored 186,322 bars and more than 8-million ounces of gold coin during the period 1939-45. After the war, it was returned to its owners intact although many chose to allow some to remain in earmarked accounts. While the storage of gold in Ottawa was huge, its value was dwarfed by another hoard in Montreal in the form of British negotiable certificates, bonds and the like. In 1940, Britain had made arrangements with the Sun Life company to store this wealth, their building in Montreal then being the largest commercial one in the British Empire . The first such shipment arrived aboard the Emerald and on July 3, it was trucked under armed guard to that building and temporarily stored in the Sun Life's subterranean Buttress Room. But now permanent quarters were constructed as a sub- sub -basement of the Sun Life Building . Under the guise of shoring up the basement walls as a guard against subsistence, over a period of some six weeks a new vault was constructed some fifty feet underground. It had steel-reinforced walls three feet thick and a huge vault door loaned by the Royal Bank of Canada . By 28 July, it was ready for use. The vault contained some nine hundred 4-drawer filing cabinets, all of which were stuffed with securities. This was very much British territory, with 120 retired financiers hired to staff the "United Kingdom Security Deposit". It was from there that Britain paid for the war, under the feet of Sun Life employees who generally were totally unaware of what was going on - or even that there was a sub-sub-basement. To this day, many of the details of this operation remain secret. We know that by law, British individuals and companies had to turn in their negotiable securities and that they generally wound up in Montreal . We know that at least a couple of individuals were reimbursed in sterling. We know that the remaining stocks were returned to Britain aboard the HMS Leander just after the war. How much was there in paper value at the time, we don't know, but it was probably at least $20-billion in 1945 dollars. It was the R.C.M.P. who guarded everything: the arrival of gold in Halifax , on board the sealed trains to Ottawa and during the transportation to the Bank of Canada vaults. It was the R.C.M.P. who also guarded the paper securities during transport and an entire squad was stationed in the Sun Life's Buttress Room sub-basement as well as outside the main vault door in the floor below. For their service, constables of the R.C.M.P. were paid the munificent sum of $1.50 per day. Operation Fish was conducted with almost miraculous efficiency. Not a single shipment was lost to U-boat action. Not one ounce of gold or a single bond went missing. Practically all was conducted by lower echelon Bank of Canada employees and bottom-grade R.C.M.P. officers. At the end, secrecy reigned for years. There was no fanfare, no medals, even very little thanks. Just jobs done by a great many people - very very well.
************************************Back to top ************************************
Emergency Change of the U.S. Civil War .
Within less than a year of Fort Sumter , Americans of both the North and South disabused themselves of the notion that this was going to be a short, glorious conflict. It now became all too apparent that this "War Between the States" was going to be a long, hard slog. Accordingly, gold soon disappeared from circulation, even in the North. Everything disappeared in the South. Soon, northern gold was followed by the larger silver denominations, then the smaller, finally even by the lowly cents. All change became scarce in circulation. This was not the fault of the U.S. government; their mints were turning out coin that should have been sufficient for the country's needs. But coin was widely being hoarded and, much like France during the First World War, large mintages simply disappeared into the sugar bowls and cash boxes. After all, who knew what the fortunes of war might bring? U.S. federal paper was typically at a discount to coin and, in terms of gold, frequently worth less than half. When there is a need that governments can't fill, private citizens tend to do so. In this case, loose postage stamps began to be passed from hand to hand as change. It was a poor substitute since they soon became dirty and stuck together. Many were unhappy with the expedient and exasperated businesses sometimes prominently posted broadsheets such as that shown below. No sales except for "real" change.
Loose mint stamps, of course, were a pain. The next step was to protect them by enclosure in some sort of holder. In early 1862, that came to be small paper envelopes. In an era before the invention of glassine paper (and certainly cellophane), opaque paper was the best they could do. There were numerous such issuers, nearly all of whom used the envelopes as a means of advertising their businesses. But these were far from ideal as well. Open envelopes might have the stamps fall out and sealed ones made inspection impossible. By holding up to the light, something that was probably a stamp (or stamps) could be seen, but all too often sealed envelopes contained nothing more than rectangles of paper. Fraud will flourish where ever opportunity exists.
Stamp envelope for the New York Central Railway Company, early 1862. Companies such as these had to have the means of making change.
The next step was taken by John Gault of New York City with his invention of the world's first encased postage stamps for which he was granted a U.S. patent on August 22, 1862 . All of them served a secondary advertising purpose since, obviously, all cost more than face value to produce - apparently about 2¢ plus the postage stamp each. But they were also a very cheap means of mass advertising for the issuers. Because the manufacturing charge per item was the same, some issued essentially useless denominations, such as 90¢.
Gault used a thin brass case upon which the appropriate advertising was embossed on the back, the whole enclosing a mint postage stamp protected by a thin sheet of mica. By the numbers of these objects still extant, it indicates that no large amounts were initially issued - and certainly not for long. Customers willing to pay over face for this service may have dried up rapidly - but the U.S. post office got into the act as well, refusing to sell Gault the quantities of stamps that he required. But the main reason was that an entirely better solution was emerging even as Gault was securing his patent: the Civil War Cent series. The first of the true "Civil War Tokens" seems to have appeared in Cincinnati , Ohio , in the fall of 1862 - although Chicago had some similar "business cards" as early as 1861. Their success spread to New York by the spring of 1863, and until put a stop to by federal legislation in the next year, it is estimated that some 25-million of these little coins were struck and circulated, in seven to eight thousand varieties. All of them were smaller and lighter than the Indian Head Cent, offering a good profit margin - which might range up to half face for quantity. Most were copper. In general, they fell into three categories: (a) the "anonymous denominationals". These showed some sort of "denomination" but it was generally given as "NOT ONE CENT" (b) the "anonymous patriotics". These showed no denomination at all but rather some patriotic theme, which may have psychologically helped acceptance and circulation. (c) the "store cards". These were not anonymous but served the dual purposes of advertising and a circulating medium. The two types of anonymous cents were frequently from stock dies on hand at the various "mints", mixed and matched every which way. There was no way to tell who the issuer was - and no intention that this be the case anyway. Struck for as little as half face, the profit was taken and redemption not even contemplated
Top: "Anonymous denominational", 1863, imitating an Indian Head Cent Bottom: "Anonymous Patriotic", 1863. Both illustrations circa 2x. Nor was there much more intention as far as the business card types were concerned. Although the business was named, there was no promise to pay on them - or anything other than a simple business card. If people wanted to pass his business cards as money, well, that was no concern for the issuer. In fact, it was just this attitude that caused the suppression of the Civil War Cents. In New York , Gustavus Lindenmeuller had issued a huge number of his business cards which for a time had passed as cents. When the Third Avenue Railroad of New York asked him to redeem a large number of his tokens - which they had accepted as fare - he simply laughed at them. They would have had no recourse under the law, but such incidents sparked an Act of Congress in 1864 forbidding private individuals from issuing any form of money.
It was the U.S. federal government that got into the act to address this shortage of small change. Taking their lead from the loose postage stamps, and Gault's encased ones, the government began to issue small fractional currency notes in 1862. The first issue, consisting of 5-, 10-, 25- and 50-cent denominations not only pictured actual postage stamps (5¢ "Jeffersons", 10¢ " Washingtons " with the 25¢ showing 5x5¢ and the 50¢ 5x10¢), but were at first issued in sheets with the notes separated by perforations. That
"Business card" token, John Washburn, Columbia City , Ind. , 1863. Circa 2x Roughly an imitation of the Flying Eagle cent, it is also in white metal
shown below is of the earliest issue, in this case its retained selvage at the left even displaying the Plate Number as being 3.
Before long, these notes were also issued as straight-edge types and in all cases, the denomination was shown on the back in large numerals within lathework. There were five issues of the fractional notes in all: Second Issue (1863) 5-, 10-, 25- and 50-cent denominations but not showing postage stamps or their images; Third Issue (1863) 3-, 5-, 10-, 25- and 50-cent denominations; Fourth Issue (1863) 10-, 15-, 25- and 50-cents; Fifth Issue ( Issued 1874/5 but the notes themselves dated 1863 or 1864) 10-, 25- and 50-cent denominations. Practically all the above notes exist in a number of varieties.
Since that time, the U.S. has not issued paper currency in values of less than a dollar.
Old Bank Buildings: As They Look Today
Photos from the files of Jim Charlton
Bank of Upper Canada building, Toronto
Established and run by the Family Compact, the Bank of Upper Canada, founded in 1819, was at one time practically the only bank in Upper Canada , operating through numerous branches. Unwise real estate speculations and loans in the 1850s crippled the Bank in the 1850s and brought about its ultimate demise in 1866, to the great loss of shareholders, depositors, note holders and even the government.
Bank of Upper Canada, 1d token, 1852. (actual size: 33mm) Large issues of both ½ d and 1d tokens were made in 1850, '52, '54 and '57.
Bank of Upper Canada . $1, 1861. One of the last Toronto issues.
Original Toronto branch of the Bank of Montreal .
Bank of Montreal . $10, issue of 1923. The Toronto branch of the Bank of Montreal was secondary only to the head office in Montreal itself and the bank buildings often appeared on the backs of bank notes. That of Toronto appeared: $5(1891); $5 (1895); $50 (1903 - shared with head office); $10 (1904); $10 and $50 (1912); $10 and $50 (1923); $10 and $50 (1931); $10 (1935); $10 (1938).
|
November 2009" Canada : Democracy's Strongbox" "Emergency Change of the U.S. Civil War" "Old Bank Buildings as They Now Look"
|
|---|
