File No. 812.516/170

Ambassador Fletcher to the Secretary of State

No. 80

Sir: I have the honor to enclose text and translation of a decree providing for administrative liquidation of banks, issued April 6, 1917 by First Chief Carranza of the Constitutionalist Army.

[Page 1010]

For the information of the Department, Article 5 of the Decree of December 14, 1916 which is modified by the enclosed decree is translated as follows:

If the report of the Board of Receivers shows that the bank cannot cover its liabilities with its assets, the Secretary of the Treasury will order its judicial liquidation in accordance with the Decree of September 15 referred to (1916).

The decree enclosed has not yet been published in the Diario Oficial and the text was copied from a local paper.

I have [etc.]

Henry P. Fletcher
[Inclosure—Translation]

decree dated april 6, 1917, modifying article 5 of decree of december 14, 1916

Venustiano Carranza, First Chief of the Constitutionalist Army, in charge of the Executive Power of the Nation, in the exercise of the faculties with which I am invested, and whereas

I.
The banking institutions which according to the decree of December 14, 1916, should be put in liquidation are at the present time in an undefined situation because, for the reason that it is difficult to arrive at an appreciation of values due to the recentness of the reestablishment of metallic circulation, it is impossible in a short period to determine upon judicial liquidation;
II.
The operations of the Boards of Receivers offer continual difficulties in the way of an exact determination of the condition of the institutions of credit which is essential to the definite decision of the manner of liquidation.
III.
The continuation of such a state of affairs is prejudicial to the interested parties and makes difficult the realization of the banking precepts contained in the Constitution of the Republic which shall take effect on May 1, 1917, therefore

I have seen fit to decree the following:

Article 5 of the Decree of December 14, 1916 is modified as follows:

All banks which in accordance with Article 7 of the Decree of December 14, 1916 are declared in a state of liquidation shall be administratively liquidated. The Executive will prescribe the regulations necessary to avoid, in making such liquidations, disturbances of a general nature, private damage and loss of time. If during the liquidation it should appear that any bank cannot cover its liabilities with its assets, the Ministry of Hacienda may bring the matter before the ordinary judicial authorities to the end that the procedure may take its course in the courts in accordance with the legislation relative to bankruptcy.

The Ministry of Hacienda, in case that criminal acts are proven, will consign the responsible parties to the appropriate criminal authorities.

Therefore, I order that it be printed, published, circulated and given due compliance.

Constitution and Reforms

Given in the City of Mexico the 6th day of April, 1917.

V. Carranza