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Home > About GDB > History

History

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The Fifties: Years of Growth

Propelled by the new investments in manufacturing, the island’s economy took off in the 1950's. Annual growth averaged 8.3% during the decade and the island’s per capita income doubled from $342 in 1950 to $756 in 1960. Meanwhile, gross investment increased 219% over the same 10-year period. Puerto Rico’s accelerated growth made it a model for economic development and visitors came from all over the world to learn about the island. Puerto Rico had been transformed from the “Poorhouse of the Caribbean into the “Showcase of Democracy”.

But tax incentives and low wages would not be enough to attract and keep important industries on the island. Without an adequate infrastructure, such as good roads as well as reliable electricity and water services, Puerto Rico would not be able to retain these new investments. So the 1950s was also a period of vigorous expansion of the island’s infrastructure, including the construction of new highways, an expanded electric power system, new aqueduct and sewer systems, new airport facilities and the expansion of the island’s maritime port areas.

With the GDB leading the way, the island’s infrastructure was transformed. Between 1951 and 1965 – a period during which the island achieved an extraordinary rate of growth- GDB’s net disbursement and financing as the government’s fiscal agent amounted to more than $1 billion. For each year, average net disbursements and financing surpassed 20% of the government’s gross domestic investment.

Meanwhile, GDB was also increasing its loans to the island’s private sector. Many U.S. companies investing for the first time in Puerto Rico viewed government financial support as an added guarantee of the government’s commitment to the success of their enterprises. Among the large companies obtaining loans from the Bank during this period of expansion were General Electric, Caribe Mills, San Juan Intercontinental Hotels, Woolworth Stores, W.R. Grace and Molinos de Puerto Rico.

Nevertheless, two-thirds of the total loans granted by the Bank during the 1950's went to local enterprises. The commercial and industrial loans granted by the GDB during this period went to a wide array of operations: laundries, car repair shops, drugstores, milk processing plants, furniture makers and candy manufacturers. More often than not, the Bank provided financing to local firms that were ignored by the private banks. Eventually, the Bank’s initiative paved the way for the private banks to begin offering them loans.

The Bank played a key role in stimulating the construction of condominiums. Puerto Rico was the first jurisdiction under the U.S. flag to resort to the condominium concept to solve the need for housing in densely populated metropolitan areas. In 1955, the GDB approved a loan for the island’s first residential condominium, the San Luis Condominium in Puerta de Tierra.

The Bank also provided financing for the construction of shopping centers in the 1950's. Following its policy of breaking ground and then letting the private banks step in, the Bank financed some of the early shopping centers and then withdrew from the market in the early 1960's when the private banks began to finance such projects.

To help preserve the island’s cultural heritage, the Bank worked hand-in-hand with the Institute of Puerto Rican Culture in restoring historic sections of Old San Juan. In 1959, the Bank initiated a loan program for the purchase and restoration of historic buildings in the Old City. The first such loan was for the renewal of the old convent that would eventually become El Convento Hotel.

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