Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-03-17
PAID. WITH WHAT

The information comes from Bismarck that the Bank
OF North Dakota has paid the million dollar note which It
gave some time ago in exchange, for money borrowed
from a Chicago banking house, and has thus redeemed the
SASee.ooo worth OF bonds pledged as collateral. With
what was the note paid?
It may be taken for granted that II the Bank OF North
Dakota has really got Its bonds back the note was paid
With cash. The bank officials devised the ingenious
scheme of creating capital out Of thin air by writing cer-
from one office to another. When enough passes had
been made it wa found that the bank had 4 capital OF
two million dollars. whereas q few minutes earlier it had
nothing at all.
It is not likely that this device was used in paying
Oft the million dollar loan-not il the Chicago bank was
looking. Just what method was used has not been given
The Bank Of North Dakota has never at any time had
any money Of Its own. It started out with 4 fictitious CAP
itAl Of two million. 1t figured out in its own favor some
Thousands of dollars Of profit on Its operations. credttins
itself, among other things, with interest on Its own bonds,
and making no deductions Tor bad paper, Of which it had
q rather imposing bundle. Its entire resources have been
the deposits received by it from the state treasury and
from the various locAl. taxing bodies throughout the state.
Leaving out Of account all shtnkage Of every kind. the
banks available resources have been diminished to the
extent Of nearly three million dollars by the ioaning out
OF approximately that sum on long time on real estate So
curly. Most OF this is presumably on 30-year farm
loans Who're. the loans have not been excessive, which
they have been shown to be In q number Of instances. such
security u sound. But the Investment Is not q proper one
for funds which have been collected for current expenses.
The counties, townships and school districts are not
collecting taxes to invest the proceeds in farm loans. Those
taxes are levied tor the purpose OF paying current ex-
penses. Deposited in local banks they are loaned out on
short-tsrm upon which collections can be made quickly,
and by knowing what the local needs are likely to be the
local banker can keep enough money on hand at all times
to meet any demands that are likely to arise. TO make
long time loans Of any considerable portion OF this money
would make it unavailable for the purposes for which 1t
was collected. This is exactly what the Bank Of North
Dakota has done.
The Bank Of North Dakota is not reported to have
received any considerable sums in individual >deposits.
Apparently the only way which it had for obtaining actual
money with which to pay its note was to collect enough
re-deposits tor that purpose. and If the note has been
paid out Of such collections. tho note has been paid out Of
money belonging. not to the Bank OF North Dakota, but to
the counties and other subdivisions which need the money.
Real money cannot b paid where mono existA II the
note has been paid with real money It has been paid with
the proceeds Of taxes collected by hundreds OF conanun-
tiles for another purpose. p