Wednesday, April 07, 2010

When financial journalists write history

Riffing on the flight of the Canadian loonie toward parity with the greenback, the Globe's Report on Business publishes a chronology of the Canadian dollar. The piece mostly illustrates how smart people go all brainless when they turn to history, for the Globe's summary has almost no useful information on the evolution of the dollar. Here, for instance, are two of the first three items:
Early 1600s: Beaver pelts are the one universally accepted medium of exchange, though wheat and moose skins are also legal tender


June 8, 1685: The first issue of card money occurs, which is printed on playing cards. The practice is criticized because it's easy to counterfeit.
Except... Throughout this period Canada had a currency, the currency of France, then the colonial power. The unit of value was the livre, subdivided into twenty sols and twelve deniers (much like the old pre-decimalization British pound, shilling, pence, which indeed took their traditional abbreviations from the French terms). Sure, people traded in the standard commodities, but they denominated value in livres just as we would in dollars.

The card money, in the second example, was not money at all, but more like a cheque drawn on a government account. When hard currency was scarce in 1685, the colony's financial official did indeed distribute IOUs on playing cards, but what made them valuable was his signature for the specified amount, denominated in livres to be redeemed when the next shipment of hard currency arrived. The colony's early adoption of government paper might be considered interesting to financial journalists, if they really thought about history.

Going on, the list fails to mention either the adoption of the British pound or its replacement by the Canadian dollar. But you get the picture.

The full text of the RoB's source material, the Bank of Canada's History of the Canadian Dollar by James Powell, is considerably better than this use of it might suggest. You can download the whole text here.

[Thanx Andrew Smith]
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