El Banco Nacional de Tejas
Jose Felix Trespalacios was a veteran revolutionary leader of the Mexican movement for independence. For ten years he served the cause throughout Mexico and was forced to flee to Havana and thereafter to New Orleans. Shortly after Iturbide proclaimed his Plan de Iguala and entered Mexico City in victory, Trespalacios returned to Mexico, took his oath of allegiance to Emperor Iturbide, and was appointed colonel of the army and political chief of the Province of Texas, where he took the first steps for the establishment of a bank.
The occasion for this innovation was the irregularity with which hard money was sent from the treasury in San Luis Potosí for the payment of troops and other public officials in San Antonio. Troops were traditionally paid in specie (gold or silver coinage) sent under guard from the nearest treasury. While Spanish authorities had never failed to eventually send money, relatively long and irregular periods elapsed between paydays and the local merchants had to extend credit in the interim.
Trespalacios concluded that the establishment of a national bank, whose notes were guaranteed by specie, would solve the problem. Through the bank he would be able to pay the troops with regularity, the merchants would in turn be paid with notes secured by specie, and when the specie shipments arrived, they would constitute the bank reserves with which the notes could be redeemed.
Trespalacios presented his plan to the City Council for approval and it was unanimously approved. The Council recommended that the notes be declared legal tender for all transactions and be made acceptable for payment of taxes and the purchase of public lands. It was then voted that three members of the city council be made officers of the bank in order to add the prestige of the local merchants and officials to the paper money issued by the bank. The three officials were to be required to countersign all notes. The paper money was to be guaranteed by the specie expected from the government, and was not to exceed this amount.
After the attainment of independence in 1821, Texas, Nuevo León, and Tamaulipas were placed under a new commandant-general with headquarters in Saltillo. It was to this district superior, Colonel Gaspar Lopez, that Trespalacios presented his plan for a bank. Lopez sent the plans on to Mexico City for formal approval by the Iturbide government.
Without waiting for formal authorization, Trespalacios issued a decree on 21 October 1822, stating “I hereby order and command that a National Bank be established temporarily in this Province, subject to its ultimate approval by the Government.”
Trespalacios ordered paper money to be issued in the amount of fifteen thousand pesos, which would be sufficient to pay the troops and pay for supplies for a three month period. The currency would be signed by Alcalde Jose Salinas, Councilmen Vicente Travieso and Miguel Arciniega and Trespalacios himself.
Four soldiers were ordered to make by hand the notes in the various denominations to be placed in circulation on 1 November 1822. The new institution was officially designated Banco Nacional de Texas. Records indicate that the soldiers initially prepared 10 one hundred pesos notes, 10 fifty peso notes, fifty 20 peso notes, 100 five peso notes, 600 one peso notes, 600 four real notes, 200 two real notes and 100 one real notes for a total of approximately $4,462 pesos to be issued on 1 November 1822.
Trespalacios sent the first group of new bank notes to the commander of the garrison at La Bahia (Goliad), and instructed him to read the decree in the town square. Captain Francisco Garcia replied on 9November 1822, that he had complied with the governor’s instructions and that the paper money had been well received and generally accepted. Since more than half of the currency sent was in large denominations, Garcia suggested that the next remittance should consist of notes of only ten pesos or less. “In this Presidio,” he explained, “there are no persons capable of exchanging for cash notes of higher denominations.”
The Banco Nacional de Texas was created shortly before a somewhat similar institution was authorized in Mexico City by imperial decree of Agustin de Iturbide. While there are no records directly linking the two, it is a distinct possibility that Emperor Iturbide’s decision to issue paper money was in part caused by Trespalacios and the Banco Nacional de Texas, especially when the struggling government of independent Mexico was faced with serious financial problems. Although Iturbide did not order the establishment of a bank, he did authorize the national treasury to issue paper money in the amount of the revenue expected within the following ninety days.
Iturbide’s decree was published on 29 December 1822. The instrument bears a remarkable resemblance to the decree issued by Trespalacios in Texas. It declared that the government found itself obliged to resort to paper money in order to meet the obligations of the government. It stated, as did the Texas decree, that the measure had been approved unanimously by the national council. The national treasury was authorized to issue paper money in the amount of 84,000,000 pesos, redeemable within one year, with the resources of the nation pledged as security. The treasury was empowered to print 2,000,000 one peso notes, 500,000 two peso notes, and 100,000 ten peso notes. The new currency was declared legal tender.
After 1 January all payments made by or to the national treasury were to consist of one third paper money and two thirds silver. This provision made it necessary for citizens to secure treasury notes to the extent of one third their obligations for taxes and other indebtedness to the national government. All business transactions that involved more than three pesos had to be satisfied in both currency and silver. Violations of the new law were subject to heavy fines and imprisonment. The notes taken in as payment for government taxes and other obligations were to be destroyed to prevent further circulation.
In the meantime the notes of the Banco Nacional de Texas were being circulated without difficulty. The four men assigned to make them by hand had turned out a new issue for December which consisted of approximately $7,375 pesos.
Governor Trespalacios received a request for payment for drafting work from the four men preparing the notes on 2 December 1822. Trespalacios turned the matter over to the city council for its members to determine what would be a fair compensation. Penmanship and artistic design were evidently not held in very high esteem in those days since the council decided to pay the sum of fifty pesos for all four scribes. The soldier in charge put it on the record that he was accepting the money under protest, declaring the sum was totally inadequate for the exacting labor required of the four men.
Commandant General López wrote to Trespalacios from Saltillo on 18 January 1823, regarding the new paper money being printed by the national treasury. He informed Trespalacios that the emperor had requested all officials to explain to the public the advantages of paper money. In the future, López continued, all troops and public officials were to be paid one third in national treasury notes and two thirds in cash.
Although nothing was said in regard to the Banco Nacional de Texas, the governor and his friends immediately became apprehensive. If full specie payment for the troops could no longer be expected, the notes of the Texas bank could not be redeemed at their face value with specie. Since the Texas notes had been issued on the expectation of full specie payment, public confidence was seriously shaken. The governor reluctantly had to publish the national decree regarding the treasury notes, thus advising the citizens that the Texas notes had a rival currency and were no longer backed by 100 per cent specie.
At the same time the Secretary of the Treasury of Mexico issued a circular declaring that Emperor Iturbide had decided that the paper money created in Texas by Governor Trespalacios should be replaced by the new federal currency. The secretary added that a sufficient amount of paper money was on its way to the intendant of San Luis Potosí, who had been instructed to call in all the notes issued by the Banco Nacional de Texas and exchange them for the new treasury notes. The intendant of San Luis Potosí had been ordered to burn all the Texas notes upon their presentation for exchange.
Governor Trespalacios was instructed to gather all the notes of the defunct Banco Nacional de Texas and send them to San Luis Potosí to be exchanged. Fortunately for him, he was spared this painful duty by being sent to another province. After his departure the note holders refused to surrender them in the hope that the original agreement would be eventually fulfilled by the government. They maintained that the notes of the Banco Nacional de Texas were redeemable in silver or gold only.
For two years the note holders refused to surrender their notes and repeatedly pointed out to the government that they had given their cash and their goods in exchange for the Banco Nacional de Texas currency under a solemn agreement that it would be redeemed in specie. They refused all offers to exchange their Texas notes for national paper money. Early in 1825 the city council of San Antonio presented a petition in the name of the people of Texas to the governor of Coahuila and Texas—the two provinces had been joined— requesting settlement. Reluctantly they admitted their willingness to exchange the Texas bank notes for full or partial payment in specie.
In May 1825 some citizens of San Antonio tried to use their notes by contributing to a fund for establishing a tobacco factory in Saltillo. However, their contributions were refused because they had been made “en papel del Banco Nacional de Texas”.statement dated Sala Capitular de Bejar 8 de Mayo de 1825, and signed by Juan Martin de Beramendi, at this time first alcalde of Bexar in Lista Que Manifiesta el prestamo y Donativo voluntario que en reales y efectos han hecho los Pueblos del Estado para el establecimiento de la Fabrica de Tabacos de esta Capital en virtud de la circular expedida por este Gobierno con fecha 20 de Marzo de este año, y se publíca por disposicion del Honorable Congreso de 30 de Junio del mismo. Imprenta del Gobierno á cargo del C. José Maria Praxedis Sandobal. [Saltillo]. .
The matter was presented to the president of the nation but other questions more pressing occupied his attention. Not until four years later was the matter finally settled. President Vicente Guerrero issued a decree on 8 May 1829, ordering the national treasury to pay the citizens of San Antonio for the paper money issued by the Banco Nacional de Texas. This was the last transaction in the operations connected with Governor Trespalacios’ banking experiment in the wilds of Texas.
(Based on "Banco Nacional de Texas and Iturbide Currency" by Cory Frampton, USMexNA journal October 2010)