Carranza and the banks

As many banks in the area occupied by the Constitutionalists had closed their offices, on 6 December 1913 Carranza issued a circular (núm. 7) ordering all banks within his territory to open their doors to the general public and continue operating within a thirty day period as specified by the Ley General de Instituciones de Crédito. If they did not do so they would be liable to lose their charters. The thirty-day period was extended (circular núm. 3) until 1 February 1914 and when Carranza’s orders still went unheeded, in retaliation he ordered his treasury department to take over some banks including the Hermosillo branch of the Banco Minero.

There was always an ambivalence in the rebels’ attitude towards banknotes for although the banks were considered hostile to the revolution and many were already technically bankrupt, they had not be absolved of their commitment to honour their banknotes and these still commanded more confidence than the various revolutionary issues. One solution was to order that all banknotes should be handed in and to use the banknotes to purchase supplies in the United States so certain military commanders issued edicts forcing people to exchange their banknotes for revolutionary currency.

Thus, on 10 January 1914 Governor Chao of Chihuahua stated that, since Carranza’s deadline had expired, his government was establishing a limit of thirty days, until 10 February, for people holding any banknotes issued in the state of Chihuahua to exchange them for notes of the Tesorería General del Estado or Gobierno Constitucionalista. Once that period had expired any banknotes still in circulation would be null and void, whilst the various bankers would be held responsible for the notes collected by the Tesorería General^{Periódico Oficial, 11 January 1914}. On 11 February Chao issued a decree decommissioning the banks established in the Chihuahuan capital (namely the Banco Minero, the Banco Comercial Refaccionario, the Caja de Ahorros de la República Mexicana and the branches of the Banco Nacional de México and the Banco de Sonora) and confiscating all their assets^{Periódico Oficial, 15 February 1914}.

On 16 February, since despite the deadline some poor people still retained banknotes, the Tesorería General said it would continue to exchange them for certain holders, taking into account their lack of resources^{Periódico Oficial, 22 February 1914}. However, some banknotes (and scrip) continued to circulate since on 1 July 1914 Sebastian Vargas wrote to Vida Nueva asking it to inform its readers of the offence that they would be committing^{Vida Nueva, 1 July 1914}.

On 24 February 1914 the Governor of Sinaloa, Felipe Riveros, told Carranza that Banco Minero notes were being used (with difficulty) in the north of his state and asked for advice. Carranza replied that they were not forced but of voluntary acceptance^{CEHM, Fondo MVIII, telegram Riveros to Carranza, 24 February 1914: telegram Carranza to Riveros, 27 February 1914}.

Originally Carranza had distinguished between notes issued before and notes issued after 19 February 1913, the date of Huerta’'s coup d'état, and would not recognise the latter but later, because of the hardship caused to the holders of such notes, he mellowed. However, as the Carrancistas took over states and republished their earliest decrees in the various Periódicos Oficiales, they created a great deal of confusion and alarm.

People were particularly suspicious about notes from banks in the north of Mexico. For example, in Puebla certain businesses and banks refused to accept such notes and on 25 August 1914, General Francisco Coss, the Comandante Militar, ordered that notes of all the bank of issue were of forced circulation, until ordered otherwise ^{Periódico Oficial del Gobierno Constitucionalista del Estado de Puebla, 15 September 1914}.

On 27 August 1914 Carranza decreed, in circular núm. 1455, that in order to avoid hardship for the needier classes the federal offices would accept every kind of banknote, without limitation, for any type of duty or tax. However, on 14 October the Tesorero General of Sonora, Luis Sotomayor, reminded the public that Carranza had prohibited notes of the Banco Minero de Chihuahua dated March 1914, such as were being presented in Altar^{El Estado de Sonora, 16 October 1914}. A year later, in a telegram dated 20 September 1915 from Veracruz to the Governor of Querétaro, the Secretaría de Hacienda advised that the use of banknotes was tolerated, and that there were no dispositions about the Banco de Guanajuato and the Banco Minero^{La Sombra de Arteaga, 2 October 1915}.

On 2 December 1914 Enrique Creel wrote from El Paso to José Simon, Director of the Banco Nacional de México, about a proposal to reorganise the Banco Minero de Chihuahua and increase its capital to $5m. He said that the actual amount of notes in circulation was within the law, though there was the risk that future government dispositions might change that, but a reorganisation would completely change the situation. However, banknotes needed to be of compulsory circulation for several years: to force the banks to honour them on sight would be disastrous^{CEHM, Fondo Creel, 99, 25502}.