The Hope pioneer. [volume] (Hope, N.D.) 1882-1964, 1919-10-16

System Of Accommodation Notes, Heralded As Being
Made By Farmers, Shows That Organizers and
Other Paid Workers Are the Signers
League Exchange, Through Block Of 1877 Shares and
Voting Proxies, Controlled Fargo Bank-Condi-
tion of Bank Often Criticized by Examiners
In the ten day interval that has elapsed since the closing Of
the Scandinavian American bank of Fargo, the attention Of the
people of North Dakota has been focused on the developments
incident thereto, to the exclusion Of almost every other interest.
during this period there has come to the public an official
statement OF the bank S condition from the state banking board
on October ., has been made available in full, and today The
Forum gives to its readers the complete data set forth iii those
reports.
April Report Shows Condition Bad.
Another interesting report on the bank that has also come
INTO possession 9i Of The Forum was made last April, by Deputy
Bank Examiner p. r. Halldorson, and he reported to the state
satisfactory.
coxe a study 3Sy ; of the April t5ai o report T. o @n4nSss . to ,s the reports Ess filed f.
of the bank during the period Of slightly more than five months.
League Loans Increased $4,000 a Month
Probably the most interesting feature in connection with the two
'eports is the fact that the loans made by the bank to the Non
ead q half 3f9 %enti aHf fro oa s1ss'Soo TO s *%a5soeS: increased IN live
In April, the Nonpartisan league and the Consumers Stores
league Exchange, Inc, and the Publishers National Service
Bureau had been added to the group of league debtors, and the
following are the high lights that have been developed in THE
aHSldl poi coVcIAu Lc wi o III farRO Dank:
The Scandinavian American bank of Fargo has operated for
"a Ions! long period on a reserve below legal requiremsnts;
counts, each OF which was in excess Of the limit permitted by
The bank carried loans of $4,000 on four Nonpartisan league
accounts, the greatest possible legal loan to which, on the fin.
est security, would be $4,000, on the basis of $4,000 to each,
to make on the basis Of its $4,000 capital and $4,000 surplus
The bank obaincd admission to the state guaranty fund
through a plan directed from the Office of the state bank exam
liner. as disclosed by the Halliday letter, which told an officer
Of the bank how to handle "bad matter to tide over the period
of admission.
The bank was repeatedly given advance information as to the
time Of pending examinations by deputy bank examiners.
mtted to the guaranty system, was temporarily handled by
institution, in accordance with the plan detailed to the officers
OF the bank by an officer Of the state.
Money was taken out of the Scandinavian American bank
at the rate OF about $4,000 a month during the last five months it
was in operaion o., a s. shown by the increase in Nonparhsan league
The bank didn't retain control Of hundreds Of thousands of
dollars in post dated checks, represented to be collateral on a
large portion Of the Nonpartisan league loans.
The bank permitted an employe Of its principal debtor to have
free access to its vaults; it permitted the debtors agent to
it permitted the debtor itself to have control of such collateral
and required of such debtor no accounting Of collections made
The bank maintained no record of the hundreds of
thousands of dollars of post dated checks and similar collateral
The bank S board of directors were virtually wholly inactive
and its discount committee existed in name only.
The president and cashier of the bank, according to crimi-
nal charges filed against them, and on which they have been
arrested, are accused of exhibiting false figures to the deputy
bank examiner for the purpose of deceving such official as
to the real condition Of the bank.
The bank has been repeatedly advised by deputy bank ex-
aminers that its condition was poor; and had been repeatedly
ordered by deputy examiners to put its affairs in better shape.
The bank carried, in its assets, $4,000 of past due paper;
of that amount, $104, 600 was in the hands of attorneys for col
lection, representing accounts that failed of collection through
the ordinary channels Of collection employed by banks.
The bank permitted it's own officers to carry loans in excess
of the limit allowed by law, some Of these not having the an.
proval of the board of directors.
The Duluth transaction whereby a phoney credit of $8l 900
was maintained for purposes of deception, had the approval of
the banks board of directors.
The state bank examiner was advised by a deputy examiner
last April that the condition of the institution was such as to
warrant drastic action.
The state examiner was advised again early in September
that the condition of the bank had, during the five month in
terval, grown worse.
The period between September 16, when the regular exami-
nation was made, and October z, when the special examination
of the bank was made, witnessed a still further depreciation in
the banks condition.
Where the Bank Ownership Lies |ganized and controlled by A G.
A featurei in the banks affairs that Townley. president Of tho Eonpar-
Is especially significant is that of tsan league. According to his own
bwnership n control sworn testimony in his bankruptcy
The list Of stockholders. a copy Of case, Townley dictates all policies Of
which The Forum has obtained from the League Exchange, Inc.
the official records dscloses that The whole number of shares is
the largest single block o stock is sued b. the bank is 500 and the
l67 shsIes,. held in h nam of The block Of 167 shares held by the
League Exchange, Inc" The League League Exchange a voted with
Exchange, Inc, is a corporation or sufficient other shares on which rot