Fantastic Banknotes

Effective last week the Mexican Treasury announced that banknotes issued by defunct Mexican banks are now officially "valueless," no longer legal tender.

Informally the Treasury "advised" holders of such paper that they can sell it at a heavy discount through the Mexican Bank Liquidation Commission.

Holders of banknotes issued by any of the 160-odd National Banks which failed last year have not lost, cannot lose a cent. Under U. S. banking law no banknote can be issued until its full value is covered by bonds which bear the circulation privilege deposited with the Treasury's Comptroller of the Currency. When banknotes issued by defunct U. S. banks come in, the Comptroller withdraws them from circulation, giving in exchange full value secured by the bonds in his possession.

In Mexico new governments frequently like to "fail" as many banks as possible, thus sweeping the fiscal boards, making way for a new issue of paper money by the Government on its own security, sometimes fantastic.

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