The Bank of Upper Canada, Toronto’s first bank, was established on April 21, 1821, just 25 years after Lieutenant Governor John Graves Simcoe left the fledgling settlement of York. Read more on toronto1.one.
The Need for a Local Bank and Choosing the First President
By 1821, York had a population of approximately 2,000 residents, with 209 houses, 27 shops, and 5 warehouses. It was clear that a local bank was essential for growth, eliminating the need to travel to Montreal or New York for loans. In response, a group of wealthy and influential businessmen founded the Bank of Upper Canada.
The bank’s establishment was not without controversy. Many York residents were dissatisfied that all the bank’s directors were Tories, closely associated with the Family Compact. Nonetheless, the businessmen appointed William Allan, one of the province’s wealthiest and most respected individuals, as the bank’s first president.
The Bank of Upper Canada opened in July 1822 in a repurposed store at the southeast corner of Frederick and King Streets. By 1827, it relocated to the northeast corner of George and Duke Streets (now Adelaide Street), on land purchased from Sir William Campbell, whose mansion was situated on Duke Street. The new two-storey building was constructed in a neoclassical style with limestone blocks. Its impressive portico, designed by John G. Howard—later the donor of land that became High Park—was added in 1844. The portico featured four large Doric columns on the south side, with rectangular lantern doors topped by a semi-circular transom and a balcony above. The interior was finished with mahogany.
In 1849, following riots in Montreal, Canada’s capital was relocated to Toronto. That same year, the Bank of Upper Canada was granted the right to mint copper coins.
Bank Crises and Ownership
The Bank of Upper Canada was a success, significantly financing projects that contributed to the city’s development. It introduced a branch banking system, establishing Toronto as the financial hub of the province. The bank also safeguarded savings, although it initially did not pay interest on accounts. It faced no competition in York until the 1830s, when other banks or branches were established. These competitors began offering interest on deposits, prompting the Bank of Upper Canada to follow suit.
In 1857, the decimal system was adopted for currency, replacing pounds with dollars, based on the U.S. system.
However, the bank faced challenges. The economic crisis of 1857—following the end of the Crimean War—severely affected the institution, which had extended loans to land speculators, particularly those investing in railway lands. The situation improved temporarily in 1861 with the onset of the U.S. Civil War, as Toronto merchants sold supplies to the North. But after the war ended in 1865, another economic downturn ensued. By 1866, a combination of bad loans, economic instability, and competition from 11 rival banks led to the collapse of the Bank of Upper Canada.
In 1870, the bank building was purchased by the De La Salle Institute, a Roman Catholic boys’ school. They expanded the structure, adding a three-storey mansard-roofed building on the eastern side, unifying the two buildings into one. In 1874, they acquired Toronto’s first post office next door, integrating it with the other two buildings. Mansard roofs were added to the bank and post office to create the appearance of a single structure. The school occupied the premises until 1913.
In 1914, the former bank building became a recruitment center for the Royal Flying Corps. After the war, it was acquired by Christie Brown and Company, Canada’s largest baking company. The bank building stood vacant by 1956, falling into disrepair. Eventually, Sheldon and Alice Godfrey purchased and restored it. In 1978, the former bank was designated a National Historic Site of Canada.
Redemption of Banknotes Issued by the Bank of Upper Canada
Paper currency was a banking innovation of the era, experimented with during the American Revolutionary War. However, it suffered from significant devaluation, leading to widespread mistrust. Banknotes were not legal tender but rather promissory notes issued by state banks, akin to checks. These notes promised to pay the bearer “real” money, usually coins, if returned to the issuing bank. Any bank unable to redeem its notes would be forced to close permanently.
The Bank of Upper Canada issued far more notes than it could redeem, as Upper Canada was a poor province. These notes circulated extensively, facilitating trade but rarely returned to the bank.
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