In the beginning of Canada, the Dominion Government did all of its banking through the Bank of Montreal. Canadian banknotes were printed by the federal Finance department, but private banks were also allowed to issue banknotes, mostly as small bills. Then the Depression happened.
In 1933, R.B. Bennett called a Royal Commission to study the feasibility of a central bank. It was chaired by Hugh, Lord Macmillan, the standing counsel to the Dominion of Canada in London and a Lord of Appeal in Ordinary. His fellow commissioners were the Premier of Alberta, the general manager of the Banque Canadienne de Montreal, a director of the Bank of England, and former finance minister the Rt. Hon. Sir William Thomas White. It recommended the establishment of a central bank. This was supported by farmers who wanted easier credit, the Mayor of Vancouver and eminent monetary reform advocate Gerald Grattan McGeer, and the Royal Bank of Canada, who would be delighted if the Bank of Montreal lost such a big client.
Parliament passed the Bank of Canada Act in 1934 and the Bank was founded the next year. It held sweeping new powers to regulate interest rates and monetary policy and took over the government’s printing of money (private banks weren’t stopped from doing so until 1949). It its original form the Bank was privately owned, like the US Federal Reserve Board is today. It became a “special” Crown Corporation in 1938, with the Governor as its CEO.
The Governor of the Bank of Canada is an extremely powerful economic post usually held by a bland and uninteresting man that most people know for putting his signature on all the paper money. The Governors of the Bank of Canada have been:
- Graham Ford Towers CC (1897-1975), 1934-54. The first Governor, he oversaw the Government’s financing of World War II and the postwar economic boom. He went to McGill and was a longtime executive of the Royal Bank, who first hired him on the advice of his economics professor, Stephen Leacock, the famous humourist. It has long been rumoured that Towers was the secret lover of Maryon Pearson, wife of Lester Pearson.
- James Elliott Coyne (1910-2012), 1955-61. Coyne was a Rhodes Scholar and served in the RCAF in WWII. He served as executive assistant to Graham Towers and as the Deputy Governor before becoming Governor. In that role, he openly criticized the economic policies of the Conservative government of John Diefenbaker and was ultimately forced to resign in 1961. He lived to be 102; his son is the columnist Andrew Coyne.
- Louis Rasminsky CC CBE (1908-98), 1961-73. LSE educated, he moved to Geneva in 1930 to serve the League of Nations as a banking expert. (He sent a telegram proposing to his girlfriend in Toronto, saying he was making 13,700 Swiss francs per year. She wired him back, asking what the exchange rate on the Swiss franc was.) He joined the Bank of Canada in 1940 and served as Deputy Governor under Coyne. He was originally excluded from the swanky Rideau Club in Ottawa for being a Jew, but was let in after the club was pressured by Lester Pearson.
- Gerald Keith Bouey CC (1920-2004), 1973-87. Bouey, despite his best efforts, is seen by many as the worst Governor, presiding over the disastrous economic policies of the Trudeau and Mulroney eras. A graduate of Queen’s, Bouey became Deputy Governor in 1969 after spending 21 years in the Bank’s research division.
- John William Crow OC (born 1937), 1987-94. An Englishman, Crow went to Oxford, spent the 1960s working for the IMF, and moved to Canada in 1973 to serve as Deputy Chief of Research for the Bank of Canada. He was Deputy Governor from 1981 to 1987. He oversaw decreases in unemployment and inflation, but was also the beginning of the Canadian dollar’s steep drop in value in the 1990s. John Crow was the last Governor to sign a Canadian one-dollar note, after their production was ceased in 1989 in favour of the loonie.
- Gordon George Thiessen OC RNO (born 1938), 1994-2001. Thiessen earned a Ph.D. from the LSE and worked for the Bank of Canada for most of his career. Thiessen’s tenure was almost perfectly concurrent with Paul Martin’s tenure as finance minister, in which the economy improved at the cost of the devaluation of the dollar. In 1998 Thiessen instituted a policy in which the bank ceased controlling the value of the dollar against other currencies. This system, wherein a currency’s value is determined solely by markets, is known as a “floating currency”, and the Canadian dollar is widely considered to be the purest example of this phenomenon. Thiessen also consulted the Swedish government in the 1990s on its floating of the krona, for which Thiessen was made a Knight of the Order of the Polar Star. It was also Thiessen who discontinued the two-dollar bill, replacing it with the toonie.
- David Allison Dodge OC FRSC (born 1943), 2001-08. Dodge earned a Ph.D. in economics from Princeton. He taught economics at Queen’s, Johns Hopkins, UBC and Simon Fraser University before being appointed Deputy Minister of Finance in 1992, then deputy Minister of Health in 1998 before becoming Governor. His time as Governor was marked by a sharp increase in the value of the dollar. The end of his tenure saw the beginning of the current financial crisis.
- Mark Joseph Carney (born 1965), 2008-13. Born in Fort Smith, N.W.T., he earned a bachelor’s degree in economics from Harvard and a DPhil from Oxford. After working for Goldman Sachs for 13 years, he went to the Department of Finance, where he oversaw the sale of the government’s shares in Petro-Canada. As Governor, he was widely praised for leading Canada through the financial crisis without major catastrophe, ultimately leading to his resignation in 2013 to accept the post of the Governor of the Bank of England. Carney’s time as Governor saw the abolition of the penny and the introduction of the modern polymer banknotes.
- Stephen S. Poloz (born 1956), 2013-now. Poloz holds a doctorate in economics from the University of Western Ontario and was president of Export Development Canada before becoming Governor.
And now, for fun, here’s every Governor’s banknote signature as it appears on a banknote, plus Stephen Poloz’s.