Mexico: La Comision Monetaria (1916-1925)

Mexico: La Comision Monetaria (1916-1925)

To finance their respective armies, these regional warlords engaged in the unchecked printing of fiat paper money, military vouchers, and localized state emissions9. The proliferation of these competing, unbacked fiduciary instruments induced extreme hyperinflation, paralyzed interstate commerce, and caused metallic coinage to be entirely hoarded and withdrawn from circulation11. By early 1916, as the Constitutionalist faction under Carranza secured dominant political control, the national economy remained crippled by hundreds of millions of pesos in depreciated and heavily counterfeited revolutionary paper9. In a strategic declaration from Guadalajara in February 1916, Venustiano Carranza issued a decree on April 3, 1916 (published formally on April 4, 1916), establishing a new state entity named La Comisión Monetaria3. The primary mandate of the Commission was to centralize monetary authority, regularize and guarantee national monetary circulation, and stabilize the foreign exchange rate This podcast reviews the activities and impact of La Comision Monetaria from inception in 1916 to its end, just before the creation of the Banco de Mexico

Mexico: Gobierno Provisional de Mexico 2 Pesos Banknote (1916)

By late 1915, Venustiano Carranza's Constitutionalist faction had achieved military dominance over a majority of the republic. However, his government inherited an economy paralyzed by hyperinflation and a populace deeply distrustful of any paper currency. Recognizing that political legitimacy required monetary stability, the Carranza administration engineered a sweeping financial reform intended to unify the currency and restore public confidence. * First was the decree of July 21, 1915 setting forth the establishment of The Infalsificables (uncounterfeitables) series. * Second, to orchestrate this massive macroeconomic transition, Carranza issued a foundational monetary reform decree on April 3, 1916, which established the Comisión Monetaria (Monetary Commission) and set a 500 million peso limit for the new fiat currency system. The program legally dictated that these new banknotes would be released into the hands of the public starting May 1, 1916, and they entered massive circulation throughout May and June of that year. The primary objective of this rollout was to unify the chaotic, fragmented money supply by absorbing older, highly counterfeited provisional currencies—such as the massive 599 million peso Veracruz issue and the 25 million Ejército Constitucionalista issue—and replacing them with the new, highly secure American Bank Note Company (ABNC) prints. On July 24, 1916, Carranza decreed that older, deposited revolutionary issues would be exchanged for the new Infalsificables at a highly discounted rate of ten to one. To assist the poorer classes, the government also issued a circular on June 5, 1916, specifically authorizing local treasury offices to exchange older 20, 50, and 100 peso notes for Infalsificables at a rate of eight to one (up to a maximum of 100 pesos), while lower denomination old notes were exchanged at the standard ten to one ratio. The Role of the 1916 "Gobierno Provisional" Interim Notes (Pick S-711) This specific banknote was not an older currency that needed to be exchanged for the Infalsificables. Rather, it was an integral, parallel component of the exact same 1916 monetary stabilization program. The Carranza administration faced a severe logistical nightmare. While the ultimate plan was to supply the entire economy with the magnificent, steel-plate intaglio Infalsificables printed in New York, the physical delivery, accounting, and massive distribution of these notes took significant time. To satisfy the pressing, immediate demand for fractional currency needed to pay troops, federal goverment employess and maintain basic daily commerce on the mandated May 1, 1916 release date, the government authorized the domestic printing of these 1 and 2 Peso "Gobierno Provisional" notes, which is the subject banknote. These domestically printed interim notes carried the exact same legal weight and theoretical guarantee of 20 centavos of national gold per paper peso as the ABNC Infalsificables.

Mexico: Early policies on non-neutrality of money and confidence for economic growth, Alberto J. Pani: Monetary multipliers in Mexico, 1925-1940

For those deeply interested in monetary policy,. The economic recovery of Mexico following the Great Depression was primarily driven by deliberate, expansionary internal policies spearheaded by Secretary of Finance Alberto J. Pani between 1932 and 1933. This analysis challenges the traditional historiographical view that recovery was a byproduct of the external sector (exports). Instead, it demonstrates that Pani’s recognition of the "non-neutrality of money"—the idea that monetary supply directly impacts the real economy—was the catalyst for growth. By reversing the deflationary "Plan Calles" of 1931, Pani implemented a series of legal and financial reforms that restored public confidence, expanded the money supply through silver coinage and bank rediscounts, and funded public spending through seigniorage without increasing debt or tax rates. The result was a dramatic shift from a 14.8% GDP contraction in 1932 to a 10.9% expansion in 1933. Central to this success was the restoration of "confidence," which allowed fiduciary currency to be accepted and bank deposits to increase, effectively raising the monetary multiplier during the critical recovery years.

Mexico: Why Mexico's 1916 unfalsifiable banknote failed by Monica Gomez and Luis Anaya

A review of the paper written by Monica Gomez titled Why Mexico's 1916 unfalsifiable banknote failed by Monica Gomez and Luis Anaya (El Infalsificable y el fracaso de la estabilización monetaria en el carrancismo. México, 1916) In 1916, the Constitutionalist government of Venustiano Carranza attempted to resolve Mexico's monetary chaos through the introduction of a new paper currency known as the Infalsificable (Unfalsifiable). Intended to unify more than 20 disparate revolutionary issues and establish economic stability, the reform sought to move the country toward a mixed metallic-fiduciary regime. The program ultimately failed within six months due to a combination of technical design flaws, insufficient metallic reserves, and deep-seated social distrust. The government’s inability to maintain convertibility led to a rapid depreciation of nearly 90% by November 1916. Consequently, the Carranza administration was forced to abandon fiduciary experiments and return to a strictly metallic circulation by December 1916. This economic failure left a lasting negative imprint on Carranza’s historical image and significantly influenced the Mexican lexicon, associating the revolutionary leadership with financial speculation and "theft."

Mexico: La Tresoria General del Estado de Oaxaco 5 Pesos (1916) Bonus History of Oaxaca

This has added content of the social, political and economic history of Oaxaca from 1850s to 1920s, as it is my first introduction to the state. The study of regional Mexican currency during the decade-long civil conflict of 1910 to 1920 provides an unparalleled lens through which to view the macroeconomic collapse and political fragmentation of a modernizing nation. Among the most historically significant numismatic issues of this era are those originating from the State of Oaxaca. In 1915, to insulate itself from the factional violence tearing through the republic, the Oaxacan government declared state sovereignty.1 This political maneuver necessitated immediate financial independence. The 5 Pesos banknote issued by the Tesorería General del Estado de Oaxaca serves as a prime example of emergency fiat currency. This monetary instrument functioned simultaneously as a medium of daily exchange, a mechanism for state-building, a tool for military funding, and a physical declaration of regional autonomy. This analytical report provides an examination of the 1916 Oaxaca 5 Pesos banknote, focusing specifically on the Series Z specimen dated February 28, 1916. The analysis synthesizes the historical context of its issuance, the political economy of the State of Oaxaca during the revolution, the technical and physical specifications of the series, the biographical contexts of its imagery, and a precise valuation based on current market metrics and third-party grading standards.