New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-12-22
STATE BANK BILLS
TROUBLE MEXICANS
Many Circulated in RED
eral District Refused by
Business Men.
HUERTA'S DECREE
SUSPENDS OLD LAW
But Fails to Make Notes Legal
Tender in Capital. and Banks
Won't Accept Them.
lpv Gable 10 The Tribune. ]

! lRv Cable 10 The Tribune
Mexico CITY. Dec. 2l.-Mexico is now IT
the midst of the gayeties OF her Christ
mas celebra ton, and family reunions, un-
der the name OF posadas, are held every
! night. Judging by the crowds frequentine
the booths in the Alameda for the sale
NJ christmas trees and toys people OF al
classes have money TO spend. despite the
| alleged hard times The number OF
American women and children patronlz'
inc the booths at all hours and receiving
kindly treatment effectually disposes %
the stories Of anti-Amerlcanism In this
city.
The chief topic in business circles Tor
the last week has been the question oil
state bank bills. In Mexico city there
are two banks OF issue-the National BANK
of Mexico. founded in 1851, and an older
| institution, known as the Bank OF Lon
don and Mexico. founded in 1864, during
the ephemeral regime Of Maximillah'
Both operate under special charters which
! antedate the present banking law oil
I Mexico. enacted March 10. 1897. AS their
charters have the force OF special stat
! utes and no legislation in Mexico can DE
| retroactive. the banking law OF 1881 had
! TO respect the charters of the National
and London banks, hut II required. them
10 conform to the new law in all points
az 10 which il was not at variance with
| their charters.
! Rv the charters the National Bank Is
/ authorized TO issue bank bills 10 three
times the amount OF cash on hand, ana
! the Bank OF London and Mexico can issue
/ 10 twice the amount OF cash on hand.
| Practically all state banks operate under
the law Of 1897. which provides that they
| must hold i'm cash a sum equivalent 10
one-half Of the amount represented by
their notes in circulation plus the call
| deposits.
To see that the banks comply with this
and other provisions Of the law govern
ment inspector Is appointed for each
bank, but il is believed THAI some Of these
! INSPECTORS owe their appointments 10
favor and that they simply sign cash re-
counts and monthly balance sheets pre-
scented to them without In general taking
the trouble to satisfy themselves az 10
their eXactness.
Huerta's Decree IN Force.
Al This was not a burning question be-
fore Huertas decree making bank bills
legal tender. This measure Is In Nat con-
tradlction with one clause OF the law of
1891. which saws: Bank notes are sub
Jet 20 voluntary acceptance OF the part
OF the public. and on no account shall
they he considered legal tender BY
Huerta's deere this clause has been sus-
pended. and when the decree became
operative the chief anxiety Of the public
was I'm regard To state bank bills-some Of
them issued by distant institutions. as 20
whose solvency or sound management the
inhabitants NJ the federal district have no
direct means OF judging.
Huerta's decree did not. In fact. make
state bank bills legal tender In the fed
eral district. but only in the territory In
which the sta,e banks are severally au-
thorized bv their charters to operate
but when the decree came Into force
large auantity Of state bank bills were
circulating In this city. and such IL still
the case In some instances II is physl-
cally impossible Just now To send these
bank bills for redemption To the parent
institution owing 10 the interruption OF
communications
The public began ~ once To view state
bank bills with distrust. and I'm many
cases 10 refuse them in commercial
transactions But the banking insttu-
ton In this capital known as the Central
Bank had always been willing 20 eN-
change state bank bills for bills OF the
two local banks Of Issue, namely. the Ma
tional and London. When the central
Bank began TO refuse 10 effect this e1-
change for bills OF various state banks
condition bordering on panic seized the
holders thereof
The Central Bank is under no obliSa-
ton TO perform this service. and has been
doing IL only as d matter Of accommoda-
ton for the public and the state banks,
protecting itself by requiring the latter 10
keep on deposit In its vaults an adequate
guarantee fund in cash. OF late some OF
the state banks have experienced diff
Guilty owing to the interruption OF COM
muncations. i'm renewing this fund, and
hence the recent refusal Of the Central
Bank 10 handle their notes
Bankers Seek Solution.
Meetings or bankers, under the direc-
ton of the Finance Department. were
held nearly every day last week to dis
cuss the difficulty. II seems that the ul-
e. radnrs tho
number Of banks Of issue. and perhaps
restrict the issue privilege TO the two
banks OF Mexico City-the National and
the London The immediate solution
seems TO involve a plan for making state
bank bills legal tender In the federal dis
trict although the acting Minister Of