1877 Bank of British North America

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Noticed this note recently and my suspicion tells me it's a counterfeit after reading the CPMS June journal however it does not fit the known counterfeit range and seems to have a manuscript signature.

It is indeed a counterfeit, and shares characteristics with known counterfeit 162356/D - the incomplete date (a manuscript digit, now very faint, appears where there should have been an engraved "3rd" to finish up the date) and the correct flat top 1s in the sheet number, although all the other digits are quite unlike the genuine BABN sheet number numerals, being much too narrow. 
The note may have been crossed "counterfeit" in red ink at one time, but much of the red, whatever it was, seems to have been removed since, with sufficient vigour to put a hole through the note.
Good eye there, kid_kc79!

Is there any source of information about counterfeits of early Canadian notes? Were they made while the genuine notes were still in circulation? Or were they made much later to dupe collectors? Is there any kind of market for early counterfeits?

Operation Bernhard notes (Nazi counterfeits of 1930s Bank of England notes) are now worth much more than their genuine counterparts.

They were made for circulation purposes, generally.  Known counterfeits of chartered bank notes are listed in Canadian Bank Notes, with prices.  They are usually worth a lot less than real notes, not surprisingly.

Operation Bernhard notes (Nazi counterfeits of 1930s Bank of England notes) are now worth much more than their genuine counterparts.

Actually, in my observations, the opposite is true.  While still priced high, the Bernhard notes are less valuable than the genuine notes, generally speaking (some date/signature/denomination combinations may be an exception to the rule).

Is there any source of information about counterfeits of early Canadian notes? Were they made while the genuine notes were still in circulation? Or were they made much later to dupe collectors? Is there any kind of market for early counterfeits?

All of these questions and many others are answered in my recently published book, "So You Want To Collect Counterfeit Currency, eh?"  Well, actually, it's not really a book as much as it is a pamphlet.  One-sided pamphlet at that.  Self-published too (I had a couple of dollars left on my Staples photocopy card).  But basically, my advice on collecting counterfeit currency is as follows:

1) Don't collect counterfeit currency.
2) If you are not going to follow step 1 above, keep a low profile and some money in the bank in case you need a retainer to pay a good lawyer.

You see, overlooked in these types of discussions are some really basic facts, like the fact that counterfeit currency is illegal.  Banks and governments really don't like it when you try to forge financial documents in their names.  So it's not good to possess counterfeit money, nor is it proper to educate and/or encourage people to get their hands on it.

I may sound like I'm being sarcastic and/or satirical, but the core message is serious and easily overlooked.  We see images of counterfeit notes in the catalogue, and see auctions for counterfeit notes being sold for surprisingly high amounts.  But that does not make collecting counterfeit money legitimate.  Whether the note being copied is a very old series note or newer, the laws are still the same.  That is why the catalogue does not offer advice or pricing when it comes to counterfeits.  Of course, the EXCEPTION is counterfeit notes of broken/spurious/phantom banks.  When legitimate notes of such institutions are not redeemable, counterfeits of these notes likewise have no value in relation to any promises printed on them.  But many older series notes ARE still redeemable, including 19th century Dominion of Canada notes.  The collecting community has to acknowledge the existence of counterfeits when large numbers are around relative to legitimate notes.  Such is the case of the 1878 $2 note.  Legitimate notes are rare, and the counterfeits outnumber them even though counterfeits are not that plentiful either (my assumption).  Because 1878 $2 notes are so hard to obtain, some people got the idea that having a counterfeit makes a good substitution if the counterfeit looks like it could have been from period in which real notes circulated.  HOWEVER, that does not make owning a counterfeit any more legal.  There are only two ways I can see being in possession of such a counterfeit...

1) You put the counterfeit away where nobody knows you have it and you STFU about it, or
2) The counterfeit is clearly marked as counterfeit and is canceled.

Despite all the good advice about not collecting counterfeits, there are some people who do.  So to answer the question about whether a market exists for counterfeits, the answer is obviously "yes".  Just as there are wealthy people who collect stolen artwork, there are people who collect things that neither they nor anyone else should have.  Good luck getting yourself involved with that market.  And by "good luck", I mean don't do it.  At least don't look for help from legitimate people on legitimate collecting websites like this one.

The idea of counterfeits becoming more valuable than real notes is laughable.  I can think of at least one example where this is true in the realm of coins, but with paper money, it's a foreign concept.  We have already explored this subject on the forum...
http://www.cdnpapermoney.com/forum/index.php?topic=13727.0

BACK TO the original subject of this thread, the BBNA note shown above, it's quite clearly a counterfeit as evidenced by the poor quality of engraving.  It's amateurish almost to the point of being comical.