File No. 812.516/145
[Untitled]
481. Department’s 474, October 10, 6 p.m. Following is substance of memorandum given me by manager Bank London and Mexico:
The decree issued by the Carranza Government on the 15th of September, 1916, endeavors to cancel concessions granted to the National and London Banks. On the 29th September, 1915, the Carranza Government issued a decree compelling the banks of issue to have metallic reserves in their vaults equivalent to fifty per cent of their note issue, giving them a period of forty-five days to act on this decision so as to comply with their charters and the existing banking decree. After several banks had complied with this decree a statement came out in the newspapers and also in the official organ of the Government that the banks had complied with said decree and their charters were recognized to be valid and that they were at liberty to go on transacting business as before. It may be necessary to explain that the reason why the decree of September 29, 1915, was given was that all banks in Mexico were authorized by the Government of Huerta to issue bank notes at the rate of three to one so that they might be able to let him have the loan of fifty millions which the banks were at that time obliged to accept. The Carranza Government derogated the faculty of issuing three to one and in this way endeavor to annul everything by the Huerta Government. A few days after present decree was issued the Government appointed sequestration committees for the National and Mexico Banks and on these institutions refusing to deliver over their holdings in accordance with the decree soldiers sent immediately to take charge of the buildings, and later the managers of both institutions were arrested and taken before the military commander of the city who practically compelled them to permit the sequestration committees to enter the banks authorizing the latter however make all protests that they might care present and daily both banks have made protests against the high-handed procedure adopted and they will go on making these protests as long as they are allowed to enter their offices. The sequestration committees appointed for the National and London banks are now counting and weighing the metallic reserves which will be in their possession as soon as said operation is completed.