The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1924-11-25
STATES MILL
ADDS TO LOAD
OF BANK OF Nd.
Loans to Institution at Grand
Forks Increased to Over
Half Million
DANGER POINT SEEN
Continual Loaning of Tax
Money to Institution Would
lmperil 1t, Declared

Possibility of the state mill and
elevator at Grand Forks steadily be-
coming mill stone around the Bank
of North Dakota is seen in the lat
est statement of the states bank is
sued as at the close Of business No
vember II. The statement reveals
that loans to the state mill and ele-
vator, which is unusual to repay be-
cause Of losses, are steadily becoming
greater.
Loans to the mill and elevator as
sociation total $547,76652, and with
$4S2. 2.O36.O5, a total of $1,O29, ,S02.57 is
tied up in two of the state industries,
neither Of which is able to repay the
bank at this time Since virtually all
of the funds of the bank are derived
from tax deposits, in addition to
the capital stock, the loans must
come chiefly from tax money. While
balance Of tax deposits is main
tained at all times according to the
bank deposits, the total amount of
these deposits fluctuates rapidly, as
counties withdraw money to pay bills.
1t is recalled by those who see a
danger in too great loans to state in
stitutions, that the banks period of
distress three years or so ago was
caused by "frozen assets" part OF
which consisted in the advance of tax
monies for the purpose of making
farm loans, without bonds being sold
to reimburse the bank. When heavy
drafts were made on the bank by
counties and other public subdivi-
sions, the funds of the bank were not
sufficient to enable the bank to meet
obligations, and registering Of checks
was resorted to.
While private banks are restricted
i'm the amount of loan they may make
to one institution. for purposes OF Sc
curity and also as Il regulation ia
prevent the banks being placed in Il
position where they are unable to
meet current obligations. no such
regulation attaches to the Bank of
North Dakota, il is said.
The statement OF the Bank OF
North Dakota at the close Of business
April 3, 1923 shows mill and ele-
vator operating account Of 100000
was established in the Bank of North
Dakota. Failure Of the mill to make
money, caused the gradual increase
OF loans to it. The statement Of
September II, 1924, showed loans to
the mill and elevator account to total
STAG, 1862, and on November II,
1924, the amount was $547, 1862.
One of the chief purposes for
which funds Of the Bank of North
Dakota has been used by the present
administration is facilitating the
making OF farm loans. Because
bonds cannot be issued until after
mortgages are filed with the state
treasurer, it is necessary for the
farm loan department to borrow
money to run it's business for short
intervals. Bonds have found ready
sale in the last two years and there
has been, officials felt, no danger of
frozen assets" resulting from tenn
porary loans to the farm loan depart
ment. The present Industrial Com
mission recommended a change in
the method to the South Dakota plan,
however, under which the bonds
would be sold before the loans are
made, to avert the necessity of bor-
rowing and the possibility of the
farm loan business being held up
through lack of borrowing capacity.
With the Bank of North Dakota
carrying on this business, and maxi
ing other loans, it is pointed out
that the bank cannot allow its tax
money to become too heavily invested
in loans to state industries such as
the mill and elevator, or the bank
eventually might find itself unable
to function.