File No. 812.51/271

Mr. Thurston, in charge of American interests, to the Secretary of State

No. 627

Sir: I have the honor to transmit, herewith, a translation of the decree mentioned in my telegram of December 16, 4 p.m.,2 relative to the Law of Payments and subsequent amendments thereto.

I have [etc.]

Walter C. Thurston
[Inclosure—Translation]

decree dated december 11, 1916 relative to law of payments

Venustiano Carranza, First Chief of the Constitutionalist Army, in charge of the Executive Power of the Nation, in use of the faculties with which I am vested and, Considering:

  • First—That the economic situation and the relation of paper money to metallic currency has so changed since September that the forms of payments established in the Law of September 15, 1916, are now impracticable, notwithstanding the fact that the period then established has not yet expired;
  • Second—That in view of the reappearance of metallic currency in the market and the difficulties impeding the circulation of paper money together with it, public interest demands that the monetary basis for the fulfilment of obligations be made uniform, and on this base is established the definite reformation of the Law of Payments, equitably dividing the profit or loss attendant upon a payment of money incurred by the changing of currency;
  • Third—That it being necessary to reestablish the Constitutional Government of the Republic as promptly as possible, it is convenient to maintain for a short time the definite regulation of relations between creditors and debtors, which was dealt with in the Law of Payments already referred to, till such time as the Constitutional powers are in normal operation, which will also permit the awaiting of a favorable change in the conditions of the circulation of metallic currency;
  • Fourth—That, in so far as the payment of rents is concerned it is necessary to establish provisional rules, to the end that special remedies may be discovered lacking which, as per the preceding consideration, due disposition will be made;

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I have, therefore, seen fit to decree as follows:

Article 1. From the date of this decree the dispositions of the Law of Payments of September 15, 1916, and subsequent circulars, are suspended. This suspension shall last until once reestablished the Constitutional Régime in the Republic, the legally constituted public authorities shall issue laws or general dispositions applicable to contracts, obligations and deliveries of money as dealt with in said law.

Article 2. During this suspension all creditors and debtors are accorded a general moratorium so as not to be obliged to make or receive payments of money against their will.

Article 3. With reference to obligations contracted after the 9th of September 1914, in which it is expressly stated that the payment will be in metallic currency, the payment will be made as stated.

Article 4. The interested parties are granted the right to mutually arrange the payment or cancellation of an obligation.

Article 5. All suits relating to money payments which may be before any tribunal remain in suspension during the time specified in Article 1 in that status which they have at the time this decree is issued.

Article 6. There are also included in the preceding dispositions all monetary obligations in which, as creditors or debtors, those institutions holding the guaranty of the Federal Government and mentioned in Article 28 of the Law of Payments, are concerned as are likewise those persons and corporations dealt with in Article 32 of said law. Insurance companies and banks are subject to a special law.

Article 7. Rental contracts are excepted from the moratorium, and the following rules will govern them:

(1) Those unpaid rents due before the date of this decree shall be paid in metallic currency in a proportion of twenty cents for each peso paper money, having in mind, in fixing this rate, the corresponding increases, according to Article 37 of Law of Payments.

If it should be for rents after the 9th day of September, 1914, the amount will be fixed in metallic currency in accordance with the rates fixed by the Secretaria de Hacienda, through circulars.

(2) Rents after the time fixed by the above article shall also be paid in metallic currency in the following terms and proportions:

(a)
When the rents are for industrial business, agricultural houses and all types of mercantile or industry houses, rents of fifty pesos or less, shall be reduced to fifty per cent, and those of more than fifty pesos but not exceeding one hundred shall be reduced to seventy-five per cent. Rents of over one hundred pesos shall be paid in full.
(b)
When the rents are for residences of thirty pesos or less, they shall be reduced to forty per cent, those exceeding thirty pesos but not fifty shall be reduced one-half and those exceeding fifty pesos shall be reduced to seventy-five per cent.

Article 8. All rent contracts actually in force, and made out in paper money and dated after the 9th day of September 1914, may be waived if this is asked by any one of the contracting parties, giving a notice to the other party sixty days in advance.

Article 9. All dispositions contrary to the terms of this decree, are hereby voided.

V. Carranza

[Inclosure 2—Translation]

amendment to the decree of december 11, 1916

An amendment to this decree was published next day, as follows:

It being disposed by Section 1 of Article 7 of the Law of Payments of December 14, 1916, that unpaid rents expiring before that date and incorporated in rental contracts subsequent to the 9th of September 1914, should be paid in accord with rates established by this Department, and it having been noted that the text of the law already mentioned as published by the press today contains an important error in Section 2 of Article 7, this Department, to effect the true and legal precept of this last section, declares:

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First: That the rates to which the last part of Section 1, Article 7 of the Law of December 14, 1916, refers are those contained in the following table:

1914 1915 1916
January 28c 9c
February 26c 8c
March 22c 5c
April 18c 7c
May 17c 20c
June 17c 12c
July 10c 10c
August 13c 7c
September 40c 13c 5c
October 40c 14c 3c
November 39c 14c 1½c
December 37c 12c

Second: That said Section 1 refers to rents due previous to the 14th instant, the date of the decree, and Section 2 of Article 7 to those due after that date. With regard to the first, if relating to rentals of the first or second periods fixed in Article 4 of the Law of Payments of September 15, 1916, they shall be paid at the rate of 20 cents on every paper peso with the increases of three and two and a half times respectively specified in Article 37 of that law; and if it relates to rentals after September 9, 1914, that is, the third and fourth periods fixed in Article 4, the payment shall be made for the whole amount according to the table of rates contained in this circular.

Third: With relation to the rentals due after the date of the last law, i. e., the 14th of this month, the amount, whatever may be the date of the renting, will be paid reduced to the amounts expressed in incerpts “a” and “b” of Section 2 of Article 7.

R. Niueto

  1. Not printed.