As Mexico had no national paper currency previous to the outbreak of the revolution of 1910, the bills in circulation being all hank is sue, were kept at par value by a reserve of 50 per cent of the amount in circulation, exacted and guaranteed by law. During the revolu tion the banks nearly all violated this provision, issuing notes far in excess of their reserve. The Carranza government, after an investiga tion, gave the offenders a certain time in which to make good the required deposits under pain of 'being closed. This caused the rapid decline of the value of banknotes throughout the re public, both state and federal. In order to fur ther guarantee the stability of the Non-coun terfeitable Issue, $5,000,000 gold was taken from the national treasury and an additional $5,000,000 gold was obtained as a loan from the Henequen Regulating Committee of Yucatan; and all bank issues of paper currency were or dered withdrawn from circulation, the govern ment thus retaining, in conformity with the pro visions of the constitution, a monopoly of the issuing of all money, whether paper or metal, in the republic (15 Sept. 1916). The income from national lands and forests was also ordered paid in gold; and this too went to back up the new paper issue. Over $10,000,000 gold was also ob tained from uncultivated parts of great estates which had previously paid little or nothing in the way of either federal or state taxes. At the same time all the banks in the republic were placed tinder the strictest government Supervi sion, and those which had not complied with the conditions laid down as to currency re serve were permitted to do business only through a government interventor, who was empowered to see to their liquidation. None of these banks could issue any specie without the consent of the government. At the same time the duties were divided into four classes; those payable in metal only; those payable in metal •or the equivalent thereof in national paper cur rency of the new issue; those payable in the new paper issue; and those payable in the new issue or the equivalent thereof in the paper is sues of Vera Cruz and the Constitutionalist Army. The new paper currency issue was dis tributed as follows: 80,000,000 one peso bills, 60,000,000 two peso bills, 75,000,000 five peso bills, 75,000,000 10 peso bills, 70,000,000 20 peso bills, 75,000,000 50 peso bills and 75,000,000 100 peso bills. This work of reorganization of the currency and finances of the nation was placed in the hands of a commission of five members, all of whom had had considerable experience in monetary matters, and who were required to report to the Treasury Department, under whose direction they were working. The principal banks of issue in Mexico had, 30 June 1911, the following paper currency in circulation: Na tional Bank, $54,841,000; London and Mexico, $19,278,000; other banks, $42,535,000; total, $116,654,000. There were issued by the govern ment, in 1910, 6,206,000 silver coins worth $2,927,000; 6,146,250 nickel coins valued at $307, 312; and 19,450,000 bronze coins worth $194, 500. In the fiscal year ending 30 June 1911 the consular fees were $1,163,341 • the general stamp tax amounted to $15,271,000; the taxes on mining land to $1,934,000; on ores and met als, $2,365,000; tobacco, $2,760,000; alcohol, $870,000 cotton goods, $2,517,000; explosives, $5,334; direct taxes, $6,295,000; municipal taxes, $5,133,000; postal service, $4,775,000; telegraphs, $2,255,000; and lotteries, $1,255,000. During the same period the importations amounted to $47,500,000; the exportations to $435,000 and the port duties to $1,985,000, mak ing a total income from foreign commerce of $48,985,000, exclusive of export duties. In 1918 the United States took from Mexico.goods to the value of $140,800,000 and sent there goods to the value of $106,893,000, a total business of $247,694,000. Owing to the fact that the revolu tion of 1910 and succeeding years divided the country into several factions, each of which controlled its own section of country and was more interested in maintaining its ground than in furnishing statistics, such as the Mexican gov ernment put forth annually previous to 1912, definite information relative to the financial and other conditions of the country from 1913 to 1919 is not available, except in a general way; and even this covers only that part of the re public under the control of the Constitutional ist party, which was able, largely, to finance the administration through the sudden enor mous increase of the oil interests of the re public and the rise in the price of oil itself on account of the European War. The finances of Mexico, which were in a deplorably bad condition in 1876, when Gen. Porfirio Diaz as sumed the presidency for the first time, con tinued to steadily improve throughout his seven terms of office until, on his re-election for the eighth time in 1910, they had reached such a position that the Mexican government had se cured a solid standing in the money markets of the world. According to the report of the in ternal revenue tax office for the fiscal year 1917-18 the total revenue collected was $75,496, 360, distributed as follows: Mining, $2,203,353; exportation of metals, $10,003,225; alcohol and other liquors, $4,047,532; textile fabrics and thread, $'2,304,050; importation of wines and other beverages, $2,330,584; electric light and power, telephones, $201,055; bottled liquors, $900,164; matches, $286,842; advertis ing, $93,638 ; pulque, $479,295 ; petroleum, $7,955. 113; patents, $23,449; inheritance tax, $357,577; loans. $92,301; federal taxes, $27,545,390; stamp document tax, $14,376,216. The public debt of Mexico, which has never been large for the po tentialities of the nation, began with a 5 per cent loan of 13,200,000 contracted in Eng land in 1824, which was increased by a like amount at 6 per cent the following year. The interest on these two loans was not paid from 1827 to 1831; and even after this latter date it was met only intermittently and was, therefore, the cause of many disagreeable com plications which have become part of the his tory of the Mexican national debt, which itself became mixed up with political events of pri mary importance. In 1886 these two first for
eign debts of the Mexican nation were consoli dated with the national debt. Previous to this, however, they and other loans contracted in 1831 were consolidated into one national debt of 19,247,387, in 1837; and this agreement was again ratified in 1839. In 1846, the whole Mexican foreign debt, including interest due and unpaid, together with certain internal bonds and other unfunded liabilities, were again consolidated into one national debt of 110,241,650 in bonds of the 1846 issue, for the payment of which one-fifth of the cus toms receipts of the ports of Vera Cruz and Tampico, the duty on tobacco in all forms and the silver export duties on ore sent out by way of the Pacific ports were pledged. During the war with the United States the American forces seized and retained Vera Cruz and Tam pico and the Mexican government was thus un able to meet its foreign obligations. In 1850 another attempt was made to meet the foreign indebtedness of the nation through its conver sion into new bonds bearing 3 per cent and guaranteed by 25 per cent import duties and 5 per cent of the Gulf ports and 75 per cent of the Pacific ports duties, which were to be em ployed for the payment of interest on the bonds and their redemption. In 1864, by a decree of the imperial government of Maximilian. govern ment stock to the amount of 14,864,800 was issued and was accepted by the original bondholders in payment of arrears of interest. The same year the imperial government se cured a second loan of /12,365,000 in Paris and London; and this loan was practically all converted into the Mexican Imperial Lottery Loan with a face value of 120,000,000. Both these transactions were repudiated by the Re publican party on the overthrow of the empire In 1867. However, a part of the debt of the empire was subsequently recognized during the Diaz administration. In 1888 a 6 per cent loan of 110,500,000 was contracted in Lon don, Berlin and Amsterdam, 20 per cent of the export and import duties and all the direct taxes on industries and landed erty and buildings in the Federal District being meet the obligation thus contracted. The following year the Tehuantepec 5 per cent railway loan of 12,700,000 was made in Lon don and Berlin and a year later silver cur rency bonds to the amount of $6,700,000, bearmg interest at 6 per cent, were disposed of in London and Amsterdam to meet certain pressing obligations for railway concessions and construction; and the same year another loan of #6,000,000 was made in London, Ber lin and Amsterdam for the same purpose. Three years later a 6 per cent loan of 13.000, 000, secured by 12 per cent of the import and export duties, was contracted in Lon don. In 1894 the government created the 5 per cent Interior Redeemable Debt, with a view to a single new issue in which all future subventions to railways should be paid. This debt consisted of five series of $20,000,000 each. In 1899 the 5 per cent Internal Consolidated Gold Loan of #22,700,000, redeemable not later than 46 years, was issued to convert the 1888, 1890, 1893 6 per cent loans and 1889 5 per cent Railway Loan. In 1903 the fed eral government assumed obligation to the extent of 12,400,00 for the payment of the City of Mexico 5 per cent drainage loan, to meet the expenses of the drainage of the capital. The following year a 4 per cent gold bond issue of $40,000,000 was made in Lon don, New York and Amsterdam, partially through banks and partially privately, to meet various pressing obligations of the government. In 1910 the final loan of the Diaz government was made at 4 per cent for 122,200,000, with a view to the conversion of the 5 per cent loan of 1899. Finally, in 1913, a loan of $200,000,000 was authorized, of which $60,000, 000 was placed in France, with a guarantee of certain export and import duties. In Tune 1910, the public debt of Mexico was $300,524,996 (Mexican silver) payable in gold, and $137, 850,133 payable in Mexican silver, and an addi tional debt of $273,398 (Mexican currency), making a total of $438,648,528 in Mexican sil ver. In 1918 the public debt was over 500,000, 000 pesos gold (including interest of about 70,000,000 pesos), the gold peso being nomi nally worth 49.846 cents. Consult Conant. C. A., The Banking System of Mexico' (Washington 1910) and works under section on MANUFACTURES. On the same date there were in Mexico 33 banks, 25 of which were banks of issue; all of which were then doing business on a gold basis which had been introduced into Mexico in 1905 on the basis of a 50 cent dollar. For the fiscal year ending 30 June 1913 the revenue of the Mexican government was 958,902 Mexican currency against an expendi ture of $110,781,871, a very considerable in crease having taken place in five years, when the revenue was only $98,775,510 and the ex penditure $92,967,393. It is worthy of note that, even with the revolutionary activity then prevailing, the revenue of the government was, in 1912-13, $15,755,816 greater than that of the preceding year. This income had reached over $150,000,000 (pesos) in 1917. This federal reve nue is, for the most part, derived from stamp taxes, direct taxes and import and export duties. Although the finances of the Constitu tionalist government had improved consider ably in 1919, yet the disorganized condition of the country and of many of the banks, both state and federal, and the loss of credit brought about by the long revolutionary period, made the task of the Constitutionalist party of straightening out the financial affairs of the country very difficult. Money was badly needed; and this the great money centres seemed unwilling to advance until greater op portunities for the exploitation of Mexico's natural resources were granted them. Work ing under this handicap, the government stead ily pursued its ends with as much success as could be well expected under the circumstances.