For the next four years Alvarado was to issue more of the Reguladora notes, supposedly backed by gold stocks held in Yucatán vaults, or firmly guaranteed by the henequen stored in New York harbour. By decree, he held that they were to be received at the old 2-1 value of Mexican currency – two pesos for one American dollar, and promised to redeem his paper on demand in either gold or New York exchange.
With the approval of both the federal and state governments, this paper currency circulated until 1919, with businesses and the public accepting that it had sufficient backing. However, at the beginning of 1919 the Comisión began to refuse to issue drafts drawn on New York, and the edifice started to collapse. The notes depreciated so that the Secretaría de Hacienda refused to accept them in payment of taxes after 1 August 1919.
On 6 October 1919 the State Congress withdrew the notes from circulation but required the successor to the Comisión to acknowledge themDiario Oficial, Yucatán, Año XXII, Núm. 6730, 7 October 1919.
It is estimated that by 1919 there were more than 34,000,000 paper pesos circulating; much of it in fact was made good by the government, but there still remained in circulation in 1920 more than 10,000,000 pesos worth of Reguladora notes, with only half that amount in henequen stored in New York to back it up. The breaking point came in early spring of 1920 when a banking syndicate which had loaned the commission huge sums of American dollars against future henequen shipments, suddenly foreclosed on a quarter million bales of the fibre stored in New York.
In its final days, the Comisión Reguladora was merged with three major foreign investment groups – all former creditors – The Equitable Trust Company, the Royal Bank of Canada, and Inter-State Trust Company, of New Orleans, thus forming a corporation known simply as “ERIC” (a composite of the three names plus “C” for Commission), in an effort to salvage something from the ruins. The new directors managed only to right the listing ship, but perished all hopes of recouping the losses caused by the waves of Alvarado paper currency.