The monetary system of Canada consists of gold, paper currency, and silver and copper subsidiary coins, the latter, however, not being legal tender for amounts over $10 and 25 cents respectively. The unit is a dollar of 23.22 grains of pure gold. Gold coins in the United States and the British sovereign (worth $4.86%) are legal tender for any amount, and still form the bulk of the gold reserves of the government and of the banks, as it is only of recent years that Canada has had a distinctive gold coinage of its own. Gold coin is seldom seen in circulation and its use is practically confined to reserve purposes and international exchange operations. Silver is used for the subsidiary coins of the denominations from five to fifty cents and copper for the cents. With these exceptions, paper currency is practically the only form of money used in Canada. It consists of two kinds, Dominion notes and bank notes.
Dominion notes, or "legal tender," as they are often called, are issued by the Dominion government under the authority of the "Dominion Note Act," which permits an unlimited issue under the following conditions: the Minister of Finance shall always hold for the security and redemption of Dominion notes up to and including $30,000,000, issued and outstanding at any one time, an amount equal to not less than 25 per cent of the amount of such notes in gold, or in gold and securities of Canada, the principal and interest of which are guaranteed by the government of the United Kingdom. The amount held in gold, however, shall never be less than 15 per cent of the notes so issued and outstanding. As security for the redemption of Dominion Notes issued in excess of $30,000,000, the Minister must hold an amount in gold equal to such excess. The total amount of gold and specie held by the government on June 30, 1913, was $100,437,593, of which $93,863,538 was held in connection with the outstanding amount of Dominion notes on that date as follows:
Total amount of outstanding circulation
Less amount protected by 25% of gold
Excess over $30,000,000 protected by full amount of gold .................
Total gold held account Dominion notes..........
The total amount of gold held by the banks at the same date was $37,944,392 (a small proportion of this, perhaps three of four per cent, being subsidiary silver), making a total of $138,381,985 of gold held by the banks and the government or, allowing for the silver, about $133,000,000. This amount will represent the total gold holdings of Canada, as there is practically none in circulation among the public. If any British or American gold is paid out by tourists or others, it is immediately exchanged or deposited at a bank.
The total amount of circulating notes in the hands of the public on June 30, 1913, was, in round figures, $127,500,000, of which $105,700,000,1 (or over 82 per cent) was in the form of bills issued by the chartered banks, the balance $21,800,000, being in the form of Dominion notes. These figures will give an idea of the important part the bank circulation has played in the upbuilding of the country. Valuable as the note issue privilege is to the banks it has proved even more valuable to the country, since to the banks, as well as the railways, may be ascribed the credit for the phenomenal development of Canada during the past twenty years.