Today, Mexico’s peso is suffering the ill effects of Donald Trump’s election and continued bashing of the United States’ south-of-the-border neighbor.
But the Mexican Treasury has a history of enduring and bumpy times. Probably the longest and roughest of times for the nation’s treasury was during the republic’s long and chaotic 1910-1924 Revolution. During this time, just about anyone with sufficient boldness and a printing press or blacksmith’s equipment could turn out currency and specie at will. The Treasury’s credibility and jurisdiction were constantly under threat.
Mexico’s mint, created by Hernan Cortez some months after his successful siege of Moctezuma’s capital, Tenochtitlan, was officially established as a royal mint of the Spanish Empire in 1535. It is the oldest mint in all of the Americas and one of its most active. It has a long history of producing money, not only for this nation, but for other countries, primarily Latin American, as well. Yet Mexico has historically ordered most of its own paper money from abroad, most frequently from the United States.
But the Mexico City mint’s preeminent position as this country’s major money manufacturer (there were other, smaller government mints in places such as Guadalajara, Real de Catorce, Guanajuato and Durango, among others) diminished quickly once the Revolution exploded. Such rebel leaders as Emiliano Zapata, Alvaro Obregon, Pancho Villa, Venustiano Carrranza and other civil war chieftains turned out literally tons of their own currency and coins during the Revolution. Usually, this money bore the name of the state in which it was produced, or, frequently, the name of the state in which a rebel leader had begun his revolutionary career.
In 1913, when rebel factions under a number of commanders launched a coordinated campaign against the federal government led by the dictator, General Vitoriano Huerta, paper notes were printed by the Tesoreria (Treasury) General del Estado de Chihuahua; the Tesoreria del Estado de Sonora; the Gobierno Constitucionalista de Mexico, among other states.
One can trace the trail of revolutionary activity through the dates and places of issue of these notes. This same year “revolutionary” coins were also struck in Chihuahua, the first of more than 200 different types of “emergency” money produced during that period.
Such coins tended to be more readily accepted by Mexican civilians and tradespeople than Revolutionary notes. However, there was really little choice: Revolutionary armies generally took what they wanted, anyway. If a merchant didn’t want to accept a particular army’s paper money, then he didn’t get anything — except possibly shot. To show that one didn’t have faith in whatever army currently occupied one’s neighborhood was considered impolite, and such discourteous behavior was often punished by death.
This imposition of revolutionary currency on various regions caused economic chaos. Troops of one rebel faction would occupy a community in the morning and declare their currency the only legal tender permissible. By mid-day they might be driven out by another rebel faction which would immediately impose its currency on the region. And anyone refusing to accept either kind of money at the appropriate moment faced the possibility of being executed with no hesitation at all.
Sometimes there wasn’t even time for such monetary flip-flops; a printing press, or the correct plates, might not be available. In such cases, invading armies would simply begin “validating” the paper money their enemies had issued by hand-stamping it with a new identity. Some bills during this time were revalidated in this many as many as four times by different armies.
As a consequence of being produced “on the run,” as it were, Revolutionary paper money was often printed on bizarre materials. Some notes were inked onto ledger paper, children’s notebook pages, cardboard, even cloth-backed paper. Expediency dictated what materials were used and how elaborate the designs of the bills were. Some were quite ornate, many were severely, often crudely, simple. More than a few issues were even hand signed. In the north, rebel bills were called bilimbiques, which revolutionary lore tells us was a corruption of the name of William Weeks, a well-known paymaster of a Sonora mining company who had signed pay chits for miners of the regions.
Small cardboard bills were called, naturally, cartones, while the out-sized paper notes of Pancho Villa were nicknamed sabanas (sheets).
When Venustiano Carranza’s victorious Constitutionalist army (which for a while included Villa, Alvaro Obregon and may other formerly independent revolutionaries, with the exception of Emiliano Zapata) marched into Mexico in August, 1915, it imposed its own bills on the public at gunpoint. All other currency and coins were declared void. But faith in the latest victors did not flourish and the economy and commerce of Mexico fell into even further chaos during the next two years.
Revolutionary notes, in general, were poorly produced, making them easy to counterfeit, which they were, by the millions of pesos. In 1916, an effort was made to bring order to this aspect of Mexico’s money confusion. The government-of-the-moment declared all previously issued paper money, from whatever source, void and replaced it with infalsificables (non-counterfeitables) printed by the American Banknote Company, of New York. The new note, the nation’s only legitimate currency, was worth 20 United States cents per peso, though by August of 1916, its value had plunged to just a bit over four cents and by the end of the year it was worthless. This, economists point out, again proved that “fiat money has a hard time surviving.”
In September, 1916, a presidential decree placed all Mexican banks “of emission” in liquidation. Just two years later, 20 of these 26 banks were bankrupt and the other six were failing.
Up to 1916, it is estimated that approximately two billion pesos in revolutionary bills were “probably” in circulation (this amount could well be much more because of the great amount of counterfeiting and, in some cases, long-time hoarding).
Once banks failed in 1916, no paper money was again circulated in the Republic until 1925, with the formation of today’s government central bank, the Banco de Mexico.
Today, a peculiar and ironic situation is occurring concerning Mexico’s money situation. While many revolutionary bills, which in a good number of cases were worthless shortly after they were issued, are gaining value daily, today’s money issued by the Mexican federal government is losing value daily.