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The silver nuisance was an economic issue in mid-19th century Canada, specifically in Ontario and Quebec. American fractional silver coins were exported to Canada in great quantities, where they were used for day-to-day transactions due to a shortage of small coins. However, their bullion value was lower than their face value in gold, and they were not accepted by banks and some merchants, or only at a discount.

The silver nuisance was solved by the government's exportation of American silver coins from 1868 to ~1870.

US silver fractional coins circulated in Canada during the mid-19th century.^[1] They started being exported to Canada some years before the American Civil War.^[2] The circulation of US coins increased greatly during the American Civil War as silver was used by Union army agents to buy Canadian grain and cattle. A substantial volume of US silver coins was also imported by Canadian brokers,^[1] and a common scheme involved exporting American silver coins to Canada and buying gold.^[2] Many silver coins were also imported in Canada after specie payments was suspended in 1862 in the US^[3] to be replaced by greenbacks.^[4]

US coins were initially well-received due to a scarcity of small coins for day-to-day transactions, which generally amounted to less than one dollars. They were preferred to the 1858 Canadian 20-cent coin due to familiarity.^[1] They overtook British silver in popularity during the 1860s.^[4]

While merchants and individuals accepted American silver coins at par, the silver that made fractional coins was worth ~2,5% less than the coins' face value^[1][4] in gold after the American revaluations of 1853.^[4] Banks thus only accepted these coins at a discount in mid-1862,^[5] and then refused to accept them at all.^[i][1][4][5] This was problematic for merchants who continued using American silver coins because of competitive pressure, lack of alternatives and customary acceptance of US coins at par.^[1]

Many merchants, especially in Western Canada, eventually also started refusing American fractional coins or only accepting them at a discount to protect themselves. In 1863, the Post Office started to only accept American silver coins at a discount.^[4]

This was mainly a problem in Ontario and Quebec, as the Atlantic colonies discounted US coins at 80% of their face value by law.^[1]

After the discount on silver to gold rose in the 1860s, there were requests for government action. In 1868, the government exported $1,000,000 worth of U.S. silver coins to New York.^[1] Then in 1869 private interests^[3] exported $2,000,000 worth of U.S. silver coins to New York^[1] with William Weir as broker,^[3] who assumed costs and risks.^[1]

Weir and Francis Hincks elaborated a plan in 1870 to solve the silver nuisance.^[1][3] Silver coins were bought by banks^[1] recruited by Weir,^[3] in large part with their own banknotes. These coins were then exported to New York and London to be sold for gold. In total, over $5,500,000^[1] or over $7,000,000 worth of coins were exported,^[3] of which $500,000 were exported by Weir himself.^[1] The coins were sold at a discount of 5%-6%,^[1][4] for a net cost of ~$118,000.^[1]

William Weir

Francis Hincks

The transport costs and market risks were assumed by the government. Banks were given a small commission and a deposit up to $100,000 by the government. The plan was opposed by brokers^[1] and businessmen (including the Montreal Board of Trade).^[3]

To replace the U.S. coins, the government immediately issued 5, 10, 25 and 50 cents coins,^[4] $1 and $2 notes, and 25-cent shinplasters that could be redeemed for gold.^[1]