Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-03-24
FLOATING BAD PAPER

L-F 4 0hO ~
.4. When the financial operations Of Charles Ponzi, of
Boston. were brought to tho attention of the authorities,
and his career was brought to a close, there were whole
mobs Of people who protested against what they consid-
cred an outrage. They insisted that the proceedings
against Ponz were inspired by Wall street, for the pur-
pose OF preventing poor people from making money some
what after the fashion Of the Wall street magnates. Their
confidence in Ponzi was unshaken, and they were willing,
to resume their "investnents' with him.
These people. of course, were in the minority. Most
Of those who had entrusted their money to Ponzi were
concerned only with the problem Of getting it back, and
most Of them, of course. never will get it back. But the
experience with that fraud affords merely another illus
tration Of the fact that when a large number of people
become associated in a common movement, no matter
how clear the evidence Of its folly and futinty may be,
there are always some whose faith will remain mistaken,
and who will stick through thick and thin, and who will
even impoverish themselves by making further contribu-
tons to the cause.
Something of this is shown in the situation in North
Dakota today. Thousands of people have been relieved
Of their money by means of one or other Of the Townley-
Lemke enterprises, and many of these have seen the
fraud in the schemes which have been presented, and
are glad to quit. But there are many others who still
have money left who will continue to respond to the ap-
peals of these leaders, and who. will put up money as
long as they have a dollar LETT. Failing actual cash,
which is always to be preferred, the bosses will take notes,
and notes will be forthcoming.
Money belonging to the state and its subdivisions has
been used to float wagon loads of this paper, much of
which has no value whatever because signed by persons
who are unable to pay, and from whom collection cannot
be made. But certain local banks. operating under league
auspices, "a arranged VIII II BANK o I NOTLn EdNOIA
for the discount of such paper in large blocks, and in pur-
suance Of such arrangement have cashed the notes and
forwarded them to the state bank, the net result Of the
process being that the tax funds of the people has been
used to float paper of this class.
That process can be continued 30 long as the Bank
OF North Dakota exists under its present management.
and there need be no doubt that it will be continued.
In fact, there will be more of it in the future than there
has been in the past. Several of the sources of revenue
upon which the bosses have relied are dried up. There
will be nothing more coming in from Consumer stores
subscriptions. Tho league newspaper enterprises are in
a state Of collapse. The conditions are not propiious for
the organization of league banks, with . substantial rake
ing down to that Of direct appeal to the individual, and
that remaining resource will be worked for all it is
worth.
The prospect Is therefore, that whatever the gross
amounts thus realized may be-, the league managers must
rely more in the future than they have done in the past
on the accommodation note signed by the individual
farmer, and that a greater proportion of its receipts will
be in this form. Those notes must be cashed some
where, or they will be of no use. No local bank of stand
ing will touch that paper, and banks which exist for the
promotion of league activities, of which several remain,
can do nothing with it except through arrangement that
it is to be passed on to the state.
The continuation of the present regime at Bismarck,
therefore, means the constant investment Of state funds
in uncollectable paper. While this is in progress the
state will be unable to pay it's bills, and the public in
stitutions will be issuing warrants instead Of cash. y