What was the Purpose of the Nova Scotia “N.S.” Overprint on Canada’s Third Issue Bill Stamps?

Shown here are three time drafts made between 1869 and 1872 in Nova Scotia, drawn on parties in the U.S. As such they were subject first to Canada’s tax on promissory notes, drafts and bills of exchange; then upon acceptance in the U.S. to the same tax as domestic time drafts. The handwritten draft shown in Figure 1, made September 9, 1869, by B. J. Johnson & Co. at Liverpool for $50 “American Gold” and drawn on Palmer & Johnson in Bangor, Maine, bears a Canada 3¢ Third Issue bill stamp with “N.S.” overprint and a U.S. 5¢ Inland Exchange, the latter tied by “PAID MERCHANTS BANK BOSTON” embossed handstamp. The drafts shown in Figures 2 and 3 were both drawn by Gilbert Sanderson at Yarmouth on George W. Hunter

in Boston. The former, made May 29, 1872, for $1600 in gold, bears Canada 50¢ “N.S.” overprint plus unoverprinted 5¢ and 3¢ bill stamps, and on reverse U.S. Third Issue 70¢ and Second Issue 10¢. The latter, made August 22, 1872, for $1800 in gold, bears 40¢, 10¢ and 5¢ bill stamps, now all unoverprinted, and alongside U.S. Third Issue 70¢ and Second Issue 20¢.

Other considerations aside, these usages of the U.S. Third Issue 70¢ are extraordinary. Some 15 years ago only one document bearing this stamp had been recorded (Mahler, 1995). That total has now climbed to eight, but these remain underappreciated rarities.

Figure 1. 1869 time draft made

at Liverpool, Nova Scotia, for $50

“American Gold,” drawn on party

in Bangor, Maine, bearing Canada

3¢ Third Issue bill stamp with “N.S.” overprint

and U.S. 5¢ Inland Exchange.

The U.S. taxes here were assessed at the Inland Exchange rate of 5¢ per $100, in effect since August 1, 1864; they were correctly paid on all three drafts. But how were the Canadian taxes assessed? What was the purpose of the “N.S.” overprints, and what rules governed their use?

Thanks to the internet and its search engines, the answers were readily forthcoming. Before committing them to print I searched the philatelic literature1 to determine if they had already appeared elsewhere. The result was a mixed bag. Most articles dealt with the characteristics of the overprint and of possible forgeries, without

Figure 2. May 1872 time

draft for $1600 bearing Canada

Third Issue 50¢ “N.S.”

overprint plus unoverprinted

5¢ and 3¢, and on reverse U.S.

Third Issue 70¢ and Second

Issue 10¢.

Figure 3. August

1872 time draft for

$1800 bearing Canada

Third Issue 40¢, 10¢

and 5¢, and U.S.

Third Issue 70¢ and Second

Issue 20¢.

explaining or even considering why it had been used. To his credit, MacDonald (1972) at least confessed,

Why it was felt necessary to overprint the Canadian bill issue for the province of Nova Scotia, I have no idea. Possibly the rugged individualism of Howe and Woodgate still survived and demanded that the provincial revenue be separate and easily definable.

“N.S.” Overprint a Currency Control DeviceLehr (1986) reported the discovery of an early answer in the 1894

inaugural issue of The Canadian Philatelic Journal:

It has been a matter of curiosity among revenue collectors why the last issue of Canadian Bill stamps were surcharged N.S. in use in Nova Scotia, as the currency was apparently the same. This surcharging must have been done by departmental order only, as there is no trace of it in the orders of Council or in the Dominion Acts. The idea was this, there was a difference of 2⅔ percent between Canadian & Nova Scotia currency, that is $1 in Canada was worth $1.03⅔ In Nova Scotia. It will be seen that there would be a good opening for defrauding the revenue by the Canadian merchants and others buying their bill stamps in Nova Scotia. After being in use for a comparatively short time the currency was straightened out to agree with the Canadian, and the necessity for surcharging done away with, their use being limited to only one province and for such period of time has made them quote rare, especially the 7, 8, 30, 40 and 50 cents, and the 1, 2, 3 dollar stamps.

We cannot see why this was not noticed before when the first & second issue was in use.

This explanation is substantially correct, but leaves unanswered questions. As Lehr noted, “The two figures quoted obviously should both be either 2⅔ or 3⅔ to interrelate. The 3⅔ cents difference quoted represents a 3.54% difference. In any case this lead represents the first printed explanation of the purpose of the N.S. overprint. It should allow Nova Scotia or Revenue scholars a means to explore this further.”

In fact the first paragraph of the article quoted by Lehr had been lifted almost verbatim from the September 1888 issue of The Halifax Philatelist, and the original reads “$1.02⅓ in Nova Scotia,” not “$1.03⅔”! However, this merely lessens the discrepancy between the

two quantifications of the difference in currency values, it does not eliminate it.

As clarification has apparently never been forthcoming in print, let us proceed, praying forbearance by Canadian readers for occasional forays into elemental history or geography necessary for my own understanding.

Dominion Bill TaxesThe question posed in the final sentence of the 1894 article is easily

answered. The “N.S.” overprint did not appear on Canada’s First and Second Issue bill stamps because they were used only in the Province of Canada, comprised of Canada East and Canada West, previously named Lower Canada and Upper Canada, soon to be renamed Quebec and Ontario. The Third Issue stamps, in contrast, were used throughout the newly-formed Dominion of Canada, which included the maritime provinces of New Brunswick and Nova Scotia as well as Quebec and Ontario. The Dominion came into being July 1, 1867;2

legislation extending the bill stamp taxes of the Province of Canada to the new Dominion was passed December 21, 1867, to take effect February 1, 1868; and the use of Third Issue stamps appears to have coincided with the onset of the new taxes.3

The enabling legislation, “An Act to impose duties on Promissory Notes and Bills of Exchange” (31 Victoria 1867, Ch. IX), imposed the following taxes:

Amount Tax Less than $25 Exempt$25.00 1¢Above $25 to $50 2¢Above $50 but less than $100 3¢$100 and above Made singly 3¢ per $100 or fraction thereof Made in duplicate On each part, 2¢ per $100 or fraction thereof Made in two or more parts On each part, 1¢ per $100 or fraction thereof

1. Made infinitely easier by the availability online of scans of most if not all issues of BNA Topics, Canadian Revenue Newsletter, and The Canadian Philatelist (and various predecessors and related publications including The Halifax Philatelist), many transcribed and searchable.

2. The Canadian equivalent of July 4, 1776, in the U.S., commemorated each July 1 as Confederation Day. In the present context it is worth noting that Nova Scotians were overwhelmingly opposed to confederation.

3. Ryan (1994), Ryan and Woike (2000). Recorded usages prior to February 1, 1868, were evidently back-dated.

For multi-part bills of exchange in amounts less than $100, the interpretation of these taxes has been problematic. This is discussed in the Appendix.

The following Section delineated the duty payable in Nova Scotia:

7. Provided, that as regards any Promissory Note, Draft or Bill of Exchange on which the duty is payable in Nova Scotia; the amount on which the duty is payable under this Act, and the amount of such duty, shall be reckoned in the currency of that Province, and the stamped paper and stamps to be used there shall be marked according, and shall not be used in any other part of Canada.

Here is the authorization for the “N.S.” overprint that the anonymous author of 1888 could not find, and the underlying justification: the currency of Nova Scotia differed in value from that used in the rest of the Dominion.

Nova Scotia currency was in fact worth 2⅔% less than Canadian; in its most compact form, the relationship between the two was that 75¢ Nova Scotia currency was worth 73¢ Canadian. Without the “N.S.” overprints and the prohibition against their use outside Nova Scotia, it would have been possible to start with 73¢ Canadian, convert it into 75¢ Nova Scotian and buy 75¢ in stamps there, depriving the government of 2¢. On a large scale the potential loss was considered sufficient to elicit the preventive measures taken.

Differing Currencies ExplainedHow did it happen that the value of the two currencies differed? In

the Province of Canada, the British gold sovereign had been rated4 in 1842 at one pound, four shillings, and four pence in local currency, while the U.S. $10 gold eagle was valued at two pounds, ten shillings.

The Currency Act of 1853 confirmed these ratings, and set the Canadian dollar at par with the U.S. dollar. It follows that the sovereign was rated at C$4.86⅔.5 If this seems a bit arbitrary, an essentially equivalent calculation can be based on the gold content of the coins.

In Nova Scotia, though, the sovereign was rated higher, at $5. This was perhaps in part a matter of convenience; it certainly simplified calculations. A more fundamental explanation is that Nova Scotia had particularly strong ties to Great Britain. As summarized by Smith (2005),

By the time of the Revolution, Nova Scotia [“the 14th Colony”] was not an established, developed commonwealth like the first thirteen, but a still-fledgling frontier colony being re-settled by British subjects, predominantly from

4. “Until the middle of the nineteenth century, each British colony in North America regulated the use of currency in its own jurisdiction. Although pounds, shillings, and pence (the currency system used in Great Britain) were used for bookkeeping (i.e., as the unit of account), each colony decided for itself the value, or “rating,” of a wide variety of coins used in transactions or to settle debts. These included not only English and French coins, but also coins from Portugal, Spain, and the Spanish colonies in Latin America—notably Mexico, Peru, and Colombia. Once rated, coins became legal tender.” (Powell, 2005)5. The sovereign, though it bore no denomination, had a nominal value of one pound sterling. There are 20 shillings in a pound, 12 pence in a shilling. The $10 gold eagle was equivalent to 600 pence local currency and the sovereign to 292 pence, or $(2920/600) = $4.86⅔. Figure 4.

New England. Little Nova Scotia was nonetheless home to a disproportionately large Royal Navy base and later an entire regiment of the British Army intended specifically to enforce loyalty to the Crown, so the British government had a military influence in Nova Scotia unparalleled in the other colonies. And Nova Scotia was not connected contiguously to the settled regions of the other colonies. …

Nor did Nova Scotia have well-developed overland connections with the rest of Canada. It is an “almost-island” connected to the mainland by an isthmus only some 15 miles wide (Figure 4), and for decades the sea was its only highway; this heightened the importance of commerce with Britain.

Small Puzzles SolvedAccording to the tax table, the draft shown in Figure 1, for $50

American gold, if made anywhere else in the Dominion, would have been taxed at 2¢. In Nova Scotia, though, the law required “the amount on which the duty is payable … shall be reckoned in the currency of that Province”; since US$50 was equivalent to NS$51.33, this bumped the tax to 3¢.

Similar considerations explain the 2¢ tax on a draft described previously (Mahler, 1999) involving the same parties, made April 4, 1870, for $25 gold; elsewhere the tax would have been only 1¢, but in Nova Scotia it was 2¢. This draft is doubly extraordinary in that the 5¢ U.S. tax was paid with a bisected 10¢ stamp.

“N.S.” Overprints Obsolete July 1, 1871Nova Scotia retained its own currency until July 1, 1871, the

effective date of the Dominion’s Uniform Currency Act passed April 11, 1871, which established that the denominations of Canadian currency would be dollars, cents, and mills, and fixed the dollar’s value by rating the British sovereign at C$4.86⅔ and the U.S. $10 gold eagle at C$10—the same rates established in the 1853 Currency Act.

An earlier version of this Act (31 Victoria 1868, Ch. XLV), proposed soon after establishment of the stamp taxes but never passed, had specifically repealed Section 7 of the stamp Act, quoted above, which governed stamp duties in Nova Scotia:

13. The seventh section of the Act of the Parliament of Canada passed in the present session and intitled: An Act to impose Duties on Promissory Notes and Bills of Exchange,

shall be repealed as regards Promissory Notes, Drafts and Bills of Exchange made, drawn or accepted in Nova Scotia upon or after the said [blank] day of [blank] 1868, and the amount on which duty is payable under the said Act upon such Promissory Notes, Drafts or Bills of Exchange shall be reckoned in the currency of Canada as hereby established, as shall also any penalty incurred under the said Act in Nova Scotia on and after the said day.

This would have neatly rescinded the requirement for use of the “N.S.” overprints. The Uniform Currency Act of 1871, though, made no direct mention of stamp duties, and instead made the “N.S.” overprints obsolete only in indirect and roundabout fashion. It began by abolishing the separate currency of Nova Scotia:

1. On and after the first day of July, in the present year of our Lord one thousand eight hundred and seventy-one, the currency of the Province of Nova Scotia shall be the same as that of the Provinces of Quebec, Ontario, and New Brunswick, in all of which one currency, of the uniform value hereinafter mentioned, has been and is now used.

Recall that Section 7 of the 1867 stamp Act stipulated that in Nova Scotia “the amount on which the duty is payable under this Act, and the amount of such duty, shall be reckoned in the currency of that Province.” After July 1, 1871, “the currency of that Province” was the Dominion currency. But what of the further stipulation in Section 7 that “stamps to be used there shall be marked according, and shall not be used in any other part of Canada”? The need for marked stamps had been eliminated, but the requirement to mark and use them was not directly addressed. This dilemma appears to have been resolved by the final sentence of the Uniform Currency Act, a blanket provision repealing “all other Acts and parts of Acts inconsistent with this Act.” The requirement to specially mark stamps for use in Nova Scotia, on account of the now-abolished currency previously used there, was clearly inconsistent with the Uniform Currency Act.

“N.S.” Overprints after July 1, 1871After July 1, 1871, use of the “N.S.” overprints was no longer

required, but is occasionally observed. Figure 5 shows a first of exchange for $2500, from a set of three made January 26, 1872, by Dennis & Doane of Yarmouth, drawn on George Hunter & Co. of Boston. The 1¢ per $100 rate for bills made in sets of three or more

was paid by 5¢ “N.S.” and unoverprinted Third Issue 20¢. On the reverse are U.S. Third Issue $1 and Second Issue 25¢. Figure 2 shows the 50¢ “N.S.” used on May 29, 1872, together with unoverprinted 5¢ and 3¢.6 Another first of exchange of Dennis & Doane drawn on Hunter & Co. in Boston, made June 24, 1872, for $2000 bears two Third Issue 9¢ and a 2¢, now all unoverprinted, along with U.S. $1 Foreign Exchange, and the draft shown in Figure 3, made August 22, 1872, again bears all unoverprinted Third Issue stamps.

The overprinted stamps in the hands of the public after July 1, 1871, were presumably simply used up over the ensuing months. This would have constituted a small loss of revenue for the government, since they had been purchased with the depreciated Nova Scotia currency, but the aggregate loss was probably small.

What of the “N.S.” overprints still unsold as of July 1, 1871? Were they retired and perhaps destroyed? Or did an economical government

continue to sell them? The answer can be elegantly deduced from the government’s Inland Revenue Reports for 1870–1 and 1871–2. On June 30, 1871, the Bill Stamp Account for Nova Scotia stood as follows:

District (Inland Revenue) Inspector—Cash $2087.61 (NS currency)(Inland Revenue) Collector, Halifax—Stamps $5948.00 (NS currency)Post Office—Stamps $3431.12—Cash $994.50 (NS currency)

On the following day, July 1, 1871, the effective date of the Uniform Currency Act, it had become:

District (Inland Revenue) Inspector—Cash $2031.71** (CDN currency)(Inland Revenue) Collector, Halifax—Stamps $5948.00 (CDN currency)Post Office—Stamps $3431.12 (CDN currency)

** Appeared last year in Nova Scotian Currency, the alteration is made into Dominion Currency in accordance with the assimilation, dating from 1st July, 1871.

As explained in the footnote, the cash on hand in the District Inspector’s account was converted to the equivalent amount in the new Dominion currency. However, the value of the stamps in the hands

Figure 5. January

1872 first of exchange

for $2500 bearing

5¢ “N.S.” overprint plus unoverprinted

20¢. U.S. Third Issue

$1 and Second Issue

25¢ are on the reverse.

6. The tax was only 48¢, not 58¢; the 50¢ stamp appears to have been mistaken for a 40¢.

of the Collector and Post Office showed no change after the same conversion. The conclusion is inescapable that the “N.S.” overprints on hand continued to be sold at their face value, but were now paid for in the new currency.

Postal Analogs of the “N.S.” OverprintsIn occasional scenarios far removed in time and place from 1860s

Nova Scotia, postal administrations would create overprints to serve the same purpose as the “N.S.” used here—to restrict stamp sales to a given region whose currency differed in value from that of other regions, thereby preventing loss of revenue via exploitation of those differing

values. Exact parallels are the Chinese overprints of 1915–33 for the provinces of Manchuria, Szechuan and Yunnan, in each of which the currency was depreciated relative to that elsewhere. A variation on the theme occurred with the various “B” (for Bluefields) and “C” (for Cabo Gracias a Dios) overprints used circa 1910 on stamps for those two regions on Nicaragua’s Atlantic coast, where rich silver mines had led to a silver-backed peso with double the value of the paper-backed peso used elsewhere. In this case the overprints prevented the flow of cheaply-bought stamps into, not out of, the regions denoted by the overprints. Other examples can no doubted be cited.

ReferencesAnonymous. The N.S. Bill Stamps. The Halifax Philatelist 1888 September 2(9):101.——. The Canadian Philatelic Journal 1894 January 1:2.British Colony of Canada Second Issue of Bill Stamps. http://www.billstamps.com/ Lehr, James. Nova Scotia Bill Stamps. B.N.A. Topics 1986 September–October 43(5):20.MacDonald, J. J. Nova Scotia’s Revenue Overprint. B.N.A. Topics 1972 August 29(7):168–9.Mahler, Michael. Reconstructing Four Fabulous Finds. 1. The Danford Knowlton Find. The American Revenuer 1995 September 49 (8):210–27.Mahler, Michael. A Catalog of United States Revenue-Stamped Documents of the Civil War Era by Type and Tax Rate. Rockford, IA: American

Revenue Association, 1999, pp. 122–3.McLachlan, Robert Wallace. Annals of the Nova Scotian Currency. In: Proceedings and Transactions of the Royal Society of Canada for the Year

1892. Ottawa: John Durie & Sons; Montreal: J. Foster Brown & Co.; London: J. Quaritch, 1893, pp. 33–68.Powell, James. A History of the Canadian Dollar. http://www.bankofcanada.ca/en/dollar_book/, 2005.Ryan, C. D. and M. E. Woike. A Doubly Interesting Document. Canadian Revenue Newsletter 2000 December 33:2–3.Ryan, C. D. The Nature of, and the Circumstances Concerning the Printing of Canada’s First Issue of Bill Stamps. Appendix B: The End of

the Second Issue and the Beginning of the Third. Canadian Revenue Newsletter 1994 November-December 7:8–9.Smith, Andrew W. What was the 14th Colony? http://the14thcolony.blogspot.com/2005/03/what-is-14th-colony.html, 2005.Statutes of the Dominion of Canada. An Act to impose duties on Promissory Notes and Bills of Exchange. 31 Victoria 1867, Ch. IX. ———. An Act respecting the currency. 31 Victoria 1868, Ch. XLV.

Appendix. Bill Stamp Taxes on Multi-part Bills of Exchange for Amounts less than $100.The bill of exchange, the primary instrument for transfer of funds

over long distances in the mid-19th Century, has long been obsolete, so some definitions are in order. A draft is a written order from party A directing party B to pay party C a certain sum. A bill of exchange

is sometimes defined in exactly the same way, but this fails utterly to capture the essence of the bills of exchange used during the mid-19th century. These were drafts drawn on a distant source of funds, typically made in sets of two or more, essentially identical except for

being designated “First,” “Second,” “Third,” or similar terms, so made to allow for the possibility that one or more might be lost in transit. In U.S. federal and state stamp tax schedules, bills of exchange were usually referred to as being made in “sets”; a set of First, Second and Third was considered to be comprised of three bills of exchange; for example, the U.S. tax schedules refer to “every bill of each set.”

In Canadian law, and specifically in the various Bill Stamp Acts, a different terminology was used. What was elsewhere referred to as a set of two or more bills, was defined here as a single bill comprised of two or more “parts.”

The 1864 Act is clearly written, specifically covering bills made singly, in two parts, and in more than two parts. Bills for less than $100 were exempt. The taxes were as follows:

Amount Tax Made singly 3¢ per $100 or fraction thereofMade in duplicate On each part, 2¢ per $100 or fraction thereofMade in two or more parts On each part, 1¢ per $100 or fraction thereof

It seems important to note here that the principle underlying the different rates per part for bills made in one, two, or three parts was to keep the total tax the same, or as close to the same as practical, for the three cases; thus a bill made singly paid 3¢ per $100, a bill in three parts also paid 3¢, and one in duplicate paid a little more, 4¢. (The U.S. Foreign Exchange and Inland Exchange rates hewed to the same principle: there a set of three foreign bills paid about the same total as a domestic note. For example, the blanket rates of 1864 taxed notes at 5¢ per $100, and a set of three foreign bills at 2¢ per $100 apiece, totaling 6¢ per $100.)

The problems with the Bill Stamp Acts arise with the 1865 Act, which extended the tax to bills of less than $100, as follows:

Amount TaxTo $25.00 1¢Above $25 to $50 2¢Above $50 but less than $100 3¢

Conspicuously absent is any distinction between notes, drafts and bills made singly, and bills made in two or more parts, as was laid out so clearly in the 1864 Act. On the one hand, given the underlying principle of the bill stamp taxes, this makes perfect sense: the 1865 Act presumably made no such distinction precisely because it intended the taxes to be the same in all cases.

On the other hand, it would have been helpful if it had spelled out how the tax was to be paid on multi-part bills, and specifically how

it was to be apportioned among the parts. And here the lawmakers appear to have been silent because they had figuratively painted themselves into a corner. Without cutting 1¢ stamps into pieces, the parts of multi-part bills could not be uniformly stamped in all cases; the taxes per part were as follows:

Amount One part Two parts Three partsTo $25.00 1¢ ½¢ ⅓¢Above $25 to $50 2¢ 1¢ ⅔¢Above $50 but less than $100 3¢ 1½¢ 1¢

Without cutting stamps apart, for four of these six cases the parts would have to have been stamped differently. For amounts to $25 and two parts, one of the two would take a 1¢ stamp, the other would be left unstamped; for three parts, one part would be stamped at 1¢, the others unstamped; and so on. Is it any wonder the law was silent on these points? This was a royal mess!

The Canadian Postal Guide for 1867 stated that multi-part bills should be uniformly stamped as follows:

Amount One part Two parts Three partsTo $25.00 1¢ 1¢ 1¢Above $25 to $50 2¢ 2¢ 1¢Above $50 but less than $100 3¢ 2¢ 1¢

It would be interesting to know the basis and authority for this for-mulation, as neither is apparent in the 1864 and 1865 Acts then in effect. It does not result from simply rounding up to the nearest cent the uniform multi-part taxes set by the statute, which yields:

Amount One part Two parts Three partsTo $25.00 1¢ 1¢ 1¢Above $25 to $50 2¢ 1¢ 1¢Above $50 but less than $100 3¢ 2¢ 1¢

How it could be construed that two-part bills for above $25 to $50 should pay 2¢ per part is a mini-mystery. One possible scenario is the following:

● Rates for bills up to $100 were treated as “flat” rates and applied uniformly on each part of a multi-part bill.

● Rates for multi-part bills over $100 were applied to items of lesser amounts.

● Where two different rates applied to one document, the lower of the two prevailed.

These assumptions lead to the tables of the Postal Guide, but fly in the face of the language and logic of the statutes! This 1867 Postal

Guide formulation does not appear in the 1867 Stamp Act, which was passed about a year later, on December 21, 1867. It would be extremely interesting to know if it also appeared in subsequent Guides (suitably modified to incorporate the exemption for amounts less than $25 enacted in 1867). The bill stamp taxes remained in effect until March 4, 1882, so there was plenty of time for this to be ironed out.

In practice, the instruments for which stamping was controversial—two-part bills for amounts less than $100, and three-part bills for $50

or less—probably constituted a very small fraction of the instruments subject to stamp tax. Many more promissory notes and time drafts were generated than bills of exchange; moreover commercial bills, typically made in sets of three, were usually for amounts above $50. The amount of tax over- or underpaid was presumably also small. A plausible working hypothesis is that all parts were stamped at 1¢ as a matter of convenience, with two-part bills for above $25 to $50 possibly paying 2¢ per part as per the 1867 Post Office directive.

ReferencesCanadian Postal Guide. Compiled by John Dewé, Post Office Inspector. Printed by John Lovell, Montreal, 1867. (http://www.archive.org/

details/cihm_03899)

Thanks to Richard Fleet and Christopher Ryan for help in researching this article.

For comments: mikemahler@roadrunner.com