Montpelier examiner. [volume] (Montpelier, Idaho) 1895-1937, 1919-10-24
IDAHO INTERESTED IN NORTH
DAKOTA BANK SMASH

Boise. Oct. 2l.-While the failure
OF the Observation-Disclosures Bank
at Fargo. North Dakota. which had
loaned excessively to the Non-Parti-
san league and it's subsidiary con-
Germs has become a matter OF nation
al comment. no state is more inter
ested than Idaho where the Non-Par-
tisan league. during the last cam
paign created something of furry
and where its leaders are still oper-
ating along various lines. The trou-
BILE with the Fargo bank was that II
made loans to these nonpartisan
concerns on unsound security. and an
effort is now being made through le-
gal channels to ascertain what mon
les. IL any. have been diverted to IL
legal purposes.
The examination was ordered at
the instance OF the attorney gener-
al. one of the governors OF the bank.
the other two being the governor of
the state and the commissioner of ag-
ricuIture and labor.
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-
kota and the Non-Partisan league.
In intention or pretense It is an inn
itation of the numerous rural credit
banks of Europe, banks where far
mers. artisans and tradesmen can get
cheap money. and It is conducted ac-
cording to rules unknown in any code
of banking laws since modern bank
ing began. II keeps no reserve: at
least II is not bound to. The state
banks have to have a reserve amount
ing to 10 per cent of their time GER
tificates and 30 per cent OF their de-
mand deposits.
The Bank of North Dakota. as Mr..
Frank f. Packard, ain assistant at
torney general Of the state OF North
Dakota. told the Montana Press AS
sociation the other day. "can loan
out all its money and keep nothing
to pay its depositors. 1t can loan
all of it's funds to one individual and
overdrafts are not forbidden. Only
the legislature can declare the bank
insolvent.
All public funds have to be depos-
tied in 1t. Thus II is sure of de-
posits amounting to some $4,000
900.
yet" says Mr.. Packard. while
such deposits are being made the
bank may be insolvent and refuse to
honor the warrants of the political
subdivisions making the deposits. II
may continue to transact business,
including the receipt of deposits af-
ter insolvency. No penalty is at
tached to the mishandling of funds. y
This extraordinary bank doesn't
have to publish statements of itt
condition. No penalty can be inflict
ed upon its officers for making false
reports. 1t doesn't have TO make
good bad debts or impaired capital.
Upon depositing the public funds
in this bank all public treasurers ant
their bondsmen are released from liza
bility. II the money is squand6ret
or embezzled, the amount can be re
turned to the state only by taxation.
Moreover. 1t is allowed by the &C
creating 1t to transfer funds to 9th
er departments, institutions. indus
s triets. enterprises. or business pre-
- jects of the state, which shall be re
y turned with interest to the banI
That is, It may transfer the schoC
endowment to the credit OF any stat
owned enterprise from a glue factor
to a humming bird aviary.
The public moneys may be approx
rated, without security to any stat
owned enterprise.
II the money Is lost. the taxpayer
make up the deficiency. IF ther
is a deficiency. the state shifts II
money from one fund to another. an
tax the people for the deficit" sa,
Mr.. Packard. The public bank exam
liner and banking boards have no 81
perision Ger this child Of M
Townley'A genius. The bank exam
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