The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1921-02-23
One Banker Of Opinion 1t Will
Mean Forcing Of Farmers to-
Sell Grain
AFFECTS MANY BANKS
Enforcement Depends on Sub.
sequent Develop.
ments

mentS
What Independents term the
final play of the state admins
tration to save the Bank Of
North Dakota through putting
the screws on private banks Of
the state took place today when
State Examiner Lofthus sent
registered letters to all banks in
the state telling them to get
their reserves up to the legal
minimum or close their doors.
The order is companion to the
'"pay up or close order sent out to
banks sometime ago when the Bank
of North Dakota sought to withdraw
large amounts from country banks to
meet correspondingly large obliga-
tions on the bank. This order. was not
strictly enforced If the order issued
today would be strictly enforced 1t
would mean the closing of large
number Of small country banks, it is
said. According to testimony ad-
~duced at the senate investigation
hearing there are about 800 banks in
the state under legal reserve. =
Cathro's Claim :, :,
F. w. Cathro, of the Bank of North
Dakota, =, asserted on the witness
stand in the senate that turning down
Of drafts of the Bank of North sDa-
kota, constituted an act of insolvency
upon the part Of private banks. He
said that 800 Of the banks had turned
down drafts. 4. \.
Various opinions were expressed as
to the effect of the order. One bank
er. said that the effect on solvent
banks which are short Of reserve
would beNto put the screws" ont
farmers by foreclosure or other pres
sure ,.and get the cash through the
sale Of the farmers products, even
though it might means acute loss to
the bank on loans and to the farmer
on the basis Of present pricess Sol
vent banks would not BE- osed. he
said. A&[ ri
Strict enforcement probably would
necessitate the closing of many banks
but the examiner said that rigid en-l
forcement depended upon subsequent
developments. -E..,i
Copies of this letter, which Mr.. Lof-
thus spent yesterday afternoon in
signing, read: =
l"Office of State Examiner, ~ !
estate of North Dakota, | |
Bismarck
=, ..s.sss, "Feb. %, 1921 |
"To the Bank Addressed: ~
Enclosed you will find copy of re-
serve law whcih took effect July l,
1920. y ., .S,,In;s ,,,5,
"You are hereby advised to comply
with this law, which requires that you
shall have on hand in available funds
not less than ten per cent IF demand
deposits and seven per cent Of time
deposits, within period Of thirty
days after this notice. /
"Yours truly,
20. E. Lofthus, state examiner"
The copy of the law, section 5170
as amended, provides that "the State
Banking Board (nonpartisan-con-!
trclled) may impose a penalty of not
less than 800 or more than $500" if
the reserve requirements are not met !,
with on thirty days, notice. ~ -
Section 5189 of the laws Of 1918,
which has not been amended, provides
that "any bank shall be insolvent
when it fails to make good the amount
of required reserves" Two-ffths of
the reserve must be in cash and three
fifths in approved repositories, in
Guiding the Bank of North Dakota. I
Guilty of Felony (
Section 10O12 Of the Laws of 1918,
not amended, provides that if an in
solvent bank accepts deposits after
committing an act Of insolvency the
officers committing such act are, gull
ty of a felony, punishable by a pri-
son term Of one to ten years or a fine
of not more than $4,000, or both.
Mr.. Lofthus made no threat that
he would take action to rapidly close
banks at the expiration of thirty days
stating that developments in the
meantime would have to be taken in
to consideration. ~
A. Johannson, director of audits of
the Bank of North Dakota, today said
that about fifteen Bismarck persons
deposited private funds with the
bank yesterday. ,..
Issue Statement.
& Senator-elect E. F. Ladd has issued
a statement censuring the federal
reserve bank, alleged that North. Da-
kota has been Disseminated against in
favor of Spectators
Referring to the letters sent out urg-
ing member banks to liquidate farmer
loans, DR.. Ladd says:s{
There is no question but that
strict compliance with the terms of the
letter was forcing the farmers close
to bankruptcy since the farmers could +
not meet the demand and the formal
withdrawal of the funds from the
banks in western -iorth Da- ,
Continued On Page 81
=