the Treasury Department and on Delivery of securities or documents for an equivalent sum.

II. The bonds will be divided into a number of coupons equal to the number of semesters fixed for the payment.

III. The coupons on these bonds will be paid by the banks in national gold and at par; the failure to pay one of these coupons of the bonds for the creditors referred to in A, B, Provisions I and II will bring executive action, after legal requisition, and will throw the bank into a state of bankruptcy, unless the case of refusal of payment is due to counterfeit bond or coupon.

IV. The payment of the coupons of Series A, C, and E, will commence at the end of one year counting from the date of issue of the respective bonds and the payment of the Coupons of Series B and D, six months counting from the same date.

V. The bonds will be issued in values of $100 (pesos), $500, and $1,000, and for the balance of less than $100, the bank will issue the relative certificate which will be liquidated on the same terms as the principal debt to which the balance corresponds.

VI. The certified bonds will pay an interest of 3 per cent payable every semester.

Article 20.-The creditors of the banks will change their securities and documents for the bonds referred to by this decree within a period of ten months from the date of the last publication of the declaration referred to in Article 6.

Article 21.-If any of the Banks included in Provisions (a) and (b) of Article 5 should be declared later in legal liquidation, the owners of bonds will enjoy preferences for such bonds as are provided by the General Law for Institutions of Credit and the Commercial Code.

Article 22.-The Banks will not be able to grant discharge or respites nor make transactions which reduce the guarantee of the credits or retain the payment of these credits without previous advice from the Treasury Department for those of Class (a), and after authorization for those of Class (b).

Article 23.-The Banks will be able to anticipate the date of payment of its bonds, provided that that payment includes the total of bonds of a same series or that it only includes a part of them; however in the latter case, it will be determined by lottery made under supervision of the Treasury Department which bonds are to be paid.

Article 24.-The banks of Class (a) will be obliged to accept in pay. ment of the credits in their favor, their own notes or checks drawn against them for deposits without interest or at sight or at no greater than three days' sight.

Article 25.-The transfers made in favor of the Banks in paper money or bank notes will be decided in the following manner:

I. If the transfer was made in paper money and there is a clause calling therefor, the Bank will be obliged to receive the paper money deposited or the certificate in accord with Articles 18 and 20 of the Law for Payments of September 15, 1916; however the amount of the deposit will be the only amount in national gold, after the conversion is made in accord with the table included in Article 10 of the Law of April 13, 1919, for the date when the transfer was made; the debtor being obliged to pay the difference between said amount and the amount of his transfer in metallic money, in accord with the regulations and terms established by this law.

II. If the transfer was made in bills of the creditor Bank, the latter will be obliged to accept the amount of the transfer, if there was a clause to that effect; however, if no such clause exists, the deposit will remain at the disposition of the depositor, except as provided in the preceding article.

III. In the two preceding cases, the principal will be calculated according to the period to which the specie in which the obligation was contracted corresponds.

IV. The transfers made by the Banks will be regulated according to Provision I.

Article 26. The actions which the Banks may take for exacting compliance with the obligations treated of in this law will be offered immediately in Court; however the definite clauses which are included will always grant the debtor the terms that this law provides for the respective payments. If the debtor fails to pay according to any of the terms provided, the obligation will be considered as due, and the Bank will proceed to collect the entire credit.

Article 27. When securities partially salable are included in the pledged property, the Bank will be entitled to dispose only of the part necessary for covering the amount of the obligation due, unless the express consent of the debtor is given.

Article 28.-The debts of the National Government in favor of the Bank will be covered by the issue of bonds bearing a simple interest of 6 per cent, annually.

These bonds will have 16 coupons attached, payable semi-annually for a period of eight years, from the date when the Government and the creditor Bank come to an agreement on the settlement of the debt.

The Federal Government will be able to pay in advance at any time the partial or total payment of the bonds mentioned; if the payment is made in full, that will cause the Bank which is paid to be subject to the common laws regarding its creditors.

Article 29.-If the Government fails to make the payment corresponding to any semester, the General Treasury of the Nation will be able to subdivide at the request of the Bank the coupon or coupons which are unpaid, in the sums which are indicated by the said Bank, issuing special certificates which will be accepted in payment of Federal taxes, with the exception of those which are in the form of revenue stamps and those which are pledged in some special way for some loan.

The Banks will be empowered to change said certificates for the coupon due on the bonds referred to in Article 16, and in such case the Banks being freed of the obligation contracted.

CHAPTER III

LIQUIDATION OF THE BANKS CLASSIFIED UNDER C

Article 30.-For the liquidation of the assets and liabilities of the Banks classified under (c) of Article 5, the provisions concerning equivalents in Article 15 of this law will be used; in other matters the procedures, terms and scale established in the relative provisions of the Law for Institutions of Credit and the Commercial Code.

CHAPTER IV

GENERAL PROVISIONS

Article 31.-The relative provisions of the Law of April 13, 1918, are applicable in all cases governed by the present Decree which do not oppose the provisions thereof; Article 6 of the Law itself being expressly abolished.

Article 32. The stamp tax will not be payable with the bonds and certificates issued in accord with the provisions of this Decree.

Article 33.-The Treasury Department will be authorized to dictate the necessary measure for the execution of this Decree.*

It is understood that eleven of the sequestrated banks were able to meet the requirements laid down.

In July, 1921, it was reported that foreign banks in Mexico were maintaining cash reserves or foreign balances of from 65 to 80 per cent of deposits. Mexican banks were content with a much lower reserve, running from the minimum of 33 per cent required by law, to 40 per cent. The nominal bank rate was 1% per cent, but the actual rate was from 2 to 22 per cent.

The whole banking situation is in an uncertain and unsatisfactory condition. Virtually a new system will have to be devised and put in operation before the business life of the country finds an assured foundation.

THE COMISIÓN MONETARIA

The Comisión Monetaria is a government organization which. carries on all classes of banking operations. Its balance sheet of July 30, 1921, is printed below:

Department "Refaccionario" de la Laguna. $5,313,416.99

Mexican Navigation Co...

Other debtors.....

General expenses.

168,736.00 1,301,064.54

966,202.68

875,605.28

7,155,224.95

43,404.36

Construction on real estate.

Crop loans....

Doubtful debts..

Amortization of national gold certificates.

Public debt in national gold certificates..

Paper collectable in city.

Paper collectable out of the city.

Values in guarantee..

Values in custody..

Emission fund..

Deliveries in mint.

For the period prior to 1920, Walter F. McCaleb, Present and Past Banking in Mexico, with its helpful bibliography will be found especially useful.