File No. 812.51/259
The German Ambassador to the Secretary of State
Rye, N. Y., September 22, 1916.
Mr. Secretary of State: In connection with the new banking laws enacted by General Carranza, President of Mexico, and relating chiefly to Mexican note banks, a further decree has also been issued according to which the repayment of obligations entered into in previous years is to be regulated, this being done in such a manner that all debts incurred before April 15, 1913, are to be repaid by an amount 5 times that of the original, that is, $5,000 are to be paid for $1,000, and debts incurred up to September 10, 1914, are to be paid by 4 times the amount, that is, $4,000 for $1,000, in the present government money, called infalsificables (uncounterfeitable).
While almost all credits extended have meantime been paid back to the banks in practically worthless paper money, without their being able under the existing Government decrees to refuse to accept payments, it was impossible for them to pay off deposits in the same way.
Now the banks must settle their still existing obligations in the above manner. In case these decrees are carried into effect, it will mean the bankruptcy of the existing banks, foremost among which are the foreign ones—English, French, American and German.
As the United States Government is interested in the matter the same as the Imperial Government, I deemed it urgent to call your excellency’s attention to the decrees of General Carranza. I should be much obliged to your excellency if you could inform me whether the American Government thinks of taking any, and if so what, steps before the Mexican Government in this behalf.
Please accept [etc.]