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The revolution in the Federal District

The Villistas

On 11 November 1914 General Maximo V. Iriarte, from San Mateo Jalpa, Federal District, informed Zapata that he had copies of the decrees of 8 September and 10 October, the second of which prohibited the circulation of the paper currency issued by the ‘ambicioso y personalista’ CarranzaAGN, Fondo Emiliano Zapata, caja 17, exp 8, f 35.

On 9 January 1915, on the last day for the payment of taxes, the Oficina de Contribuciones Directas, though an error, issued a notice that it would not accept the Monclova or state issues. Though the notice was withdrawn by midday the news, needless to say, had spread throughout the city and businesses began to refuse the notes. Since people had been paid with this money, they were greatly discommoded. Felicitas Villarreal, Ministro de Hacienda, stated that not only the state issues, but Chihuahua, Monclova and all the other Constitutionalist notes were of forced circulation and should be accepted in federal offices, and he had so instructed the Tesorería de la Federación and the Dirección de Contribuciones DirectasEl Monitor, 10 January 1915.

On 14 January Villarreal declared that Chihuahua notes were legal and of forced circulation, as their issue had been authorised by the then Primer Jefe, but various casas comerciales continued to refuse to accept themLa Convención, 14 January 1915 and they continued to be widely refused, by the railway company, banks and banking housesEl Monitor, 16 January 1915. At this time the question of the Villista paper currency was occupying the Convention’s debates. A commission led by Pérez Taylor proposed that the government of the Federal District forced their acceptance and punished those who refused, a motion that was accepted although some delegates opposed it on the grounds that the notes lacked any financial backing and that the imminent threat of the Carrancistas’ arrival explained the public's refusalEl Monitor, 20 January 1915. On 21 January the governor of the Federal District acknowledged the Convention’s disposition that business should accept Villista notes, as well as all the others of forced circulation Fondo Convención, caja 3, exp 4, f 84.

On 16 February Paulino López sent a report to Carranza, in which he stated that on 15 December 1914 the Villista government had set up four bureaux d’echange (casas de cambio) that, according to notices in the newspapers paid the best prices for gold, silver and banknotes, paying in Chihuahua notes. The Villistas also forced the banks to change, so that by the time they left they had taken most of the revalidated Gobierno Provisional, bonds and Constitutionalist currency and left several millions of their paper. The Banco de Londres had more than seven million; the Banco Nacional de México more than five and the Descuento Español more than eight million AIF, F9-57-27.

In early April in Mexico City it was announced that all Carrancista notes were without value, including the Ejército Constitucionalista issue. Only the cartones for 5c, 10c and 20c were exemptedLa República, 6 April 1915.

The government of the Distrito Federal was enforcing the acceptance of the dos caritas in July 1915El Renovador, 28 July 1915.

The Carrancistas

 After the Convention evacuated Mexico City on 26 January 1915, Obregón entered the capital, though without any goodwill on the part of its inhabitants. Obregón had qualms about the turmoil that nullifying the Convention’s currency would cause (it was estimated that 80% of the notes in circulation in Mexico City were dos caritasEl Dictamen, 6 February 1915) and the next day the authorities announced that the Villista currency would remain of forced circulation while the new government considered the best means of unifying the currency. Colonel Gustavo Pérez Figueroa, the Inspector General de Policía, on hearing that businesses were refusing to accept sábanas, ordered his Comisarías to enforce themEl Sol, 29 January 1915. La Opinión, on 30 January 1915, reported that all notes were of obligatory circulation, just as Obregón was changing his mind..

However, in a change of heart the next day, 30 January, Obregón ordered Coronel Jefe de Estado Mayor, F. R. Serrano, immediately to prohibit the circulation of Villista notes. The order was passed on to the Presidente del Ayuntamiento, Inspector General de Policía and other officials, and notices appeared on Sunday, 1 February.

Needless to say, the result was chaos. Merchants were reluctant to accept the Constitutionalist notes, because there could possibly be a resurgence of Conventionist forces which would render them worthless. A number of commercial houses advertised that they were still accepting the Villista currency in spite of Obregón’s decree. This prompted the military government to send troops to force these merchants at gunpoint to open their safes and in turn all Conventionist currency discovered was confiscated. Many grocers refused to accept the Constitutionalist money, and a number of them closed their shops preferring to hold on to their commodities until the hoped for return of the Conventionist Government. These were forced to reopen at gunpoint.

On 4 February a large crowd gathered outside the Palacio Nacional waving their now worthless notes and a commission composed of L. J. Tenorio, Amado Fernández, Francisco Chevannier and others sent an urgent telegram to Carranza asking him to reconsider because of the threat of hungerEl Dictamen, 6 February 1915. Because of the difficulties the prohibition had caused, on 4 February Obregón rescinded his order and agreed that Villista notes could circulate until such time as Carranza resolved the matter. The Ayuntamiento immediately gave Obregón’s change of heart as much publicity as possibleAAM, Hacienda General, volumen 2116, exp 743. However, the very same day, as soon as Obregón informed Carranza, in Veracruz, of his action, the latter replied that he could not authorise such a measure, and that if Obregón could not rely on the poorer classes he should abandon Mexico City. Then the rich, and those businesses interested in supporting the Villista currency, could sort out the problems. Carranza ordered Obregón to suspend his order or withdraw it, if he had already issued itEl Demócrata, Veracruz, 6 February 1915.

Carranza said nullifying Villista currency was a “war measure that, if not taken at this time, would cost us very dearly, while if taken now would completely debilitate our enemy. With this measure we kill Villa economically, as his paper will be worthless. … The only result of delay would be that businesses would offload the Villista notes that they hold onto the general public". Cabrera added that the prohibition would destroy Villa’s papers in the places that the Carrancistas had yet to take and in the United States. He argued that in these places the Villista money was in the hands of big businesses and the banks who would be affected, not the poor. Finally in those places prices for goods purchased with Villistsa paper would rise, and Villa would be unable to change his paper currency for bank notes or metalic currencytelegram Cabrera to Obregón, 4 February 1915, in Discusión de la credencial del diputado don Luis Cabrera y documentos justificativos, XXVII Legislatura, México, 1917.

On 5 February Obregón told Carranza he had published his decisionABarragán, caja II, exp. 32, telegram Obregón, Mexico City to Carranza, Veracruz 5 February 1915 and the next day reported that as a result of the prohibition companies had no money to pay their workers. He asked Carranza to send him two or three million pesos that he could give to industrialists in return for post-dated chequesABarragán, caja II, exp. 33 telegram Obregón, Mexico City to Carranza, Veracruz, 6 February 1915.

As municipal employees had been paid in the now worthless currency the previous day, there were many complaints and requests to change their money. On 6 February 1915 the Jefe de Hacienda agreed to change up to 50%.

On 10 February 1915 the Cámara de Comercio in Mexico City announced, by means of posters and press releases, that the difficulties caused by the prohibition of the paper currency that the Villistas had left behind had been solvedPrensa, 11 February 1915. On 25 February 1915 the Carranza agency in Washington, D. C. announced that Obregón had been ordered to permit the limited exchange of Chihuahua currency for legal tender in Mexico City. This action was taken to relieve the monetary situation with particular reference to the poorer classesAlbuquerque Journal, 26 February 1915: New York Times, 26 February 1915.

Obregón found himself unable to hold the capital and he finally left on 11 March. Shortly after, the Zapatista forces entered to an ecstatic welcome.

On 30 March it was reported that the dos caritas were circulating without any difficulty, though El Radical tended to be a ‘good news’ newspaper El Radical, 30 March 1915. On 26 April, on hearing rumours that Villa has been defeated by Obregón, businesses began to refuse not only the sábanas but also the dos caritasEl Radical, 26 April 1915.

Pablo González and his Constitutionalists recaptured Mexico City on 11 July. Four days later (the delay led some to hope that González would not nullify the Villista currencyIn fact González wrote to Carranza from Guadalupe, Hidalgo, on 12 July that as the Villista notes were the only money in circulation in Mexico City he felt that they should be allowed but he was waiting for Carranza’s response ( ) and all the time speculators (coyotes) were buying Villista currency in anticipation of a return), he decreed the legal and forced circulation of the Constitutionalist paper currency and at the same time declared null and void the sábanas and dos caritas. On 17 July González and his troops left Mexico City rather hurriedly following a strike at the capital by enemy troops. The result was chaos again. From 26 to 30 July the Zapatistas occupied the capital in an erratic fashion but the Constitutionalists finally retook it on 2 August. On 7 September González decreed that businesses that refused Constitutionalist paper money or speculated in basic necessities or any type of paper currency, would be treated as enemiesPrensa, 9 September 1915.

On 2 November it was reported that around 17 people had been executed in Mexico City for possessing dos caritasPrensa, 2 November 1915. On 6 November the Comisión Reguladora e Inspectora de Instituciones de Crédito agreed to collect any dos caritas or revalidados altos that the banks in the capital were holding in their vaults, as in spite of being declared null and void they were being used for speculation. The notes were to be burnt. On 9 November inspectors visited the various banks. The majority of managers acquiesced and the threat of force persuaded the others. Around $500,000 in notes was collected, though some banks, especially the Banco Nacional de México, had already handed in large quantities of revalidados altos to the Tesorería General de la NaciónEl Demócrata, 10 November 1915; El Pueblo, 10 November 1915. A few months later, on 6 March 1916, R. Nieto, subsecretary of finance, empowered Luis G. Patiño, provost general (Preboste General del Cuerpo de Ejército de Oriente) to check all the strongboxes in various banks and collect all the revalidados altos and dos caritas he might find. Patiño issued a notice, advising holders of strongboxes in the Banco de Londres y México and the Banco Internacional e Hipotecario to report to the banks within three days. All three banks (Banco de Londres y México, Banco Internacional e Hipotecario and Banco Nacional) said Patiño carried out his searches with consideration and correctness (APGG, ).

Elsewhere, as the Carranzistas advanced into Villista territory they published and enforced decrees outlawing their enemies’ currency. However, such decrees often mirror the confusion over what actually was legal tender. Occasionally commanders had to allow Villista currency for want of an alternative. In addition, poor communications, lack of newsprint or lack of space meant that notices from central government were often printed in the states’ official bulletins several months late. Some had been superseded by the time they were printed.