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1921 legislation

In 1921, President Obregón was able to begin to address the problem of the impounded banks. On 31 January 1921 Secretario de Hacienda Adolfo de la Huerta gave the banks back their legal identity but divided them into three classifications
(a) those whose assets were at least 10% greater than their liabilities;
(b) those whose assets were less than 10% greater than their liabilities; and
(c) those whose liabilities exceeded their assets.
The second category were allowed to operate only to realise their assets and cover their debts.

In accordance with this decree the Mexican banks of issue had to issue bonds to cover their liabilities.

On [                  ] (one day before Montes de Oca took office) Calles granted another extension (until 31 December 1930) to the old banks of issue to cover the payment of interest on bonos and certificados. The acuerdo specified that the Secretaría de Hacienda would determine whether those banks that were controlled by the federal government (as the majority shareholder) would be subject to the dispositionExcelsior, 13 February 1927. The rationale for applying the new moratorium rested on the government’s recognition that it did not have the resources to resume payments to the banks.

In the latter half of 1927 the government announced a payment to the banks. It did this with banknotes of the same banks: the amount was $2,712,700 but as the government had bought the notes in the market it actually cost just over $600,000. The Secretaría de Hacienda signaled that it would continue this practice with the banks to whom they owed money. This was despite the ongoing moratorium on payment to creditors.

Juan Zubarán, a lawyer representing the holders of banknotes, expressed his dissatisfaction with the moratoriums and added that the banks were speculating by buying their own notes in the marketExcelsior, 15 June 1928. However, his complaints were ignored as the Secretaría believed that the majority of notes were in the hands of speculators.

In November 1928 the Secretaría de Hacienda granted the former banks of issue a moratorium of five years before they had to start paying their certificates of interest, to give them more time to liquidate their business and meet their obligationsExcelsior, 23 November 1928.

Comité Liquidador de los Antiguos Bancos de Emisión

On 30 August 1930 the government issued a law to regulate the liquidation of the old banks of issue. This divided the former banks into two categories: the first those that were solvent and the second those that did not have sufficient assets to pay their liabilities. It established a Comité Liquidador responsible for categorising the liabilities of both categories of banks and of liquidating the assets of the banks in the second category. The Comité Liquidador was set up on 26 September and was composed of Narciso BassolsNarciso Bassols García was born in Tenango del Valle, Estado de México, on 22 October 1897. He was a lawyer and public servant, being president of the Comité Liquidador and later Secretario de Educación Pública under presidents Pascual Ortiz Rubio and Abelardo Rodríguez. In October 1931 he resigned his post on the Comité, on being appointed Secretario de Educación Pública, and was replaced by Gabino Fraga (El Universal, 31 October 1931). He died in Mexico City on 24 July 1959., Roberto Casas AlatristeRoberto Casas Alatriste was a distinguished economist, and Gonzalo Robles.

Article 24 of the decree of 31 January 1924 had imposed on banks of class (A) the obligation to accept in payment for debts their own banknotes or cheques drawn on themselves. However, in the decree of 30 August 1930 article 10 established that the Federal government would take over the obligation in respect of the provisional certificates that the banks had issued. Articles 12 and 13 arranged for holders of banknotes and certificates to present them to the Comité Liquidador, before 1 March 1931, in exchange for bonds. On 18 October 1930 the Comité resolved that banks should stop changing their banknotes for certificates and on 1 March 1931 the period for exchanging notes of the old banks ended and all bank notes and certificates finally lost any residual valueEl Universal Grafico, 24 February 1931.

The Tesorería de la Federación was charged with issuing Bonds for the Bank Debt (bonos de la Deuda Bancaria) in exchange for outstanding banknotes and the certificates that had been issued since 19[ ]. The bonds were in the following number and denominations and were to be redeemed in ten six-monthly payments by means of coupons.

Serie Clase   $ from to Value  
X A orange 10 1 92000 920,000  
B green 50 92001 147200 2,760,000  
C violet 100 147201 239200 9,200,000  
D sepia 1000 239201 244750 5,500,000  
Y E red 10 1 2300 23,000  
F blue 50 2301 3600 65,000  
G green 100 3601 5800 220,000  
H grey 1000 5801 5950 150,000  


The bonds were signed by Luis Montes de Oca (Secretario de Hacienda y Crédito Público), Lorenzo L. Hernández (Tesorero de la Federación) and Julio Freyssinier Morín (Contralor de la Federación).

When the law came into effect the government owed banks in the second category a total of $27,822,678.11 though special arrangements reduced this, during 1931, to $23,779,508.33.

In March 1932 the government reviewed the basis of these calculations and entered into new agreements with the banks that reduced the total debt that it recognised to a more manageable $2,830,272.37. So, with the final arrangements on 30 June 1933, the federal government took over the remaining assets of the banks and the obligation to pay any outstanding liability.