The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1926-06-10

New Rockford, N. D., June 10
@-Pointing out that the Bank of
North Dakota already has lost more
than it's capital stock, Attorney Gen
eral George +. Shafer, in an address
here last night, averred that the
only place in which the bank has
pr&per field for operation is in the
handling Of farm loans. "lt is only
in ,the field OF rural credits that the
FACILITIES of the private bankers are
now inadequate to meet the reason
at1c, needs of the agricultural inter
\ csss. of the State he said.
Eve favor restricting the functions
of-the Bank of North Dakota to the
farm loan business and to eliminat-
ing all of its other functions for the
following reasons" Shafer said.
~. The capital Of the Bank Of
North Dakota in the sum of 81,
90 boo originally provided by the
state, has been practically wiped out
through losses and hence, as a bank
ing unit, it is now and has been for
the last six years. legally insolvent.
SO The Bank of North Dakota is
MOI, and has not been since its or
gan;zation, self supporting: but it is
dc dent on the treasury of the
state
rs. 1t is highly dangerous and in
furious to the state to engage in the
general banking business with the
public funds and upon the credit Of
the state through Il state owned and
politically managed bank"
Audit Report Quoted
Quoting the audit report of o. Is.
Lund to show that the bank had lost
S2,G67 .2s6.34 on September 10, 1925,
Shafcr said that the bank now is
being operated as no private bank
yoald be permitted to operate for "A
day. without any actual capital. 1t
IS being operated entirely on its de-
post reserves. If it were a private
institution il would be closed by the
banking department at once; it is
only permitted 10 continue business
because il il compelled to operate
by the law ct the state. 1t is able to
function only by using as its capital
the pEhllc funds belonging to the
state and is political subdivisions
which are placed on deposit with it.
cit surely does not seem wise to
continue The Bank of North Dakota
as 81 general banking institution or to
attempt, as the Nonpartisan League
Says4.we should. to make it the fl
i.anriat center Of North Dakota when
it has no capital and is obviously
insolvent. Either the state should
recognize that the bank is, in reality
insolvent and is a financial burden
upon the state, or that the state
ought to replace its lost capital and
thus put it in funds and give it an
other chance to become self-sup-
porting.
"This latter condition could not
be complied with without amending
the state constitution. for only $4,000
900 in unsecured bonds is now author
izedl to be issued by the state, and
it is hardly feasible to furnish such
capital by an appropriation out of
the trc 5ury Of the state. Since it
is nat likely that the banks capital
will be restored the state has the
alternative of operating it without
capital, or closing out its general
banking activities. Under these cir
cum stances, is it not the better part
of wisdom to frankly recognize the
fact that the bank is virtually in
solvent, in that Its capital is gone
!nd liquidate its commercial bank
ing department?
Should BE Self Supporting
ANY commercial, or business insti-
tuition, whether publicly or privately
owned. should be self-supporting if
1t is to justify its continued exist
cnce. If state industry is not self
supporting, it is a dependent upon
the state. rather than supporter OF
the state; liability rather than an
asset. The Bank of North Dakota
has been in operation since July
1919, a period of seven years; and
it has never been self-supporting dur
ing any of that time. Since the first
two years of its operation, it has not