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(note par redemption and clearing system for other payments that operated in Mexico City from)490 1941 MS (1899 until 1913. I first describe the origins of the Banco Central System. I then consider)490 2058 MS (whether it became prone to behavioral problems, as some observers contended. I find that)490 2175 MS (although Banco Central was less well-positioned to address incentive problems relative to one of)490 2292 MS (its counterparts in the United States \(the Suffolk Bank of Boston\), it did act to constrain bank)490 2409 MS (behavior. However, considerable government intervention weakened the disciplinary role of)490 2526 MS (Banco Central and thus made the system more prone to collapse.)490 2643 MS [100 0 0 -100 0 0]/Times-Roman MF (K)490 2994 MS (e)562 2994 MS (y)606 2994 MS ( )653 2994 MS (w)678 2994 MS (o)750 2994 MS (r)800 2994 MS (d)833 2994 MS (s)883 2994 MS (:)922 2994 MS ( )950 2994 MS (p)975 2994 MS (a)1025 2994 MS (y)1069 2994 MS (m)1116 2994 MS (e)1194 2994 MS (n)1238 2994 MS (t)1288 2994 MS (s)1316 2994 MS ( )1355 2994 MS (s)1380 2994 MS (y)1419 2994 MS (s)1466 2994 MS (t)1505 2994 MS (e)1533 2994 MS (m)1577 2994 MS (s)1655 2994 MS (,)1694 2994 MS ( )1719 2994 MS (f)1744 2994 MS (r)1777 2994 MS (e)1810 2994 MS (e)1854 2994 MS ( )1898 2994 MS (b)1923 2994 MS (a)1973 2994 MS (n)2017 2994 MS (k)2067 2994 MS (i)2117 2994 MS (n)2145 2994 MS (g)2195 2994 MS (,)2244 2994 MS ( )2269 2994 MS (c)2294 2994 MS (o)2338 2994 MS (m)2388 2994 MS (p)2466 2994 MS (e)2516 2994 MS (t)2560 2994 MS (i)2588 2994 MS (t)2616 2994 MS (i)2644 2994 MS (v)2672 2994 MS (e)2722 2994 MS ( )2766 2994 MS (c)2791 2994 MS (u)2835 2994 MS (r)2885 2994 MS (r)2918 2994 MS (e)2951 2994 MS (n)2995 2994 MS (c)3045 2994 MS (i)3089 2994 MS (e)3117 2994 MS (s)3161 2994 MS (,)3200 2994 MS ( )3225 2994 MS (c)3250 2994 MS (e)3294 2994 MS (n)3338 2994 MS (t)3388 2994 MS (r)3416 2994 MS (a)3449 2994 MS (l)3493 2994 MS ( )3521 2994 MS (b)3546 2994 MS (a)3596 2994 MS (n)3640 2994 MS (k)3690 2994 MS (i)3740 2994 MS (n)3768 2994 MS (g)3818 2994 MS (*)490 3466 MS ( )540 3466 MS (E)565 3466 MS (c)626 3466 MS (o)670 3466 MS (n)720 3466 MS (o)770 3466 MS (m)820 3466 MS (i)898 3466 MS (s)926 3466 MS (t)965 3466 MS (,)993 3466 MS ( )1018 3466 MS (D)1043 3466 MS (i)1115 3466 MS (v)1143 3466 MS (i)1193 3466 MS (s)1221 3466 MS (i)1260 3466 MS (o)1288 3466 MS (n)1338 3466 MS ( )1388 3466 MS (o)1413 3466 MS (f)1463 3466 MS ( )1496 3466 MS (I)1521 3466 MS (n)1552 3466 MS (t)1602 3466 MS (e)1630 3466 MS (r)1674 3466 MS (n)1707 3466 MS (a)1757 3466 MS (t)1801 3466 MS (i)1829 3466 MS (o)1857 3466 MS (n)1907 3466 MS (a)1957 3466 MS (l)2001 3466 MS ( )2029 3466 MS (F)2054 3466 MS (i)2109 3466 MS (n)2137 3466 MS (a)2187 3466 MS (n)2231 3466 MS (c)2281 3466 MS (e)2325 3466 MS (,)2369 3466 MS ( )2394 3466 MS (B)2419 3466 MS (o)2485 3466 MS (a)2535 3466 MS (r)2579 3466 MS (d)2612 3466 MS ( )2662 3466 MS (o)2687 3466 MS (f)2737 3466 MS ( )2770 3466 MS (G)2795 3466 MS (o)2867 3466 MS (v)2917 3466 MS (e)2967 3466 MS (r)3011 3466 MS (n)3044 3466 MS (o)3094 3466 MS (r)3144 3466 MS (s)3177 3466 MS ( )3216 3466 MS (o)3241 3466 MS (f)3291 3466 MS ( )3324 3466 MS (t)3349 3466 MS (h)3377 3466 MS (e)3427 3466 MS ( )3471 3466 MS (F)3496 3466 MS (e)3551 3466 MS (d)3595 3466 MS (e)3645 3466 MS (r)3689 3466 MS (a)3722 3466 MS (l)3766 3466 MS ( )3794 3466 MS (R)3819 3466 MS (e)3886 3466 MS (s)3930 3466 MS (e)3969 3466 MS (r)4013 3466 MS (v)4046 3466 MS (e)4096 3466 MS (S)490 3585 MS (y)546 3585 MS (s)593 3585 MS (t)632 3585 MS (e)660 3585 MS (m)704 3585 MS ( )782 3585 MS (\()807 3585 MS (r)840 3585 MS (o)873 3585 MS (b)923 3585 MS (i)973 3585 MS (t)1001 3585 MS (a)1029 3585 MS (i)1073 3585 MS (p)1101 3585 MS

(@)1151 3585 MS (f)1243 3585 MS (r)1276 3585 MS (b)1309 3585 MS (.)1359 3585 MS (g)1384 3585 MS (o)1433 3585 MS (v)1483 3585 MS (\))1533 3585 MS (.)1566 3585 MS ( )1591 3585 MS ( )1616 3585 MS [100 0 0 -100 0 0]/Times-Roman MF (I thank seminar participants at Cornell University and participants in)1641 3585 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (the division\222s Monday workshop for helpful comments. I also benefitted from conversations)490 3704 MS (with several people over various stages of this research, especially with Michael Bordo, David)490 3821 MS (Bowman, Mike Gibson, Ed Green, Andy Levin, Noel Maurer, Art Rolnick, Jeff Stehm, and)490 3938 MS (Warren Weber. Noel Maurer generously provided me with some of the data on Mexican banks. )490 4055 MS (Special thanks to Barbara Tennenbaum of the Hispanic Division of the Library of Congress and)490 4172 MS (to Richard Doty of the National Numismatic Collection at the Museum of American History for)490 4289 MS (their help. Bernadette Ryan provided outstanding research assistance. All quotes taken from)490 4406 MS (Spanish language sources were translated by me unless otherwise indicated. The views in this)490 4523 MS (paper are solely the responsibility of the author and should not be interpreted as reflecting the)490 4640 MS

(views of the Board of Governors of the Federal Reserve System or of any other person associated)490 4757 MS (with the Federal Reserve System. )490 4874 MS [100 0 0 -100 0 0]/Times-Bold MF ( )490 5461 MS [100 0 0 -100 0 0]/_Times-Roman MF ( )490 5582 MS showpage %%Page: 3 3 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate n 1199 7 490 5443 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (1)790 5599 MS [100 0 0 -100 0 0]/Times-Roman MF ( The Federal Reserve Board \(The Rivlin Committee\) has recently undertaken the task of)820 5642 MS (reassessing its role in payments systems \(see statement by Vice-Chair Alice Rivlin in the)490 5759 MS (November 1997 )490 5876 MS %%IncludeFont: Times-Italic [100 0 0 -100 0 0]/Times-Italic MF (Federal Reserve Bulletin)1161 5876 MS [100 0 0 -100 0 0]/Times-Roman MF (\).)2159 5876 MS %%IncludeFont: Times-BoldItalic [100 0 0 -100 0 0]/Times-BoldItalic MF (I. Introduction)490 596 MS [100 0 0 -100 0 0]/Times-Roman MF ( )1128 596 MS (Over the past decade, payments systems have grown considerably and have become)790 832 MS (increasingly complex, prompting regulators to reassess their roles.)490 1066 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (1)3139 1023 MS [100 0 0 -100 0 0]/Times-Roman MF ( Two controversial issues that)3169 1066 MS (have arisen are to what extent self-regulation can supplant government regulation and)490 1300 MS (supervision and how well a completely private system could cope in times of stress. These)490 1534 MS (questions have prompted some to take a closer look at historical experiences in banking. With)490 1768 MS (respect to private payments systems involving bank currencies, or bank notes, at least two of)490 2002 MS (them appear to have worked very well with minimal government intervention: the note exchange)490 2236 MS (system that developed in Scotland during eighteenth century \(White 1984, Cowen and Kroszner)490 2470 MS (1989\) and the Suffolk Bank System of New England in the early nineteenth century \( Mullineaux)490 2704 MS (1987, Calomiris and Kahn 1996\). )490 2938 MS (In this paper, I study a Mexican bank note redemption and payments system that was not)790 3172 MS (considered successful. It started in 1899, when Banco Central Mexicano \(Banco

Central for)490 3406 MS (short\) received a federal charter to be, in part, the Mexico City correspondent for certain banks. )490 3640 MS (Banco Central redeemed member bank notes for specie \(gold or silver coin\) at par and acted as)490 3874 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (their agent in the clearing of other payments. Because of Banco Central\222s role in the)490 4108 MS (arrangement, I call it the Banco Central System \(BCS\). The BCS lasted until 1913, two years)490 4342 MS (after the revolution began. )490 4576 MS (The Mexican banking system of the early 1900s was far from, as Selgin and White \(1994)790 4810 MS (p. 1718\) put it, a "pure laissez faire monetary regime". Throughout the late nineteenth century,)490 5044 MS (Mexico\222s largest bank, Banco Nacional de Mexico, had a close relationship with the federal)490 5278 MS showpage %%Page: 4 4 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (2)2415 596 MS n

1199 7 490 5326 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (2)790 5482 MS [100 0 0 -100 0 0]/Times-Roman MF ( Federal government banking records \()820 5525 MS [100 0 0 -100 0 0]/Times-Italic MF (Memorias de las Instituciones de Credito)2394 5525 MS [100 0 0 -100 0 0]/Times-Roman MF (\) was)4046 5525 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (the main source of information for this study. It contains bank charters, shareholders\222 annual)490 5645 MS (reports, reports from federal bank inspectors, correspondence between the federal government)490 5762 MS (and banks, and other information. )490 5879 MS (government and enjoyed special privileges that helped shield it from competition. Even after)490 813 MS (barriers to entry into banking were relaxed in 1896, entry continued to be restricted for banks of)490 1047 MS (issue \(i.e., those that were allowed to issue demandable notes\). The experience with the BCS)490 1281 MS (nonetheless greatly altered the prevailing attitude in Mexico concerning the desirability of)490 1515 MS (privately controlled payments systems. The belief that fraud or mismanagement

was a serious)490 1749 MS (problem rationalized the creation of a government-owned central bank and the banning of private)490 1983 MS (bank notes.)490 2217 MS ( )490 2451 MS (Below, I describe the origins of the BCS and trace its experiences to its demise. I then)790 2451 MS (take a closer look at the BCS. According to Manero \(1957\), Banco Central failed to act in ways)490 2685 MS (that would have ensured the viability of the system. I find, however, that Banco Central did act)490 2919 MS (to constrain the behavior of member banks. At least, it did so initially, but government)490 3153 MS (intervention in the system muted Banco Central\222s effectiveness as a source of bank discipline. I)490 3387 MS (conclude that government meddling with the system made it more prone to behavioral problems)490 3621 MS (than otherwise would have been the case.)490 3855 MS ( )490 4089 MS [100 0 0 -100 0 0]/Times-BoldItalic MF (II. Background )490 4321 MS [59.996 0 0 -59.996 0 0]/Times-BoldItalic MF (2)1180 4278 MS [100 0 0 -100 0 0]/_Times-Roman MF (For several decades after Mexico\222s independence from Spain in 1820, internal turmoil)790 4555 MS (and armed conflicts against external powers greatly limited economic development. The coming)490 4789 MS (to power of General Porfirio Diaz in 1877 marked the beginning of an unprecedented period of)490 5023 MS showpage %%Page: 5 5 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (3)2415 596 MS (political stability that set the stage for growth and the development of the financial system. )490 813 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright

/quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (Diaz\222s rein lasted until 1911. \(Appendix 1 describes the historical setting in greater detail.\))490 1047 MS ( In the early 1900s, as many as 29 Mexican banks issued demandable notes that by law)790 1281 MS (had to be redeemed from the issuer for specie \(gold or silver coin\) at par. Banks of issue were)490 1515 MS (the predominant type of depository institution, although their importance declined in the first)490 1749 MS (decade, apparently because of the rising use of checkable deposits that paid interest \(see)490 1983 MS (Rosenzweig 1965\). Banks of issue accounted for 92 percent of assets of chartered banks in 1897,)490 2217 MS (and for 84 percent of their assets in 1907. These figures understate the declining importance of)490 2451 MS (banks of issue to some degree because several unregulated depository institutions were)490 2685 MS (established in the early 1900s, but the available information suggests that the banks of issue were)490 2919 MS (still the predominant banking institutions. )490 3153 MS (Since the early 1890s, all issuers of demandable notes had been operating under federal)790 3387 MS (bank charters. There were two types of banks of issue, "city" banks and "state" or "local" banks. )490 3621 MS (The two city banks were based in Mexico City and were the country\222s two largest banks,)490 3855 MS (accounting for 80 percent of the assets of the banking system in 1897. Banco Nacional de)490 4089 MS (Mexico was the larger of the two, accounting for 50 percent of the assets of the banking system)490 4323 MS (that year. Banco de Londres y Mexico was the other city bank. City banks were not subject to)490 4557 MS (branching restrictions, whereas state banks were. State banks were not allowed to branch outside)490 4791 MS (specific regions \(that sometimes overlapped\) and were prohibited from operating in Mexico City.)490 5025 MS (In 1896, a federal bank law was passed that succeeded, among other things, in subjecting)790 5259 MS (nearly all state banks to common legal requirements. \(City banks continued to operate under the)490 5493 MS (terms of their charters when in conflict with the law.\) The law also made nearly uniform the)490 5727 MS showpage %%Page: 6 6

13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (4)2415 596 MS n 1199 7 490 5329 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (3)790 5485 MS [100 0 0 -100 0 0]/Times-Roman MF ( Article 967 of the 1884 Commercial Code \(see Lelo de Larrea 1884\) provides the only)820 5528 MS (available detailed description of the steps that an issuer had to follow before putting its notes into)490 5645 MS (circulation that I could find. Although the section relating to banking was removed from the)490 5762 MS (commercial code several years later, it appears that the same steps continued to be followed.)490 5879 MS (physical characteristics of all bank notes. Notes had to state the date of the issue and carry the)490 813 MS (signatures of one of the directors of the bank, its cashier or manager, and a federal government)490 1047 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (bank inspector. \(Banco Nacional\222s notes bore the signatures of two federal

government)490 1281 MS (inspectors.\) The minimum denomination note was 1 peso for Banco Nacional and 5 pesos for all)490 1515 MS (other banks. In 1895, GDP per capita was 67 pesos. Thus, a 5-peso note was not something that)490 1749 MS (the typical Mexican worker would have used in day-to-day transactions.)490 1983 MS (A bank of issue could put its notes into circulation by accepting specie or making a loan. )790 2217 MS (Before an issuer could put notes into circulation, it had to follow a number of steps. The)490 2451 MS (available information suggest that notes were shipped to the issuer, and then were sent on to)490 2685 MS (Mexico City after a federal bank inspector was satisfied that the bank had complied with legal)490 2919 MS (requirements. The notes were passed through the federal tax office \()490 3153 MS [100 0 0 -100 0 0]/Times-Italic MF (Oficina de Timbre)3232 3153 MS [100 0 0 -100 0 0]/_Times-Roman MF (\), a part of)3965 3153 MS (the federal Treasury \()490 3393 MS [100 0 0 -100 0 0]/Times-Italic MF (Secretaria de Hacienda)1350 3393 MS [100 0 0 -100 0 0]/_Times-Roman MF (\), where a note tax was paid and the notes were)2298 3393 MS (stamped.)490 3633 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (3)848 3590 MS [100 0 0 -100 0 0]/_Times-Roman MF ( )878 3633 MS (Under the 1896 law \(as well as prior to that law\), notes were backed by the assets of the)790 3867 MS (bank, which consisted essentially of specie reserves and risky assets. While a bank did not have)490 4101 MS (to back its notes in full by specie reserves, Mexican bank law was designed to make bank notes)490 4335 MS (as safe as was thought possible. Notes had a first lien on the assets of the bank, and banks had to)490 4569 MS (adhere to other legal restrictions designed to protect note holders. Any issuer that could not)490 4803 MS (redeem its notes at par faced liquidation. However, a bank branch was not obligated to redeem at)490 5037 MS showpage %%Page: 7 7 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (5)2415 596 MS (par notes put into circulation by another branch of the same bank. )490 813 MS (Prior to the passage of the 1896 law, only a few banks of issue operated in Mexico)790 1047 MS (because issuing notes required a federal bank charter, which was difficult to obtain. Moreover, a)490 1281 MS (charter to be a bank of issue was of uncertain legal validity because it conflicted with Banco)490 1515 MS

/IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (Nacional\222s 1884 charter. Banco Nacional, the federal government\222s fiscal agent, had been)490 1749 MS (founded in 1881 as a result of the federal government\222s efforts to attract capital from abroad. )490 1983 MS (Banco Nacional\222s foreign associations and the bank\222s efforts to enforce its special powers fueled)490 2217 MS (considerable resentment against the bank throughout the latter part of the nineteenth century. )490 2451 MS (\(Appendix 1 discusses these circumstances further.\) )490 2685 MS (In 1896, the legal dilemma was finally resolved, paving the way for the passage of a new)790 2919 MS (banking law for state banks. The 1896 law relaxed entry into the business of issuing notes for)490 3153 MS (state banks, but preserved their branching restrictions and resulted in there being more favorable)490 3387 MS (tax treatment given to city bank notes \(see Appendix 2\). Tax considerations and minimum)490 3621 MS (capital requirements essentially restricted entry to no more than one bank per state in most cases)490 3855 MS (\(see Appendix 2\). By 1903, nearly every state had one chartered bank of issue based in that)490 4089 MS (state, and three states had two; the number of state banks rose from 7 to 25 between 1896 and)490 4323 MS (1903, and peaked at 27 in 1905. Tables 1a and 1b list the state banks that

received federal)490 4557 MS (charters before 1896 \(all of them between 1888 and 1891\) and under the 1896 law.)490 4791 MS [100 0 0 -100 0 0]/Times-BoldItalic MF (III. Origins of the Banco Central System)490 5023 MS [100 0 0 -100 0 0]/_Times-Roman MF (By the late 1890s, a manufacturing sector was emerging and interregional trade was)790 5257 MS (growing rapidly, spurred by the development of transportation and communications systems and)490 5491 MS (the suppression of interstate tariffs \()490 5725 MS [100 0 0 -100 0 0]/Times-Italic MF (alcabadas\))1929 5725 MS [100 0 0 -100 0 0]/_Times-Roman MF ( in 1896. Less than one thousand kilometers in)2373 5725 MS showpage %%Page: 8 8 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (6)2415 596 MS n 1199 7 490 4752 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (4)790 4908 MS [100 0 0 -100 0 0]/Times-Roman MF ( Data come from Instituto Nacional de Estadistica Geografia e Informatica, )820 4951 MS [100 0 0 -100 0 0]/Times-Italic MF (Estadisticas)3871 4951 MS (Historicas de Mexico)490 5071 MS [100 0 0 -100 0 0]/Times-Roman MF (, 1985.)1344 5071 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (5)790 5248 MS [100 0 0 -100 0 0]/Times-Roman MF ( As for Banco de Londres, Martinez Sobral \(1911\) suggests that its notes circulated at)820 5291 MS (par from the time it started operating in the 1860s \(see Appendix 1\). Also, ) 490 5408 MS [100 0 0 -100 0 0]/Times-Italic MF (El Heraldo Mexicano)3500 5408 MS [100 0 0 -100 0 0]/Times-Roman MF (states on January 21, 1908 that "ten years ago, the notes of only two banks were accepted without)490 5528 MS (discount"; since it was well known that state bank notes circulated at discounts around the turn of)490 5645 MS (the century, the newspaper most likely was referring to the two city banks.)490 5762 MS (railroad lines existed in 1880. By 1900, a 12 thousand kilometer system extended over various)490 813 MS (parts of the country from the central hub in Mexico City. Cargo transported by rail rose from 0.2)490 1047 MS (million tons in 1880 to 7.5 million tons in 1900.)490 1281 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (4)2413 1238 MS

[100 0 0 -100 0 0]/Times-Roman MF ( By the turn of the century, for instance,)2443 1281 MS (Mexico had a thriving textile industry that was heavily concentrated in the Mexico City region,)490 1515 MS (mostly in the Federal District and Puebla, that received shipments of raw materials from other)490 1749 MS (regions \(Casasus 1905; see also Haber 1991\). )490 1983 MS (The rise in interregional trade and in the number of state banks resulted in more state)790 2217 MS (bank notes traveling greater distances. A consequence of these developments, as Casasus \(1908\))490 2451 MS (observed, was that state bank notes exchanged for specie at discounts when they were far from)490 2685 MS (the issuer. Casasus observed that the discounts in Mexico City were higher for the banks in the)490 2919 MS (more remote states. In contrast, all indications are that the notes of the city banks circulated)490 3153 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (throughout the country at par. Both the law and Banco Nacional\222s charter explicitly stated that a)490 3387 MS (branch of a bank was not required to accept at par note issued by another branch of the same)490 3621 MS (bank. Since 1893, though, Banco Nacional had made it a policy to do so whenever possible.)490 3855 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF

(5)4191 3812 MS [100 0 0 -100 0 0]/_Times-Roman MF ( )4221 3855 MS (The fact that, since 1887, only Banco Nacional\222s notes could be accepted by treasury agents)490 4089 MS (helped support the demand for its notes, and thus boosted their value, especially since acceptance)490 4323 MS showpage %%Page: 9 9 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 7 -)2357 596 MS n 1199 7 490 4644 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (6)790 4800 MS [100 0 0 -100 0 0]/Times-Roman MF /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF ( Under Banco Nacional\222s 1881 charter, the bank\222s notes were legal tender for federal)820 4843 MS (payments, but federal treasury agents were not required to accept its notes at par until its charter)490 4960 MS

(was renegotiated in 1884. From 1884 to 1887, federal tax agents also accepted at par the notes of)490 5077 MS (another financial institution \(Monte de Piedad\) that had suspended convertibility during the crisis)490 5194 MS (period of 1883-84. Banco Nacional\222s 1884 charter stipulated that Monte de Piedad would retire)490 5311 MS (its notes.)490 5428 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (7)790 5602 MS [100 0 0 -100 0 0]/_Times-Roman MF ( According to Gurza \(op. cit.\) , the Banco Central arrangement had other advantages,)820 5645 MS (such as not charging members commissions on other clearings, as had been the case with)490 5762 MS (previous correspondents. Conant \(1911\) provides conflicting information.)490 5879 MS (was required to be at par.)490 813 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (6)1498 770 MS [100 0 0 -100 0 0]/_Times-Roman MF ( )1528 813 MS (Against this background, in November 1898, representatives of thirteen local banks)790 1047 MS (established the basis for the creation of a Mexico City bank. The following February, President)490 1281 MS (Diaz approved a request for a charter to create a development bank in Mexico City called Banco)490 1515 MS (Refaccionario Mexicano and approved the bank\222s statutes. A development bank \()490 1749 MS [100 0 0 -100 0 0]/Times-Italic MF (banco)3766 1749 MS (refaccionario)490 1989 MS [100 0 0 -100 0 0]/_Times-Roman MF (\) had to adhere to different rules than did the banks of issue, but the crucial)1034 1989 MS (distinction was that it could not issue notes. The name of the bank was shortly thereafter)490 2229 MS (changed to Banco Central. Banco Central\222s statutes stipulated that it would enter into)490 2463 MS (correspondent arrangements with state banks. Although Banco Central was expected to raise)490 2697 MS (some of its capital from its members, it could also issue shares to outside investors. With the)490 2931 MS (federal government\222s help, more than half of the bank\222s capital was raised from an private)490 3165 MS (placement that will be described further below. After raising one half of the authorized capital,)490 3399 MS (the bank began operating on February 15, 1899.)490 3633 MS (Gurza \(1905\) and Casasus \(op. cit.\) make it clear that it was intended that Banco Central)790 3867 MS (redeem local bank notes in Mexico City at par.)490 4101 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (7)2362 4058 MS [100 0 0 -100 0 0]/_Times-Roman MF ( Gurza \(op. cit. p. 49\), for instance, tells us that)2392 4101 MS (state banks that devised the note redemption system "understood that their circulation could not)490 4335 MS showpage

%%Page: 10 10 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 8 -)2357 596 MS n 1199 7 490 4744 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (8)790 4900 MS [100 0 0 -100 0 0]/Times-Roman MF /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF ( The belief that Banco Nacional\222s actions or even those of Banco de Londres were)820 4943 MS (predatory was never stated explicitly. However, Gurza \(op. cit. p. 48\), quotes one anonymous)490 5060 MS (observer who said that the idea of the Government was \221that the new national banking system)490 5177 MS (would reduce the exploitation of the great banks of the Federal District...\222. Barrera Lavalle \(op.)490 5294 MS (cit. p. 207\) recounts conflicts that arose in the states of Veracruz and Yucatan when the branches)490 5411 MS (of Banco Nacional returned local bank notes for redemption. The banks were located in these)490 5528 MS

(and in other states that had customs collection points were "at the mercy of the agencies and)490 5645 MS (branches of Banco Nacional".)490 5762 MS (be sufficiently wide and productive unless their notes were admitted at par in the capital of the)490 813 MS (Republic." Gurza thus understood that having an agent that would redeem bank notes at par in)490 1047 MS (the country\222s financial and commercial center increased the desirability of state bank notes and)490 1281 MS (added to state banks\222 profitability. Thus, the BCS was a collusive mechanism for extracting rent)490 1515 MS (from the city banks.)490 1749 MS (In the course of its business, Banco Nacional had at times redeemed state bank notes for)790 1983 MS (specie at par, but its prompt return of state bank notes for redemption was clearly unpopular)490 2217 MS (\(Barrera Lavalle 1909 p. 207\).)490 2451 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (8)1703 2408 MS [100 0 0 -100 0 0]/_Times-Roman MF ( If Banco Central had not been created, Banco Nacional probably)1733 2451 MS (would have continued to act as a broker for state bank notes. By returning notes quickly to the)490 2685 MS (issuer for redemption, Banco Nacional acted as a check on state banks and in this sense had a)490 2919 MS (stabilizing effect on the banking system. However, Banco Central seemed less vulnerable to the)490 3153 MS (criticism that it was anti-competitively constraining state bank note issuance. Its statutes)490 3387 MS (prohibited it from operating in states where it had a correspondent relationship \(which was in all)490 3621 MS (states that had a state bank\) and it could not issue notes.)490 3855 MS [100 0 0 -100 0 0]/Times-BoldItalic MF (III. Experience under the BCS and Reform)490 4087 MS [100 0 0 -100 0 0]/_Times-Roman MF (According to Conant \(1911\), the BCS seemed to work very well. Conant credited the)790 4321 MS (system for enabling state bank notes to circulate throughout the country at par in the early)490 4555 MS showpage %%Page: 11 11 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 9 -)2357 596 MS n 1199 7 490 4401 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (9)790 4557 MS [100 0 0 -100 0 0]/Times-Roman MF ( Federal bank examiners often noted the discount rates of bank drafts \("giros"\) on)820 4600 MS (distant localities, which suggests that the Banco Central System was not intended to and did not)490 4717 MS (support par check clearing.)490 4834 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF

(10)790 5008 MS [100 0 0 -100 0 0]/Times-Roman MF ( Help in 1908 had come in the form of the creation of the )850 5051 MS [100 0 0 -100 0 0]/Times-Italic MF (Caja de Asistencia para)3182 5051 MS (Obras de Fomento e Irrigacion)490 5171 MS [100 0 0 -100 0 0]/Times-Roman MF (,)1744 5171 MS [100 0 0 -100 0 0]/Times-BoldItalic MF ( )1769 5171 MS [100 0 0 -100 0 0]/Times-Roman MF (whose government-guaranteed bonds were marketed abroad in)1794 5171 MS (the fall of that year. The federal government, Banco Central, Banco Nacional, and two other)490 5291 MS (large banks held portions of the )490 5408 MS [100 0 0 -100 0 0]/Times-Italic MF (Caja)1777 5408 MS [100 0 0 -100 0 0]/Times-Roman MF /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (\222s shares \(the bank was capitalized at 10 million pesos\). )1972 5408 MS (The proceeds from the bond sales, which totaled about 44 million pesos, were swapped at par for)490 5528 MS (loans of the four banks that presumably were not likely to be repaid in full. 44 million pesos)490 5645 MS (amounted to 20 percent of the paid in capital and reserves of the banking system

as of March)490 5762 MS (1908, defined to include banks of issue and regulated depository institutions. ) 490 5879 MS (1900s.)490 813 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (9)754 770 MS [100 0 0 -100 0 0]/_Times-Roman MF ( The broadening of the BCS in 1904 to include a limited mutual assistance arrangement)784 813 MS (added more protection to note holders. )490 1047 MS (The BCS only survived a financial crisis in 1907-08, however, because of the financial)790 1281 MS (assistance that was provided by Banco Nacional and the Mexican government. The crisis was)490 1515 MS (marked in part by the restructuring of two banks in the state of Yucatan by Banco Central and)490 1749 MS (Banco Nacional and from an apparent injection of new capital by shareholders of Banco)490 1983 MS (Nacional \(discussed below\). Banco Nacional also responded by agreeing to accept at par the)490 2217 MS (notes of two other state banks \(Banco de Campeche and Banco de Michoacan\) that were in)490 2451 MS (trouble \(Maurer 1997\). Finally, in the fall of 1908, the Mexican government also provided)490 2685 MS (Banco Central, Banco Nacional, Banco de Londres, and another large bank with a considerable)490 2919 MS (amount of financial assistance \(see Conant op. cit\).)490 3153 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (10)2553 3110 MS [100 0 0 -100 0 0]/_Times-Roman MF ( )2613 3153 MS (Although Banco Central apparently also continued to accept state bank notes for specie at)790 3387 MS (par throughout the crisis, as of 1909, outside Mexico City, some state bank notes could be)490 3621 MS (exchanged for specie only at discounts \(Schell 1996 p. 82 fn 72\). Judging from McCaleb \(1920\),)490 3855 MS (Banco Central continued to redeem state bank notes in Mexico City at par until 1913, two years)490 4089 MS showpage %%Page: 12 12 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 10 -)2332 596 MS (after the revolution began, and after many banks suspended the convertibility of their notes into)490 813 MS (specie \(Kemmerer 1940\). The following November, the Mexican government formally made)490 1047 MS (bank notes inconvertible. Considerable financial turmoil enveloped the country for several years)490 1281 MS (while various armed factions fought for control. By the time a new government took power in)490 1515 MS (1916, bank notes could be exchanged for specie at a small fraction of their pre1913 par value,)490 1749 MS (and circulated along with currencies issued by competing armies \(Kemmerer op. cit.\). )490 1983 MS

/IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (During the revolution, there had been various attempts to restore the public\222s confidence)790 2217 MS (in paper money \(see McCaleb op. cit., Kemmerer op. cit.\). With the coming to power of)490 2451 MS (Venustiano Carranza in 1916, efforts to reform the banking system began to make some)490 2685 MS (headway. A banking commission was set up to determine which banks, which were in a quite)490 2919 MS (sorry state by this point, had sufficient specie reserves to remain in operation. The ultimate)490 3153 MS (objective, however, was much more far-reaching, to create a government-owned bank with a)490 3387 MS (monopoly on the power to issue notes. )490 3621 MS (It was believed by Manero and others who were intimately involved in the reform process)790 3855 MS (that many banks had engaged in fraudulent behavior and had been managed poorly, and as a)490 4089 MS (result ran into serious problems before the revolution. One cannot attribute this view entirely to)490 4323 MS (the strained relationship between banks and the Carranza government at that time, as this view)490 4557 MS (had been expressed by Mexico\222s finance minister before the revolution. Kemmerer \(1940 p.19\),)490 4791 MS (too, tells us that "Mexico was a country whose banking laws had been carefully

drawn, but not so)490 5025 MS (carefully enforced. Partly as a result of banking abuses, and partly as a result of the political and)490 5259 MS (economic disturbances of the period, some of the banks found themselves in a rather unstable)490 5493 MS (position during the early part of the period." Manero and Cerda \(1997\) were more specific in)490 5727 MS showpage %%Page: 13 13 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 11 -)2332 596 MS (that the state banks were the main objectives of their criticism in this regard. )490 813 MS (There are only a couple of cases in which there is any direct evidence of fraud or highly)790 1047 MS (questionable banking practices. Perhaps the best documented case is that of Banco de)490 1281 MS (Campeche, which was a small bank. In 1907, it was revealed that loans to its main shareholder,)490 1515 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (Jose Castellot, accounted for the lion\222s share of its capital \(Rosenzweig op. cit. p. 853\). )490 1749 MS

(Rosenzweig\222s account of the case suggests that Castellot, who was governor of the state of)490 1983 MS (Campeche, never made any attempt to repay his obligations. After being subject to what was)490 2217 MS (obviously weak regulatory pressure to shape up, the bank was finally closed in 1911. )490 2451 MS (Nonetheless, the belief that the banking system had suffered from behavioral problems)790 2685 MS (before the revolution ran strong \(see Manero op.cit.\). This view was apparent from the)490 2919 MS (memorandum from F. G. Camacho, a Mexican banking official, to Walter McCaleb around 1920,)490 3153 MS (who concluded that "...it is a matter already extensively debated and practically decided that the)490 3387 MS (system of plurality of Banks of Issue is )490 3621 MS [100 0 0 -100 0 0]/Times-Italic MF (less efficient)2078 3621 MS [100 0 0 -100 0 0]/_Times-Roman MF ( than one centralizing the matter of)2575 3621 MS (emissions" \(McCaleb op. cit. p. 255, italics added for emphasis\). The 1917 constitution had)490 3861 MS (already mandated the creation of a government-owned bank with a monopoly over the power to)490 4095 MS (issue notes. As a result, the Banco de Mexico \(Mexico\222s modern-day central bank\) was founded)490 4329 MS (in 1925. )490 4563 MS showpage %%Page: 14 14 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 12 -)2332 596 MS n 1199 7 490 5563 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (11)790 5719 MS [100 0 0 -100 0 0]/Times-Roman MF ( Zarazaga \(1993\) studies a similar incentive problem in a model with independent)850 5762 MS (issuers of a common currency under a fiat money regime. )490 5879 MS [100 0 0 -100 0 0]/Times-BoldItalic MF (V. )490 813 MS [100 0 0 -100 0 0]/Times-Roman MF ( )790 813 MS [100 0 0 -100 0 0]/Times-BoldItalic MF (The Working of the BCS)815 813 MS [100 0 0 -100 0 0]/Times-Roman MF (Regarding the BCS, Manero opined: )790 1049 MS (It was to be hoped that being the local banks possessing...two-)1090 1283 MS (thirds of the total capital, that the administration of Central would)1090 1400 MS (be totally favorable to their interests. But it was not thus... )1090 1517 MS (Actually, it does not appear that state banks had collectively this large a stake in Banco)790 1751 MS (Central for more than a brief period. Even if they had, one should have expected a fundamental)490 1985 MS

(tension among members of a fixed exchange rate system for bank notes, which is what the BCS)490 2219 MS (was essentially intended to be. With notes by member banks being exchangeable at a fixed rate)490 2453 MS (and for specie at par, discounts would no longer signal the creditworthiness of the borrower. )490 2687 MS (Each bank had an incentive to exploit this informational problem for its own gain at the expense)490 2921 MS (of others by issuing more of its notes than what would otherwise have been the case. Eventually,)490 3155 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (Banco Central\222s reserves would be exhausted by demands for redemption, and the system would)490 3389 MS (thus collapse. If the BCS was to be viable, there had to be some mechanism for constraining the)490 3623 MS (behavior of member banks.)490 3857 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (11)1582 3814 MS [100 0 0 -100 0 0]/_Times-Roman MF ( )1642 3857 MS (The BCS was similar to the Suffolk Bank System of New England in that they both)790 4091 MS (involved an agent that redeemed member bank notes at par. The Suffolk System appears to have)490 4325 MS (been the most successful of the bank note redemption systems that operated in the

United States)490 4559 MS (before the Civil War, making it a standard for comparison against the BCS. Calomiris and Kahn)490 4793 MS (\(op. cit.\) provide evidence that the discipline instilled by the Suffolk Bank enabled New England)490 5027 MS (banks to operate more efficiently and enabled their notes to circulate at smaller discounts)490 5261 MS showpage %%Page: 15 15 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 13 -)2332 596 MS n 1199 7 490 5563 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (12)790 5719 MS [100 0 0 -100 0 0]/Times-Roman MF ( The loan rate rose if the balance surpassed 10 percent of the capital the member had)850 5762 MS (paid into Banco Central.)490 5879 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (compared with banks outside the system. I draw heavily on Calomiris\222 and

Kahn\222s account of)490 813 MS (the Suffolk Bank System. Since the contracts governing the relationships between Banco)490 1047 MS (Central and its correspondents \(to which Conant op. cit. referred in his description\) could not be)490 1281 MS (located, I relied on Conant\222s account, which seems to be the source of Manero\222s and others\222)490 1515 MS (discussions of the BCS.)490 1749 MS (Relative to the Suffolk Bank System, the BCS seems to have been at a disadvantage in)790 1983 MS (terms of influencing the behavior of member banks in at least one respect. In contrast to the)490 2217 MS (Suffolk Bank System, the BCS was not limited geographically, as Banco Central\222s statutes)490 2451 MS (required all state banks to be correspondents. Although communications and transportation)490 2685 MS (systems had developed considerably by the turn of the century, it would not have been all that)490 2919 MS (easy for Banco Central to monitor the activities of state banks in the more remote regions. \(This)490 3153 MS (would have been an easier task for Banco Nacional, given its branch network.\) ) 490 3387 MS (According to Conant, Banco Central did not necessarily require payment in specie when)790 3621 MS (it returned state bank notes, essentially permitting overdrafts. However, Banco Central charged)490 3855 MS (interest on overdrafts.)490 4089 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (12)1363 4046 MS [100 0 0 -100 0 0]/_Times-Roman MF ( Banco Central\222s accounts with local banks were balanced once every 6)1423 4089 MS (months \(according to Conant\). The Suffolk Bank, in contrast, at first required payment in specie. )490 4323 MS (It later allowed overdrafts, but loans had to be repaid each week. As the Suffolk Bank System)490 4557 MS (evolved, the Suffolk Bank had daily clearings and put other restrictions on the volume of notes)490 4791 MS (that could be cleared in one day. According to Calomiris \(1989\), payments arrangements that)490 5025 MS (allowed overdrafts tended to collapse quickly. However, overdrafts reduced the gain from and)490 5259 MS showpage %%Page: 16 16 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 14 -)2332 596 MS n 1199 7 490 5212 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (13)790 5368 MS [100 0 0 -100 0 0]/Times-Roman MF ( The capital requirement for membership was increased in January 1903 from 5 percent)850 5411 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1

roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (of a member\222s own capital to 10 percent. In early 1904, however, the requirement was modified)490 5528 MS (such that a member could purchase stock equal to 10 percent of the book value of its capital as of)490 5645 MS (December 1901. The combined equity \(book value\) of the 19 state banks that existed in June)490 5762 MS (1901 rose from 26 million pesos at that point to 56 million pesos in June 1907. ) 490 5879 MS (thus the incentive to "overissue", since they amounted to paying interest on notes. It is not clear)490 813 MS (whether the BCS would have been a less effective constraint than the Suffolk Bank System in)490 1047 MS (this respect, if access to the overdraft feature had been left to Banco Central\222s discretion. )490 1281 MS (Under Banco Central\222s charter, members could not sell their stakes in Banco Central for)790 1515 MS (ten years. This went some of the way towards alleviating the incentive problem, forcing a)490 1749 MS (member bank to balance its short-term gains from "inflating" against its longerrun interest in)490 1983 MS (ensuring the viability of the system. Each bank was required to hold a small stake in Banco)490 2217 MS (Central.)490 2451 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (13)809 2408 MS

[100 0 0 -100 0 0]/_Times-Roman MF ( Judging from Mexican government records, major investors of some banks held)869 2451 MS (considerable stakes in Banco Central, but this does not appear to have been the case for all banks.)490 2685 MS (An important feature of the Suffolk Bank System was the Suffolk Bank\222s use of non-)790 2919 MS (price mechanisms, including the threat of suspension of a member from the arrangement, to help)490 3153 MS (induce good behavior. Conant notes that Banco Central could refuse "notes which [were])490 3387 MS (presented in abnormal quantities or with suspicious intent" \(op. cit. p. 43\). However, following)490 3621 MS (an incident that occurred in 1900 involving Banco Yucateco, suspending any member from the)490 3855 MS (par redemption arrangement does not appear to have been considered a politically feasible)490 4089 MS (option. Banco Yucateco\222s case is an important one, because the bank was relatively large. The)490 4323 MS (case also provides what seems to be the best direct evidence of a bank that did try to exploit the)490 4557 MS (system at the expense of other members.)490 4791 MS showpage %%Page: 17 17 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 15 -)2332 596 MS [100 0 0 -100 0 0]/Times-BoldItalic MF (Va. Banco Yucateco and the BCS )490 811 MS [100 0 0 -100 0 0]/Times-Roman MF (Banco Yucateco \(BY\) was one of two state banks in the state of Yucatan and had grown)790 1045 MS (to be the largest state bank in 1901. \(Banco Nacional also had a branch in that state.\) In August)490 1279 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft

/logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (1900, Banco Central began accepting BY\222s notes for specie at a five percent discount after the)490 1513 MS (state bank notified the Mexico city bank and two other correspondent state banks that it was not)490 1747 MS (able to provide the "funds that were made for the redemption of its notes at par". \(Minutes from)490 1981 MS (BY\222s February 2, 1901 annual shareholders\222 meeting.\) The other two correspondents followed)490 2215 MS (suit. )490 2449 MS (Although the discount on BY\222s notes had fallen to only one-half percent in early 1901,)790 2683 MS (this state of affairs was not deemed satisfactory by the bank\222s management, declaring that "the)490 2917 MS (free exchange and circulation of our notes in the exchanges \()490 3151 MS [100 0 0 -100 0 0]/Times-Italic MF (plazas)2916 3151 MS [100 0 0 -100 0 0]/_Times-Roman MF (\) of Mexico [City] and the)3172 3151 MS (States of the Republic will not be possible until it is at par" \(minutes from BY shareholders\222)490 3391 MS (annual meeting 1/29/1902\). Management observed that 50 percent of Banco Central\222s stock was)490 3625 MS (held by [a] foreign syndicate" and stated that "experience has demonstrated the inconveniences)490 3859 MS (of this arrangement". It added that "it has been considered the acquisition of all of the shares and)490 4093 MS (bonds that were in the hands of foreign Banks" \(minutes from 2/1/1901 BY shareholders\222)490 4327 MS (meeting\). )490 4561 MS (Half of Banco Central\222s initial placement of shares had been taken up by three foreign)790 4795 MS (investment houses, Deutchebank, Bleichroeder, and J.P. Morgan. Deutchebank and Bleichroeder)490 5029 MS (were major investment houses in Europe. Bleichroeder & Co. had a longstanding relationship)490 5263 MS (with the Mexican government, having led or helped managed the government\222s issue of bonds in)490 5497 MS (Europe since the early days of the Diaz administration. According to Carosso \(1987\), the three)490 5731 MS showpage %%Page: 18 18 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 16 -)2332 596 MS

n 1199 7 490 5329 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (14)790 5485 MS [100 0 0 -100 0 0]/Times-Roman MF ( The deal, writes Carosso, took 15 months to conclude, in part because the Mexican)850 5528 MS (government was holding out for better terms with rival firms. Ultimately, Bleichroeder and)490 5645 MS (company won the account, and the bonds were marketed in the United States and Europe as the)490 5762 MS (5 Percent External Consolidated Gold Loan of 1899.)490 5879 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (investment houses had been working together to secure a lead role in the Mexican government\222s)490 813 MS (restructuring of bonds held abroad as of early 1898, and so their acquisition of shares in Banco)490 1047 MS (Central may have been made to sweeten the deal. )490 1281 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (14)2485 1238 MS [100 0 0 -100 0 0]/_Times-Roman MF ( )2545 1281 MS (As a result of a agreement reached in early 1901, the Bleichroeder et al stake passed into)790 1515 MS

(the hands of the state banks, with each state bank\222s contribution being in proportion to its own)490 1749 MS (capital. Exactly how the money was made available is not clear, but BY\222s management stated)490 1983 MS (that "the terms of payment were flexible" \(minutes 1/29/1902\), suggesting that it came in the)490 2217 MS (form of a loan. Gurza \(op. cit. p. 51\) also suggests that the government\222s role in the arrangement)490 2451 MS (was quite critical: )490 2685 MS (Although the law... explicitly prohibits that establishment of said agencies in the Federal)790 2919 MS (District [for redeeming state bank notes], the Government not only was not opposed that Banco)490 3036 MS (Central deceitfully had this character, but also, understanding that the union of the local banks)490 3153 MS (was a progress in our banking system, favored the idea of the creation of Banco Central, granting)490 3270 MS (its charter, facilitating its establishment, and )490 3387 MS [100 0 0 -100 0 0]/Times-Italic MF (giving material help and very marked help)2283 3387 MS [100 0 0 -100 0 0]/_Times-Roman MF ( when)3986 3387 MS (later the new bank hit difficulties, owing to the foreign shareholders wanting to follow a policy)490 3507 MS (counter to the interests of the local banks \(italics added for emphasis\).)490 3624 MS ( )490 3741 MS ( )490 3975 MS (In the years following the 1900 incident, BY was not subject to any further suspensions)790 3975 MS (of convertibility by Banco Central, but its troubles did not end. BY\222s notes outstanding peaked)490 4209 MS (at 8 million pesos at the end of 1903, but then steadily declined. It had only 2 million pesos in)490 4443 MS (notes outstanding in mid-1907, despite various mechanisms that had been adopted to boost the)490 4677 MS (demand for state bank notes in general and for its notes in particular. In November 1903, BY,)490 4911 MS (Banco Mercantil de Yucatan, and Banco Nacional agreed to accept each others\222 notes at par)490 5145 MS showpage %%Page: 19 19 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 17 -)2332 596 MS n 1199 7 490 4992 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (15)790 5148 MS [100 0 0 -100 0 0]/Times-Roman MF /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256

array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF ( "El Cr\351dito en Yucatan", )850 5191 MS [100 0 0 -100 0 0]/Times-Italic MF (El Economista Mexicano)1922 5191 MS [100 0 0 -100 0 0]/_Times-Roman MF (, May 28, 1904.)2926 5191 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (16)790 5368 MS [100 0 0 -100 0 0]/_Times-Roman MF ( Member banks would send specie to Banco Central, so that "the amount thus placed in)850 5411 MS (the hands of the Banco Central [would be] employed in redeeming at par the notes of the)490 5528 MS (establishment which is threatened." \(Rosenzweig op. cit. p. 828\) Assistance was limited to 50)490 5645 MS (percent of the book value of capital of the bank in need and to 2 percent of the book value of the)490 5762 MS (capital of the contributing bank. )490 5879 MS (\(BY\222s annual report to shareholders 2/12/1904\). The following April, however, BY notified)490 813 MS (Banco Nacional that it could not redeem its notes for specie \(Cerda op. cit.\), and asked for a loan. )490 1047 MS (Banco Nacional\222s senior executive body postponed its decision. In late May, a newspaper)490 1281 MS (reported that the notes of BY were accepted at par by Banco Mercantil de Yucatan, but observed)490 1515 MS (that the "notes are not exchanged regularly and balances build up".)490 1749 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (15)3158 1706 MS [100 0 0 -100 0 0]/_Times-Roman MF

( Although the story does)3218 1749 MS (not explicitly say that Banco Mercantil de Yucatan was accumulating BY\222s notes, it seems)490 1983 MS (reasonable to infer that this had been the case.)490 2217 MS (As these events unfolded, in March of 1904, representatives of state banks held their first)790 2451 MS (joint meeting in the nation\222s capital and agreed on what were considered to be wide-ranging)490 2685 MS (changes in the BCS. First, they agreed on a limited the mutual aid scheme that would be)490 2919 MS (administered through Banco Central.)490 3153 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (16)1966 3110 MS [100 0 0 -100 0 0]/_Times-Roman MF ( Second, each state bank would accept at par notes of any)2026 3153 MS (other state bank. This, according to Rosenzweig \(op. cit. p. 828\), was intended to "avoid)490 3387 MS (excessive concentration of exchange at Banco Central and reduce to a more manageable level the)490 3621 MS (balances of each bank with Banco Central", which suggests that overdrafts by some banks were)490 3855 MS (reaching unreasonably high levels. The third change was an anti-competitive agreement under)490 4089 MS (which banks agreed to close all branches and agencies in states other than the ones in which they)490 4323 MS (had been originally established. State banks did not follow through on this last commitment,)490 4557 MS (illustrating the difficulties of enforcing collusive agreements \(private communication with Noel)490 4791 MS showpage %%Page: 20 20 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 18 -)2332 596 MS n 1199 7 490 5446 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (17)790 5602 MS [100 0 0 -100 0 0]/Times-Roman MF /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft

/bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF ( The gold price of sisal \(hemp fiber\), the region\222s most important export commodity,)850 5645 MS (had fallen by 30 percent between 1902 and 1904, and by another 30 percent by 1907. \(Data from)490 5762 MS (Askinasy 1936, reproduced in Barcelo Quintal op. cit. pp 192-3.\))490 5879 MS (Maurer\).)490 813 MS (Federal regulators tabulated the volume of state bank notes purchased by Banco Central)790 1047 MS (in the second half of 1905, and show that it purchased more BY notes than those of any other)490 1281 MS (bank. Some rough calculations suggest that while it took roughly 6 months for a note issued by)490 1515 MS (Banco Mercantil de Yucatan to be presented to Banco Central for redemption, a note issued by)490 1749 MS (BY passed through Banco Central two and a half times more quickly. Thus, BY had more)490 1983 MS (trouble keeping its note in circulation than did Banco Mercantil de Yucatan. ) 490 2217 MS (While BY\222s notes in circulation continued to decline after 1904, its other liabilities did)790 2451 MS (not. Bank balance sheets did not distinguish among various types of non-bank note liabilities in)490 2685 MS (any meaningful way, so it is impossible to know for sure how BY obtained its funding. )490 2919 MS (However, Banco Nacional had provided each of the Yucateco banks with sizeable loans in 1906)490 3153 MS (\(Cerda op. cit.\). In the bank\222s 1906 report to shareholders, BY stated that it "suspended the)490 3387 MS (circulation of...notes in the Capital of the Republic", adding that it could not hope to keep its)490 3621 MS (notes in circulation as long as they were being sent immediately to Banco Central for)490 3855 MS (redemption. Management also suggested the move had come in response to official pressure)490 4089 MS (\(2/19/1907, 1906 shareholders report\).)490 4323 MS (By 1907 economic conditions in the Yucatan peninsula had deteriorated to the point)790 4557 MS (where both BY and Banco Mercantil de Yucatan were in trouble.)490 4791 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (17)3092 4748 MS

[100 0 0 -100 0 0]/_Times-Roman MF ( In mid-1907, according to)3152 4791 MS (Barcelo Quintal \(1986\), the French financiers that held a large stake in Banco Nacional had also)490 5025 MS (acquired a stake in BY and replaced the management of both of the Yucateco banks. In early)490 5259 MS showpage %%Page: 21 21 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 19 -)2332 596 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (1908, the two banks were merged. Barcelo Quintal\222s characterization of the event suggests that)490 813 MS (the merged bank was recapitalized with the help of French investors. )490 1047 MS [100 0 0 -100 0 0]/Times-BoldItalic MF (Vb. Further Evidence of Government Involvement in the BCS )490 1279 MS [100 0 0 -100 0 0]/_Times-Roman MF (The state banks\222 purchase of the Bleichroeder et al stake in Banco Central would have left)790 1513 MS (state banks holding two-thirds of the bank\222s shares as of early 1901. However, there were)490 1747 MS

(subsequent capital increases that were taken up by outside shareholders. According to Conant)490 1981 MS (\(op. cit. p. 45\), these issues \221were taken up by foreign syndicates [that] did not interfere with the)490 2215 MS (local management of the bank\222. In mid-1905, Banco Central more than doubled its capital,)490 2449 MS (raising it from 10 million pesos to 21 million pesos, with nearly half of the shares issued being)490 2683 MS (taken up by the Banque de l\222Union Parisienne. According to )490 2917 MS [100 0 0 -100 0 0]/Times-Italic MF (El Economista Mexicano )2953 2917 MS [100 0 0 -100 0 0]/_Times-Roman MF (\(June 23,)3982 2917 MS (1905\), Banque de l\222Union was to ensure that the shares could be traded in the Paris exchange,)490 3157 MS (but that French interests would be represented by the French bank. Prior to the capital)490 3391 MS (subscription, Banco Central\222s statutes were amended to give state banks collectively a majority)490 3625 MS (on its senior executive board \()490 3859 MS [100 0 0 -100 0 0]/Times-Italic MF (Consejo de administracion)1696 3859 MS [100 0 0 -100 0 0]/_Times-Roman MF (\). Why outside shareholders would)2774 3859 MS (have been willing to agree to dilution of their representation on the board is left unexplained. It)490 4099 MS (is reasonable to speculate that there was an implicit or explicit understanding that the Diaz)490 4333 MS (government would protect their interests. )490 4567 MS (Cerda \(op. cit.\) notes that beginning around 1904, Banco Nacional became more active in)790 4801 MS (providing loans to other banks. Banco Nacional was subject to pressures from the Mexican)490 5035 MS (government to provide certain loans from time to time, which, according to Maurer \(1997\), it)490 5269 MS (mostly resisted. In mid-June, however, Banco Nacional granted a loan to Banco Central for one)490 5503 MS (and a half million pesos two weeks after it had refused an earlier request for a smaller loan)490 5737 MS showpage %%Page: 22 22 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 20 -)2332 596 MS n 1199 7 490 5563 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (18)790 5719 MS [100 0 0 -100 0 0]/Times-Roman MF /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1

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(i)2146 1996 MS (t)2174 1996 MS (s)2202 1996 MS ( )2241 1996 MS (t)2266 1996 MS (i)2294 1996 MS (m)2322 1996 MS (i)2400 1996 MS (n)2428 1996 MS (g)2478 1996 MS ( )2527 1996 MS (a)2552 1996 MS (n)2596 1996 MS (d)2646 1996 MS ( )2696 1996 MS (t)2721 1996 MS (h)2749 1996 MS (e)2799 1996 MS ( )2843 1996 MS (f)2868 1996 MS (a)2901 1996 MS (c)2945 1996 MS (t)2989 1996 MS ( )3017 1996 MS (t)3042 1996 MS (h)3070 1996 MS (a)3120 1996 MS (t)3164 1996 MS ( )3192 1996 MS (J)3217 1996 MS (o)3257 1996 MS (a)3307 1996 MS (q)3351 1996 MS (u)3401 1996 MS (i)3451 1996 MS (m)3479 1996 MS ( )3557 1996 MS (C)3582 1996 MS (a)3649 1996 MS (s)3693 1996 MS (a)3732 1996 MS (s)3776 1996 MS (u)3815 1996 MS (s)3865 1996 MS ( )3904 1996 MS (h)3929 1996 MS (a)3979 1996 MS (d)4023 1996 MS (r)490 2232 MS (e)523 2232 MS (q)567 2232 MS (u)617 2232 MS (e)667 2232 MS (s)711 2232 MS (t)750 2232 MS (e)778 2232 MS (d)822 2232 MS ( )872 2232 MS (t)897 2232 MS (h)925 2232 MS (e)975 2232 MS ( )1019 2232 MS (r)1044 2232 MS (e)1077 2232 MS (n)1121 2232 MS (e)1171 2232 MS (w)1215 2232 MS (a)1287 2232 MS (l)1331 2232 MS ( )1359 2232 MS (o)1384 2232 MS (f)1434 2232 MS ( )1467 2232 MS (t)1492 2232 MS (h)1520 2232 MS (e)1570 2232 MS ( )1614 2232 MS (l)1639 2232 MS (i)1667 2232 MS (n)1695 2232 MS (e)1745 2232 MS ( )1789 2232 MS (o)1814 2232 MS (f)1864 2232 MS ( )1897 2232 MS (c)1922 2232 MS (r)1966 2232 MS (e)1999 2232 MS (d)2043 2232 MS (i)2093 2232 MS (t)2121 2232 MS ( )2149 2232 MS (s)2174 2232 MS (u)2213 2232 MS (g)2263 2232 MS (g)2312 2232 MS (e)2361 2232 MS (s)2405 2232 MS (t)2444 2232 MS (s)2472 2232 MS ( )2511 2232 MS (t)2536 2232 MS (h)2564 2232 MS (a)2614 2232 MS (t)2658 2232 MS ( )2686 2232 MS (t)2711 2232 MS (h)2739 2232 MS (i)2789 2232 MS (s)2817 2232 MS ( )2856 2232 MS (w)2881 2232 MS (a)2953 2232 MS (s)2997 2232 MS ( )3036 2232 MS (t)3061 2232 MS (h)3089 2232 MS (e)3139 2232 MS ( )3183 2232 MS (c)3208 2232 MS (a)3252 2232 MS (s)3296 2232 MS (e)3335 2232 MS (.)3379 2232 MS ( )3404 2232 MS ( )3429 2232 MS (C)3454 2232 MS (a)3521 2232 MS (s)3565 2232 MS (a)3604 2232 MS (s)3648 2232 MS (u)3687 2232 MS (s)3737 2232 MS ( )3776 2232 MS (w)3801 2232 MS (a)3873 2232 MS (s)3917 2232 MS ( )3956 2232 MS (i)3981 2232 MS (n)4009 2232 MS (t)4059 2232 MS (i)4087 2232 MS (m)4115 2232 MS (a)4193 2232 MS (t)4237 2232 MS (e)4265 2232 MS (l)4309 2232 MS (y)4337 2232 MS (i)490 2469 MS (n)518 2469 MS (v)568 2469 MS (o)618 2469 MS (l)668 2469 MS (v)696 2469 MS (e)746 2469 MS (d)790 2469 MS ( )840 2469 MS (i)865 2469 MS (n)893 2469 MS ( )943 2469 MS (t)968 2469 MS (h)996 2469 MS (e)1046 2469 MS ( )1090 2469 MS (B)1115 2469 MS (C)1181 2469 MS (S)1248 2469 MS (,)1304 2469 MS ( )1329 2469 MS (h)1354 2469 MS (a)1404 2469 MS (v)1448 2469 MS (i)1498 2469 MS (n)1526 2469 MS (g)1576 2469 MS ( )1625 2469 MS [100 0 0 -100 0 0]/Times-Roman MF (represented the local banks in negotiations with the Bleichroeder)1650 2469 MS (syndicate)490 2707 MS [100 0 0 -100 0 0]/_Times-Roman MF ( )867 2707 MS (a)892 2707 MS (n)936 2707 MS (d)986 2707 MS ( )1036 2707 MS (a)1061 2707 MS (c)1105 2707 MS (t)1149 2707 MS (i)1177 2707 MS (n)1205 2707 MS (g)1255 2707 MS ( )1304 2707 MS (a)1329 2707 MS (s)1373 2707 MS ( )1412 2707 MS (a)1437 2707 MS ( )1481 2707 MS (m)1506 2707 MS (e)1584 2707 MS (m)1628 2707 MS (b)1706 2707 MS (e)1756 2707 MS (r)1800 2707 MS ( )1833 2707 MS (o)1858 2707 MS (f)1908 2707 MS ( )1941 2707 MS (i)1966 2707 MS (t)1994 2707 MS (s)2022 2707 MS ( )2061 2707 MS (e)2086 2707 MS (x)2130 2707 MS (e)2181 2707 MS (c)2225 2707 MS (u)2269 2707 MS (t)2319 2707 MS (i)2347 2707 MS (v)2375 2707 MS (e)2425 2707 MS ( )2469 2707 MS (b)2494 2707 MS (o)2544 2707 MS (a)2594 2707 MS (r)2638 2707 MS (d)2671 2707 MS (.)2721 2707 MS ( )2746 2707 MS

( )2771 2707 MS (C)2796 2707 MS (a)2863 2707 MS (s)2907 2707 MS (a)2946 2707 MS (s)2990 2707 MS (u)3029 2707 MS (s)3079 2707 MS ( )3118 2707 MS (w)3143 2707 MS (a)3215 2707 MS (s)3259 2707 MS ( )3298 2707 MS (a)3323 2707 MS (l)3367 2707 MS (s)3395 2707 MS (o)3434 2707 MS ( )3484 2707 MS (c)3509 2707 MS (l)3553 2707 MS (o)3581 2707 MS (s)3631 2707 MS (e)3670 2707 MS (l)3714 2707 MS (y)3742 2707 MS ( )3789 2707 MS (a)3814 2707 MS (s)3858 2707 MS (s)3897 2707 MS (o)3936 2707 MS (c)3986 2707 MS (i)4030 2707 MS (a)4058 2707 MS (t)4102 2707 MS (e)4130 2707 MS (d)4174 2707 MS (w)490 2944 MS (i)562 2944 MS (t)590 2944 MS (h)618 2944 MS ( )668 2944 MS (t)693 2944 MS (h)721 2944 MS (e)771 2944 MS ( )815 2944 MS (D)840 2944 MS (i)912 2944 MS (a)940 2944 MS (z)984 2944 MS ( )1029 2944 MS (g)1054 2944 MS (o)1103 2944 MS (v)1153 2944 MS (e)1203 2944 MS (r)1247 2944 MS (n)1280 2944 MS (m)1330 2944 MS (e)1408 2944 MS (n)1452 2944 MS (t)1502 2944 MS (.)1530 2944 MS ( )1555 2944 MS ( )1580 2944 MS (A)1605 2944 MS ( )1677 2944 MS (f)1702 2944 MS (o)1735 2944 MS (r)1785 2944 MS (m)1818 2944 MS (e)1896 2944 MS (r)1940 2944 MS ( )1973 2944 MS (l)1998 2944 MS (e)2026 2944 MS (g)2070 2944 MS (i)2119 2944 MS (s)2147 2944 MS (l)2186 2944 MS (a)2214 2944 MS (t)2258 2944 MS (o)2286 2944 MS (r)2336 2944 MS (,)2369 2944 MS ( )2394 2944 MS (C)2419 2944 MS (a)2486 2944 MS (s)2530 2944 MS (a)2569 2944 MS (s)2613 2944 MS (u)2652 2944 MS (s)2702 2944 MS ( )2741 2944 MS (h)2766 2944 MS (a)2816 2944 MS (d)2860 2944 MS ( )2910 2944 MS (p)2935 2944 MS (r)2985 2944 MS (e)3018 2944 MS (s)3062 2944 MS (i)3101 2944 MS (d)3129 2944 MS (e)3179 2944 MS (d)3223 2944 MS ( )3273 2944 MS (o)3298 2944 MS (v)3348 2944 MS (e)3398 2944 MS (r)3442 2944 MS ( )3475 2944 MS (t)3500 2944 MS (h)3528 2944 MS (e)3578 2944 MS ( )3622 2944 MS (c)3647 2944 MS (o)3691 2944 MS (m)3741 2944 MS (m)3819 2944 MS (i)3897 2944 MS (s)3925 2944 MS (s)3964 2944 MS (i)4003 2944 MS (o)4031 2944 MS (n)4081 2944 MS ( )4131 2944 MS (t)4156 2944 MS (h)4184 2944 MS (a)4234 2944 MS (t)4278 2944 MS (d)490 3180 MS (r)540 3180 MS (a)573 3180 MS (f)617 3180 MS (t)650 3180 MS (e)678 3180 MS (d)722 3180 MS ( )772 3180 MS (t)797 3180 MS (h)825 3180 MS (e)875 3180 MS ( )919 3180 MS (1)944 3180 MS (8)994 3180 MS (9)1044 3180 MS (6)1094 3180 MS ( )1144 3180 MS (b)1169 3180 MS (a)1219 3180 MS (n)1263 3180 MS (k)1313 3180 MS ( )1363 3180 MS (l)1388 3180 MS (a)1416 3180 MS (w)1460 3180 MS (,)1532 3180 MS ( )1557 3180 MS (a)1582 3180 MS (n)1626 3180 MS (d)1676 3180 MS ( )1726 3180 MS (f)1751 3180 MS (u)1784 3180 MS (l)1834 3180 MS (f)1862 3180 MS (i)1895 3180 MS (l)1923 3180 MS (l)1951 3180 MS (e)1979 3180 MS (d)2023 3180 MS ( )2073 3180 MS (o)2098 3180 MS (t)2148 3180 MS (h)2176 3180 MS (e)2226 3180 MS (r)2270 3180 MS ( )2303 3180 MS (r)2328 3180 MS (o)2361 3180 MS (l)2411 3180 MS (e)2439 3180 MS (s)2483 3180 MS ( )2522 3180 MS (d)2547 3180 MS (u)2597 3180 MS (r)2647 3180 MS (i)2680 3180 MS (n)2708 3180 MS (g)2758 3180 MS ( )2807 3180 MS (h)2832 3180 MS (i)2882 3180 MS (s)2910 3180 MS ( )2949 3180 MS (d)2974 3180 MS (i)3024 3180 MS (s)3052 3180 MS (t)3091 3180 MS (i)3119 3180 MS (n)3147 3180 MS (g)3197 3180 MS (u)3246 3180 MS (i)3296 3180 MS (s)3324 3180 MS (h)3363 3180 MS (e)3413 3180 MS (d)3457 3180 MS ( )3507 3180 MS (c)3532 3180 MS (a)3576 3180 MS (r)3620 3180 MS (e)3653 3180 MS (e)3697 3180 MS (r)3741 3180 MS (,)3774 3180 MS ( )3799 3180 MS (i)3824 3180 MS (n)3852 3180 MS (c)3902 3180 MS (l)3946 3180 MS (u)3974 3180 MS (d)4024 3180 MS (i)4074 3180 MS (n)4102 3180 MS (g)4152 3180 MS ( )4201 3180 MS (t)4226 3180 MS (h)4254 3180 MS (a)4304 3180 MS (t)4348 3180 MS (o)490 3416 MS (f)540 3416 MS ( )573 3416 MS (t)598 3416 MS (h)626 3416 MS (e)676 3416 MS ( )720 3416 MS (M)745 3416 MS (e)834 3416 MS (x)878 3416 MS (i)929 3416 MS (c)957 3416 MS (a)1001 3416 MS (n)1045 3416 MS ( )1095 3416 MS (A)1120 3416 MS

(m)1192 3416 MS (b)1270 3416 MS (a)1320 3416 MS (s)1364 3416 MS (s)1403 3416 MS (a)1442 3416 MS (d)1486 3416 MS (o)1536 3416 MS (r)1586 3416 MS ( )1619 3416 MS (t)1644 3416 MS (o)1672 3416 MS ( )1722 3416 MS (t)1747 3416 MS (h)1775 3416 MS (e)1825 3416 MS ( )1869 3416 MS (U)1894 3416 MS (n)1966 3416 MS (i)2016 3416 MS (t)2044 3416 MS (e)2072 3416 MS (d)2116 3416 MS ( )2166 3416 MS (S)2191 3416 MS (t)2247 3416 MS (a)2275 3416 MS (t)2319 3416 MS (e)2347 3416 MS (s)2391 3416 MS ( )2430 3416 MS (a)2455 3416 MS (r)2499 3416 MS (o)2532 3416 MS (u)2582 3416 MS (n)2632 3416 MS (d)2682 3416 MS ( )2732 3416 MS (1)2757 3416 MS (9)2807 3416 MS (0)2857 3416 MS (5)2907 3416 MS (.)2957 3416 MS ( )2982 3416 MS [100 0 0 -100 0 0]/Times-Roman MF (Despite the suggestion of official intervention to help Banco Central, Table 2 does not)790 3653 MS (suggest that Banco Central acted as though freed from the constraint of profitmaximization to)490 3887 MS LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (pursue other objectives. Although the bank\222s liabilities relative to its specie reserves increased)490 4121 MS (substantially after 1901, subsequent capital increases enabled it to maintain a fairly constant ratio)490 4355 MS (of liabilities to \(book\) capital.)490 4589 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (18)1681 4546 MS [100 0 0 -100 0 0]/_Times-Roman MF ( However, the balance sheets do not give a complete picture of)1741 4589 MS (the financial situation of the bank. In 1906, Banco Central established the )490 4823 MS [100 0 0 -100 0 0]/Times-Italic MF (Compania Bancaria)3478 4823 MS (de Obras y Bienes Raices)490 5063 MS [100 0 0 -100 0 0]/_Times-Roman MF (, which was a banking company \(1906 shareholders\222 report 4/10/1907\).)1510 5063 MS (Banking companies were depository institutions that were not regulated, and their books were)490 5303 MS showpage %%Page: 23 23 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 21 -)2332 596 MS (not consolidated with those of chartered banks even through there may have been a close)490 813 MS (relationship between the two entities. McCaleb \(op. cit. p. 201\) states that in 1909, it became)490 1047 MS (widely known that Banco Central had suffered large losses through the operations of the banking)490 1281 MS (company.)490 1515 MS [100 0 0 -100 0 0]/Times-BoldItalic MF (VI. Evidence of Behavioral Problems Under the System)490 1981 MS [100 0 0 -100 0 0]/Times-Roman MF (The evidence seems quite compelling that official intervention blunted the disciplinary)790 2215 MS (role of Banco Central in the system, but how severe resulting behavioral problems were remains)490 2449 MS

(unclear. Comparing measures of risk of the two Yucateco banks, which were exposed to the)490 2683 MS (same underlying risks, shed some light into the issue. As seen in Table 3, particularly before)490 2917 MS (1904, the ratio of notes to specie reserves and to \(book\) capital were higher for BY than for)490 3151 MS (Banco Mercantil de Yucatan. Despite the difficulties in interpretation, the same comparison was)490 3385 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (made with total liabilities in the numerator. BY\222s total liabilities to specie reserves and to capital)490 3619 MS (again often exceeded that of its Yucateco competitor. That is, abstracting from events affecting)490 3853 MS (both banks \(and marked changes in these ratios suggests that these events were important\),)490 4087 MS (Banco Yucateco pursued a relatively risky strategy.)490 4321 MS (Risk measures of all state banks were also compared with the two city banks. Tables 4a)790 4555 MS (and 4b compare note-to-specie ratios and note-to-market capital ratios of the state banks with)490 4789 MS (those of Banco Nacional and Banco de Londres. After 1901, state banks tended to have higher)490 5023 MS (ratios of notes to specie and higher ratios of specie to market capital than did the city banks. )490 5257 MS (Total liabilities of banks were also looked at \(results not shown\), even though

Banco Nacional\222s)490 5491 MS (role as a federal treasury agent makes it hard to interpret the results. If one ignores Banco)490 5725 MS showpage %%Page: 24 24 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 22 -)2332 596 MS (Nacional \(whose risk was the highest by this measure\), state banks tended to have higher ratios)490 813 MS (of liabilities to specie and to market capital than did Banco de Londres. The ratios are not)490 1047 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (reported after 1904 because Banco Nacional\222s role in management of the bimetallic standard)490 1281 MS (adopted in 1905 would make the results hard to interpret. )490 1515 MS (Because it could be that state banks tended to be more risky because they were more)790 1749 MS (vulnerable than were the city banks to underlying economic conditions \(because city banks were)490 1983 MS (better diversified\), an attempt was made to account for bank-specific risk with panel estimations. )490 2217 MS (The observations were from December of each year. Four measures of bank risk for

which data)490 2451 MS (are available over the 1897 to 1904 period were used as dependent variables: notes relative to)490 2685 MS (specie, total liabilities relative to specie, notes relative to book capital, and total liabilities relative)490 2919 MS (to book capital. These measures were regressed on bank dummies, time dummies, and a dummy)490 3153 MS (variable that was equal to one if an observation represented a state bank after 1900 and zero)490 3387 MS (otherwise \(statebank01\). If the coefficient associated with statebank01 was positive and)490 3621 MS (significant, it was interpreted as meaning that state banks tended to be riskier after 1900 than city)490 3855 MS (banks. )490 4089 MS (The results weakly support the hypothesis that even after controlling for year and bank)790 4323 MS (specific factors, state banks tended to have higher levels of risk after 1900. Although the)490 4557 MS (coefficient on the interactive dummy was always positive, the only case in which it was not)490 4791 MS (significantly different from zero was when note/specie was the dependent variable. The lack of)490 5025 MS (statistical significance probably reflects the tests\222 low power; only two banks are alternatives to)490 5259 MS (the state banks \(with varied in number from 7 in 1897 to a peak of about 25\). ) 490 5493 MS (Graph 1 attempts to give a better picture of what was going on in the regression in which)790 5727 MS showpage %%Page: 25 25 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 23 -)2332 596 MS (the note-to-specie ratio was the dependent variable. Another model was estimated to include)490 813 MS (only the state banks with the note-to-specie ratio as the dependent variable. Time and bank)490 1047 MS (dummies were constructed such that one could interpret the year intercepts as changes in the)490 1281 MS (average state bank note-to-specie ratio relative to its 1897 level. These numbers \(the year)490 1515 MS (intercepts\) are plotted in Graph 1. The plot shows that once state bank specific effects are)490 1749 MS (accounted for, the note-to-specie ratio \(on average\) generally rose after 1897. \(This result also)490 1983 MS (holds when removing the Yucateco banks.\) The state bank average \(relative to 1897\) is)490 2217 MS (compared with those of Banco Nacional and Banco de Londres.)490 2451 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron

/breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (One could interpret the rise in state banks\222 average note-to-specie ratio \(relative to 1897\))790 2685 MS (either as a sign of rising risk-taking or as a sign of greater confidence in state bank notes. If)490 2919 MS (investors were more confident about the safety of state bank notes, state banks would have been)490 3153 MS (able to issue more notes with fewer specie reserves to back them \(as was the case with banks in)490 3387 MS (New England under the Suffolk Bank System\). However, if this had been the case, then there)490 3621 MS (would not have been any need for the alterations that were made to the system in the early 1900s)490 3855 MS (to keep state bank notes circulating at par. Thus, in my view, the graph suggests that at least in)490 4089 MS (1903 and 1904, the city banks behaved in a more conservative manner than the state banks. )490 4323 MS [100 0 0 -100 0 0]/Times-BoldItalic MF (VII. Conclusion)490 4791 MS [100 0 0 -100 0 0]/_Times-Roman MF ( )1184 4791 MS (Overall, the evidence suggests that government intervention muted Banco Central\222s)790 5027 MS (effectiveness as a source of discipline on state bank behavior. By 1908, Mexico\222s government)490 5261 MS (had come to the conclusion that the BCS was in need of reform. Among several amendments to)490 5495 MS (the 1896 law that were approved in June of that year by congress was one that addressed the note)490 5729 MS showpage %%Page: 26 26 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform

translate [100 0 0 -100 0 0]/Times-Roman MF (- 24 -)2332 596 MS n 1199 7 490 5329 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (19)790 5485 MS [100 0 0 -100 0 0]/Times-Roman MF ( Casasus \(op. cit p. 190\) suggested that all banks, except for Banco Nacional, meet once)850 5528 MS (or twice per month in Mexico City to exchange their notes. He also suggested that the notes of)490 5645 MS (Banco Nacional or drafts on Mexico City payable by Banco Central could be used to settle)490 5762 MS (adverse balances.)490 5879 MS (exchange process. The amendment stated that banks of issue would "periodically exchange the)490 813 MS (notes of other banks in their possession and shall, in the absence of express agreement between)490 1047 MS (the parties, pay the balances in cash" \(Conant op. cit. p. 177\). Further details were to be)490 1281 MS (forthcoming, but the reform initiative obviously lost favor during the revolution.)490 1515 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (19)3705 1472 MS [100 0 0 -100 0 0]/Times-Roman MF ( )3765 1515 MS (Because BCS was government mandated and government influenced, the Mexican)790 1749 MS (experience provides little insight into the viability of private payments systems. How costly)490 1983 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex

/Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (government involvement in the BCS ultimately turned out to be \(in terms of muting members\222)490 2217 MS (incentives to act conservatively\) is impossible to determine, since even a welldesigned private)490 2451 MS (payments system may have had trouble coping with the crisis period of 1907-08. The most)490 2685 MS (likely source of problems during this period was the government\222s decision to adhere to the)490 2919 MS (bimetallic standard in the face of adverse shocks \(including wide variations in the gold to silver)490 3153 MS (price ratio\). A closer look at this and other causes of Mexico\222s banking problems in the early)490 3387 MS (1900s is left, however, for future research.)490 3621 MS showpage %%Page: 27 27 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 25 -)2332 596 MS n 3899 7 490 1034 B f n 1299 7 490 1352 B f n 1312 7 1790 1352 B f n 1286 7 3103 1352 B f n 1299 7 490 1535 B f n 1312 7 1790 1535 B f n 1286 7 3103 1535 B f n 1299 7 490 2893 B f n 1299 7 490 3068 B f n 1312 7 1790 2893 B f

n 1312 f n 1286 f n 1286 f n 1299 f n 1299 f n 1312 f n 1312 f n 1286 f n 1286 f n 1299 f n 1299 f n 1312 f n 1312 f n 1286 f n 1286 f n 1299 f n 1299 f n 1312 f n 1312 f n

7 1790 3068 B 7 3103 2893 B 7 3103 3068 B 7 490 3664 B 7 490 3839 B 7 1790 3664 B 7 1790 3839 B 7 3103 3664 B 7 3103 3839 B 7 490 4141 B 7 490 4316 B 7 1790 4141 B 7 1790 4316 B 7 3103 4141 B 7 3103 4316 B 7 490 4618 B 7 490 4793 B 7 1790 4618 B 7 1790 4793 B

1286 7 3103 4618 B f n 1286 7 3103 4793 B f [100 0 0 -100 0 0]/Times-Bold MF (Table 1a State Banks That Received Federal Charters Between 1889 and 1891)564 1016 MS [100 0 0 -100 0 0]/Times-Roman MF (Bank)564 1221 MS (States where authorized to)1840 1221 MS (establish branches)1840 1338 MS (Year federal charter)3152 1221 MS (approved)3152 1338 MS [100 0 0 -100 0 0]/Times-Bold MF (Chihuahua)564 1517 MS [100 0 0 -100 0 0]/Times-Roman MF (Banco Comercial de)564 1698 MS (Chihuahua)564 1815 MS (Not specified by charter)1840 1698 MS (1889 \(previously Banco de)3152 1698 MS (Santa Eulalia 1875-89,)3152 1815 MS (chartered by the legislature)3152 1932 MS (of Chihuahua\))3152 2049 MS (Banco Minero de Chihuahua )564 2226 MS (Not specified by charter)1840 2226 MS (1888 \(previously had been)3152 2226 MS (chartered by the legislature)3152 2343 MS (of Chihuahua\))3152 2460 MS (Banco Mexicano de)564 2637 MS (Chihuahua)564 2754 MS (Not specified by charter)1840 2637 MS (1888 \(previously had been)3152 2637 MS (chartered by the legislature)3152 2754 MS (of Chihuahua\))3152 2871 MS [100 0 0 -100 0 0]/Times-Bold MF (Yucatan)564 3050 MS [100 0 0 -100 0 0]/Times-Roman MF (Banco Yucateco)564 3231 MS (Yucatan, Campeche, and)1840 3231 MS (Tabasco)1840 3348 MS (1889 \(previously a)3152 3231 MS (commercial house\))3152 3348 MS (Banco Mercantil de Yucatan )564 3525 MS (Yucatan, Campeche, and)1840 3525 MS (Tabasco)1840 3642 MS (1889 \(previously a)3152 3525 MS (commercial house\))3152 3642 MS [100 0 0 -100 0 0]/Times-Bold MF (Durango)564 3821 MS [100 0 0 -100 0 0]/Times-Roman MF (Banco de Durango)564 4002 MS (Durango)1840 4002 MS (1890 \(opened for business)3152 4002 MS (9/90\))3152 4119 MS [100 0 0 -100 0 0]/Times-Bold MF (Zacatecas)564 4298 MS [100 0 0 -100 0 0]/Times-Roman MF

(Banco de Zacatecas)564 4479 MS (Zacatecas and)1840 4479 MS (Aguascalientes)1840 4596 MS (1891 \(opened for business)3152 4479 MS (12/91\))3152 4596 MS [100 0 0 -100 0 0]/Times-Bold MF (Nuevo Leon)564 4775 MS [100 0 0 -100 0 0]/Times-Roman MF (Banco de Nuevo Leon)564 4956 MS (Nuevo Leon, Coahuila, and)1840 4956 MS (Tamaulipas)1840 5073 MS (1891 \(opened for business in)3152 4956 MS (10/92\))3152 5073 MS showpage %%Page: 28 28 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 26 -)2332 596 MS n 3899 7 490 939 B f n 1559 7 490 1426 B f n 1384 7 2050 1426 B f n 954 7 3435 1426 B f [100 0 0 -100 0 0]/Times-Bold MF (Table 1b)540 912 MS [100 0 0 -100 0 0]/Times-Roman MF (: )916 912 MS [100 0 0 -100 0 0]/Times-Bold MF (State Banks That Received Federal Charters Under 1896 Bank Law)969 912 MS [100 0 0 -100 0 0]/Times-Roman MF (Bank)540 1286 MS (States where allowed to open)2100 1286 MS (branches and agencies)2100 1403 MS (Opening Date)3484 1286 MS (1. Banco del Estado de Mexico)540 1588 MS (Mexico \(state\), Hidalgo,)2100 1588 MS (Puebla, Michoacan, and)2100 1705 MS (Veracruz)2100 1822 MS (8/1897)3484 1588 MS (2. Banco de Coahuila)540 1999 MS (Coahuila)2100 1999 MS (10/1897)3484 1999 MS (3. Banco de San Luis Potosi )540 2176 MS (San Luis Potosi; could also)2100 2176 MS (establish a branch in)2100 2293 MS (Guanajuato)2100 2410 MS (10/1897)3484 2176 MS (4. Banco de Sonora )540 2587 MS (Sonora)2100 2587 MS

(1/1898)3484 2587 MS (5. Banco Occidental de Mexico)540 2764 MS (Sinaloa and could establish a)2100 2764 MS (branch in Sonora)2100 2881 MS (2/1898)3484 2764 MS (6. Banco Mercantil de Veracruz )540 3058 MS ( )540 3175 MS (Veracruz)2100 3058 MS (3/1898)3484 3058 MS (7. Banco de Jalisco)540 3352 MS (Jalisco, and one agency in)2100 3352 MS (Celaya \(state of Guanajuato\))2100 3469 MS ("for exchange of notes". )2100 3586 MS (12/3/98: Celaya agency was)2100 3703 MS (converted into a full service)2100 3820 MS (branch. 1899:, could establish)2100 3937 MS (branches in the territory of)2100 4054 MS (Tepic. Also later established)2100 4171 MS (branch in the state of)2100 4288 MS (Michoacan)2100 4405 MS (11/1898)3484 3352 MS (8. Banco Mercantil de Monterrey)540 4582 MS (Nuevo Leon, Coahuila)2100 4582 MS (Tamaulipas, and Durango)2100 4699 MS (12/1899)3484 4582 MS (9. Banco Oriental de Mexico )540 4876 MS (Puebla \(opened branch in)2100 4876 MS (Oaxaca in 1901\))2100 4993 MS (3/1900)3484 4876 MS (10. Banco de Guanajuato)540 5170 MS (Guanajuato, Jalisco, Michoacan)2100 5170 MS (8/1900)3484 5170 MS (11. Banco de Tabasco )540 5347 MS (Tabasco)2100 5347 MS (1/1901)3484 5347 MS (12. Banco de Chiapas)540 5524 MS (Chiapas)2100 5524 MS (2/1902)3484 5524 MS showpage %%Page: 29 29 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 27 -)2332 596 MS n 3899 7 490 939 B f [100 0 0 -100 0 0]/Times-Bold MF (Table 1b)540 912 MS [100 0 0 -100 0 0]/Times-Roman MF (: )916 912 MS [100 0 0 -100 0 0]/Times-Bold MF (State Banks That Received Federal Charters Under 1896 Bank Law)969 912 MS n 1559 7 490 947 B f n

1559 7 490 1249 B f n 1384 7 2050 947 B f n 1384 7 2050 1249 B f n 954 7 3435 947 B f n 954 7 3435 1249 B f n 1559 7 490 3318 B f n 1384 7 2050 3318 B f n 954 7 3435 3318 B f [100 0 0 -100 0 0]/Times-Roman MF (Bank)540 1109 MS (States where allowed to open)2100 1109 MS (branches and agencies)2100 1226 MS (Opening date)3484 1109 MS (13. Banco de Aguascalientes)540 1411 MS (Aguascalientes; could establish)2100 1411 MS (one branch in the state of)2100 1528 MS (Guadalajara)2100 1645 MS (9/1902)3484 1411 MS (14. Banco de Tamaulipas)540 1822 MS (Tamaulipas)2100 1822 MS (10/1902)3484 1822 MS (15. Banco de Hidalgo)540 1999 MS (Hidalgo)2100 1999 MS (11/1902)3484 1999 MS (16. Banco de Oaxaca)540 2176 MS (Oaxaca)2100 2176 MS (11/1902)3484 2176 MS (17. Banco de Michoacan)540 2353 MS (Michoacan)2100 2353 MS (1902)3484 2353 MS (18. Banco de Morelos)540 2530 MS (Cuernavaca; could establish)2100 2530 MS (one branch in Acapulco \(state)2100 2647 MS (of Guerrero\))2100 2764 MS (3/1903)3484 2530 MS (19. Banco de Queretaro)540 2941 MS (7/1903)3484 2941 MS (20. Banco de Campeche)540 3118 MS (8/1903)3484 3118 MS (21. Banco de Guererro)540 3295 MS (1905)3484 3295 MS ( )490 3420 MS (Sources: Gurza \(1905\), Secretaria de Hacienda, )490 3537 MS

[100 0 0 -100 0 0]/Times-Italic MF (Memoria de Hacienda)2436 3537 MS [100 0 0 -100 0 0]/Times-Roman MF (, various dates, )3334 3537 MS [100 0 0 -100 0 0]/Times-Italic MF (The)3958 3537 MS (Banker)490 3657 MS [100 0 0 -100 0 0]/Times-Roman MF (, various dates.)778 3657 MS showpage %%Page: 30 30 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 28 -)2332 596 MS n 1299 7 490 958 B f n 1299 7 490 1141 B f n 1299 7 1790 958 B f n 1299 7 1790 1141 B f n 1299 7 3090 958 B f n 1299 7 3090 1141 B f [100 0 0 -100 0 0]/Times-Bold MF (Table 2 Total liabilities of Banco Central relative to specie and to book capital)490 815 MS [100 0 0 -100 0 0]/Times-Roman MF ( \(December)3860 815 MS (of each year\))490 936 MS (Liabilities/specie*)1840 1103 MS (Liabilities/book capital **)3140 1103 MS (1899)540 1294 MS (2.7)1840 1294 MS (1.6)3140 1294 MS (1900)540 1485 MS (3.5)1840 1485 MS (0.9)3140 1485 MS (1901)540 1676 MS (5.8)1840 1676 MS (1.3)3140 1676 MS (1902)540 1867 MS (14.5)1840 1867 MS (2.4)3140 1867 MS (1903)540 2058 MS (15.0)1840 2058 MS (1.7)3140 2058 MS (1904)540 2249 MS

(15.0)1840 2249 MS (1.7)3140 2249 MS (1905)540 2440 MS (21.9)1840 2440 MS (1.2)3140 2440 MS (1906)540 2631 MS (33.1)1840 2631 MS (1.5)3140 2631 MS (1907)540 2822 MS (42.9)1840 2822 MS (1.6)3140 2822 MS (* specie includes holdings of other bank notes prior to 1901)490 3080 MS (** book capital = paid in capital plus reserves)490 3197 MS ( )490 3782 MS showpage %%Page: 31 31 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 29 -)2332 596 MS n 432 7 490 1040 B f n 865 7 923 1040 B f n 865 7 1789 1040 B f n 865 7 2655 1040 B f n 865 7 3521 1040 B f n 432 7 490 1486 B f n 432 7 923 1486 B f n 432 7 1356 1486 B f n 432 7 1789 1486 B f n 432 7 2222 1486 B f n 432 7 2655 1486 B f n 432 7 3088 1486 B f n

432 7 3521 1486 B f n 432 7 3954 1486 B f n 432 7 490 3320 B f n 432 7 923 3320 B f n 432 7 1356 3320 B f n 432 7 1789 3320 B f n 432 7 2222 3320 B f n 432 7 2655 3320 B f n 432 7 3088 3320 B f n 432 7 3521 3320 B f n 432 7 3954 3320 B f %%IncludeFont: Helvetica-Bold [92 0 0 -92 0 0]/Helvetica-Bold MF (T)490 1019 MS (a)545 1019 MS (b)596 1019 MS (l)652 1019 MS (e)678 1019 MS ( )729 1019 MS (3)755 1019 MS (.)806 1019 MS ( )832 1019 MS (R)858 1019 MS (i)924 1019 MS (s)950 1019 MS (k)1001 1019 MS ( )1052 1019 MS (M)1078 1019 MS (e)1155 1019 MS (a)1206 1019 MS (s)1257 1019 MS (u)1308 1019 MS (r)1364 1019 MS (e)1400 1019 MS (s)1451 1019 MS ( )1502 1019 MS (o)1528 1019 MS (f)1584 1019 MS ( )1615 1019 MS (B)1641 1019 MS (a)1707 1019 MS (n)1758 1019 MS (k)1814 1019 MS (s)1865 1019 MS ( )1916 1019 MS (i)1942 1019 MS (n)1968 1019 MS ( )2024 1019 MS (t)2050 1019 MS (h)2081 1019 MS (e)2137 1019 MS ( )2188 1019 MS (S)2214 1019 MS (t)2275 1019 MS (a)2306 1019 MS (t)2357 1019 MS (e)2388 1019 MS ( )2439 1019 MS (o)2465 1019 MS (f)2521 1019 MS ( )2552 1019 MS (Y)2578 1019 MS (u)2639 1019 MS (c)2695 1019 MS (a)2746 1019 MS (t)2797 1019 MS (a)2828 1019 MS (n)2879 1019 MS %%IncludeFont: Helvetica [92 0 0 -92 0 0]/Helvetica MF (N)1091 1194 MS (o)1157 1194 MS (t)1208 1194 MS (e)1234 1194 MS (s)1285 1194 MS (/)1331 1194 MS (s)1357 1194 MS (p)1403 1194 MS (e)1454 1194 MS (c)1505 1194 MS (i)1551 1194 MS (e)1571 1194 MS (L)1889 1194 MS (i)1940 1194 MS (a)1960 1194 MS (b)2011 1194 MS (i)2062 1194 MS (l)2082 1194 MS (i)2102 1194 MS (t)2122 1194 MS (i)2148 1194 MS (e)2168 1194 MS (s)2219 1194 MS (/)2265 1194 MS (s)2291 1194 MS (p)2337 1194 MS (e)2388 1194 MS (c)2439 1194 MS (i)2485 1194 MS (e)2505 1194 MS (N)2710 1194 MS (o)2776 1194 MS (t)2827 1194 MS (e)2853 1194 MS (s)2904 1194 MS

(/)2950 1194 MS (b)2976 1194 MS (o)3027 1194 MS (o)3078 1194 MS (k)3129 1194 MS ( )3176 1194 MS (c)3191 1194 MS (a)3237 1194 MS (p)3288 1194 MS (i)3339 1194 MS (t)3359 1194 MS (a)3385 1194 MS (l)3436 1194 MS (L)3557 1194 MS (i)3604 1194 MS (a)3620 1194 MS (b)3667 1194 MS (i)3714 1194 MS (l)3730 1194 MS (i)3746 1194 MS (t)3762 1194 MS (i)3784 1194 MS (e)3800 1194 MS (s)3847 1194 MS (/)3889 1194 MS (b)3911 1194 MS (o)3958 1194 MS (o)4005 1194 MS (k)4052 1194 MS ( )4095 1194 MS (c)4121 1194 MS (a)4163 1194 MS (p)4210 1194 MS (i)4257 1194 MS (t)4273 1194 MS (a)4295 1194 MS (l)4342 1194 MS (Y)526 1360 MS (e)587 1360 MS (a)638 1360 MS (r)689 1360 MS (B)959 1360 MS (a)1020 1360 MS (n)1071 1360 MS (c)1122 1360 MS (o)1168 1360 MS (Y)959 1466 MS (u)1020 1466 MS (c)1071 1466 MS (a)1117 1466 MS (t)1168 1466 MS (e)1194 1466 MS (c)1245 1466 MS (o)1291 1466 MS (B)1392 1360 MS (a)1453 1360 MS (n)1504 1360 MS (c)1555 1360 MS (o)1601 1360 MS (M)1392 1466 MS (e)1467 1466 MS (r)1518 1466 MS (c)1549 1466 MS (a)1595 1466 MS (n)1646 1466 MS (t)1697 1466 MS (i)1723 1466 MS (l)1743 1466 MS (B)1825 1360 MS (a)1886 1360 MS (n)1937 1360 MS (c)1988 1360 MS (o)2034 1360 MS (Y)1825 1466 MS (u)1886 1466 MS (c)1937 1466 MS (a)1983 1466 MS (t)2034 1466 MS (e)2060 1466 MS (c)2111 1466 MS (o)2157 1466 MS (B)2258 1360 MS (a)2319 1360 MS (n)2370 1360 MS (c)2421 1360 MS (o)2467 1360 MS (M)2258 1466 MS (e)2333 1466 MS (r)2384 1466 MS (c)2415 1466 MS (a)2461 1466 MS (n)2512 1466 MS (t)2563 1466 MS (i)2589 1466 MS (l)2609 1466 MS (B)2691 1360 MS (a)2752 1360 MS (n)2803 1360 MS (c)2854 1360 MS (o)2900 1360 MS (Y)2691 1466 MS (u)2752 1466 MS (c)2803 1466 MS (a)2849 1466 MS (t)2900 1466 MS (e)2926 1466 MS (c)2977 1466 MS (o)3023 1466 MS (B)3124 1360 MS (a)3185 1360 MS (n)3236 1360 MS (c)3287 1360 MS (o)3333 1360 MS (M)3124 1466 MS (e)3199 1466 MS (r)3250 1466 MS (c)3281 1466 MS (a)3327 1466 MS (n)3378 1466 MS (t)3429 1466 MS (i)3455 1466 MS (l)3475 1466 MS (B)3557 1360 MS (a)3618 1360 MS (n)3669 1360 MS (c)3720 1360 MS (o)3766 1360 MS (Y)3557 1466 MS (u)3618 1466 MS (c)3669 1466 MS (a)3715 1466 MS (t)3766 1466 MS (e)3792 1466 MS (c)3843 1466 MS (o)3889 1466 MS (B)3990 1360 MS (a)4051 1360 MS (n)4102 1360 MS (c)4153 1360 MS (o)4199 1360 MS (M)3990 1466 MS (e)4065 1466 MS (r)4116 1466 MS (c)4147 1466 MS (a)4193 1466 MS (n)4244 1466 MS (t)4295 1466 MS (i)4321 1466 MS (l)4341 1466 MS (1)526 1640 MS (8)577 1640 MS (9)628 1640 MS (7)679 1640 MS (1)959 1640 MS (.)1010 1640 MS (7)1036 1640 MS (9)1087 1640 MS (1)1392 1640 MS (.)1443 1640 MS (5)1469 1640 MS (3)1520 1640 MS (2)1825 1640 MS (.)1876 1640 MS (7)1902 1640 MS (2)1953 1640 MS (1)2258 1640 MS (.)2309 1640 MS (9)2335 1640 MS (2)2386 1640 MS (1)2691 1640 MS (.)2742 1640 MS (4)2768 1640 MS (2)2819 1640 MS (1)3124 1640 MS (.)3175 1640 MS (4)3201 1640 MS (0)3252 1640 MS (2)3557 1640 MS (.)3608 1640 MS (1)3634 1640 MS (5)3685 1640 MS (1)3990 1640 MS (.)4041 1640 MS (7)4067 1640 MS (6)4118 1640 MS (1)526 1806 MS (8)577 1806 MS (9)628 1806 MS (8)679 1806 MS (1)959 1806 MS (.)1010 1806 MS (7)1036 1806 MS (7)1087 1806 MS (1)1392 1806 MS (.)1443 1806 MS (3)1469 1806 MS (2)1520 1806 MS (2)1825 1806 MS (.)1876 1806 MS (7)1902 1806 MS (0)1953 1806 MS (1)2258 1806 MS (.)2309 1806 MS (7)2335 1806 MS (8)2386 1806 MS (2)2691 1806 MS (.)2742 1806 MS (5)2768 1806 MS (7)2819 1806 MS (1)3124 1806 MS (.)3175 1806 MS (6)3201 1806 MS (3)3252 1806 MS (3)3557 1806 MS (.)3608 1806 MS (9)3634 1806 MS (1)3685 1806 MS (2)3990 1806 MS (.)4041 1806 MS (2)4067 1806 MS (0)4118 1806 MS (1)526 1972 MS (8)577 1972 MS (9)628 1972 MS (9)679 1972 MS (1)959 1972 MS (.)1010 1972 MS (7)1036 1972 MS (6)1087 1972 MS (1)1392 1972 MS (.)1443 1972 MS (3)1469 1972 MS (7)1520 1972 MS (2)1825 1972 MS (.)1876 1972 MS (7)1902 1972 MS (9)1953 1972 MS (2)2258 1972 MS (.)2309 1972 MS (2)2335 1972 MS (0)2386 1972 MS (2)2691 1972 MS (.)2742 1972 MS (4)2768 1972 MS (5)2819 1972 MS

(1)3124 1972 MS (.)3175 1972 MS (9)3201 1972 MS (1)3252 1972 MS (3)3557 1972 MS (.)3608 1972 MS (8)3634 1972 MS (7)3685 1972 MS (3)3990 1972 MS (.)4041 1972 MS (0)4067 1972 MS (6)4118 1972 MS (1)526 2138 MS (9)577 2138 MS (0)628 2138 MS (0)679 2138 MS (1)959 2138 MS (.)1010 2138 MS (8)1036 2138 MS (6)1087 2138 MS (1)1392 2138 MS (.)1443 2138 MS (5)1469 2138 MS (2)1520 2138 MS (2)1825 2138 MS (.)1876 2138 MS (7)1902 2138 MS (2)1953 2138 MS (2)2258 2138 MS (.)2309 2138 MS (1)2335 2138 MS (2)2386 2138 MS (1)2691 2138 MS (.)2742 2138 MS (8)2768 2138 MS (3)2819 2138 MS (1)3124 2138 MS (.)3175 2138 MS (2)3201 2138 MS (8)3252 2138 MS (2)3557 2138 MS (.)3608 2138 MS (6)3634 2138 MS (8)3685 2138 MS (1)3990 2138 MS (.)4041 2138 MS (8)4067 2138 MS (0)4118 2138 MS (1)526 2304 MS (9)577 2304 MS (0)628 2304 MS (1)679 2304 MS (1)959 2304 MS (.)1010 2304 MS (8)1036 2304 MS (2)1087 2304 MS (1)1392 2304 MS (.)1443 2304 MS (6)1469 2304 MS (8)1520 2304 MS (2)1825 2304 MS (.)1876 2304 MS (9)1902 2304 MS (7)1953 2304 MS (2)2258 2304 MS (.)2309 2304 MS (6)2335 2304 MS (8)2386 2304 MS (1)2691 2304 MS (.)2742 2304 MS (1)2768 2304 MS (2)2819 2304 MS (1)3124 2304 MS (.)3175 2304 MS (0)3201 2304 MS (2)3252 2304 MS (1)3557 2304 MS (.)3608 2304 MS (8)3634 2304 MS (2)3685 2304 MS (1)3990 2304 MS (.)4041 2304 MS (6)4067 2304 MS (3)4118 2304 MS (1)526 2470 MS (9)577 2470 MS (0)628 2470 MS (2)679 2470 MS (1)959 2470 MS (.)1010 2470 MS (7)1036 2470 MS (0)1087 2470 MS (1)1392 2470 MS (.)1443 2470 MS (5)1469 2470 MS (8)1520 2470 MS (3)1825 2470 MS (.)1876 2470 MS (1)1902 2470 MS (1)1953 2470 MS (3)2258 2470 MS (.)2309 2470 MS (1)2335 2470 MS (7)2386 2470 MS (1)2691 2470 MS (.)2742 2470 MS (1)2768 2470 MS (4)2819 2470 MS (0)3124 2470 MS (.)3175 2470 MS (8)3201 2470 MS (0)3252 2470 MS (2)3557 2470 MS (.)3608 2470 MS (0)3634 2470 MS (7)3685 2470 MS (1)3990 2470 MS (.)4041 2470 MS (6)4067 2470 MS (1)4118 2470 MS (1)526 2636 MS (9)577 2636 MS (0)628 2636 MS (3)679 2636 MS (1)959 2636 MS (.)1010 2636 MS (8)1036 2636 MS (1)1087 2636 MS (1)1392 2636 MS (.)1443 2636 MS (6)1469 2636 MS (8)1520 2636 MS (3)1825 2636 MS (.)1876 2636 MS (8)1902 2636 MS (5)1953 2636 MS (3)2258 2636 MS (.)2309 2636 MS (7)2335 2636 MS (8)2386 2636 MS (0)2691 2636 MS (.)2742 2636 MS (5)2768 2636 MS (2)2819 2636 MS (0)3124 2636 MS (.)3175 2636 MS (3)3201 2636 MS (8)3252 2636 MS (1)3557 2636 MS (.)3608 2636 MS (1)3634 2636 MS (1)3685 2636 MS (0)3990 2636 MS (.)4041 2636 MS (8)4067 2636 MS (5)4118 2636 MS (1)526 2802 MS (9)577 2802 MS (0)628 2802 MS (4)679 2802 MS (1)959 2802 MS (.)1010 2802 MS (7)1036 2802 MS (1)1087 2802 MS (1)1392 2802 MS (.)1443 2802 MS (6)1469 2802 MS (6)1520 2802 MS (4)1825 2802 MS (.)1876 2802 MS (2)1902 2802 MS (1)1953 2802 MS (4)2258 2802 MS (.)2309 2802 MS (2)2335 2802 MS (4)2386 2802 MS (0)2691 2802 MS (.)2742 2802 MS (4)2768 2802 MS (4)2819 2802 MS (0)3124 2802 MS (.)3175 2802 MS (6)3201 2802 MS (3)3252 2802 MS (1)3557 2802 MS (.)3608 2802 MS (0)3634 2802 MS (8)3685 2802 MS (1)3990 2802 MS (.)4041 2802 MS (6)4067 2802 MS (1)4118 2802 MS (1)526 2968 MS (9)577 2968 MS (0)628 2968 MS (5)679 2968 MS (2)959 2968 MS (.)1010 2968 MS (7)1036 2968 MS (4)1087 2968 MS (1)1392 2968 MS (.)1443 2968 MS (5)1469 2968 MS (7)1520 2968 MS (7)1825 2968 MS (.)1876 2968 MS (9)1902 2968 MS (9)1953 2968 MS (4)2258 2968 MS (.)2309 2968 MS (6)2335 2968 MS (1)2386 2968 MS (0)2691 2968 MS (.)2742 2968 MS (5)2768 2968 MS (2)2819 2968 MS (0)3124 2968 MS (.)3175 2968 MS (3)3201 2968 MS (7)3252 2968 MS (1)3557 2968 MS (.)3608 2968 MS (5)3634 2968 MS (0)3685 2968 MS (1)3990 2968 MS (.)4041 2968 MS (1)4067 2968 MS (0)4118 2968 MS (1)526 3134 MS (9)577 3134 MS (0)628 3134 MS (6)679 3134 MS

(1)959 3134 MS (.)1010 3134 MS (6)1036 3134 MS (6)1087 3134 MS (1)1392 3134 MS (.)1443 3134 MS (6)1469 3134 MS (9)1520 3134 MS (6)1825 3134 MS (.)1876 3134 MS (8)1902 3134 MS (0)1953 3134 MS (5)2258 3134 MS (.)2309 3134 MS (4)2335 3134 MS (0)2386 3134 MS (0)2691 3134 MS (.)2742 3134 MS (1)2768 3134 MS (8)2819 3134 MS (0)3124 3134 MS (.)3175 3134 MS (3)3201 3134 MS (1)3252 3134 MS (0)3557 3134 MS (.)3608 3134 MS (7)3634 3134 MS (2)3685 3134 MS (1)3990 3134 MS (.)4041 3134 MS (0)4067 3134 MS (0)4118 3134 MS (1)526 3300 MS (9)577 3300 MS (0)628 3300 MS (7)679 3300 MS (1)959 3300 MS (.)1010 3300 MS (7)1036 3300 MS (3)1087 3300 MS (1)1392 3300 MS (.)1443 3300 MS (6)1469 3300 MS (9)1520 3300 MS (6)1825 3300 MS (.)1876 3300 MS (3)1902 3300 MS (4)1953 3300 MS (4)2258 3300 MS (.)2309 3300 MS (6)2335 3300 MS (2)2386 3300 MS (0)2691 3300 MS (.)2742 3300 MS (1)2768 3300 MS (7)2819 3300 MS (0)3124 3300 MS (.)3175 3300 MS (2)3201 3300 MS (4)3252 3300 MS (0)3557 3300 MS (.)3608 3300 MS (6)3634 3300 MS (2)3685 3300 MS (0)3990 3300 MS (.)4041 3300 MS (6)4067 3300 MS (5)4118 3300 MS (b)490 3732 MS (o)541 3732 MS (o)592 3732 MS (k)643 3732 MS ( )690 3732 MS (c)716 3732 MS (a)762 3732 MS (p)813 3732 MS (i)864 3732 MS (t)884 3732 MS (a)910 3732 MS (l)961 3732 MS ( )981 3732 MS (=)1007 3732 MS (p)1061 3732 MS (a)1112 3732 MS (i)1163 3732 MS (d)1183 3732 MS ( )1234 3732 MS (i)1260 3732 MS (n)1280 3732 MS ( )1331 3732 MS (c)1357 3732 MS (a)1403 3732 MS (p)1454 3732 MS (i)1505 3732 MS (t)1525 3732 MS (a)1551 3732 MS (l)1602 3732 MS ( )1622 3732 MS (p)1648 3732 MS (l)1699 3732 MS (u)1719 3732 MS (s)1770 3732 MS ( )1816 3732 MS (r)1842 3732 MS (e)1873 3732 MS (s)1924 3732 MS (e)1970 3732 MS (r)2021 3732 MS (v)2052 3732 MS (e)2097 3732 MS (s)2148 3732 MS showpage %%Page: 32 32 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 30 -)2332 596 MS n 486 7 490 940 B f n 973 7 977 940 B f n 486 7 1951 940 B f n 486 7 2438 940 B f n 486 7 2925 940 B f n 486 7 3412 940 B f n 486 7 490 1395 B f n 486 7 977 1395 B f

n 486 f n 486 f n 486 f n 486 f n 486 f n 486 f n 486 f n 486 f n 486 f n 486 f n 486 f n 486 f n 486 f n 973 f n 488 f n 484 f n 486 f n 486 f n 486 f n

7 1464 1395 B 7 1951 1395 B 7 2438 1395 B 7 2925 1395 B 7 3412 1395 B 7 490 2755 B 7 977 2755 B 7 1464 2755 B 7 1951 2755 B 7 2438 2755 B 7 2925 2755 B 7 3412 2755 B 7 490 3203 B 7 977 3203 B 7 1951 3203 B 7 2440 3203 B 7 2925 3203 B 7 3412 3203 B 7 490 3658 B

486 7 977 3658 B f n 486 7 1464 3658 B f n 488 7 1951 3658 B f n 484 7 2440 3658 B f n 486 7 2925 3658 B f n 486 7 3412 3658 B f n 486 7 490 4511 B f n 486 7 977 4511 B f n 486 7 1464 4511 B f n 488 7 1951 4511 B f n 484 7 2440 4511 B f n 486 7 2925 4511 B f n 486 7 3412 4511 B f [92 0 0 -92 0 0]/Times-Bold MF (Table 4a Notes Relative to Specie Reserves)490 916 MS [92 0 0 -92 0 0]/Times-Roman MF (State Banks)1027 1096 MS (Banco)2975 1096 MS (Nacional )2975 1205 MS (Banco de)3462 1096 MS (Londres )3462 1205 MS (Year)540 1374 MS (No. Obs.)1027 1374 MS (Median)1514 1374 MS (Mean)2001 1374 MS (Std. Dev.)2488 1374 MS (1897 )540 1551 MS (7 )1027 1551 MS (1.55 )1514 1551 MS (1.51 )2001 1551 MS (0.34 )2488 1551 MS (1.11 )2975 1551 MS (1.67 )3462 1551 MS

(1898 )540 1720 MS (13 )1027 1720 MS (1.59 )1514 1720 MS (1.45 )2001 1720 MS (0.42 )2488 1720 MS (0.82 )2975 1720 MS (1.89 )3462 1720 MS (1899 )540 1889 MS (13 )1027 1889 MS (1.49 )1514 1889 MS (1.49 )2001 1889 MS (0.31 )2488 1889 MS (0.90 )2975 1889 MS (1.70 )3462 1889 MS (1900 )540 2058 MS (15 )1027 2058 MS (1.74 )1514 2058 MS (1.70 )2001 2058 MS (0.34 )2488 2058 MS (0.93 )2975 2058 MS (1.59 )3462 2058 MS (1901 )540 2227 MS (17 )1027 2227 MS (1.69 )1514 2227 MS (1.74 )2001 2227 MS (0.37 )2488 2227 MS (1.33 )2975 2227 MS (1.04 )3462 2227 MS (1902 )540 2396 MS (21 )1027 2396 MS (1.67 )1514 2396 MS (1.64 )2001 2396 MS (0.44 )2488 2396 MS (1.62 )2975 2396 MS (1.82 )3462 2396 MS (1903 )540 2565 MS (26 )1027 2565 MS (1.73 )1514 2565 MS (1.74 )2001 2565 MS (0.30 )2488 2565 MS (0.96 )2975 2565 MS (1.60 )3462 2565 MS (1904 )540 2734 MS (26 )1027 2734 MS (1.71 )1514 2734 MS (1.76 )2001 2734 MS (0.22 )2488 2734 MS (0.62 )2975 2734 MS (1.20 )3462 2734 MS [92 0 0 -92 0 0]/Times-Bold MF (Table 4b Notes Relative to Market Capital)490 3179 MS [92 0 0 -92 0 0]/Times-Roman MF (State Banks)1027 3359 MS (Banco)2975 3359 MS (Nacional)2975 3468 MS (Banco de)3462 3359 MS (Londres)3462 3468 MS (Year)540 3637 MS

(No. Obs.)1027 3637 MS (Median)1514 3637 MS (Mean)2001 3637 MS (Std. Dev.)2490 3637 MS (1900 )540 3814 MS (15 )1027 3814 MS (0.89 )1514 3814 MS (1.08 )2001 3814 MS (0.77 )2490 3814 MS (0.58 )2975 3814 MS (0.76 )3462 3814 MS (1901 )540 3983 MS (16 )1027 3983 MS (0.82 )1514 3983 MS (1.07 )2001 3983 MS (0.61 )2490 3983 MS (0.47 )2975 3983 MS (0.60 )3462 3983 MS (1902 )540 4152 MS (21 )1027 4152 MS (0.84 )1514 4152 MS (1.02 )2001 4152 MS (0.51 )2490 4152 MS (0.46 )2975 4152 MS (0.64 )3462 4152 MS (1903 )540 4321 MS (22 )1027 4321 MS (0.84 )1514 4321 MS (0.97 )2001 4321 MS (0.45 )2490 4321 MS (0.35 )2975 4321 MS (0.69 )3462 4321 MS (1904 )540 4490 MS (26 )1027 4490 MS (0.95 )1514 4490 MS (1.01 )2001 4490 MS (0.55 )2490 4490 MS (0.31 )2975 4490 MS (0.60 )3462 4490 MS showpage %%Page: 33 33 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 31 -)2332 596 MS n 4797 2619 87 879 B 1 g f 1 j 1 setlinecap 3 sl 0 g n 567 1344 M 567 3001 L CM 2.398 1.309 scale

s SM n 567 3001 M 4617 3001 L CM 2.398 1.309 scale s SM n 4617 3001 M 4617 1344 L CM 2.398 1.309 scale s SM n 4617 1344 M 567 1344 L CM 2.398 1.309 scale s SM n 512 3001 M 622 3001 L CM 2.398 1.309 scale s SM [73.387 0 0 -73.387 0 (-)354 3022 MS (0)378 n 531 2883 M 603 2883 L CM 2.398 1.309 scale s SM n 512 2764 M 622 2764 L CM 2.398 1.309 scale s SM 1 sl [24 24 24 24 24 24 24 n 567 2764 M 4617 2764 L s (-)354 2785 MS (0)378 3 sl []0 sd n 531 2646 M 603 2646 L CM 2.398 1.309 scale s SM n 512 2528 M 622 2528 L

0]/Helvetica MF 3022 MS (.)419 3022 MS (8)439 3022 MS ( )480 3022 MS

24 ]0 sd

2785 MS (.)419 2785 MS (6)439 2785 MS ( )480 2785 MS

CM 2.398 1.309 scale s SM 1 sl [24 24 24 24 24 24 24 n 567 2528 M 4617 2528 L s (-)354 2549 MS (0)378 3 sl []0 sd n 531 2410 M 603 2410 L CM 2.398 1.309 scale s SM n 512 2290 M 622 2290 L CM 2.398 1.309 scale s SM 1 sl [24 24 24 24 24 24 24 n 567 2290 M 4617 2290 L s (-)354 2312 MS (0)378 3 sl []0 sd n 531 2172 M 603 2172 L CM 2.398 1.309 scale s SM n 512 2055 M 622 2055 L CM 2.398 1.309 scale s SM 1 sl [24 24 24 24 24 24 24 n 567 2055 M 4617 2055 L s (0)439 2076 MS ( )480 3 sl []0 sd n 531 1935 M 603 1935 L CM 2.398 1.309 scale

24 ]0 sd

2549 MS (.)419 2549 MS (4)439 2549 MS ( )480 2549 MS

24 ]0 sd

2312 MS (.)419 2312 MS (2)439 2312 MS ( )480 2312 MS

24 ]0 sd

2076 MS

s SM n 512 1817 M 622 1817 L CM 2.398 1.309 scale s SM 1 sl [24 24 24 24 24 24 24 n 567 1817 M 4617 1817 L s (0)378 1839 MS (.)419 3 sl []0 sd n 531 1699 M 603 1699 L CM 2.398 1.309 scale s SM n 512 1581 M 622 1581 L CM 2.398 1.309 scale s SM 1 sl [24 24 24 24 24 24 24 n 567 1581 M 4617 1581 L s (0)378 1603 MS (.)419 3 sl []0 sd n 531 1462 M 603 1462 L CM 2.398 1.309 scale s SM n 512 1344 M 622 1344 L CM 2.398 1.309 scale s SM (0)378 1366 MS (.)419 n 819 3027 M 819 2975 L CM 2.398 1.309 scale s SM [87.801 0 0 -87.801 0

24 ]0 sd

1839 MS (2)439 1839 MS ( )480 1839 MS

24 ]0 sd

1603 MS (4)439 1603 MS ( )480 1603 MS

1366 MS (6)439 1366 MS ( )480 1366 MS

0]/Helvetica MF

(1)721 3106 MS (8)770 3106 MS (9)819 3106 MS n 1325 3027 M 1325 2975 L CM 2.398 1.309 scale s SM (1)1227 3106 MS (8)1276 3106 MS (9)1325 3106 n 1831 3027 M 1831 2975 L CM 2.398 1.309 scale s SM (1)1733 3106 MS (8)1782 3106 MS (9)1831 3106 n 2338 3027 M 2338 2975 L CM 2.398 1.309 scale s SM (1)2240 3106 MS (9)2289 3106 MS (0)2338 3106 n 2844 3027 M 2844 2975 L CM 2.398 1.309 scale s SM (1)2746 3106 MS (9)2795 3106 MS (0)2844 3106 n 3350 3027 M 3350 2975 L CM 2.398 1.309 scale s SM (1)3252 3106 MS (9)3301 3106 MS (0)3350 3106 n 3857 3027 M 3857 2975 L CM 2.398 1.309 scale s SM (1)3759 3106 MS (9)3808 3106 MS (0)3857 3106 n 4363 3027 M 4363 2975 L CM 2.398 1.309 scale s SM (1)4265 3106 MS (9)4314 3106 MS (0)4363 3106 1 sl [144 48 ]0 sd 0.105 g n 819 2055 M 1325 2399 L 1831 2305 L 2338 2267 L

(7)868 3106 MS

MS (8)1374 3106 MS

MS (9)1880 3106 MS

MS (0)2387 3106 MS

MS (1)2893 3106 MS

MS (2)3399 3106 MS

MS (3)3906 3106 MS

MS (4)4412 3106 MS

2844 1798 L 3350 1456 L 3857 2243 L 4363 2644 L s [24 24 24 24 24 24 24 24 ]0 sd 0.605 g n 819 2055 M 1325 1792 L 1831 2014 L 2338 2149 L 2844 2799 L 3350 1874 L 3857 2134 L 4363 2606 L s 5 sl []0 sd 0.289 g n 819 2055 M 1325 2133 L 1831 2087 L 2338 1863 L 2844 1775 L 3350 1823 L 3857 1660 L 4363 1634 L CM 2.398 1.309 scale s SM 0 j 3 sl 0 g n 2610 236 1277 3200 B cp gs 1 g e gr CM 2.398 1.309 scale s SM 1 j n 3888 3214 M 3888 3437 L 1296 3437 L 1296 3445 L 3900 3445 L 3900 3214 L cp gs e gr CM 2.398 1.309 scale

s SM 1 sl [144 48 ]0 sd 0.105 g n 1340 3318 M 1563 3318 L s [61.59 0 0 -61.59 0 0]/Helvetica MF 0 g (B)1618 3318 MS (a)1659 3318 MS (n)1693 3318 MS (c)1727 3318 MS (o)1758 3318 MS ( )1792 3318 MS (N)1809 3318 MS (a)1854 3318 MS (c)1888 3318 MS (i)1919 3318 MS (o)1933 3318 MS (n)1967 3318 MS (a)2001 3318 MS (l)2035 3318 MS [24 24 24 24 24 24 24 24 ]0 sd 0.605 g n 2187 3318 M 2410 3318 L s 0 g (B)2465 3318 MS (a)2506 3318 MS (n)2540 3318 MS (c)2574 3318 MS (o)2605 3318 MS ( )2639 3318 MS (d)2656 3318 MS (e)2690 3318 MS ( )2724 3318 MS (L)2741 3318 MS (o)2775 3318 MS (n)2809 3318 MS (d)2843 3318 MS (r)2877 3318 MS (e)2898 3318 MS (s)2932 3318 MS 5 sl []0 sd 0.289 g n 3034 3318 M 3257 3318 L CM 2.398 1.309 scale s SM 0 g (s)3312 3318 MS (t)3343 3318 MS (a)3360 3318 MS (t)3394 3318 MS (e)3411 3318 MS ( )3445 3318 MS (b)3462 3318 MS (a)3496 3318 MS (n)3530 3318 MS (k)3564 3318 MS (s)3596 3318 MS [116.633 0 0 -116.633 0 0]/Helvetica-Bold MF (G)1863 1033 MS (r)1954 1033 MS (a)2000 1033 MS (p)2065 1033 MS (h)2136 1033 MS ( )2207 1033 MS (1)2240 1033 MS (:)2305 1033 MS ( )2343 1033 MS (N)2376 1033 MS (o)2460 1033 MS (t)2531 1033 MS (e)2570 1033 MS (s)2635 1033 MS (/)2700 1033 MS (S)2733 1033 MS (p)2811 1033 MS (e)2882 1033 MS (c)2947 1033 MS (i)3012 1033 MS (e)3045 1033 MS (\()1805 1172 MS (c)1844 1172 MS (h)1909 1172 MS (a)1980 1172 MS (n)2045 1172 MS (g)2116 1172 MS (e)2187 1172 MS ( )2252 1172 MS (r)2285 1172 MS (e)2331 1172 MS (l)2396 1172 MS (a)2429 1172 MS (t)2494 1172 MS (i)2533 1172 MS (v)2566 1172 MS (e)2630 1172 MS ( )2695 1172 MS (t)2728 1172 MS (o)2767 1172 MS ( )2838 1172 MS (1)2871 1172 MS (8)2936 1172 MS (9)3001 1172 MS (7)3066 1172 MS (\))3131 1172 MS showpage %%Page: 34 34 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 32 -)2332 596 MS n

1199 7 490 4872 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (20)790 5028 MS [100 0 0 -100 0 0]/Times-Roman MF ( Source of data here and below unless otherwise stated is the Mexican government,)850 5071 MS [100 0 0 -100 0 0]/Times-Italic MF /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Italic /Times-Italic reencode [100 0 0 -100 0 0]/_Times-Italic MF (Estad\355sticas Hist\363ricas de Mexico)490 5188 MS [100 0 0 -100 0 0]/Times-Roman MF (, 1985.)1853 5188 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (21)790 5365 MS [100 0 0 -100 0 0]/Times-Roman MF ( Although Mexico City had close commercial links with the port of Veracruz \(roughly)850 5408 MS (500 miles to the southeast\), had fewer ties with the more remote regions. For instance, one)490 5525 MS (report in 1882 posted from Ciudad Chihuahua near the U.S. border stated that the area was)490 5642 MS (isolated from the rest of Mexico, but was connected to all parts of the United States by railroad)490 5759 MS (and telegraph \()490 5876 MS [100 0 0 -100 0 0]/_Times-Italic MF

(The Mexican Financier)1088 5876 MS [100 0 0 -100 0 0]/Times-Roman MF (, November 16, 1882\).)2025 5876 MS [100 0 0 -100 0 0]/Times-BoldItalic MF (Appendix 1: Historical Setting)1800 811 MS [100 0 0 -100 0 0]/Times-Roman MF (Throughout the nineteenth and early twentieth centuries, Mexico remained for the most)790 1046 MS (part a small economy that was heavily dependent on mining and agriculture. Silver and other)490 1280 MS LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (minerals accounted for three-quarters of Mexico\222s exports in the early 1880s \(declining to two-)490 1514 MS (thirds by 1900\), and agricultural commodities accounted for most of the rest. In terms of per)490 1748 MS (capita income, Mexico was roughly two-fifths the size of the United States in 1800, but was only)490 1982 MS (one-eighth its size in 1895.)490 2216 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (20)1570 2173 MS [100 0 0 -100 0 0]/_Times-Roman MF ( )1630 2216 MS (Financial and economic development came late to Mexico, which experienced many)790 2450 MS (episodes of internal strife and military conflicts with foreign powers for nearly six decades after)490 2684 MS (independence from Spain in 1820. Domestic strife, poor infrastructure, and interstate tariffs)490 2918 MS (\()490 3152 MS [100 0 0 -100 0 0]/Times-Italic MF (alcabadas)523 3152 MS [100 0 0 -100 0 0]/_Times-Roman MF (\) limited growth and interregional trade over most of the 1800s. The lack of)934 3152 MS (navigable waterways and Mexico\222s mountainous terrain also made travel slow and difficult. )490 3392 MS (Mexico was a rural nation, with less then 30 percent of its population of 15 million living in)490 3626 MS (urban areas in 1910, but the central region of the country was relatively densely populated. As of)490 3860 MS (1878, there were over 50 localities with populations of over 15 thousand, most of which were)490 4094 MS (located in the neighboring states of Jalisco, Guanajuato, Queretaro, and San Luis Potosi in the)490 4328 MS (central region of the country. )490 4562 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (21)1676 4519 MS [100 0 0 -100 0 0]/_Times-Roman MF ( )1736 4562 MS showpage %%Page: 35 35 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 33 -)2332 596 MS n

1199 7 490 5446 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (22)790 5602 MS [100 0 0 -100 0 0]/Times-Roman MF ( Mexican silver peso coins circulated throughout the world in the nineteenth century,)850 5645 MS (and no serious attempt was made to determine the amount held domestically until 1903 \(see)490 5762 MS (Kemmerer 1916\).)490 5879 MS (Judging from McCaleb \(op. cit.\), payments more than occasionally involved shipments of)790 813 MS (specie. The high cost of sending specie from one location to another would have encouraged the)490 1047 MS (development of more economical payments mechanisms. A limiting factor appears to have been)490 1281 MS (the high risk of default. )490 1515 MS [100 0 0 -100 0 0]/Times-Italic MF (Casas de comercio)1475 1515 MS [100 0 0 -100 0 0]/Times-Roman MF ( \(commercial houses\) made loans to )2235 1515 MS [100 0 0 -100 0 0]/Times-Italic MF (hacendados)3699 1515 MS [100 0 0 -100 0 0]/Times-Roman MF (\(owners of large estates\) and to the government at exorbitant rates at times \(see Tennenbaum)490 1755 MS (1986\), and some )490 1989 MS [100 0 0 -100 0 0]/Times-Italic MF (casas)1178 1989 MS [100 0 0 -100 0 0]/Times-Roman MF ( funded their operations by circulating liabilities called )1400 1989 MS [100 0 0 -100 0 0]/Times-Italic MF (vales.)3614 1989 MS [100 0 0 -100 0 0]/Times-Roman MF ( )3844 1989 MS [100 0 0 -100 0 0]/Times-Italic MF (Vales)3894 1989 MS [100 0 0 -100 0 0]/Times-Roman MF (evolved into bearer notes that were redeemable for some type of commodity money \(usually gold)490 2229 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron

/guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (or silver coin\) on demand \(see Barcel\363 Quintal 1986, Lobato Lopez 1945\). According to Lobato)490 2463 MS (Lopez, bankruptcies among )490 2697 MS [100 0 0 -100 0 0]/Times-Italic MF (casas)1621 2697 MS [100 0 0 -100 0 0]/_Times-Roman MF ( seem to have been a common phenomenon for reasons he does)1843 2697 MS (not make clear, but probably were the result of adverse economic conditions. Another important)490 2937 MS (impediment to the development of the financial system was the lack of an adequate framework)490 3171 MS (for specifying and enforcing property rights \(see Haber op. cit. p. 567\). )490 3405 MS (Banco de Londres y Mexico was the first major financial intermediary able to issue notes)790 3639 MS (that were widely accepted, for Martinez Sobral \(op. cit. p. 25\) tells us it was not long after Banco)490 3873 MS (de Londres began operations in the 1860s that its notes "were always guaranteed, and the)490 4107 MS (exchange of the notes was carried out without any difficulty". Nonetheless, bank notes did not)490 4341 MS (supplant coins as a means of payment until around 1900.)490 4575 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (22)2760 4532 MS [100 0 0 -100 0 0]/_Times-Roman MF ( )2820 4575 MS (The economic and financial landscape underwent a dramatic transformation with the)790 4809 MS (arrival of political stability in the 1880s. In 1877, General Porfirio Diaz seized power in a)490 5043 MS (military struggle. After stepping down in 1880, Diaz was elected president in 1884, and served)490 5277 MS showpage %%Page: 36 36 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 34 -)2332 596 MS n 1199 7 490 4644 B f

[59.996 0 0 -59.996 0 0]/Times-Roman MF (23)790 4800 MS [100 0 0 -100 0 0]/Times-Roman MF ( Banco Nacional Mexico was opened in 1881 after the federal government awarded D.)850 4843 MS (Eduardo Noetzlin, the representative of the Franco-Egyptian Bank, a bank charter. Following a)490 4960 MS (financial crisis in 1884, the bank was merged with another bank to form Banco Nacional de)490 5077 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (Mexico. According to Marichal \(1986\), two-thirds of Banco Nacional\222s stock was held abroad in)490 5194 MS (the late eighteenth and early nineteenth centuries. See Ludlow \(1986\) on the origins of Banco)490 5311 MS (Nacional de Mexico.)490 5428 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (24)790 5602 MS [100 0 0 -100 0 0]/_Times-Roman MF ( The law required a bank to pay a 5 percent tax on notes that it was )850 5645 MS (authorized)3547 5645 MS n 420 5 3547 5654 B f ( to put)3968 5645 MS (into circulation, so the effective tax on outstanding notes could have been much

higher. The note)490 5762 MS (tax was 10 percent for non-bank \(i.e., unchartered\) issuers of notes.)490 5879 MS (several consecutive terms in office until he was forced into exile in 1911. Political stability and)490 813 MS (greater access to capital from abroad made possible sizeable investments in infrastructure and)490 1047 MS (stimulated development in other areas of economic activity. )490 1281 MS (Before 1897, several banks of issue operated throughout Mexico, but entry into the)790 1515 MS (business of issuing notes was restricted and a bank of issue was of uncertain legal validity. The)490 1749 MS (legal quandary had existed since 1884, when Mexico\222s first federal banking law was passed by)490 1983 MS (the national legislature in response to a financial crisis. The new law required all existing issuers)490 2217 MS (of demandable notes to obtain a federal charter to become a bank of issue and greatly enhanced)490 2451 MS (the position of Banco Nacional de Mexico. Banco Nacional had received a federal charter in)490 2685 MS (1881 as a result of the federal government\222s efforts to secure financing from abroad.)490 2919 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (23)3853 2876 MS [100 0 0 -100 0 0]/_Times-Roman MF ( The 1884)3913 2919 MS (law imposed a considerable note tax on all other issuers of notes and prohibited new banks of)490 3153 MS (issue \(other than the private issuers that could stay in business as long as they obtained a federal)490 3387 MS (bank charter\).)490 3621 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (24)1043 3578 MS [100 0 0 -100 0 0]/_Times-Roman MF ( These provisions were incorporated into Banco Nacional\222s charter, which was)1103 3621 MS (renegotiated in 1884. )490 3855 MS (For several years, the 1884 law was challenged in political and legal arenas on the)790 4089 MS (grounds that it was unconstitutional and violated states\222 rights \(Barcelo Quintal op. cit. P. 184,)490 4323 MS showpage %%Page: 37 37 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 35 -)2332 596 MS n 1199 7 490 4761 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (25)790 4917 MS [100 0 0 -100 0 0]/Times-Roman MF ( In 1889, a book by Luis Labastida was published with a proposal for a new bank law,)850 4960 MS (as the author had been commissioned by the federal government to come up with one. The book)490 5077 MS

(appears to be most well-known, however, for its attack on Banco Nacional. Labastida wrote that)490 5194 MS (the institution that represented the interests of foreign investors, and that the bank was)490 5311 MS (unconstitutional. The book, writes Gurza \(1905 p. 28\), "caused a profound sensation in)490 5428 MS (commercial circles".)490 5545 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (26)790 5719 MS [100 0 0 -100 0 0]/Times-Roman MF ( Report on the Banking System of Mexico by the Secretary of Finance Yves Jose)850 5762 MS (Limantour to Congress, November 15, 1897, in Conant op. cit. )490 5879 MS (Manero op. cit.\). The legal dispute between Banco de Londres and Banco Nacional entered)490 813 MS (philosophical dimensions, generating a famous debate on question of whether it was more)490 1047 MS (desirable to have a monopoly over the power to issue notes or allow competitive currencies \(see)490 1281 MS (Rosenzweig op. cit.\). There was at least one attack on Banco Nacional as a foreign institution.)490 1515 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (25)4247 1472 MS [100 0 0 -100 0 0]/Times-Roman MF ( )4307 1515 MS (In the face of such opposition, in 1888, the national congress gave the Executive the power to)490 1749 MS (grant bank charters at its discretion for two years, even though this violated the terms of Banco)490 1983 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis

/aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (Nacional\222s charter. The following year, the banking provisions were removed altogether from)490 2217 MS (the commercial code with the notice that new banking legislation would be forthcoming. )490 2451 MS (By the early 1890s, the federal government had succeeded to some degree in establishing)790 2685 MS (its authority to regulate banks. All issuers of notes had federal bank charters. Several state)490 2919 MS (banks were operating in Mexico in the 1890s, and were concentrated in the region along the U.S.)490 3153 MS (border \(in the states of Chihuahua and Nuevo Leon in particular\), in the interior northern region)490 3387 MS (\(in Durango and Zacatecas\), and in the Yucatan peninsula. )490 3621 MS (Soon after Jose Yves Limantour became finance minister in May 1892, the federal)790 3855 MS (government suspended the granting of bank charters in view of the legal issues they raised.)490 4089 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (26)4125 4046 MS [100 0 0 -100 0 0]/_Times-Roman MF ( In)4185 4089 MS (early 1896, a six-member commission was created to draft the new bank law; members of the)490 4323 MS (commission included executives from Banco Nacional and Banco de Londres. On June 3, 1896,)490 4557 MS showpage %%Page: 38 38 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 36 -)2332 596 MS n 1199 7 490 5680 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (27)790 5836 MS [100 0 0 -100 0 0]/Times-Roman MF ( Translation from Conant \(op. cit. p. 171\))850 5879 MS (President Diaz signed a decree containing general guidelines for the General Law of the)490 813 MS (Institutions of Credit, authorizing federal charters to be granted to banks operating in the states)490 1047 MS (and territories under certain conditions. The decree also authorized the Executive "to make)490 1281 MS (arrangements with the National Bank of Mexico, by virtue of which and on payment of the)490 1515 MS (compensation what may be considered equitable, all conflict shall be terminated between the)490 1749 MS (privileges of that bank and the provisions of the general law...".)490 1983 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (27)3027 1940 MS [100 0 0 -100 0 0]/Times-Roman MF

( Two weeks later, Banco)3087 1983 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute /Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (Nacional\222s shareholders voted to amend the bank\222s charter to state that the provisions referring to)490 2217 MS (other banks of issue applied only to ones that were chartered to operate in Mexico City. )490 2451 MS (According to McCaleb \(op. cit. p. 98\), the draft of the new bank law was approved by congress)490 2685 MS (with little debate, and was promulgated in March 1897.)490 2919 MS showpage %%Page: 39 39 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 37 -)2332 596 MS n 1199 7 490 5446 B f [59.996 0 0 -59.996 0 0]/Times-Roman MF (28)790 5602 MS [100 0 0 -100 0 0]/Times-Roman MF ( Banco de Nuevo Leon refused to go submit to the requirements of the new law, and)850 5645 MS (retained its original charter. A second bank that was chartered in the state of

Nuevo Leon was)490 5762 MS (also considered a "first" bank. )490 5879 MS [100 0 0 -100 0 0]/Times-BoldItalic MF (Appendix 2: Taxes and Legal Requirements for Banks of Issue Under the 1896 Law)673 813 MS [100 0 0 -100 0 0]/Times-Roman MF ( )4133 813 MS (The 1896 bank law liberalized the rules for entry into the banking system for a bank of)790 1049 MS (issue \(i.e., for state banks\), but still required them to obtain a charter, and capital requirements)490 1283 MS (plus taxes made it difficult to establish more than one bank per state. The first bank that was)490 1517 MS (established in each state or territory was exempted from a 2 percent annual tax on the book value)490 1751 MS (of paid in capital. The banks already operating in the states of Yucatan and Chihuahua were the)490 1985 MS (exceptions, having been grand fathered into the law.)490 2219 MS [59.996 0 0 -59.996 0 0]/Times-Roman MF (28)2577 2176 MS [100 0 0 -100 0 0]/Times-Roman MF ( From 1896 to 1908, the minimum capital)2637 2219 MS (requirement was 500 thousand pesos, which was about 250 thousand U.S. dollars. This was)490 2453 MS (about two-and-a half times the minimum for national banks in the United States in the early)490 2687 MS (1900s \(Haber op. cit. p. 568 fn. 20\).)490 2921 MS (The available information indicates that notes issued by city banks were taxed at a lower)790 3155 MS (rate than notes issued by state banks. The 1896 bank law stipulated that notes that were put in)490 3389 MS (circulation were subject to a stamp tax that would be determined by separate legislation, but at a)490 3623 MS (maximum would be five centavos per note \(Martinez Sobral op. cit.\). \(One centavo was one one-)490 3857 MS (hundredths of a peso.\) Since the stamp tax laws that were in effect in the early 1900s appear to)490 4091 MS (have imposed a much higher tax on bank notes, the five centavo maximum would have been)490 4325 MS (binding \(De la Torre 1902\). McCaleb \(op. cit. p. 109\) also suggests that the stamp tax was five)490 4559 MS /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin

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/Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Roman /Times-Roman reencode [100 0 0 -100 0 0]/_Times-Roman MF (banks\222 notes for lower denominations \(5 to 20 pesos\), and one-fifth the rate on state banks\222 notes)490 813 MS (for higher denominations \(50 to 1,000 pesos\). Therefore, except for Banco Nacional\222s one- and)490 1047 MS (two-peso notes, the city banks were subject to a note tax of at most one-tenth of one percent.)490 1281 MS ( )490 1515 MS showpage %%Page: 41 41 13.238 780.059 translate 72 600 div dup neg scale 0 0 transform .25 add round .25 sub exch .25 add round .25 sub exch itransform translate [100 0 0 -100 0 0]/Times-Roman MF (- 39 -)2332 596 MS [100 0 0 -100 0 0]/Times-Bold MF (Bibliography)2159 815 MS [100 0 0 -100 0 0]/Times-Roman MF (Barcelo Quintal, Raquel Ofelia. "El desarrollo de la banca en Yucatan: el henequen y la)490 1053 MS (oligarquia henequenera." In )790 1170 MS [100 0 0 -100 0 0]/Times-Italic MF (Banca y poder en Mexico \(1800-1925\))1922 1170 MS [100 0 0 -100 0 0]/Times-Roman MF (, edited by Leonor)3465 1170 MS (Lodlow and Carlos Marichal. Mexico City: Grijalbo Enlace, 1986.)790 1290 MS (Barrera Lavalle. )490 1524 MS [100 0 0 -100 0 0]/Times-Italic MF /IsChar{exch/CharStrings get exch known}bd/MapCh{3 -1 roll/Encoding get 3 1 roll put}bd/MapDegree{dup 16#b0 exch/degree IsChar{/degree}{/ring}ifelse MapCh} bd/MapBB{dup 16#a6 exch/brokenbar IsChar{/brokenbar}{/bar}ifelse MapCh}bd /reencode{findfont begin currentdict dup length dict begin{1 index/FID ne{def} {pop pop}ifelse}forall/FontName exch def dup length 0 ne{/Encoding Encoding 256 array copy def 0 exch{dup type/nametype eq{Encoding 2 index 2 index put pop 1 add}{exch pop}ifelse}forall}if pop currentdict dup end end/FontName get exch definefont dup MapDegree MapBB}bd/LATENC[0/grave/acute/circumflex/tilde/macron /breve/dotaccent/dieresis/ring/cedilla/hungarumlaut/ogonek/caron/dotlessi/fi/fl /Lslash/lslash/Zcaron/zcaron/minus/.notdef/.notdef/.notdef/.notdef/.notdef /.notdef/.notdef/.notdef/.notdef/.notdef/.notdef/space/exclam/quotedbl /numbersign/dollar/percent/ampersand/quotesingle/parenleft/parenright/asterisk /plus/comma/hyphen/period/slash/zero/one/two/three/four/five/six/seven/eight /nine/colon/semicolon/less/equal/greater/question/at/A/B/C/D/E/F/G/H/I/J/K/L/M /N/O/P/Q/R/S/T/U/V/W/X/Y/Z/bracketleft/backslash/bracketright/asciicircum /underscore/grave/a/b/c/d/e/f/g/h/i/j/k/l/m/n/o/p/q/r/s/t/u/v/w/x/y/z/braceleft /bar/braceright/asciitilde/.notdef/.notdef/.notdef/quotesinglbase/florin /quotedblbase/ellipsis/dagger/daggerdbl/circumflex/perthousand/Scaron /guilsinglleft/OE/.notdef/.notdef/.notdef/.notdef/quoteleft/quoteright /quotedblleft/quotedblright/bullet/endash/emdash/tilde/trademark/scaron /guilsinglright/oe/.notdef/.notdef/Ydieresis/.notdef/exclamdown/cent/sterling /currency/yen/brokenbar/section/dieresis/copyright/ordfeminine/guillemotleft /logicalnot/hyphen/registered/macron/degree/plusminus/twosuperior/threesuperior /acute/mu/paragraph/periodcentered/cedilla/onesuperior/ordmasculine /guillemotright/onequarter/onehalf/threequarters/questiondown/Agrave/Aacute

/Acircumflex/Atilde/Adieresis/Aring/AE/Ccedilla/Egrave/Eacute/Ecircumflex /Edieresis/Igrave/Iacute/Icircumflex/Idieresis/Eth/Ntilde/Ograve/Oacute /Ocircumflex/Otilde/Odieresis/multiply/Oslash/Ugrave/Uacute/Ucircumflex /Udieresis/Yacute/Thorn/germandbls/agrave/aacute/acircumflex/atilde/adieresis /aring/ae/ccedilla/egrave/eacute/ecircumflex/edieresis/igrave/iacute /icircumflex/idieresis/eth/ntilde/ograve/oacute/ocircumflex/otilde/odieresis /divide/oslash/ugrave/uacute/ucircumflex/udieresis/yacute/thorn/ydieresis]def LATENC /_Times-Italic /Times-Italic reencode [100 0 0 -100 0 0]/_Times-Italic MF (Estudios sobre el origen, desarollo, y legislaci\363n bancaria)1162 1524 MS [100 0 0 -100 0 0]/Times-Roman MF (. Mexico: D. Garcia)3509 1524 MS (and Co., 1909.)790 1644 MS (Calomiris, Charles. "Deposit Insurance: Lessons from the Record." )490 1878 MS [100 0 0 -100 0 0]/_Times-Italic MF (Federal Reserve Bank of)3199 1878 MS (Chicago Economic Perspectives)790 1998 MS [100 0 0 -100 0 0]/Times-Roman MF ( \(May/June 1989\), 10-30.)2082 1998 MS (____, and Charles Kahn. "The Efficiency of Self-Regulated Payments Systems: Learning from)490 2235 MS (the Suffolk System." )790 2352 MS [100 0 0 -100 0 0]/_Times-Italic MF (Journal of Money, Credit, and Banking)1648 2352 MS [100 0 0 -100 0 0]/Times-Roman MF ( 28 \(November 1996, Part)3222 2352 MS (2\), 766-797.)790 2472 MS (Carosso, Vincent P. )490 2706 MS [100 0 0 -100 0 0]/_Times-Italic MF (The Morgans: Private International Bankers 1864-1913)1309 2706 MS [100 0 0 -100 0 0]/Times-Roman MF (. Cambridge, Mass.:)3560 2706 MS (Harvard University Press, 1987.)790 2826 MS (Casasus, Joaquin D. )490 3060 MS [100 0 0 -100 0 0]/_Times-Italic MF (La reforma monetaria en Mexico: Informes presentados a la Comision)1320 3060 MS (Monetaria y redactados por Joaquin D. Casasus, Presidente de la Cuarta Subcomision)790 3180 MS [100 0 0 -100 0 0]/Times-Roman MF (,)4286 3180 MS (Mexico: Imprenta de Hull, 1905.)790 3300 MS [100 0 0 -100 0 0]/_Times-Italic MF ( )490 3415 MS [100 0 0 -100 0 0]/Times-Roman MF (____. )490 3535 MS [100 0 0 -100 0 0]/_Times-Italic MF (Las Reformas a la Ley de Instituciones de Cr\351dito)740 3535 MS [100 0 0 -100 0 0]/Times-Roman MF (. From articles published in the)2745 3535 MS (newspaper )790 3655 MS [100 0 0 -100 0 0]/_Times-Italic MF (El Tiempo)1241 3655 MS [100 0 0 -100 0 0]/Times-Roman MF (. Mexico City: Tip. De la Oficina Impresora de Estampillas, 1908.)1655 3655 MS (Cerda, Luis. )490 3892 MS [100 0 0 -100 0 0]/_Times-Italic MF (Historia Financiera del Banco Nacional de Mexico)1006 3892 MS [100 0 0 -100 0 0]/Times-Roman MF

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