On 21 September 1821, the Army of the Three Guarantees, headed by its First Leader or Commander General Agustín de Iturbide, made its triumphal entry into the capital of New Spain, among the joyous shouts of the inhabitants, after three long centuries of Spanish domination and eleven years of incessant and heroic fight for liberty.
On 19 May 1822 Iturbide was proclaimed, by the Supreme Council in which resided the power, "Emperor of Mexico Agustín the First, by the Grace of God" and later, on 21 July of the same year was crowned in pomp and splendor at the Mexico City cathedral with the growing enthusiasm of his followers: the conservative circles, the army and the populace.
A new government was named and very soon the cabinet had to face among other grave problems, the catastrophic economic situation through which the country was going as a result of hundreds of years of continued drainage of its mineral resources by the old regime; the bleeding that represented the high military expenses during the years of the War of Independence; the closing and abandonment of many mines motivated by an absurd, pernicious mining policy, especially in the last decades of the colonial government, as well as the destruction of others as a consequence of the military actions that took place mainly in the formerly rich mineral zones of the country; the remittance of great sums of money to Spain to support its wars against England first, and against the France of Napoleon later and finally, the flight of Spanish capital to the Peninsula during the armed struggle.
All of that had obviously produced an incredible shortage of minted gold and silver as well as of the precious metals in bulk, which were indispensable for coinage. The sum of these factors forced the Minister of Finance Don Antonio de Medina, to request an authorization from the Supreme Council to issue paper money that, with character of "promise of payment", was granted. On 20 December 1822 a decree was issued authorizing the issue of cedulas, for the total amount of four million pesos, distributed in the following way:
The decree specified the form, design, text, paper quality, dates of issue and expiration, etc. In effect, they have the heading ‘EL IMPERIO MEXICANO’; are printed on one side only and their term for circulating is stipulated as beginning on 1 January 1828 and ending on 31 December of the same year; which means that their validity would be solely for one year. In the centre is the coat-of-arms approved by the Sovereign Provisional Junta on 21 November 1821 and in the lower part appear the signatures of A. Medina, as Ministro de Hacienda, A. Batres as Tesorero General and R. Mangino as Contador General.
The same decree made known the system to be used for the gradual withdrawal of notes from circulation: the paper money that was received by the tax collection offices had to be cancelled in the presence of the interested party, by means of a diagonal cut in the left signature i.e. the one of the Ministro de Hacienda, in such a way that they could not go back into circulation, avoiding any possible frauds to the nation. In addition, the cancelled notes had to be sent periodically to the Finance Ministry, with the corresponding list for the purpose of their accumulation, control and final incineration.
The same local offices had the obligation of collecting and making null and void any bogus notes that were presented to them, by cancelling with non erasable ink, crossing these forgeries on their face.
In order to instruct the employees of the local Treasury Offices and the army paymasters all over the country, how to recognize the authentic and counterfeit they were sent samples without signatures or numbers in advance, which they had to return on receiving the valid and complete notes.
The notes were printed at the rate of eight at a time, in sheets of paper of 42.5 x 31 cms., white “medio floret” quality: four on one side with blank reverse and four on the other half, but on the opposite face of the paper, so they also have a blank reverse. Each sheet of paper had its corresponding watermark distributed between two halves: in one, the name of the manufacturer ‘JHP ROMUGOSA’ under the trademark of its mill: a mediaeval tower with a big entrance door, called Tower of the Guarros, and laurel leaves, and in the other simply ‘No 1o’, undoubtedly referring to the paper quality. This paper, of Spanish origin, was bought at the important wholesale-retail store "El Comercio de Mexico", owned by José Severo de Arana, and located at the Portal de las Flores, in the main square.
The sheets of eight, printed as described above were sent complete and uncut to the different Treasury Offices in the Empire and there, every time as needed, notes were cut at the approximate size of 10.5 x 16 cms. to put them individually into circulation.
The paper money was numbered by hand with red ink and had printed the corresponding signatures, although this impression was done in a separate operation after the text. So, when they left Mexico City, the sheets were signed and numbered ready to go to their destinations.
Anticipating a strong opposition to the paper money, the decree ordered their acceptance in all payments made to the government for various taxes (custom duties, excises, etc.), as 33% of the total amount of a payment, with the officers absolutely prohibited from collecting the whole exclusively in metallic money. The payment of wages to government employees and to the army would be made with a similar proportion, although this last order had to be modified very soon in view of the protest of the members of the army.
In fact from the very first the notes were received with repugnance and distrust by all the social stratum of the population and especially by merchants and military men (because army paymasters charged a high percentage for changing them into hard currency). They were also easy to counterfeit.
This paper money circulated practically in all the vast Empire that included New Spain with its provinces and the immense territories of the North, with the Californias, Texas, Arizona and New Mexico and in the south, Guatemala and all its provinces in Central America.
Notes with a special seal with the shape of a red olive wreath, not numbered, circulated in the southeast of what is now the Mexican Republic and in the Central American countries. In the centre of the wreath they had printed, also in red ink, respectively: GUATEMALA (The Capitaincy General of Guatemala)[image, information needed] and LEON (The Department of León, Nicaragua).
The printers did not print the full amount authorized but rather:
The issue was suspended after Iturbide was obliged to abdicate on 19 March 1823 and soon after forced to leave the country. The ephemeral Empire suddenly collapsed and the Congress ordered the complete destruction of printed notes and also of the remaining blank paper, as well as of the plates that had been used for their impression.
Congress issued orders for calling in all the paper money that was in circulation or in the local government treasury offices in order that it be accumulated in one place and destroyed. They allowed only a thirty-day period for this to be done and naturally this was too short a time considering the great distances and inadequate transportation facilities of the period. Because of the protests and repeated requests for the extension of the deadline some notes were not remitted. In Oaxaca, to cite one case, perhaps due to a shift of administrative personnel or because papers were misplaced in the shuffle, a few notes of one and two pesos and some full sheets and half sheets of one peso denomination were "saved". Someone, perhaps a new administrator, found them and since there was no point in cancelling and returning them as provided for in the original decree, took the trouble to cancel them one by one writing on the reverse 'Inutilisado - Oaxaca 16 de Mayo de 1825' and signing with illegible initials Then they were filed.
A great deal of controversy exists in regard to counterfeits. If they exist, they are very difficult to recognize because all are printed on original paper pertaining to the historical period of the First Empire of Mexico.
The majority of these notes have been cancelled by means of a 2-inch long cut at the bottom.
(based on “The Paper Money of Iturbide” by Eduardo Rosovsky in Boletín, No. 70, January-March 1971)