The Caldwell tribune. [volume] (Caldwell, Idaho Territory [Idaho]) 1883-1928, 1919-10-24
Nonpartisan-C Controlled lnstitu
ton Operates On Basis En-
tirely Foreign to Accepted
Banking Practices.

OF the ndlnaYlan-American bank
at Fargo, North Dakota, which had
loaned excessively to the National
Nonpartisan League and its subsidiary
concerns has become matter OF ma
tional comment no state is more in
terested than Idaho where the Non
partisan League, during the last cam
paign created something of a furry
and where its leaders are still operat-
ing along various lines. The trouble
with the Fargo bank was that it made
loans to these Nonpartisan concerns
on unsound security, and an effort is
being made now through legal chan
nels to ascertain what monies, if any,
have been diverted to illegal purposes.
The examination was ordered at the
instance of the attorney general, one
of the governors of the bank, the
other two being the governor of the
state and the state commissioner of
agriculture and labor.
Curious Deal.
The Bank of North Dakota is per-
haps the most famous and curious of
the institutions established by Mr..
Townley, the autocrat of North Da-H
kota and of the Nonpartisan League.
In intention or pretense it is an
:. imitation of the numerous rural credit
banks of Europe, banks where farm
ers, artisans, tradesmen can get cheap
money. In effect it is something en-
tirely different, and it is conducted
according to rules unknown in any
code of banking laws since modern
banking began. 1t keeps no reserve;
at least it is not bound to. The state
banks have to have reserve amount
ing to 10 per cent of their time certi-
ficates and 20 per cent of their del
mand deposits.
Easy Money.
The Bank of North Dakota, as
Frank E. Packard, an assistant at
torney general of North Dakota, told
the Montana Press association the
other day, "can loan out all of its
money and keep nothing to pay its
depositors." 1t can loan all Of its
funds to one individual and over
drafts are not forbidden Only the
legislature can declare the bank in
solvent.
Sure of Deposits.
All public funds have to be de-
posted in it. Thus it is sure of de-
posts, amounting recently to some
YlOUUO,UNU.
Yet" says Mr.. Packard, while
such deposits are being made the bank
may be insolvent and refuse to honor
the warrants OF the POLITICAL sub
divisions making the deposits. 1t may
continue to transact business, includ-
ing the receipt of deposits after in
solvency. No penalty is attached to
the mishandling of the funds"
Public Kept in Dark.
This extraordinary bank doesn't
have to publish statements OF its con
dition No penalty can be inflicted
upon its officers for making false re-
ports. 1t doesn't have to make good
bad debts or impaired capital.
Upon depositing the public funds
in this bank all public treasurers and
their bondsmen are released from liza
bility. If the money is squandered or
embezzled, the amount can be made
good only by taxation" Moreover, it
is allowed by the act creating it to
transfer funds to other departments,
institutions, industries, enterprises, or
business projects of the state, which
shall be returned with interest to the
bank" That is, it may transfer. the
school endowment to the credit OF
any state-owned enterprise from al
glue factory to humming- bird aviary. |
Without Security.
The public moneys may be appro-
priated, without security, to any state
owned enterprise.
If the money is lost, the taxpayers
can make up the deficiency. IF there
is deficiency. the state shifts money
from one fund to another, and tax the
people for the deficit" says Mr.. Pack
ard. The public bank examiner and
banking boards have not supervision
genius. The directors are not bound
to examine its condition. The bank
examiner does indeed examine, but he
reports to the governors, a political
body.