1919–1922 Philippine financial crisis
[1] Because of this, the Philippine Legislature experienced a leadership crisis resulting to the resignation of House Speaker Sergio Osmeña on December 16, 1921, and Senate President Manuel L. Quezon on January 10, 1922.
[2] Economic reforms implemented during the administration of Governor General Leonard Wood helped the Philippine economy recover from the crisis.
This diversion of funds led to the depletion of the reserves, rapid inflation, and ultimately a financial crisis for the National Bank from 1919 to 1922.
The shift towards pre-war normalcy significantly affected the Philippines in 1921, leading to a sharp decline in the prices of key cash crops: abaca fell from ₱50 to ₱16, sugar from ₱50 to ₱9, and copra from ₱30 to ₱10.
The national bank struggled to provide government funds as it lent money to private borrowers, mainly in the sugar industry, leading to defaults.
[7] In December 1920, President Woodrow Wilson delivered a speech in U.S. Congress over which he stated that the Philippines has met the requirements for independence stipulated under the Jones Law of 1916.
Harding, who was formerly a chairman of the U.S. Senate Committee on Territories and Insular Affairs (1929–1946), knew that the Philippines was already in a deep financial crisis.
The Bureau of Insular Affairs (BIA) in the U.S. played a crucial role in gathering information from the Philippines to assist in this investigation.
[9] Francis Burton Harrison, former governor-general, wrote to Senate President Manuel L. Quezon that same month about their missed chance to avoid a disaster that affected their administration, linking it to the Philippine National Bank situation.
Quezon shared some blame for allowing House Speaker Sergio Osmeña's autocratic style to persist, either knowingly or tolerantly.
[1] After the Wood-Forbes report was published, Quezon made a public campaign in support for a collective leadership to ensure he was consulted on important matters, especially appointments, to prevent the Philippine National Bank's near-bankruptcy.
[11] On 16 December 1921, senators and representatives held separate meetings, followed by a convention the next day where leadership issues arose without resolution.
As Wood dedicated more time to his agenda and did not return for the 1924 elections, Filipino leaders had to confront his reforms and defend their own development framework.
He called for the sale or dismantling of government corporations from the Harrison administration, citing the financial burden they placed on public funds.
[18] If Osmeña controlled the Philippine National Bank, then Senate President Manuel Quezon was seen as the main supporter of the Manila Railroad Company (MRC).
Shortly after taking office, he became the target of political attacks for seeking advice from Sergio Osmeña on appointments, which was common practice.
[23] The issue calmed when the Philippines Herald reported that Wood agreed to include legislative leaders in future discussions about appointments, reflecting the rising tensions between Quezon and Osmeña.
One bill aimed to cancel a new assessment law crucial for the budget, while the others were poorly written or politically motivated amidst a financial crisis in the Philippines.
La Nacion, a newspaper ran by the Partido Democrata, defended Wood and stated that he informed the Legislature regarding the reason of not signing those bills.
[27] The cabinet crisis of 1923 was believed to have begun with the reinstatement of Detective Ray Conley by the Governor General, which resulted to the mass resignation of Filipino government officials.
"[27] The cabinet crisis emerged from a conflict between Governor Wood and senior Filipino officials over their differing government and development plans.
[4] The political battles over the PNB and the Currency Reserve Fund directly impacted issues related to land, labor, and wages in various regions like Visayan sugar plantations, Luzon tobacco factories, and Bicol ports.
[6]: 261 The influx of capital during the wartime boom led to significant land accumulation by wealthy landowners for agricultural products like sugar and copra.
After the 1921 financial crisis, large landholders received the redistributed land instead of smaller owners or tenants, while agricultural workers faced wage cuts and layoffs.
[6]: 261 The inequality of land distribution resulting from the postwar economic crisis was described by Carlos Bulosan in his seminal work, America is in the Heart, where he narrated his experiences as a child of a tenant farmer during the early 1920s.
[6]: 265 According to the report of the Philippine Bureau of Labor in March 1921, the financial crisis greatly affected the majority of municipalities in the islands.
[29]: 217 Despite exporting a larger quantity of sugar in 1922 compared to 1921, the overall value remained similar due to low prices at the beginning of the year.
