File No. 812.51/258

Mr. Parker, representing American interests, to the Secretary of State

No. 522

Sir: For the information of the Department I have the honor to enclose herewith, in triplicate, a copy of the Decree of General Carranza, dated September 15, 1916, relative to the “Law of Payments”, together with a translation of same.

I have [etc.]

Charles B. Parker

decree dated september 15, 1916, relative to the law of payments

Venustiano Carranza, First Chief of the Constitutionalist Army, in charge of the Executive Power of the Union, in view of the extraordinary faculties of which I am vested, I have seen fit to decree as follows:

law of payments

Chapter I

general disposition

Article 1. The present law shall be applied to all cases involving a loan of money, regardless of the date of the obligation, or of the express money stipulations celebrated between contracting parties, unless there be a determined exception in the same law.

Article 2. The paper peso of the infalsificable issue has unlimited liberatory power for its nominal value and it is not only legal tender but obligatory. Therefore, all money loans are complied with the delivery of the fiduciary currency of the infalsificable issue, in the terms prescribed by this law; all money loans referred to in Articles 1453, 2690 and 2968 of the Civil Code of the Federal District, of the Civil Codes of the States and of the Commercial Code, shall be ruled by the present law, for the period during which the decree of June 21, 1915, shall remain in force, which decree authorizes the emission of the notes designed for the purpose of unifying the fiduciary currency of legal tender. During the period during which this law may remain in force the legal dispositions above mentioned are hereby derogated, except for the special cases, expressly determined in this same law.

Article 3. For the effects of the present law, the infalsificable bill shall in no case be considered in relation to the silver peso with a value less than twenty cents national gold for the peso, which is the decreed guaranty in favor of said paper money at the present time; if in the future this guaranty should be increased, the relation which in that case shall be fixed will be proportionate to the increase.

Article 4. For the application of this law four different periods are hereby established:

The normal period, that is to say, the period during which there was no sensible alteration in the value of the fiduciary money. The conclusion of this period is fixed on the 15th day of April, 1913.
The period between April 15, 1913, inclusive, and September 10, 1914.
The period between September 10, 1914, inclusive, and April 30, 1916.
The period which commenced with the emission of the infalsificable fiduciary money, on the 1st of May of this year.

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Article 5. All money loans contracted during the first period will be considered as if they had been made in silver, regardless of the tenor of the respective documents, or of the verbal contract in such case, and shall be paid in infalsificable fiduciary money, delivering five times the amount of the silver loan. Such loans as have been contracted in foreign currencies shall first be reduced to national gold for the effects of the present article in conformity with the official equivalents established for the application of Stamp Taxes.

Article 6. All obligations contracted during the second period shall be considered as having been made in bank-notes and shall be paid delivering four times the amount of such loans in infalsificable fiduciary money.

With respect to contracts in foreign currency the previous article holds good.

Article 7. All obligations contracted during the third period shall be considered as having been made in paper money and shall be paid delivering the same amount as that received in infalsificable fiduciary money at par value.

Article 8. All the obligations contracted during the fourth period shall be considered as having been made in infalsificable paper and shall be paid in same fiduciary money, at par, except when a special contract has been made on certain specie, but in no case currency retired from circulation shall be delivered.

Article 9. Confidential deposits shall be returned delivering the same specie deposited. In the case that deposits of illegal currency may have been deposited they shall be delivered to the respective office by the depositary and the latter is obliged only to prove delivery to the depositor.

Article 10. When it appears clearly expressed that in loans made during the third and fourth periods it was intended to make the contract in a fixed specie the contract will hold as stipulated, as regards both the capital and the interests; but if it be in a foreign currency the debt will be paid delivering national gold at the rate prevailing on the date of the expiration.

Article 11. For the effects of the previous articles, if the document contracting a loan be a letter of exchange or draft, in order to determine the date of the transaction, the day when the provision of funds was made, will be considered.

Article 12. If during periods 3 and 4 referred to in Article 4 of this law, there has been a renewal of contract in regard to certain specie for the compliance of the obligation, the stipulation in this renewal will be followed, as if a new contract had been made.

Article 13. For the effects of the previous article a renewal of debt in regard to certain specie will be understood when conformity has been expressed for the receipt of the specie which is or may have been in circulation on determined date.

Article 14. The earned interest before the enforcement of this law shall be paid in infalsificable paper at par. The interest or any other periodical loans which may become due from the enforcement of this law, shall be paid in infalsificable paper at par value.

Article 15. If in the contracts celebrated during periods 3 and 4 there shall be express stipulation respecting the manner in which the periodical loans should be paid, the stipulation will hold, but in the debts of foreign currency they must be reduced to national gold at the rate prevailing on the day of the expiration.

Article 16. It is declared that no delay has been incurred by those who may have made deposits or consignations in paper money according to their contracts. All the interested parties are under obligation, in order to enjoy the benefits of this article, to make new deposits in infalsificable paper, when it is thus stipulated, in proportion to their debts according to the bases established by the previous articles and they must make such deposits within a month from the date this law goes into force.

Article 17. In cases when consignations have been made in paper money of legal emissions, different from that of the infalsificable for loans contracted during the first and second periods, the debtor is obliged to increase such consignations, making a new deposit four and a half times as much for the first period and three times and a half as much for the second, because the amount of money consignated in the first deposit is considered as having a value of ten cents national gold, therefore equivalent to half as much in infalsificable money.

Article 18. The party in whose favor such deposits in money of legal emissions is left, different from that of the infalsificable, may collect the corresponding certificates which the respective office shall issue in accordance with the Decree of May 31, 1916.

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Article 19. In the case that a deposit has been made in paper money different than that of the infalsificable during the months of May and June of the present year of 1916 and for debts previous to these months, the consignee is obliged to make a new deposit in infalsificable paper.

Article 20. Such deposits made in public offices or institutions authorized for that purpose shall be considered as having been made in the respective office to the effect of being exchanged for gold certificates in conformity with the Decree of May 31, 1916.

The offices where such deposits have been made shall send immediately to the exchange office a statement of them and the species deposited.

The exchange office shall remit to the authority recipient of such deposits the corresponding certificates.

Article 21. The payment to be made as a consequence of contracts celebrated at the time when certain currency, which has been declared null by the Constitutionalist Government, had liberatory power, must be paid in infalsificable paper at par value, except in the cases when contracting parties had foreseen something relative to the nullification of the paper in which the contract was made, or a change of one paper into another, in which cases the stipulation will hold.

Article 22. The following cases are comprised in this law:

The consignation cases notwithstanding the state of the judgments and even in the case in which resolute sentence has been passed but not executed.
The payments attempted before administrative, political and military authorities when the debtor has not received the loan.
The payments which may have been refused by the debtor notwithstanding the fact that the extinguishment of the obligation may have been juridically decreed.

In these cases the cancellations in the public registers are not considered as having been made.

Article 23. In cases of auction adjudications will not alter the juridical situation acquired by creditors of greater rights; in such a way that the property referred to shall pass to the grantee with all the burden, unless they involve debts already due, in which case they must be liquidated.

Article 24. All the payments proceeding from civil responsibility for noncompliance of a contract, shall be made as the rest of the loans, the date of the celebration of the contract determining the obligation of the payment.

Article 25. In cases of controversy between the general dispositions contained in this law and some precepts of the legislation in force, it is for the judge to resolve, giving preference to the former, in view of the fact that this law is of general observance in all the Republic.

Article 26. In cases when the application of the present law does not appear quite clearly and in cases omitted by it, the authority to whose knowledge it has been brought shall make up a statement with copies of all the evidence of the case together with a report sending it to the Department of Hacienda in order that it may dictate the decision.

Article 27. Credits of fiscal order and in favor of the Federation are subject to the special dispositions of the Department of Hacienda; therefore, this law does not apply to controversies arising thereof. In doubtful cases the Department of Hacienda will determine what may be deemed appropriate.

Article 28. Insurance companies and institutions having the guaranty of the General Government, shall be ruled by special law in all their operations. Credit institutions shall also be ruled by that special law; with reference to the banks of issue to bills and deposits to a date of payment not to exceed three days; for mortgage banks to payment of mortgage bonds; and for the banks of agricultural loans to payment of cash bonds.

Article 29. All the dispositions contained in the present chapter shall always be applied to cases, except when it is otherwise expressly determined in the following chapters, in which case it must be resolved accordingly.

Article 30. In the case that the interested parties prefer administrative proceedings to judicial proceedings for the resolution of a doubtful point for the application of the present law, they shall apply to the Department of Hacienda that it may resolve the controversy.

Article 31. Any person interested in the application of this Law shall consult the Department of Hacienda for the solution of any point which may appear doubtful on the dispositions of same.

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Chapter II

titles subject to moratorium

Article 32. The following persons shall have a right to reject payments, be it total or partial, on capitals, during a year’s time from the enforcement of this law, notwithstanding the facts that payments become due:

Purely beneficiary institutions, with respect to their invested capitals.
Municipal governments.
The persons classified by the Civil Code of the Federal District and of the States as being incapable naturally and legally, provided always that their capital is less than 20,000 pesos national gold.
Those ailing of incurable sickness or having physical defects as to be incapable of working in the judgment of the judge and who may possess a capital less than 20,000 pesos national gold.
Women and elderly people which having no one to look after them or are living alone and possessing a capital less than 20,000 pesos national gold.

Article 33. Only such creditors whose credits may not have been renewed and which may have been constituted in their favor during the first and second periods have a right to use of the moratorium.

Article 34. A creditor having a right to the moratorium may demand the payment of his credit in accordance with the dispositions of this law, renouncing in this case the moratorium.

Chapter III

swindling and usurious contracts

Article 35. In the cases when credits cause interests of more than 20 per cent per annum, and in those in which there may have been notable injury or loss, the debtor shall free himself paying in infalsificable paper the corresponding amount in conformity with the articles pertinent thereto of this law, in the understanding that he shall never be obliged to pay in paper money at par value, a sum larger than the one to which his debt amounts.

Chapter IV

societies, associations and partnerships

Article 36. In the cases of societies, of associations, or partnerships, there being a written contract or not, the payments for utilities or dividends shall be made in infalsificable paper, in the equivalent amount to that of the specie in which the payment should have been made on the date the utilities were obtained, except by stipulation otherwise in regard to the date in which the debt be demanded.

Chapter V


Article 37. The proprietors of city and rural properties receiving rents by virtue of rent contracts, celebrated during the first and second periods, shall have a right to charge three times as much the amount of the rent agreed upon for the first period, and two and a half for the second. Those who may have celebrated contracts during the third period shall charge the stipulated rent at par value in infalsificable paper. Contracts celebrated during the fourth period remain the same.

Article 38. Unpaid due rents shall be paid as established by this law by periodical payments.

Article 39. Deposits constituted as a guaranty for the payment of rent shall be considered as common debts and shall be paid according to the general rules, the date of the obligation being determined by the date on which such deposits were constituted.

Chapter VI

promissory notes with collateral security and pawnshop tickets

Article 40. Promissory notes with collateral security and pawnshop tickets which may have been extended to accredit debts during the first and second periods are subjected to the following rules.

If the amount is less than $50 they are payable in paper money at par value.
If more than $50 but less than $500 the debtor shall free himself upon payment of twice the amount in paper money.
If exceeding $500 charges will be collected in the proportion fixed by this law.

Article 41. With regard to the promissory notes with collateral security and pawnshop tickets which may have been extended in order to accredit a debt after the date of the second period they must be paid according to the general dispositions of this law.

Article 42. The provisions of the preceding article are also applied to renewed pawnshop tickets. 4


The proportions fixed for the payments in this law, with relation to the money of the infalsificable issue, shall last in force for six months beginning with the date of this law. After that mentioned period the Department of Hacienda will determine whether the mentioned proportions are to be altered or whether they must remain as provided in this law.

Therefore, I order its printing, publishing, circulation and due compliance.

Constitution and Reforms

Given in the City of Mexico on the 15th day of September, 1916.

V. Carranza