The following tentative estimate of expenditures for 1921 was presented by the Department of Hacienda to the Chamber of Deputies in November, 1920. These figures were afterwards revised to some extent, and it is too early to say how closely the estimated totals will agree with the actual receipts and disbursements. Recent advices from Mexico place the tentative budget for 1922 at 250,000,000 pesos. The War Department is seeking an appropriation of 100,000,000 pesos and the newly established Department of Instruction requests 50,000,000. It is supposed that these and the estimates of other Departments will be materially reduced. 5% Consolidated Debt of 1899. NATIONAL DEBT Published figures of the National Debt of Mexico vary greatly. The following table from Thomas R. Lill, The National Debt of Mexico, is considered authentic for the items included. It does not take into account, however, the very large amounts the government will be called upon to pay in satisfaction of damages arising out of revolutionary conditions, or of various other obligations incurred during the troubled period from 1912 to 1920. Title 3% Consolidated Interior Debt of 5% Interior Debt of 1894. 5% State of Vera Cruz, 1901. * To bring these figures to date, the interest accruing after Dec. 31, 1918, must be added. †The Mexican Minister of Finance published the following figures, as of June 30, 1921. The Lill figures are far more trustworthy. Foreign debt.. Pesos 380,333,625 Interior debt.. ..181,850,900 The annual revenues of Mexico today are roughly estimated at 250,000,000 pesos. With this sum, by strict economy and the drastic reduction of military expenditures, the government should be able to resume interest payments on its bonds. A revival of general business and the increase of oil, mineral and henequen exports would materially aid such a program. Various attempts have been made to secure the aid of American banking houses in refunding the national debt; but it is generally agreed that recognition of Obregón by the United States must precede any large refinancing of the Mexican government by foreign loans. Lill, The National Debt of Mexico, and Walter F. McCaleb, The Public Finances of Mexico, are the most valuable authorities in English on the subject of the Mexican debt. CURRENCY On March 25, 1905, the gold standard was definitely put into effect in Mexico. The peso (100 centavos) is the unit of value and equals $0.498 United States currency. The coins are 20, 10, 5, 22 and 2 pesos (gold); 1 peso, 50, 20 and 10 centavos (silver): 20, 10, 5, 2, and 1 centavos (bronze). During one period of the revolution, metallic currency almost disappeared from circulation, owing to the flood of paper currency which overflowed the country from the time of Madero onward. Besides the earlier issues of this fiat money and the bills circulated by local military chiefs, the Carranza government put out four distinct issues of itself, the most noteworthy of which were the so-called Veracruzaños, and Infalsificables. The latter, issued after Carranza was firmly entrenched in power, were designed to supplant the government paper currency already outstanding. They were issued to the extent of about 500,000,000 pesos and made legal tender, with an assigned value of 20 centavos for each infalsificable peso. This fictitious value, however, could not long be sustained, and the infalsificable currency soon became almost worthless. In November, 1916, gold and silver were declared the only legal tender; but some six months later a new decree required that an infalsificable peso should be returned for each peso in gold given in payment of certain taxes, chiefly export and import duties, and stamp taxes on metals and oil. The object of this decree was to recall the infalsificable currency into the treasury where it could be destroyed. The decree is still in effect. Owing to the depreciation of paper currency and the insufficient supply of gold and silver, the government next restricted the export of silver and totally prohibited that of gold.* After vainly seeking to supply the country's needs in this fashion, Carranza was at last forced to permit the use of American currency in commercial transactions and to accept it in payment of government taxes. While all forms of business have suffered because of this scarcity of money, Mexico has at least freed herself from the ills faced today by so many of the European governments because of their depreciated paper currency. The nation is almost entirely on a metallic basis. In order to increase the supply of currency the government set about purchasing all the silver presented at the mint for immediate coinage. Obregón has also (July, 1921) prohibited the use of American money, except gold, throughout the republic. Whether this is a wise step is questionable. At the present time the currency is dangerously inelastic, and a remedy cannot be found until the banking system of the country is rehabilitated. *Except under bond guaranteeing re-importation of an equal amount. BANKS AND BANKING Prior to the revolution of 1910 the banking system of Mexico. comprised three types of banks, namely banks of emission, or commercial banks; mortgage banks, issuing bonds to cover loans on real estate; and auxiliary or promotion banks (bancos refaccionarios) designed to encourage mining, agriculture, and industrial enterprises. In 1914 the most important of these were as follows:1 From 1914 to 1918 the banks of emission were forced into liquidation by Carranza, and their funds sequestrated by the gov ernment. In their place Carranza proposed to establish a single bank of issue, called the Bank of the Mexican Republic. This bank was to have a capital of 200,000,000 pesos, half of which should be furnished by the government. It was to be located in Mexico City, with branches throughout the republic. Carranza's banking program, however, was never carried out; and though various other expedients were proposed before his overthrow, nothing was actually done to repair the ruin suffered by the banking system. Though materially injured by the Carranza policy, the foreign banks in Mexico escaped more easily than those operating under distinctly Mexican concessions. Chief of these foreign banks located in the capital are the following: |