5 Cents – Canada

In 1944, Canada’s currency situation was fundamentally shaped by the extraordinary pressures of total war. The nation’s economy was under strict federal control, operating under the War Measures Act and guided by the Wartime Prices and Trade Board. To prevent the inflation that had plagued the First World War, a comprehensive system of wage and price controls had been implemented in 1941, successfully stabilizing the cost of living. This control, combined with rationing of key goods, meant that the purchasing power and circulation of Canadian dollars were heavily managed, with the primary economic goal being to direct maximum resources toward the Allied war effort.

Financially, the war was being funded through a mix of high taxation, domestic war bond campaigns (notably "Victory Bonds"), and careful monetary policy. The Bank of Canada, nationalized in 1938, maintained low interest rates to keep government borrowing costs manageable. Crucially, Canada's foreign exchange was under a fixed regime, with the Canadian dollar pegged at a value of 90.9 U.S. cents (or US$0.909) since September 1939. This "fixed peg" was maintained by the Foreign Exchange Control Board, established that same year, which held a monopoly over all foreign currency transactions to conserve U.S. dollar reserves for essential war purchases.

Looking ahead, 1944 was a year of planning for the postwar monetary order. Canadian officials, including the influential Deputy Minister of Finance, W. C. Clark, and his deputy, John Deutsch, were actively involved in the international Bretton Woods Conference in July. There, Canada helped shape the agreements that would establish the International Monetary Fund and the World Bank, committing to a system of fixed but adjustable exchange rates. While the wartime peg to the U.S. dollar would remain until 1946, the groundwork was being laid for Canada's future, more independent, and sometimes volatile, approach to currency valuation in the coming decades.