The earliest Canadian banks, whether chartered or private, issued their own notes. Many merchants did as well. In addition to the private issues were government notes on the municipal, provincial, and federal levels. This tradition of government vs. private issues has persisted to some degree right up to the present day.
Canada's bank notes begin with the short-lived Canadian Banking Company in Montreal in the 1790s and continued with the early issues of the Montreal Bank, the Quebec Bank and the Bank of Upper Canada after the War of 1812. Over the years many banks came and went. Gradually, by the twentieth century, the number of banks was reduced through absorptions and mergers, leaving the familiar banks where we do our business today.
Bank notes not only reflect the fascinating history of our reputable financial institutions but of a number of fraudulent ones as well. Consequently, some notes have survived to be enjoyed by collectors because the bank that issued them ultimately failed, leaving them unredeemable, or because they were issued by a sham bank and were never redeemable at any time. Such losses to holders of notes of charter banks ended with the 1890 Bank Act revision, which provided for a fund to guarantee the redemption of notes of failed banks. Subsequently, notes of the few banks which failed after 1890 were sometimes redeemable at even more than their face value, because they gathered interest from the time of the bank suspension of their redemption until redemption through the fund which was provided for.
Most of the paper money now in circulation is issued by our central bank, the Bank of Canada. In 1935, with the opening of the Bank of Canada, the withdrawal of Dominion notes was ordered and the chartered banks were required to gradually reduce the circulation of their own notes. It was the government's intention to essentially replace both types of notes with Bank of Canada notes by 1950. The latest date to appear on a chartered bank note is 1943 (the Royal Bank of Canada $5). In 1950 the chartered banks paid over to the Bank of Canada $13,302,046.60, the face value of their outstanding notes, and since that time the Bank of Canada has been responsible for their redemption. As the chartered bank notes are redeemed, the Bank of Canada credits the amounts of the banks that originally issued the notes.
The opportunities for specialization within the Canadian paper money series are numerous. In the chartered series some collectors attempt to assemble a collection of all notes issued by a particular bank or a currently existing bank and all the banks that it absorbed along the way. Others save a single note from each bank. Still others collect notes payable in a particular section of the country, that is, they collect on a regional basis.