On December 8, 1913, the Villa's army, Division of the North occupied Ciudad Chihuahua, capital city of the state. On December 10, Provisional Governor Villa decreed that the treasury of the state issue paper money to support his division and revive the economy of the state.At first people were hesitant to accept his money in trade or payments of any sort. Villa finally issued a decree that no one might refuse payment with his money, and, in addition to this, that all previously used money had to be turned in and exchanged for "Pancho Villa money" as it is now known. John Reed describes in Chapter 3 of part 2 of "Insurgent Mexico" how Villa staved off famine and economic collapse in the state by forcing merchants and traders to accept his money on pain of being jailed.
"The farmers who produced meat and vegetables refused to come into the city margkets because no one had any money to buy from them. The truth was that those possessing silver or Mexican bank-notes buried them in the ground. Chihuahua not being a manufacturing center, and the few factories there having closed down, there was nothing which could be exchanged for food. So, like a blight, the paralysis of production of food began all at once and actual starvation stared at the town populations."
Villa's response to this situation was, as Reed describes it, that he said, "Why, if all they need is money, let's print some."
Villa first issued a decree that anyone found guilty of "discriminating against his money", as Reed put it, would get 60 days jail time. He next decreed that all existing money be exchanged for his, and that after a certain date that any such money found in existance would be declared counterfeit. With these measures Villa actually brought stability to the state and staved off actual famine.
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