To remedy these conditions the Philippine National Bank was organized. From a modest beginning the bank grew by leaps and bounds, especially during the war.
Constructive Service In spite of the many criticisms hurled against it, the constructive service that the bank has rendered to the community stands out in bold relief—the financing of the liberty loans, the handling of the sale of alien property, the financial assistance extended in time of dire need to two banks doing business in the islands, the financing of sugar centrals, the giving of loans to agriculturists, and the extension of banking facilities to merchants and manufacturers.
The post-war depression caught the bank unprepared to meet the emergencies and it suffered heavy losses. The bank, however, is now in a fair way to sound footing. But as an institution, despite its reverses, it has come to be part and parcel of Philippine financial life. The Filipino people regard the bank as indispensable in the economic development of the islands.
The Manila Railroad.—The Philippine railroads were taken over by the government in 1916. They were bought from an old English company. The principal motive that impelled the purchase of the lines from the English owners was the failure of the owners to operate the lines with profit. This failure resulted in the imposition of greater burden on the taxpayers in the way of payment for interest on railroad bonds guaranteed by the government from the early days of American administration. The secondary motive was of course to nationalize this most important medium of communication and to put it at government disposal in case of emergency.
From 1914 to 1916 the aggregate net deficit of the company was about $600,000. Under government management the railroad has been gaining steadily. In 1917 the gain was $400,000; in 1918, $130,000; in 1920, $120,000; and in 1921 $148,000, with the added advantage that the government has not been called upon to pay any interest on the bonds.
The National Coal Company.—During the war the coal shortage was one of the great problems that the government had to solve. The Philippine Islands are rich in coal deposits, but very little private capital has been invested in its exploitation. The Philippine Legislature, therefore, chartered the National Coal Company and supplied it with a capital of $1,700,000. The company is now ready to furnish at least the coal needed by the government, which is about 120,000 tons a year, heretofore imported from foreign countries.
The National Development Company.—The company was organized for the purpose of financing isolated commercial, industrial or agricultural enterprises that the government may desire to establish for the general welfare of the country, the motive being that whenever or wherever there was profiteering the government should enter into competition with the profiteer and compel him to reduce the cost of his goods.
The stock of the company is controlled, as in other government companies, by a committee of three, composed of the Governor-General, the President of the Senate, and the Speaker of the House of Representatives.
Other development companies which have been established by law, some of which have not yet begun to function, are the National Cement Company (2855), the National Coal Company (2705), the National Iron Company (2862), and the National Petroleum Company (2814).