Revisiting the Coyne Affair: A singular event that changed the course of Canadian monetary history

Given how central bankers are being put under all kinds of pressure and even threatened, the affair of James Coyne, Governor of Bank of Canada (1955-61) is worth reading. He could not be fired so the Government actually declared the Governor’s position as vacant and advertised others to apply.

Pierre Siklos in this paper reviews the events and circumstances which forced Coyne to resign:

The Coyne Affair is the greatest institutional crisis faced by the Bank of Canada in its history. The crisis took place in 1959-1961 and led to the resignation of the Governor, once he was cleared of any wrongdoing. The crisis eventually resulted in a major reform of the Bank of
Canada Act. Archival and empirical evidence is used to assess the performance of monetary policy throughout the 1950s. In doing so, a real-time dataset is constructed for both Canada and the US that permit estimation of reaction functions. I find that the case against James Coyne is ‘not proven’.

It was Coyne saga which paved way for better appointment rules for Canada’s central bankers.

Here is another interesting account written in 1963:

At 5.45 p.m.. a Bank of Canada official flashes the word to the parliamentary press gallery that the governor will be leaving his office at 6.15. Reporters and photographers rush across Wellington Street.

At 6.21. six minutes behind schedule, a bulging black briefcase in his left arm. and guiding his misty-eyed wife with his other hand, Coyne steps out of the bank’s elevator. He shakes hands with the elevator operator. Seeing the wall of newsmen, he barks out a brusque “No comment.” then catching one of the reporters questions. “Do you have any 1 st words?” he replies: “No. Not for another forty years.” Then he walks out of public life.


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