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The Agricultural Bank of the Philippine Government, 1908–1916

Published online by Cambridge University Press:  07 April 2011

Yoshiko Nagano
Yoshiko Nagano
Affiliation:
Kanagawa University
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Abstract

This study of the Agricultural Bank of the Philippine Government, which was established in 1908 to provide agricultural loans to local fanners, describes the background of bank, focusing on the active role of the local elite. Then, it discusses to what extent the bank served the needs of landlords, and why it stopped operations in 1916, facing a shortage of capital.

Type
Articles
Information
Journal of Southeast Asian Studies , Volume 28 , Issue 2 , September 1997 , pp. 301 - 323
Copyright
Copyright © The National University of Singapore 1997

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References

1 The important studies on this topic are Owen, Norman G. (ed.), Compadre Colonialism: Studies on the Philippines under American Rule, Michigan Papers on South and Southeast Asia No. 3 (Ann Arbor: University of Michigan, Center for South and Southeast Asian Studies, 1971)Google Scholar; Paredes, Ruby R. (ed.), Philippine Colonial Democracy (Quezon City: Ateneo de Manila University Press, 1989)Google Scholar; Salamanca, Bonifacio S., The Filipino Reaction To American Rule, 1901–1913 (Quezon City: New Day Publishers, 1984)Google Scholar; Stanley, Peter W., A Nation in the Making: The Philippines and the United States, 1899–1921 (Cambridge, Mass.: Harvard University Press, 1974)CrossRefGoogle Scholar.

2 “Agricultural Bank of the Philippine Government” was the name registered under the law, though the bank was often called the “Agricultural Bank of the Philippine Islands”, or simply the “Agricultural Bank”.

3 Stanley, A Nation in the Making, pp. 232–48. For the contemporary essays on the Agricultural Bank of the Philippine Government, see Elliot, Charles Burke, The Philippines: To the End of the Commission Government (New York: Greenwood Press, 1968, reprint; 1st ed., 1917), pp. 369-72Google Scholar; Jenks, Jeremiah W., “Agricultural Bank for the Philippine Islands”, Annals of the American Academy of Political and Social Science 30 (Jul.-Dec. 1907): 38–44CrossRefGoogle Scholar; Kemmerer, E.W., “Agricultural Bank for the Philippines”, The Yale Review 16 (Nov. 1908): 262-79Google Scholar.

4 Salamanca, The Filipino Reaction to American Rule, p. 22.

5 Miguel Peréz, et al, “Cronica semi-historia de Filipinas y en especial de las Yslas Bisayas desde 1877 a 1887” (ms. [Manila], [1887]), p. 3.

6 For example, see Romero, Ma. Fe Hemaez, Negros Occidental between Two Foreign Powers (1888–1909) (Bacolod City: Negros Occidental Historical Commission, 1974), pp. 242-43Google Scholar. For the agricultural credit system in the late nineteenth century, see McCoy, Alfred W., “A Queen Dies Slowly: The Rise and Decline of Iloilo City”, in Philippine Social History: Global Trade and Local Transformations, ed. McCoy, Alfred W. and Jesus, Ed. C. de (Quezon City: Ateneo de Manila University Press, 1982), pp. 307–326Google Scholar; Owen, Norman G., Prosperity without Progress: Manila Hemp and Material Life in the Colonial Philippines (Berkeley: University of California Press, 1984), pp. 42–71Google Scholar.

7 Salamanca, The Filipino Reaction to American Rule, pp. 105–121.

8 Elliot, The Philippines, pp. 96–126; Hayden, Joseph Ralston, The Philippines: A Study in National Development (New York: Macmillan, 1945), pp. 166-67Google Scholar; Stanley, A Nation in the Making, pp. 54–55, 63.

9 United States War Department, Report of the Philippine Commission to the President, January 31, 1900, 4 vols. (Washington, D.C.: Government Printing Office, 1900), vol. I, p. 149Google Scholar.

10 United States War Department, Reports of the Philippine Commission, The Civil Governor, and the Heads of the Executive Departments of the Civil Government of the Philippine Islands (1900–1903) (Washington, D.C.: Government Printing Office, 1904), pp. 109–110Google Scholar.

11 Kemmerer, Edwin Walter, Modern Currency Reform: A History and Discussion of Recent Currency Reforms in India, Port Rico, Philippine Islands, Straits Settlements and Mexico (New York: Macmillan, 1916), p. 308Google Scholar; Rosenberg, Emily S., “Foundations of United States International Financial Power: Gold Standard Diplomacy, 1900–1905”, Business History Review 59 (Summer 1985): 176-83CrossRefGoogle Scholar.

12 Conant, Charles A., A Special Report on Coinage and Banking in the Philippine Islands Made to the Secretary of War (Washington, D.C.: Government Printing Office, 1901)Google Scholar.

13 Ibid., pp. 34–35.

14 Ibid., pp. 35–36.

15 Ibid., pp. 56–57.

16 Ibid., pp. 57–58.

17 Ibid., p. 58.

18 United States War Department, Reports of the Philippine Commission to the Secretary of War for the Periods from Dec. 1, 1900 to Oct. 15, 1901, 2 pts. (Washington, D.C.: Government Printing Office), pt. 1, pp. 109–110.

19 Ibid., p. 110.

20 Aguinaldo to the Philippine Commission (23 Nov. 1902); Root to the President of the Senate and the Speaker of the House (20 Jan. 1903); United States, House of Representatives, 57th Congress, 2d Session, Document No. 303, Establishing of an Agricultural Bank in the Philippine Islands. Letter from the Secretary of War, Transmitting Petition of Emilio Aguinaldo y Famy Asking Legislation for the Establishment of an Agricultural Bank in the Philippine Islands, 1903, United States National Archives, Record Group 350, Records of the Bureau of Insular Affairs [hereafter cited as BIA], 6769–1.

21 United States, House of Representatives, Establishing of an Agricultural Bank, pp. 1–4.

22 In fact, Aguinaldo himself was interested in acquiring friar lands from the Philippine government. The official record of 1910 showed that he was granted a special lease of 1,056 hectares of the Imus estate in the province of Cavite. This was one of six special lease contracts involving larger lands. U.S. House of Representative, 61st Congress, 3d Session, Report No. 2289, Administration of Philippine Lands: Report by the Committee on Insular Affairs of the House of Representatives of Interior Department of the Philippine Government Touching the Administration of Philippine Lands and All Matters of Fact and Law Pertaining Thereto, Pursuance of House Resolution, No. 795, 2 vols. (Washington, D.C.: Government Printing Office, 1911), vol. 1, pp. xxixGoogle Scholar, 195–204.

23 Poblete to Taft and Roosevelt (27 Oct. 1904), BIA, 6769–4.

24 El Mercantil, 27 Oct. 1904, BIA, 6769–4. The newspaper clipping contained an excerpt from an editorial that appeared in El Grito del Pueblo (26 Oct. 1904).

25 See, for example, Manila Times (1 Jul. 1905).

26 For the role of W. Morgan Shuster for the collaboration with local elites, see Ruby R. Paredes, “The Origin of National Politics: Taft and the Partido Federal”, in Philippine Colonial Democracy, ed. Paredes, pp. 41–69.

27 Manila Times, 1 Jul. 1905.

28 United States, House Representatives, 59th Congress, 1st Session, Philippine Tariff: Hearings before the Committee on Ways and Means (Washington, D.C.: Government Printing Office, 1906)Google Scholar, Appendix: Public Hearings in the Philippine Islands, pp. 24–26.

29 United States War Department, Third Annual Report of the Philippine Commission, 1902, 2 pts. (Washington, D.C.: Government Printing Office, 1903), pt. 2, p. 107Google Scholar; ditto, Fourth Annual Report of the Philippine Commission, 1903, 3 pts. (Washington, D.C.: Government Printing Office, 1904), pt. 3Google Scholar, pp. 290–91; ditto, Fifth Annual Report of the Philippine Commission, 1904, 3 pts. (Washington, D.C.: Government Printing Office, 1905), pt. 3, pp. 369-78Google Scholar.

30 Kemmerer, Modern Currency Reform, p. 318; “Currency Division Ends” (the title of newspaper unknown), 31 Jan. 1906, Princeton University, Seeley G. Mudd Manuscript Library, Edwin W. Kemmerer Papers (hereafter cited as KP), Box 254.

31 “Currency Division Ends” (the title of newspaper unknown), 31 Jan. 1906; New York American, 4 Jan. 1903; Manila Times, 3 Sep. 1903, KP, Box 254.

32 This report was included in the Seventh Report of the Philippine Commission. United States War Department, Seventh Annual Report of the Philippine Commission, 1906, 3 pts. (Washington, D.C.: Government Printing Office, 1907), pt. 1, pp. 487–641Google Scholar. See also, United States War Department, Report of the Chief of the Division of the Currency to the Treasurer of the Philippine Islands Concerning the Advisability of Establishing a Government Agricultural Bank in the Philippines (Washington, D.C.: Government Printing Office, 1906)Google Scholar, BIA, 6769–24, 25.

33 Seventh Annual Report of the Philippine Commission, 1906, pt. 1, p. 487. In Kemmerer's report, a detailed study on the opinions of provincial treasures on the establishment of an agricultural bank (May 1903) was attached. Ibid., pp. 510–25.

34 Ibid., p. 490.

35 Ibid., pp. 491–94.

36 Ibid., pp. 494–95.

37 Ibid., pp. 501–509.

38 United States War Department, Report on the Agricultural Bank of Egypt to the Secretary of War and to the Philippine Commission (Washington, D.C.: Government Printing Office), 1906Google Scholar, BIA 6769–48, 49.

39 “Currency Division Ends”, (name of newspaper unknown), 31 Jan. 1906, KP, Box 254.

40 Ibid., pp. 20–23.

41 Ibid., pp. 25–26.

42 United States War Department, Six Annual Report of the Philippine Commission, 1905, 4 pts. (Washington, D.C.: Government Printing Office, 1906), pt. 4, pp. 21–22Google Scholar.

43 Manila Cablenews, 24 Oct. 1905; Manila Times, 24 Oct. 1905; Manila Cablenews, 25 Oct. 1905; Manila American, 25 Oct. 1905; Manila Cablenews, 26 Oct. 1905; Manila Times, 26 Oct. 1905; Manila Times, 27 Oct. 1905; Manila Times, 1 Nov. 1905; Manila Times, 8 Nov. 1905, KP, Box 254.

44 Those involved in the process included Colonel Clarence R. Edwards (Chief of the Bureau of Insular Affairs), J.W. Jenks (a Professor at Cornell University and U.S. Commissioner at the Commission on International Exchange), Senator J.C. Spooner, Senator F.G. Newlands, Senator W.B. Allison, Senator Henry Cabot Lodge, John Hubbard (Treasurer of the International Banking Corporation) and J.S. Tait (Manager of the International Banking Corporation). Jenks to Edwards (20 Dec. 1905); Edwards to Spooner (20 Dec. 1905); Edwards to Jenks (20 Dec. 1905); Edwards to Newlands (20 Dec. 1905), BIA, 6769–18; Jenks to Edwards (23 Dec. 1905), BIA, 6769–19; Newlands to Edwards (30 Dec. 1905); Edwards to Newlands (3 Jan. 1906), BIA, 6769–20; Hubbard t o Edwards (8 Jan. 1906) and his friend's comments on a draft of the bill to establish an agricultural bank, BIA, 6769–21, 22; Newlands to Edwards (9 Jan. 1906); Edwards to Allison (12 Jan. 1906), BIA, 6769–23; Allison to Edwards (15 Jan. 1906); Edwards to Allison (18 Jan. 1906), BIA, 6769–26; Jenks to Edwards (18 Jan. 1906), BIA, 6769–27; Tait to Edwards (18 Jan. 1906) and a criticism against a bill to establish an agricultural bank by an unknown writer, BIA, 6769–28; Jenks to Edwards (5 Mar. 1906), BIA, 6769–30; Taft to Lodge (22 Mar. 1906), BIA, 6769–31.

45 59th Congress, 2nd Session, “S. 6249. A Bill to provide for the establishment of an agricultural bank in the Philippine Islands, by Mr. Lodge, May 22, 1906, Feb. 2, 1907”, BIA, 6769–31.

46 Governor of Ilocos Sur to the Governor-General, 18 Jun. 1906; Governor of Hocos Norte to the Governor-General (24 Jan. 1906); Diego Linan of Ambos Camarines to the Governor-General, 25 Jun. 1906; 18 landowners of Negro Occidental to the Governor-General, 26 Jun. 1906; Acting Secretary to the Governor-General, 28 Jul. 1906, BIA, 6769–47.

47 Lodge to Taft (19 Jun. 1906) BIA, 6769–35; “The Proposed Philippine Bank”, (name of newspaper unknown) (12 Feb. 1907), KP, Box 254.

48 59th Congress, 2d Session: “H.R. 23567. A Bill to encourage agricultural bank in the Philippine Islands, by Mr. Cooper, Jan. 10, 1907”; “H.R. 23937. A Bill to provide for the establishment of an agricultural bank in the Philippine Islands, by Mr. Cooper, Jan. 10, 1907”; “H.R. 25049. A Bill to encourage agriculture in the Philippine Islands..., by Mr. Garret, Jan. 28, 1907”; “H.R. 25053. A Bill to provide for the establishment of an agricultural bank in the Philippine Islands, by Mr. Cooper, Jan. 28, 1907”; “H.R. 25049. A Bill to encourage agricultural in the Philippine Islands... by Mr. Garret, Jan. 28, 1907”, BIA, 6769–31.

49 Cable from the Governor of Negros Occidental to Taft (11 Feb. 1907), BIA, 6769–65.

50 Taft to Hale (4 Feb. 1907), BIA, 6769–61; Lodge to Taft (5 Feb. 1907), BIA, 6769–63; Cooper to Taft (19 Feb. 1907), BIA, 6769–66.

51 “Public No. 243, An Act to provide for the establishment of an agricultural bank in the Philippine Islands”, Seventh Annual Report of the Philippine Commission, 1906, pt. 1, pp. 500a-500b.

52 Smith to Taft (14 Mar. 1907), BIA, 6769–69.

53 Edwards to Speyer (14 Mar. 1907), BIA, 6769–69; Speyer to Edwards (15 Mar. 1907), 6769–70; Hubbard to Edwards (22 Mar. 1907), BIA, 6769–71; Hubbard to Edwards (4 Apr. 1907); Edwards to Hubbard (11 Apr. 1907), BIA, 6769–72; Jobes to Edwards (13 Apr. 1907), BIA, 6769–73; Hubbard to Edwards (16 Apr. 1907), BIA, 6769–75; Edwards to Jobes (24 Apr. 1907), BIA, 6769–76; Jobes to Edwards (27 Apr. 1907), BIA, 6769–77; Jobes to Edwards (7 May 1907), BIA, 6769–79; Stanley, A Nation in the Making, p. 234.

54 This style of banking business was also followed by the International Banking Institution. Willis, H. Parker, “The Philippine National Bank”, The Journal of Political Economy 25,5 (1917): 410-11CrossRefGoogle Scholar. For details of the operation of the Hongkong and Shanghai Banking Corporation in the Philippines from the late 19th century to the 1920s, see Ybanez, Roy C., “The Hongkong Bank in the Philippines”, in Eastern Banking: Essays in the History of the Hongkong and Shanghai Banking Corporation, ed. King, Frank H.H. (London: Athlone Press, 1983), pp. 435-66;Google ScholarKing, Frank H.H., The History of the Hongkong and Shanghai Banking Corporation, Volume II: The Hongkong Bank in the Period of Imperialism and War, 1895–1918: Wayfooning, The Focus of Wealth (Cambridge: Cambridge University Press, 1988), pp. 102–122Google Scholar, 234–36; idem, The History of the Hongkong and Shanghai Banking Corporation, Volume III: The Hongkong Bank between the Wars and the Bank Interned, 1919–1945: Return from Graneur (Cambridge: Cambridge University Press, 1988), pp. 530-39Google Scholar. As for the Bank of the Islands, Philippine, see Banco de las Islas Filipinos, LXXV Anniversario (Manila: Banco de las Islas Filipinas, 1928)Google Scholar; Colayco, Maria Teresa, A Tradition of Leadership: Bank of the Philippine Islands (Manila: Bank of the Philippines Islands, 1984)Google Scholar; “The Bank of the Philippine Islands”, Bankers Magazine 96,3 (1918): 371-76Google Scholar.

55 Insular Treasurer to Secretary of War (25 Oct. 1907), BIA, 6769–82; United States War Department, Eighth Annual Report of the Philippine Commission, 3 pts. (Washington, D.C.: Government Printing Office), pt. 3, pp. 60–61.

56 “Act No. 1730, An Act to authorize continuing annual appropriation to meet any obligations of the Philippine government...”, BIA, 6769–80.

57 First Philippine Legislature, First Session, “Joint Resolution No. 9, Providing for the appointment of a committee for studying a plan to carry into effect the establishment of an agricultural bank in the Philippine Islands”, BIA, 6769–86.

58 Smith to Taft (19 Mar. 1908), BIA, 6769–83.

59 Edwards to Smith (23 Mar. 1908); Taft to Attorney General (21 Mar. 1908), BIA, 6769–83.

60 “Act No. 1865, An Act creating a government agriculture bank of the Philippine Islands and appropriating for funds thereof the sum of one million pesos”, Philippine Islands, Official Gazette 6,32 (1908): 1122-23Google Scholar.

61 Agricultural Bank of the Philippine Government: Act of the Philippine Legislature Creating and Establishing the Bank and By-Laws Adopted by the Board of Director (Manila: Bureau of Printing, 1908), pp. 5–10Google Scholar, BIA, 6769–90, 91.

62 Philippine Islands, Bureau of Treasury, Annual Report to the Treasurer of the Philippine Islands, FY1910 (Manila: Bureau of Printing, 1910), p. 13Google Scholar.

63 United States War Department, Report of the Philippine Commission 1909 (Washington, D.C.: Government Printing Office, 1910), p. 166Google Scholar.

64 Annual Report of the Treasurer... FY1910, p. 16; United States War Department, Report of the Philippine Commission 1910 (Washington, D.C.: Government Printing Office, 1911), pp. 153-54Google Scholar.

65 Fiscal year for 1909–1913 started from July of one year previous to the fiscal year and ended at June of the fiscal year. In 1914–15, the fiscal year started from January and ended at December of each year.

66 Annual Report of the Treasurer... FY1910, p. 16.

67 This took effect in October 1911. United States War Department, Report of the Philippine Commission, 1911 (Washington, D.C.: Government Printing Office, 1912), p. 145Google Scholar; Philippine Islands, Bureau of Treasury, Annual Report of the Treasurer of the Philippine Islands, FY1912 (Manila: Bureau of Printing, 1912), p. 23Google Scholar.

68 Annual Report of the Treasurer... FY1910, p. 16; Annual Report of the Treasurer... FY1912, p. 23; United States War Department, Report of the Philippine Commission 1912 (Washington, D.C.: Government Printing Office, 1912), p. 206Google Scholar. At first these agencies accepted only current accounts, and mainly served local merchants. In FY1913, 24 agencies of the bank were operating throughout the country, 13 having being newly established in various provinces (in this year, Zamboanga agency was closed with the opening of an agency of the Bank of the Philippine Islands, following the bank's policy of not competing with the commercial banks). In FY1913, all agencies accepted both current accounts and time deposits. As of June 1913, current accounts amounted to 191,010 pesos, time deposits to 33,888 pesos. Annual Reports of the Treasurer... FY1913, pp. 42–43; Report of the Philippine Commission 1913, p. 223.

69 Philippine Islands, Bureau of Treasury, Annual Report of the Treasurer of the Philippine Islands, FY1913 (Manila: Bureau of Printing, 1913), p. 46Google Scholar; United States War Department, Report of the Philippine Commission 1913 (Washington, D.C.: Government Printing Office, 1914), p. 223Google Scholar.

70 As will be later discussed, By the Act No. 2214 (Feb. 1913), the maximum amount of each loan was increased to 35,000 pesos. Of the total 390 loans provided during FY1909–1913, the collateral for 259 loans consisted of land under Torrens Tides, while the remaining 131 loans were provided under the Spanish titles. Annual Report of the Treasurer... FY1913, pp. 46–47.

71 Archibald Harrison, “Report by the Chairman of the Investigating Committee on Conditions Affecting Agricultural Property in the Island of Negros which is Mortgaged to the Bank”, 10 Aug. 1918, BIA, 6769–634.

72 Salamanca, The Filipino Reaction to American Rule, pp. 46—49. See also Michael Cullinane, “Implementing the ‘New Order’: The Structure and Supervision of Local Government During the Taft Era”, in Compadre Colonialism, ed. Owen, pp. 20–22. Cullinane points out that “in 1906, when Filipinos were given the majority control of the provincial boards, the commissioners continued t o emphasize the important role of the American provincial treasurer and the overall restraining power of the American-dominated Executive Bureau”. Ibid., p. 21.

73 Salamanca, The Filipino Reaction to American Rule, pp. 43, 47.

74 Forbes to Mclntyre (16 Oct. 1911), BIA, 6769–95; Forbes to Edwards (23 Oct. 1911), BIA, 6769–96; Legarda to Edwards (7 Nov. 1911), BIA, 6769–99.

75 Assembly Bill No. 176, Third Philippine Legislature, First Sessions, BIA, 6769–105.

76 McIntyre to Forbes, 19 May 1913, BIA, 6769–107.

77 “Act No. 1906, An Act to amend act numbered eighteen hundred and sixty-five...,” Official Gazette 7,28 (1909): 986Google Scholar. Another change prohibited the bank officials as well as all the officials of the insular, provincial and municipal governments from receiving commissions in connection with loans.

78 “Act No. 2016”, BIA, 6769–110.

79 Annual Report of the Treasurer... FY1913, pp. 43–45. Before this decision was given, there was controversy over whether or not it was proper for provincial governments to earn interest by depositing their funds in the government agricultural bank, since they could not get interest by depositing funds with the Insular Treasury. Carpenter to Mclntyre, 16 Jan. 1913; McIntyre to Carpenter, 21 Feb. 1913, BIA, 6769–103.

80 “Act No. 2214, An Act providing for certain changes in the general powers of the Agricultural Bank of the Philippine Government and for other purposes”, BIA, 6769–106. See also Executive Bureau, the Government of the Philippine Islands, “Provincial Circular, No. 60”, BIA, 6769–115.

81 In early 1913, the Insular Treasury had about three million pesos of provincial treasurers’ current accounts while the Manila branch of the International Banking Corporation held more than four million pesos of those deposit, at the annual interest rate of three and one-half per cent. Carpenter to Mclntyre, 16 Jan. 1913, BIA, 6769–103.

82 Manning to McIntyre (10 Jun. 1913), BIA, 6769–110. It was unknown how the International Banking Corporation agreed to give up a favourable position as depository of provincial government funds. However, we may assume that the pressure from the local elite to increase the capacity of the Agricultural Bank was so intense that the U.S. government officials in the insular government ventured to persuade the International Banking Corporation to surrender its position as depository of provincial government funds in exchange of for larger benefits in the future.

83 The prevailing annual interest at the Agricultural Bank during the fiscal year of 1913 was three per cent of time deposits for six months’ periods and three and one-half per cent for yearly deposit periods. Daily Consular and Trade Reports, Oct. 21, 1913, BIA, 6769–112.

84 “Provincial Circular No. 60”, BIA, 6769–115.

85 Philippine Islands, Bureau of Treasury, Annual Report of the Treasurer of the Philippine Islands, FY1914 (Manila: Bureau of Printing, 1916), pp. 52–53Google Scholar; United States War Department, Report of the Philippine Commission 1914 (Washington, D.C.: Government Printing Office, 1915), p. 243Google Scholar.

86 Philippine Islands, Bureau of Treasury, Annual Report of the Treasurer of the Philippine Islands, FY1915 (Manila: Bureau of Printing, 1916), p. 55Google Scholar; United States War Department, Report of the Philippine Commission 1915 (Washington, D.C.: Government Printing Office, 1916), p. 187Google Scholar.

87 “Consolidacfon Nacional, Manila, 5 Feb. 1914, Timely Resolution”, BIA, 6769–116: “Consolidacfon Nacional, Manila, 24 Feb. 1914, Recommendations of the Agricultural Committee: The Resolution increasing capital of the Agricultural Bank before the Legislature”, BIA, 6769–118; Philippine Free Press, 7 Mar. 1914, BIA, 6769–118.