Willmar tribune. [volume] (Willmar, Minn.) 1895-1931, 1921-10-26

WlLlAaAk TIKI
to the League, and combine Its credit
accommodations to them. The list Of
loans however, includes so large a
number of persons who are not mem.
bers Of the League, or who are even
bitterly opposed to it, that the charge
Of favoritism is completely disproved.
Il would almost seem as though the
Bank did 60 out OF its way to avoid
faVoring its own friends It is signifi-
cant that the hostile investigating
committee Of the House of Repre-
sentatives last winter sent out a ques-
tionnaire to persons who had applied
forS.farm loans to The Bank of North
Dakota, apparently thinking that the
replies would disclose favoritism,
and that it neither published these
replies, nor introduced them into the
record of the Investigation. Why did
It not do so? Evidently because the
replies did not suit it's purposes.
Z AS to the charge that many of the
payments on these loans are in de-
fault, the Bank frankly admits that
extensions have been literally made,
under the authority Of the bank law
permitting such extensions. The Bank
denies, however, that there is any
likelihood of loss. The loans are
amply secured, and the financial stan
ding and character of the borrowers
is uniformly good. The management
of the Bank maintains that the pro-
vision authorizing extensions is wise
and just and that these extensions are
fully justified by existing conditions.
1t has absolutely no excuse to offer
in this connection, but believes, on
the contrary, that it would have been
open to the charge of undue harshness
| and of disregard for the true inter
ests of the people of the state, if it
had refused to grant these extensions.
Consequences Of Defiation
The policy followed by The Bank
of North Dakota during this trying
time Of financial stringency and price
defation is in striking contrast with
that of the private banks in North
Dakota and elsewhere. The Comp
troller Of the Currency has recently
shown that drastic def1ation of credit
threatens to prove more injurious to
industry and business than the in
f1ation proposed to be corrected by
credit restriction could ever have
brot about. He has taken the bold
position that a bank which at this
time strengthens it's position" by
calling in every possible loan and
building up it's reserves, thus playing
safe while industry is being ruined for
want of credit, merits, not praise, but
the most outspoken disapproval. AS
agriculture has suffered more than
any other industry from deflation, and
as it is now widely admitted that the
general stagnation of business and
industry is largely due to the losses
Of the farmers thru deflation, restric-
ton of banking accommodations in
agricultural districts is especially to
be deplored.
Among those who have most strong
ly condemned the policy of The Bank
Of North Dakota, and who have en-
ployed every effort to destroy it, are
men who have most to do with the
shaping of banking policy in North
Dakota. On their own confession
that policy has been one of drastic de-
f1ation of credit since the beginning
of the downward movement in farm
prices over year ago. Largely as a
result Of this policy of credit restric-
ton, farm crops which would have
sold for over $3.50, 900 900 in 1919, were
sold for less than 100000, 900 in 1920.
On the basis of cost estimates made
by experts of the agricultural exper-
iment station, these crops must have
cost near $400,O00,O00 to produce, not
allowing for any profit to the produ-
Ger. So that the 1920 farm crops
have sold at something like SITS, OOO,-
600 under the cost of production. The
lowest profit that could be considered
fair would be $25,0OO, 900, making a
total loss, including profit, of $780,
000, 1000.
Def1ation Of North Dakota Banks
It has recently been pointed out by
certain financial experts who at first
favored def1ation, that price is deter
mined by the relation between the
volume of credit and the volume Of
business. It is suggested by these ex-
perts that farm prices could be re-
stored by increasing credit accommo-
dations to farmers, prOpOrtiOnate to
the volume of their production. They
suggest that this is desirable, owing
to the fact that general recovery of
business and industry must wait up
on the recovery of farm prices. If
farm prices could be restored by in
creasing credit to the farmers, it
seems to follow that farm prices could
have been maintained by maintaining
or increasing the former volume of
credit. But not only has credit not
| been increased in proportion to in
creased production, relative to pro-
duction in other lines, but it has been
greatly decreased.
Here is the record of the private
banks in North Dakota for the year
beginning September 1920 and ending
September 1921.
On September 20, 1920, the deposits
| in all state banks in North Dakota
amounted to $126, 305, 4O2.56.
On September 6, 1921, their depos-
its were $93, 733, 270.17-a decrease of
$32672,I32;
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