The Philippine National Bank and
Credit Inflation after World War I
Abstract
This paper discusses the mismanagement of the Philippine National Bank during the financial crisis of 1919-1922, with special reference to its extravagant commercial and industrial loans. First, it examines the financial condition of the Bank from about 1913 through the early 1920s against the background of the expansion of loan business and the export boom. Second, the Bank's role is discussed in the light of the development of three major export sectors: Manila hemp (abaca) trading, coconut processing, and sugar processing. Third, the blatant illegitimacy of the Bank's lending is detailed, given the virtual across-the-board direct involvement of the Bank’s board members in the ownership and management of the companies active in these businesses.
