Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1922-04-24
Fourth And Last Report or
Audit Company Disclose.
Still Further Waste And
lncompetency Of League
Officials; Marked I'm
provement Under New
Regime.

Bismarck, N. D.. April 24.-Final
settlement OF business of the Bank OF
North Dakota originating under Non
partlsan league management will ma
terlally increase the losses of the
bank, now placed at $15O,475.s4, ac-
cordtng to conclusions urawn in the
audit report of Bishop. Brissman *&
Co.. made public today. The repor.
is the fourth and last Of the reports
made by that firm of the operation
industrial commission. 1t covers a
period Of the banks operation from
July, 1919, to December -. 1921.
1T is apparent" says the report.
that a. considerable amount of the
assets will be slow of liquidation and
realization, and considerable ultimate
losses of these assets will be sustain
ed which will correspondingly increass
the present book deficit"
The auditors. in making their COM
pilations. listed all assets at face val
ue, the report says and adds that mo
reserves were computed by us to pro-
vide for such depreciation"
insufficient collateral required for
loans, losses in loans to closed banks
and farm loans on which money has
been paid out but which cannoti be
completed because of unpaid taxes Or
lack of good title on the land arc
among the conditions pointed out as
leading to further losses to the bank.
Improved Conditions Noted.
The auditors however, find an i'm
proved condition under the new man
agement of the bank by c. r. Greene
and the new industrial commission.
including a marked reduction in ex.
penses. revision of records and more
careful consideration of loans made.
The heaviest loss sustained in the
operation of the bank was during the
year 1921, the report shows. \ During
the year. 1919, when the bank wassin 4
operation for about six months It s1s-
! talned a book loss of $4,79582, show
ed profit of $74.924.e7 in 1920 ana
loss of 1920, ,602.8s in Ia2 b,up to De-
cember IL, according to tae report
Discussing the bank reports issued
under it's former management which
showed great profit the audit com
pany shows that these profits were
paper profits" and were arrived at
IN large measure by crediting to the
bank interest on bank bonds which
had not been sold. In the year 1919
, the bank credited up $47,234O4 inter.
est on bank bonds received and ac-
crued, but the bank did not charge
itself with any interest on the bank
series bonds. the report says The
Pank also credited to itself discounts
and commissions paid on bond sales
which represented loss, and accrued
| interest in closed banks.
''Thawing OUT of "frozen assets
under the new bank management is
| reflected in the statement that the
frozen assets" now total s2,osS.-
4Sl.73: At the peak they totalled
several million dollars.
Loans Of 1919 Untumpleted.
A condition Of which there is Sc
we're criticism implied is the inability
or the bank to transfer $119,176.2s
OF farm loans to the state treasurer
| because the loans. although made in
1919 and 1920. are still uncompleted.
The first loan made by the farm,
loan department of the bank-loau
No. l. application No. 9-to James
w. Pauley, August 16, 1919, "is still
| uncompleted and in an unsatisfactory
condition, the report says.
Included in the amount of loans on
| which bonds cannot be issued because
they are in unsatisfactory condition
are four loans to D. ]. Mcmahon. the
| report says. They amount to $4,000
and are dated January 2, 1920. The
! report says: These loans were later
! covered by one blanket mortgage. No
! interest was paid on this mortgage to
date Of audit and We were advised
that the taxes on the properties were
also unpaid" 9.re
In detail No. 16 are listed the
farm loan special deposits in the open
banks of $64.400." the report saws.
| These deposits were made to pro
vide funds to clear up the incum-
orances of the properties for which
loans had been applied for. You will
observe that of these deposits two
were made in 1919. twelve in 1920
and one in January. 1921 1t would
seem that the completion of these
loans is unusually slow Farm loan
| deposits in closed banks amount to
$4S,6OO.
Big Equity Packing Loan
Among the loans of the bank is
one of $28,972.O2 to the Equity Co
operative Packing company of Fargo.
which is in the hands OF receiver.
The report says the security to this
Is mortgage on some land. that an
executed deed is ON file ''but owing to
unpaid taxes thereon Of $6,s72.02, the
deed had not been recorded" Another
| loan of $S,346.14 mentioned is secured
! by IS shares Of capital stock in
! bank now closed.
The greatest losses which will be
sustained by the bank are in transac-
| tious wAtI CiOScQ OankS. IL IS ant1C1-
pated. The total liabilities Of closed
banks to the Bank of North Dakota
amount to $1,6S2.765.57 j.
\ These assets the same as all other
assets" the report says. ''are stated
at full face value, but it is apparent
that the final liquidation land the
liquidation will be slow, will result In
a very large depreciation OF the said
assets. and! will correspondingly in
I crease the 1booE deficit - slsa5tS5N 7sf !
The Scandinavian american Bank
of Fargo, now closed had Incurred
an overdraft Of $15,874.01 when It
closed, according to the audit report.
The bank has s231, ,0sS 30 IN redepos-
Its and $138,7s4.5l In loans. the re-
port shows. ~ $:S
Dnubefal O0llAteEal.
Included In the collaterai are two
notes executed by tho Berinx 6sA
Fisheries company. endorsed by u. y. !.
Hagen. former president OF the hank.
4 Lars MikkelScn and ~. g. Nsgan. Sors
$40. 900; notes on lcan made q =. ~.
tCAAtinnAA ~ nAsA G.l .ss