Bank-on-bank issues in Gómez Palacio
On 1 October 1913 Villa defeated the Federalist Army outside Torreón and Gómez Palacio. Amid cheers of jubilation from the masses of the population in these cities where he was very popular, he and his men entered Torreón. His troops had not been paid in months. The next day, his financial representative, Lazaro de la Garza, called the representatives of all the six banks in the area Banco de Coahuila, Banco de la Laguna, Banco Nacional de México, Banco de Londres y México, Banco Minero and Deutsche-Südamerikanische Bank together for a meeting.
By this time, all the gold and silver had been withdrawn from the banks and there was an acute shortage of circulating money, both for the army and for the townspeople. Lazaro de la Garza, on Villa's orders, demanded a compulsory loan of three million pesos from the banks. Villa was quoted as saying: "There is money in the banks and whenever our cause is in danger, that money is offered voluntarily or we take it."
The problem was that the banks had no money, and would not until communications were restored with the rest of Mexico, but the simple printing of fiat money by the banks would not have worked if the banks failed to guarantee it. So señor Zunzuneguí (of the Banco Nacional de México) came up with an idea of "bank-to-bank" notes. These were, in effect, mutual promissory notes which could circulate both among the townspeople and the revolutionary soldiers. These notes would be a loan from one bank against another, payable when railway traffic was re-opened with the capital of the Republic, as stated on the back of each of these notes. These cheques were printed by C. Montauriol y Valdés, in five different denominations.
On 3 October the leading businesses, including the Banco de la Laguna, Banco de Coahuila, Banco Germánico de la América del Sur (Deutsch-Südamerikanische Bank), Banco de Londres y México, Banco Nacional de México, Banco de Durango and Banco Minero, were summoned to a meeting in the morning of the following day at the Casino de la LagunaLG papers, 3-A-1: Memo from la Comisión de Hacienda (de la División del Norte) announcing a meeting ordered by Villa, 3 October 1913. Following this, on 5 October, the Commission announced that the Ejército Constitucionalista had imposed a loan of three million pesos on various businesses but as actual cash was in short supply, it asked holders of any type of specie (silver, gold or bank notes) to deposit them in the local banks (the Banco Nacional, Banco de Londres y México, Banco de la Laguna, Banco Germánico de la América del Sur and Banco de Coahuila) in exchange for the bank-on-bank chequesLG papers, 3-A-2: Circular issued by la Comisión. 5 October 1913.
The various banks in Torreón, Coahuila made a series of issues as did the branch of the Banco Minero in Gómez Palacio. One issue of four values were drawn on the Banco de la Laguna (which issued a reciprocal series in Torreón), while three others were drawn on different banks, the $5 on the Banco de Coahuila, the $10 on the Banco Nacional de México and the $20 on the Deutsch-Südamerikanische Bank.
On 25 October Villa wrote to de la Garza about the urgent need for money for the armyLG papers, 1-A-7: Villa, Ciudad Camargo, to L. de la Garza, Torreón. 25 October 1913 and on 27 October de la Garza replied that the Commission has decided to levy a new forced loan on banks, industry and commerceLG papers, 1-A-14, L. de la Garza, Torreón, to Villa, Ciudad Camargo, 27 October 1913. So on 27 October Calixto Contreas, the Jefe de las Armas, gave notice to 63 different concerns immediately to hand over $146,450 (including $47,000 from the various banks) in gold, silver or small notes to be exchanged for bank-on-bank chequesLG papers, 3-A-16: 16: Memorandum issued by Calixto Contreras, Torreón. 27 October 1913: Announcing the amount of money demanded by Villa and the Comisión de la Hacienda from the commercial establishments listed. The deadline was extended on 2 November to the following dayLG papers, 3-A-28: Memorandum issued by Calixto Contreras, Torreón. 2 November 1913: Extending the due date of the wartax imposed by Villa, with a list of persons who have partially fulfilled their quota and lists of merchants.
In August 1914 it was reported that 119,000 cheques in different denominations to a total value of almost a million pesos had been issuedAMS, fondo Presidencia Municipal, caja 157/1, legajo 34, expediente 7 - Cheques emitidos en Torreón.
On 30 November 1914 the Carrancista Comandante Militar in Saltillo, General Luis Gutiérrez, issued a circular nullifying the bank-on-bank cheques and the sábanas (los billetes emitidos por la División del Norte, comúnmente conocidos por “Villistas”)AMS, Decretos y Circulares, caja 10, exp. 614. Strangely, in the notes that he decreed of forced circulation he included the dos caritas. There could be several reasons for this curiosity (1) he meant the Ejército Constitucionalista, also datelined Chihuahua, though these would have been included in the first group “Billetes Constitucionalistas”; (2) he meant just the earliest dos caritas that Carranza has authorized; (3) he did not realize the dos caritas were “Villista”, or (4) there were too many in circulation and their nullification would have caused trouble. Gutiérrez’s circular will have been superseded by Carranza’s decree nine days later.