Paper Money of Chihuahua

.. by Simon Prendergast

  • Increase font size
  • Default font size
  • Decrease font size
Home The History El Banco Minero Bank-on-bank issues in Gómez Palacio

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By this time, all the gold and silver had been withdrawn from the banks and there was an acute shortage of circulating money, both for the army and for the townspeople.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." (see excursus below.)

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. Montalrio y Valdez, in five different denominations.

On 3 October the leading businesses, including the Banco de la Laguna, Banco de Coahuila, Banco Germanico de la America del Sur, 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.

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-to-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 day(LG 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. The Banco Minero was assessed at $3,000 and had handed over $910 by 2 November.

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.

Banco Minero's cheques

The notes of the Gómez Palacio branch of the Banco Minero were signed by Francisco C. Terrazas and José .

Francisco C. Terrazas:

José:

Notes drawn on the Banco de Coahuila

The only known value is a $5 note.

Notes drawn on the Deutsch-Südamerikanische Bank

The only known value is a $20 note.

Notes drawn on the Banco de la Laguna

Four values ($5, $10, $20 and $50) are known.

In its turn the Banco de la Laguna Refaccionario in Torreón issued notes for five, ten, twenty and fifty pesos drawn on the Banco Minero.

On 30 November 1914 the Carrancista Comandante Militar in Saltillo, General Luis Gutiérrez, issued a circular nullifying the bank-to 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.

In June 1917 Lázaro de la Garza still had $10,000 in Banco de la Laguna bank-on-bank notesThe Banco de la Laguna issued notes against the Banco de Coahuila and Banco de Londres y Méxicoas well as the Banco minero in the Rio Grande Bank & Trust and wanted to sell. He asked Raymundo Navarro who was in El Paso what was the best price he could getLG papers, 6-I-43, telegram L. de la Garza, Los Angeles, to Navarro, El Paso, 4 June 1917. Navarro replied that they were priced at 30c, but with no buyersLG papers, 6-I-45, telegram Navarro, El Paso to L. de la Garza, Los Angeles, 6 June 1917 though a few days earlier they had stood at 35cLG papers, 6-I-54, letter Navarro, El Paso to L. de la Garza, Los Angeles, 6 June 1917. De la Garza was still trying to sell them six months laterLG papers, 6-J-52, letter L. de la Garza, New York, to Navarro, El Paso, 21 December 1917. Navarro could not find a buyerLG papers, 6-J-53,  telegram Navarro, El Paso to L. de la Garza, New York, 27 December 1917 but de la Garza found one in New York and the notes were sent to him there on 27 DecemberLG papers, 6-J-54,  telegram de la Garza, New York, to Navarro, El Paso, 28 December 1917: 6-J-55, telegram. Navarro, El Paso, to L. de la Garza, New York. 28 December 1917.

By 1919 some of the cheques issued by the Banco Minero and drawn on the Banco de la Laguna had still not been paid and were a matter of dispute. The dispute evolved around the date that communications were resumed between Torreón and Mexico City. Juan F. Brittingham had posited one date: Francisco C. Terrazas had replied that Brittingham was not in Gómez Palacio at the time and had got the dates wrong. His own family had left Torreón on 21 or 22 December, arriving in Saltillo a couple of days later CONDUMEX, Fondo Creel, 244, 62488, letter Terrazas, Mexico City to Enrique C. Creel, Los Angeles, 16 October 1919 whilst Miguel Torres said that his investigation suggested the first train from Torreón to Mexico City, via Monterrey, was on 9 December CONDUMEX, Fondo Creel, 246, 63140, letter Enrique C. Creel to Juan A. Creel, El Paso, 19 December 1919. Creel therefore believed that the period for presenting the cheques had expired, since more than three years had passed before Carranza’s moratorium.

The argument appears to have been that
(a) the cheques were payable in cash once railway communications had been definitely re-established with Mexico City (en dinero efectivo al quedar definitivamente abierto el tráfico ferrocarrilero con la Capital de la República).
(b) The Código de Comercio required cheques to be presented within three years, or they lost their value
However,
(c) Carranza’s Ley del Moratorio, on 16 December 1916, suspended any expiration
So,
(d) if traffic was resumed before 16 December 1913, the cheques expired on 16 December 1916, but
(e) if traffic was resumed after 16 December 1913, Carranza’s moratorium would suspend any expiration, and the cheques would still be valid.

Enrique Creel was worried that as the Banco de la Laguna had reopened its branch in Torreón it would accept the cheques in payment and then present them to the Banco Minero for honouring. However, Francisco C. Terrazas felt that the amount still outstanding was very small as most were used by the revolutionary troops for expenses and the rest would have been destroyed during the following disturbances CONDUMEX, Fondo Creel, 244, 62464, letter Francisco C. Terrazas, Mexico City to Enrique C. Creel, Los Angeles, 23 December 1919.

Notes drawn on the Banco Nacional de México

Only the $10 value is known.

Francisco C. Terrazas, the branch manager, reported that the bank had issued $380,000 in cheques de Banco a Banco, and had retired $300,000CONDUMEX, Fondo Creel, 149, 38352, report on Banco Minero by Francisco C. Terrazas.

Excursus on monies taken from Torreón banks

In 1913 the branches of the banks in Torreón had handed over to the Villistas cheques drawn on Mexico City and on foreign banks. The cheques which Villa sent to the Rio Grande Valley Bank & Trust were

Banco Aleman (Deutsch-Südamerikanische Bank) 192603 £2,000 sterling
10389 $20,000 U.S.
A 44381 10,000 francs
L 25862 $20,000
L 25863 $20,000
Banco Nacional de México 38305 30,000 francs
47053 $80,000
46975 $30,000 U.S.
Banco de la Laguna $15,000
$15,000

A cheque for $10,000 U.S. from the Compañía Metalurgica de Torreón and one from the Banco Germanico (Deutsch-Südamerikanische Bank) for $20,000 U.S. had been paid. Two other documents, one from the Banco de Londres y México and another from the Banco Nacional de México, were deposited in the First National Bank of Eagle Pass. Since Villa had not allowed him to cash these documents, de la Garza had been forced to use them as security for a $80,000 U.S. gold credit to cover the Banco del Estado’s costsLG papers, 3-L-15, telegram L. de la Garza, El Paso, to Villarreal, Mexico City, no date.

On 6 December 1914, F. F. Villarreal told Lázaro de la Garza that, on Villa’s instructions, he had to send any cheques that he had to Mexico CityLG papers, 3-L-6, telegram from Villareal, Mexico City, to L. de la Garza, Ciudad Juárez, 6 December 1914. De la Garza offered to send Farías with the documents and some $10,000,000 that was also requestedLG papers, 3-L-7, telegram from Villarreal, Mexico City, to L. de la Garza, Torreón. 8 December 1914but, because of the difficulty in assembling the money, as the $50 denominations had to be signed, he later agreed to send $2,000,000 a day from 14 DecemberLG papers, 3-L-12, telegram L. de la Garza, Torreón, to Villarreal, Mexico City, 12 December 1914.

The Banco de Londres y México document was a cheque. no. 29668, for $50,000 (Mexican pesos) dated 20 October 1913, drawn on its head offices in favour of the First National Bank of Eagle Pass.  On 1 January 1914 Lázaro de la Garza wrote to the Rio Grande Valley Bank & Trust Company in El Paso, explaining that the draft was a means for him, like others, to get his money out of Torreón. For example. G. C. Carothers, the U.S. consular agent in Torreón, who supported de la Garza’s case, had drawn cheques in favour of the Lockwood National Bank of San Antonio, TexasLG papers, 3-I-1, letter L. de la Garza, El Paso, to Rio Grande Valley Bank & Trust Co., El Paso. 15 January 1914. On 8 January Villa agreed that de la Garza should cash the cheque at a rate of 45c U.S.LG papers, 3-M-26, letter A. S. Farias, El Paso, to L. de la Garza, El Paso. 22 March 1915. However, on 6 March Rio Grande Valley Bank & Trust reported that the Banco de Londres y México had refused to honour the cheque as the manager of the Torreón branch, Castro, had stated that it had been obtained by General Villa by forceLG papers, 3-I-5, Letter Rio Grande Valley Bank & Trust Co., El Paso, to L. de la Garza, El Paso. 6 March 1914). De la Garza gave the cheque to A. S. Farias to cash in the Mexican capital as soon as the Conventionist forces were in charge of communicationsLG papers, 3-M-26, letter A. S. Farias, El Paso, to L. de la Garza, El Paso. 22 March 1915.

 

Main Menu