On April 23 182, Major General Brock writes to Ensign Noah Freer, Military Secretary, a letter describing some of the effects of the American embargo on the economy of Upper Canada. Brock anticipated that that the embargo would exacerbate the scarcity of "specie" or coins used for currency in the colony. Brock is planing, in the event of war, to introduce a paper currency. He also notes that the price of flour has risen to eight dollars for one half per barrel but the effect of the embargo has not yet been felt. He estimates that the embargo may mean that about 40,000 barrels may be kept from the Montreal market. Brock's letter is reproduced below:
York April 23 1812
I transmit herewith, for the information of the commander of the forces, a copy of a letter received from the Earl of Liverpool, authorizing an increase of £ 200 per annum to the salary of Colonel Claus, deputy superintendent of Indian affairs, to commence from the 1st of January last
The inconvenience to which the public service has already been exposed, owing to a scarcity of specie; the likelihood of the evil being increased by the operation of the embargo; and the almost total impossibility, in the event of war, of getting a sufficient supply to defray the ordinary expenses of government have led me to consider the best means of obviating so serious a difficulty. And having consulted with some of the principal merchants as to the practicability of introducing a paper currency with any probability of success, I think myself warranted in stating that such an arrangement would, particularly in the event of war, be generally supported throughout the province. The old inhabitants understand perfectly the circulation of paper as a substitute for specie; and having been formerly in the habit of receiving the notes of private individuals, they would not hesitate taking the more certain security of government, especially if convinced that payment could not be made in any other way.
The commissaries ought to be instructed to receive this paper as cash giving bills in return on Quebec. It is supposed that the circulation of 10 or £15,000 would answer every purpose. No note under 5s or above £10 should be issued. The accompanying letter from Mr Selby, the receiver general, will fully elucidate the business.
I have to acknowledge the receipt of your letter of the 1st of April. The commissary general will doubtless have been apprized that his instructions to Mr M Gill arrived in time to supersede those he received from me. Too great dependance ought not to be placed on the surplus of the several species of stores at the different posts. I have reason to think that at Amherstburg nearly the entire excess will be found damaged and unserviceable. Being desirous to ascertain the actual state of the stores at that post, I directed, a month ago, a regular survey to be taken of every article, and the moment I receive the report, it shall be forwarded to head quarters.
Flour has risen to eight dollars and one half per barrel. The effect of the embargo is not yet felt. Upwards of 40,000 barrels the produce of the south of Lake Ontario, will be kept by it from the Montreal market.