Banks falter following 1870s ‘Long Depression’

An 1882 $4 banknote, the first of that denomination issued by the Dominion of Canada, crossed the block as Lot 955 of the 2018 Toronto Coin Expo Spring Sale. Described as 'Very Fine,' it sold for $4,080 (including buyer’s premium). Photo by Geoffrey Bell Auctions.

The relative success of Canada’s Dominion Bank Act, which shifted control of the banking industry to the government beginning in 1870, was exacerbated by the Long Depression a few years later. A worldwide recession, the Long Depression was triggered by the so-called “Panic of 1873,” which was driven by several factors and quickly strained bank reserves in Europe and then North America. Then the world’s worst economic crisis – until the Great Depression that followed the stock market crash of 1929 – the Long Depression was tied to the widespread demonetization of silver plus rampant speculative railroad investments. A young country of only six years, Canada wasn’t excluded from what would become “the first truly international crisis,” according to the 1997 book, Business Cycles and Depressions: An Encyclopedia. Continue reading →

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