Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-03-04
.Hssse Report Urge.
Jury Investigates
OF N. D. Industries,
CONTINUED from Page ~

Of the resolution creating this commits
investigation. regardless Of matter OF
a personal and partisan character, be
made OF the broad and underlying
questions relating to the industries to
be examined, n the conduct thereof,
SO that it might be accurately deter
mined whether the same were operat-
ed upon an economic n business ba-
sts or for the purpose of sfurthcring
political and personal ends Of the adj
minis:ration thereof. With that sole
objeclsin view the examiners have dill
gently sought the facts relative to the
creating and management and h re-
suits of h operation Of such institu-
tons"
Accuracy Of the report presented by
Bishop Brisannan n company, of the
audit of the state industries is dealt
with briefly by h committee report
covering the Bank of North Dakota.
the North Dakota Home Builders as
ISOLATION, and the North Dakota Mill
and Elevator association, by quoting
ords:
"Messrs. e. r. sinkler. William
Lemkc. Francis Murphy and John +.
Z Sullivan all agreed. in the presence q
the committee. that the figures. every
thing in the Bishop Brissman and COM
pdIy ISPOIl CASSNl IHe lSS
and conclusions, are substantially cor
rect. This for the purpose of saving
time and difficulty of going to the
Bank of North Dakota and making
them produce papers and records.
there"
capitalization of The Bank of North
Dakota is covered in a section OF the
report. The law providing for the is
suance of two million of bonds, and
the conversion of the funds SO obtained
TO the capitalization Of the bank. is
analysed. it being held that the law
provided that the bank should be
open to transac business whenever
trial commission bonds in the sum Of
two million, issued by the state as by
Law provided for that purpose"
Must Sell For Cash.
1T appears from the testimony that
the two million dollars worth of bonds
were properly issued and delivered to
the ind ustrial com r%nission, authorizing
the industrial commission to act as an
agent for the state for the negotiation,
sale and delivery of such bonds.'' con-
i tinued the report. ut is especially
provided that it shall sell them for
cash in such manner and on such
terms as in its sound discretion it shall
deem advantageous to the state.
1T appears from, the testimony that
of the two million of bonds the sum Of
$4S.5o0 thereof was sold by the officers
Of the Bank Of North Dakota and tina
10 other portion Of said bonds have
ever been sold up to Dec. 3, 1920"
One paragraph devoted to deposits
OF the bank then discusses the manner
in which tho law provided for the
compulsory deposit of all funds in the
institution. and that on December 3.
there was more than fifteen million
dollars Of public funds on deposit in
tho bank.
The Industrial! commission-gover-
nor, attorney general and commission
or OF asriculturc-~have sole control of
Inc Bank Of North Dakota. and au-
thority to appoint all officers and en-
plcyes. From tho testimony it appears
that j. F.. Waters. first manager, was
selected b% A.. e. Townlcy and that the
Industrial commission merely confirm
ed the :e!ectioE that F. ". Cathro,
director general. was the personal Sc
lection Of Townlcy and William Lem
mission" says the committee report.
Townicy-Lcmkc Control.
"A fair conclusion is that Townley
and Lemke dominated the original
vrea niza,ion Of tho bank and its sub
sequcnt operations. The examination
declares that tho resignation of the
first manager was due TO his refusal
10 diver, funds OF the Bank of North
OakOta to h Observation-Disclosures
psnk OF Fargo. which in February OF
This yea. was indebted to the Bank Of
North Dakota for approximately $780,
neo. The control OF the foregoing nam
I'd leaguers is further demonstrated in
The record showing indirect loans to
league enterprises supervised ny
them.
The examination clearly show,
Sln. I - r--J T--,l>,
the following league corporations:
,,i The National Eonpartisan league,
The League Exchange. the Consumers
United Stores company, The Courier
Nn"s Publishing company Of Fargo,
The Publishers National Service Bu-
reau. the Nonpartisan Publishing
company. Tho North Dakota Leader
The Northwest Service Bureau. the
United States Sisal trust and the
crican bank Of Far.
The evidence disclosed that the
method of 1-cmke was to use employees
and organizers a. dummy stockhold.
ers and directors. An ingenious system
was used to inrerlock and coordinate
activities TO retain supreme contro
End 10 procure funds. An example i.
The League Exchange action in &C.
curing control oi tho Scandinavian.
American bank.
Evidence conclusively shows thai
large deposits were loaned TO or de.
posted in banks whose owners were
affiliated with the league says the
committee. and it cites numerous in.
stances in support of this statement.
An analysis Of what the farmers Of
the stat" must some day face as a re.
suit Of loaEing their credit to q. polit.
i"a] organization is set forth by tn,
committee report.
pou,,l<. ~ VDolSAlo~J <,~.>A~~p
In financing the various leagu.
concerns and the political cam aignl
conducted by the league, Messrs
scheme whereby they obtained note.
from farmers throughout the state b,
way Of accommodation. and in ex
change for the individual notes O
Townley and league corporations.
Says the committee. I'm additio,
thereto farmers were induced to Civ
their post dated checks for like pur
poses.
This accommodation paper was &C
cumulated in large amounts, and
great food of it was placed in the Va
ri01s banks in the state affiliated will
the league as collateral to loans mad.
to the league and its subordinate an,
kindred corporations.
The o striking and typical ex
ample Of this practice IL to be foun.
ia the record Of tho Scandinavian
American bank of Fargo, whore, tn,
evidence disclose4, many thousands o
dollars Of farmers Accommodate,
notes and q large quantity Of pos
dated checks were held N ~oollatera
to excessive loans to the Consumer
Stores company and the League Ex
Ghange.
This practice is doubtless a con
= tributfnE cause to the present fnaoIv