The log cabin Democrat., 1920-11-15
Monday, November 15, 1920.
OBRECON MUST REFORM
 FINANCES OF REPUBLIC
Huerta Leaves Problem for Successor to Handle-Propose Big Bank
 of Republic.
(By UnneI Prsasl }

Mexico City, Nov. 15.-Of all the problems which will confront Presi- dent-elect Obregon when he assumes the leadership of the Mexican nation next December, none will demand more urgent solution than the rehabilitation of the country's banking system.
 Thus far Provisional President De La Huerta has left the question al- most untouched, evidently believing the problem to be. so immense that short-term Substitute" government could not tackle it.
 De la Huerta, however, has divided the question into two salient angles: First, banking law must be enacted, e@tablishing rules for the guidance or both native and foreign banks; sec ond, national bank of issue must be founded.
 Around both features of the issue revolves the necessity of providing some form of reimbursement for the bank which suffered enormous losses during the revolution. Little pro- gress has been made toward the drafting of banking law. Several tentative projects have been drawn up, but none of them has passed beyond the embryonic stage and it is not likely any definite action will be taken un- til after Obregon installation.
 AS for the establishment of a na tlonal bank, the treasury department has at least prepared a project on the subject, which may be presented to congress at an early date. In this connection, 1t is recognized first that the institution must be a bank of emis- sion. Mexico today is one of the few countries of the world-perhaps the only one--which is on so thoroughlv gold basis that not a single piece or paper IS Tn circulation. One issue or paper after another, during the revolutionary period, has either de- Preclated or been repudiated to such an extent that the public will have nothing to do with any money ex- cept that made of metal.
 By establishing a national bank of issue, the government hopes to restore pubic confidence and return paper money to circulation. This is one of the ma features of the plan for the new bank. This institution, accord ing to the present proposal, is to be known as The Bank of the Mexican Republic and is to be the sole bank or issue during a period of fifty years. The capital of the bank will be 1OO,- OO0,oOO pesos, Mexican currency. to cons st of a million shares of 100 pe- sos each, half Of which is to be sub scribed by the government and the other half by individuals, local or for eogn, and by other banks. The pro- Ject permits the institution to issue notes ranging in denomination from five to one thousand pesos. the total or these notes not to be more thar 100 per cent in excess of the banks god reserves nor more than three times the capital. The hank may es tablish branches throughout the re puahc-in this way the governmen hopes to revive the national financia structure.
 How the Mexican people will re ceive a new issue of paper money when the bank is founded. will forn one of the surest and most sever, tests of the Oregon administration
 What happened to the banks il Mexico under Carranza, creatin tn present situation, is we'll described by Carranza's own finance secretary Luis Cabrera, who writes that the frs chief, in 1916, first demanded of tn banks that they bring their reserve to a par with their circulation. late placed them in liquidation and final ly confscated their gold and silver the banks as result ceasing to func tion."