The Ejército Constitucionalista notes

As soon as Carranza had taken the step of disowning Huerta, he realised that financing his revolution would be a problem. He could not merely requisition food, clothing and other military supplies as this action would have created social chaos and cash was needed to buy arms and ammunition from foreign sources. Carranza realised that he had to organise a fiscal system that would establish a means of payment acceptable to the people of Mexico and to obtain the gold for foreign expenditures. The banks would not help him, but anyway he was opposed to obtaining foreign loans or loans from individuals or banks because he felt this would put the revolution at the mercy of the lenders.

Officially, financing his revolution depended upon a combination of paper money, which created a public debt that did not directly affect a given group of Mexicans or foreigners, and export taxes used to obtain hard currency to spend on munitions. His decree issued at Piedras Negras, Coahuila on 26 April 1913 ‘considering it the duty of all Mexicans to contribute proportionally towards the expenses of the army until the re-establishment of constitutional order, and considering finally that the best way to achieve these ends, without causing direct and material injury to the people of the country, lies in the creation of paper money’ specified the creation of an internal debt of $5,000,000. All the inhabitants of the Republic were obliged to receive these notes as legal tender, and at their face value, in all civil and commercial transactions. As soon as order was re-established, laws would be promulgated on the redemption of the notes that had been issued. On 28 December while at Hermosillo, Sonora Carranza decreed (decreto núm. 14) a second issue of fifteen million pesos (in notes of $1, $5, $10 and $20). This decree also prohibited the use of scrip (fichas, tarjetas ó vales) as currency, with punishment for anyone who issued or used them. Finally, on 12 February 1914, while he was at Culiacán, Sinaloa, Carranza added a further issue of ten million pesos (decreto núm. 18), bringing the total at this time to thirty million pesos. By the end of March 1914 Carranza and his government had moved from Sonora to Ciudad Juárez.

In his informe to Congress in 1917 Carranza said that the first five million pesos were the Monclova issue whilst the remaining twenty-five million pesos were the Ejército Constitucionalista¹. However, the Monclova issue was at least thirty million pesos, as there were at least two issues and the second order, for twenty-five million pesos, was made before the 12 February decree². Serial numbers (see below) show that the genuine Ejército Constitucionalista totalled at least 49.6 million pesos, thus:

so Carranza might have been acknowledging just the earliest issues, thus:

However, Carranza was still being selective with the truth.

The Ejército Constitucionalista notes are a vast improvement on the original Monclova issue that had all the hallmarks of an emergency. The notes have a firm appearance, a patriotic motif and now it is the Constitutionalist Army, not the Government, that has given its imprimatur to the issue, perhaps suggesting a firmer backing but at the very least making one more hesitant to refuse them. Since the central design of the Mexican eagle with mountains in the background was reused on the later Gobierno Provisional notes, this earlier issue was referred to as ‘Aguilas Viejas’.

As a security measure the notes have the monograph ‘FFV’ (for Felicitos F. Villareal) as part of the design. On the $1 the monogram appears in red on both ends of the line ‘con el decreto de 12 de Febrero de 1914’; on the $5 it is in green in the lower corners of the central rectangle; on the $10 there is a red monogram on the left before the word ‘PESOS’ and another on the right after Villareal’s signature, and the $20 have a orange monogram on the left before the word ‘PESOS’and another on the right after Villareal’s signature.

On 25 February 1914 Carranza commented to Villareal that the notes needed to refer only to the decree of 12 February 1914 (as that decree itself referred to the earlier enabling decrees of 26 April and 28 December 1913)³.  On 1 March 1914 Villareal reported from Washington that he has seen proofs that he felt satisfied Carranza’s conditions and would discourage counterfeiting⁴ and the following day Carranza instructed him to start the work⁵. Thus the original notes were printed by Norris Peters in Washington: in April 1914 Villareal entered into an agreement with them to print 17,400,000 notes⁶.

The notes are signed by Serapio Aguirre as Treasurer General (Tesorero General de la Federación) and Felicitos Villareal as Head of the Finance Department (Jefe de Departamento de Hacienda).

Serapio Aguirre: Born in Saltillo, he was an early adherent to the Constitutionalist cause. He was appointed Tesorero General on 25 June 1913 when Carranza was in Sonora but removed from office in July 1914.

Felicitos F. Villareal: Villareal was Carranza’s agent in the United States, then took over as Subsecretario de Hacienda y Crédito Público, Encargado del Despacho on 9 February 1914 for a few days before renouncing in favour of Luis Cabrera. When Villa disowned Carranza, Villareal threw in his lot with Villa.

To validate the notes Alberto Pani crossed the border to El Paso, Texas and bought three electric Multigraph machines⁷. On 4 April Pani told Carranza that he had telegraphed Villareal with instructions as to how he should send the notes in order to quadruple the performance of the machines⁸.

On the same day Pani told Chao that he was expecting the new notes that week⁹.  Newspapers had picked up some details: on 1 April the El Paso Morning Times reported that eight million pesos of new Constitutionalist currency in $50, $25, $10 and $5 denominations (sic) were to be distributed in Chihuahua within a few days¹⁰.

Consignments of Ejército Constitucionalista notes

The first consignment of 650,000 (sic) pesos was sent on 11 April 1914 and Villareal promised Zubarán Campany daily deliveries in future, if possible¹¹. The El Paso Morning Times reported that the first shipment consisted of about a million pesos in $5 and $10 denominations, received by Rafael E. Muzquiz, the Constitutionalist consul in El Paso for forwarding to Chihuahua where it was to be distributed by Treasurer Sebastian Vargas ‘as the Villa currency is recalled’¹².

As an extra security measure the notes had a scalloped Ejército Constitucionalista seal, control letters and Roman numerals printed on the reverse. On 15 April 1914 Zubarán wrote to Carranza that the notes would arrive that evening, and that he had acquired a machine to stamp them¹³. Zubarán left Pani in charge of the work, which started on 20 April¹⁴. Pani had to set up a workshop for the stamping machines and find people who could work them, but by 24 April he had validated a million pesos and felt he could keep pace with the daily deliveries from Washington¹⁵. The Tesorería General de la Nación was set up in the former branch of the Banco Minero in Ciudad Juárez.

Details of known consignments are:

As stated, the El Paso Morning Times reported that the first consignment was to be forwarded to Chihuahua, where they would be distributed by State Treasurer Sebastian Vargas hijo as the Villa currency was recalled²⁴. Other consignments were

By 18 May Pani had $1,700,000 in sellados and $2,300,000 without resello, all in the $5 denomination²⁶. By 23 May he had finished stamping all the $5 notes. As he had had to return some poorly printed notes to Washington, he had $2,800,000 ready²⁷. On 11 June, having finished stamping the first lot of dos caritas (see Maverick Clarke), they began to stamp the $1 notes.

During June 1914 relations between Carranza and Villa worsened. In anticipation Pani instructed Washington to make future consignments via Laredo and also asked Carranza whether he should transfer the office to Monterrey or Saltillo²⁸. Carranza ordered the Tesorero and Pani to collect all the sealed and unsealed notes and the entire Treasury, but they only managed to send six cases (petacas) of unstamped $1 notes to Seguin at Eagle Pass²⁹. On 16 June Villista forces under Hector Ramos surrounded the Tesorería General de la Revolución and removed all the funds (a total of $14,540,000), machinery and personnel, including Serapio Aguirre, Alberto Pani, and Pascual Ortiz Rubio, who was in charge of the revalidating machines. The employees, apart from Pani and Ortiz Rubio, who were released after intervention from Adrian Aguirre Benavides, were transported to Chihuahua, where they were held for twenty-seven days.

On 21 June 1914 Pani left El Paso with four trunks of notes to put into circulation in Saltillo. The rest had been captured by Villa in Ciudad Juárez³⁰.

Carranza ordered Pani to interview Villa and redeem the printing equipment and currency and obtain the release of the men. Pani went to El Paso and requested an interview so Villa sent his car to bring Pani to his headquarters in Ciudad Juárez.

According to Pani’s account³¹, Villa’s headquarters were full of roughnecks armed with pistols, guns and bullet-belts across their chests. He went to Villa’s room where he was talking with about five or six people. Villa dismissed them, locked the door with a key and put the key in his pocket. He turned around and faced Pani, who by that time had given up his life as he knew that Villa had a habit of settling his arguments with bullets. They started talking about everything, sometimes in a normal voice but mostly in Villa’s loud angry voice. After two hours Villa had blown off some of his steam and had calmed down. Suddenly he asked Pani, ‘On what basis do you wish us to remain? Friends or enemies?’ ‘As you wish’, replied Pani controlling himself. ‘Fine! Let us keep it on a friendly basis.’ They left headquarters in Villa’s car and headed for the railway station where all the printing equipment had already been loaded onto a box car. Villa told the men in charge to turn over everything, including the printed currency, to Pani. Villa casually mentioned he had no money to pay his soldiers so Pani suggested they telegraphed Carranza to give him the good news and obtain his authority to leave a million pesos for Villa’s payroll. Pani asked Villa for a train engine and crew, an honest and reliable courier to deliver the precious cargo and a detachment of crack soldiers to escort the convoy. Villa was feeling generous and granted everything requested. Eventually the train with its cargo of five million pesos and the stamping machines reached Ciudad Juárez on 12 July safe and sound³², though $1m was released for Villa to use in Torreón³³. The San Antonio Express reported that the money was to be shipped to Carranza’s headquarters in Monterrey³⁴.

The next day Villa sent for Pani again as he wanted his opinion on a project that he had been discussing with friends. Villa had been told that he should establish a bank in Chihuahua to provide money for the needy people. Pani explained that if Villa did that all the other revolutionaries in Sonora, Sinaloa, Durango etc. would feel entitled to do the same and they would bring the country to economic chaos. It was better to wait until the revolution was over and then open a central bank to take care of the nation’s needs. Similarly Aguirre, in his memoirs, records that on 15 July Villa asked him to join him to manage the Banco de Agricultura y Minería that he was going to establish. According to Villa, Silvestre Terrazas was already studying the project. Aguirre diplomatically replied that he was interested but wanted first to finish his work in the Secretaría de Hacienda³⁵.

When Villareal placed his order with the Norris Peters Company, he left Santiago S. Winfield in Washington as the forwarding agent. However, when the Constitutionalists fell out, Winfield threw in his lot with Villa and attempted to hijack some deliveries.

The Constitutionalists’ legal adviser, Charles A. Douglas, went before the Supreme Court of the District of Columbia with an appeal for an injunction to restrain the delivery of currency at El Paso by one of three express companies by which it was shipped³⁶. On 3 July Justice Anderson of the District Supreme Court signed an order directing three express companies to show cause why they should not be enjoined from delivering several million pesos in the new currency. The application did not act as a restraining order: if they saw fit the express companies  (Adams, Wells Fargo and Southern) could deliver the consignment before 6 July, when the court order was returnable³⁷. Winfield was already travelling south with four suitcases. Though he denied that he had any money, he never let the suitcases out of his sight and at New Orleans personally attended them when they were transferred from one depot to another. At Atlanta Winfield received a telegram from Carranza, informing him that he had been replaced as Constitutionalist agent in Washington by Alfredo Breceda. Though he had tickets for Laredo, the telegram caused Winfield to change his destination, turn west from San Antonio instead of south, and deliver the money to Villa. The notes were not yet numbered but the Villistas had gained possession of the numbering machinery when they took charge of the customs house³⁸.

Winfield arrived in El Paso on the evening of Friday 3 July and went about his business, entirely unaware that deputy sheriffs were hunting him to serve an order from the district court halting the delivery of the packages. About midnight he ran into one of Villa’s agents from Ciudad Juárez, who told him of the injunction, so the money was moved from the Union station across the border to Ciudad Juárez. Carranza’s agent, Roberto V. Pesqueira, asked Colonel Tomas Ornelas, jefe de las armas at Ciudad Juárez, to arrest the four men responsible for the removal of the currency. These four men, all prominent Villistas, were detained briefly by the El Paso police and the custom officials at the international bridge but since neither knew of the injunction, the men were allowed to go on their way.  They had seven packages of new currency, but the custom officers express serious doubts of it amounting to five million pesos³⁹.

On 6 July a bench warrant was issued for the arrest of Winfield charging him with embezzlement. The warrant was sworn out by Rafael Zubarán, and charged that Winfield appropriated to his own use or diverted from their intended use about 50,000,000 pieces of paper currency valued at $5,000,000⁴⁰. Villareal also took out a petition in El Paso naming Winfield and Lazaro de la Garza and obtained injunctions against the Adams, Wells Fargo and Southern freight companies. The next day Carranza agents declared six trunks, supposedly containing the missing money, had been located in the express office at San Antonio⁴¹.

It was expected that the money would be taken to Chihuahua and put into circulation by the Treasury there, as by this time Villa had the necessary equipment for applying Aguirre’s signature and the validating stamp. However, as a result of Villa’s conference with Carranza at Torreón, at the same time as the treasury personnel and equipment were released the money was handed over by Lazaro de la Garza to Pani, for shipment to Carranza’s headquarters in Monterrey⁴².

After the open split between Villa and Carranza there was conflict over ownership of the notes and printing plates. On July 21, under replevin⁴³ proceedings instituted by Villareal, a deputy United States marshal took from a Washington engraving plant (presumably Norris Peters) the dies and plates from which revolutionary currency had been engraved and eight million one-peso notes printed. Villareal declared the property was being illegally detained. The engraving company did not protest⁴⁴. This was done to prevent any money being printed from the plates, except that authorized by the treasury department. Local Constitutionalists said that a quantity of the money, estimated to have amounted to $4,000,000, was printed from the plates before they were obtained by the treasury department representatives⁴⁵.

On 14 September 1914 de la Garza reported that he had been told that Winfield had the rest of the notes in St Louis, but that Winfield had come from Washington to say that the notes were really in Washington, as well as the duplicate plates. He told Villa of his worries about the Carrancistas and Norris Peters⁴⁶. On 16 October 1914 he wrote that Norris Peters would only entrust the billetes Constitucionalistas (and the printing plates) on Villareal’s written instruction, so Winfield did not have them⁴⁷. On 3 December 1914 Zubarán went to Navarro in Washington with orders from Villareal to collect the notes, numbering machine and original plates⁴⁸. Villa responded by ordering them not to hand over the numbering machine and original plates⁴⁹.