The Bismarck Tribune Newspaper, March 9, 1921, Page 6

oe ‘ f \ { | i ‘ i i ness of bank’s condition and policy ‘ Industrial ‘Commission 1 ee eae Three motives prompted the Industrial, Gommison of. the state of-Nerth Dakéta to use this newspaper space in behalf pf the people's common interest. Nig ‘ . —To impress upon the people facia_abdut the:, political = conspiracy, which is the open manifestation; of Ainderground syncs made upon the Bank. of North Dakota in, the hope of destroying 1. Secondly—To report {0 the people directly upon the’ gadits made of the Bank of North Dakota, rather than shave, the, report ,disseml- nated through biased partisan eKannels. ho yy Thirdly—To revenl to them how the Bank of Nerth Ditkota has operated to uphold the creqit, structure of the state at atime when the whet belt is suffering from a most serlougéfnancial stringency, due to various causes. kt eee i » The declaration of tinancig) Independence represented'in the authorization by the voters and the establishment of the Bank of North Dakota set to wosk evi wheel, of the poli entering business for theiy~common intere: ened which time had come to consider in,the light that kings used to cousider the heritage of thrones—theirs by divine right. Bp thus the large situation into which the peopte injected the Bunk of North Dakota becomes apparent. ‘Lhe bak was predestined to be the subject of battle from the time*it was-orggnized. A ” ~ NoJ stounding than the very idea itself to the banking interests was the -suec of the institution’ from the start. No less astounding was the rinciples upon which the bank was founded, and the policy te it. sman Co. of St. e office-halders hi state's bank, himself ac rinciples upon agreed to opel ¥~ J. Bishop, of Bishop, Bi pany en ed by a,group of st league, to make itn audit of the Paul, the auditing com; stile to, the Nonpar nowledged,-tT operated, ie idex of the federal reserve system ; its sary to the state und criticiZes the institution;-probibly through on of the facts, a way. ‘against which the Indystrial Commission has only one major objection. Pl ie 5 » Mr. Bishop, writing; his commentajes: in the audit which ostensibly Is used in the investigation by a committee of the house of yepresentatives, sayss Only Criticism Made Dodges Facts “The basis of our entire industrial and eeqnomic’ structure is. credit,. -‘The success of all business enterprises ig dependent toa large degree upon the establishment of adequate credit relations. The function a bank is credit extension, \Thg national reseyve system was established for the purpose of enlarging, regulating and stabilizing credit, relations.” ‘ (ihe ny Mr. Bishop might haye added that the foregoing also was the purpgse in establishing the Bank of North Dakota, es ~The Bank, of Narti.Dakota operates,” he continues, peculiarly analagous tothe functions of a reserve bank. \ “It is self-evident that fo properly perform these functions a bank must provid for a reasonable and sufficient liquidity of its assets at all times. “You are. aware of the prevalent condition of,contyaction. This is general and serjons.. In-:some ways, it is: particulgrly acute in your state, At such a time and in such a condition the bank as organized should be in ‘a position to extend considerable relief through the customary channels of credit extension.” ‘The Industria}: commisgion, despite the ‘attacks this subject has aroused in the press of the state hostile to the present administration, chodses to assume Mr. Bishop based his next statement upon being. misinformed, rather than on the fact that he was employed by politicians opposed to the very iden ,of, state ownership, .and a state pynk, ‘But. the Industrial commission . ‘liffers with Mr. Bishop. decisively and emphaticallf upon the next statement. ‘The<conmission points ou The control over the conditions ich.the report criticizes ; namely. the withdrawal of state funds in’ privaté banks where’ they had been redeposited. A law initiatet) by. forces hostile to’ the administration and the farmer. labor program made it mandatory ‘for the Bank of» North Dakota to withdraw , these funds from privatebanks, because. local public officials had taken { sndvantage of the lettér rather than the spirit of the law to, provoke an Cedented run on th resources of the Bank of North Dakota, ., - 4 The Jaw left the decision. of theofficials, of public..subdivisions to them whether they.jwowld carry public funds in, the state's bank. Heretofore thes were compelled to carry them there. Whateyer may have been the issie as the people saw it, the law and its passage was engl of crehting a!run on .the Bank of North Dakota.’ And it did. No bank of reladvee?aize in’ thé world: has. probably ever. been subjected to such. am avihinche of withdrawals. immediately \the: initiated -act became. effective. Yet the bank stood up safely, thanks to the action of the Industria}-commisgion which. issued an’ oper thatwithdrawals. sould be limited to the. normal demands of- the public, treasnries for, money. It-wag not the Bank. of North Dakota glane that; the order was designed tq protect; but private. banks throughout the state, which, totlering ‘as they \were, would have ‘gone dowo under cash demang¢ from the Bank of North Dakota. The, audit: report was-written by.@ man misinformed on. the subject. At anyorate,; the commentary, of which. the pres tration “has made much of, says: “It is therefore’ significant that, the bank ‘9 “under oa’ plan a very obvious fect. \coynizsston. had no year’s herei ry or “advi sable to draw -upon® ifs to the aniount\of $1,390,000, IBAS THAT: THIS GOULD ONLY EFFKECT AN INCREASED STIRIN- AND DECREASE THE ABILITY QE LOCAL BANKS TO ASSIST SYTHE LOCAL MERCHAND AND ‘FARMER AT THE TIME OF THEIR November W, 4 pe , ¢ GREATEST NEED.” t ‘ a en : ‘ Dic. ~ | Bankers”Pay Penalty of Own Blindness: ‘She report of the audit company has. been advértised by misconstruction and “deliberate malice as. a. criticism of the administration of thé Bank of North Dakota. ‘et private bankers, blinded for the moment by, partisan passlon;-helped initiate that law which was. so lions a blow at ‘the credit fabric .6f the state/ at the very time when ev urce, should have been concentrated ‘to help keep the credit machine working. “The bank: hal no alternative lait Tobey the law. It was. not -the;bank's w' hor, was. it the , bank’s policy to (withdraw funds froin localttiogmwhere they would help keep pen, irrespective of the Pons the ft thelr officers; where they banks would: help keep. the merchant in buSness, the tills running and the farmer going ‘on. the: farm, . j , Members. of, the commigéieon feel agfured that had business men foreseen they were voting a group of politicians the right to wreck the state's bank, the law never would have’ carried, What might have been, however aside from the question. The fact remains that the political conspirators, blindly, unseeingly, as it turned out, were given carte blanche to ‘east ruin on the state at a time when the people .were, grouning under the additional burden of financial depression, 4 Significant. indeed was the later attitude of the North’ Dakota Bankers’ association, which indorsed’ and so many members of which were active ia the campaign against the Bank of North Dakota. Bankers woke up ‘at last to’ the danger: ii The~Dankers’ association voted unanimously against a resolution condemning _the Industrial commission for its order commanding the bank to stop the Political run oti the institution, If ever there was a time when confidence in the banking system of-the state and natisn should be maintained by every possible manner,-this is the time. ~~ 3 Every business man and every /farmer and working man in the state ts awate; of: that fact... The. well-being. of -thousandssdepend. upon. what. course of action is followed. The fdture of the st&te is at stake. ~ : Yet upon this frembling stage the politicians opposed to the present state a¥ninistration entered. and. the lower hodse.of the legisinture authorized a committee to investigate the affairs-af the state industries. ‘The Industrial commission welconies_a Zeal ‘investigation not-ouly of the Bank of North Dakota buf of all snestute entegprises, There never, has been ~ (Second in a series of advertisements) ‘ hall very Business. men as well as farmers and workers _ the Bank of North Dakota, _ Sense to Check This Conspiracy Before Too Late. “cit fe ‘that they have wanted to know cal and economic, system -oppgsed to the people “Be Certain privileges) were threat: . \net eered for the purpose ighting the present adminis- | in. which. they had Nuveen the) state inthe initiated law. we t vitally affected by. litical Conspiracy to wreck ; ee SET RO Mi Re ed es Fa BS, xe EM ARSE PoE: a dN So-called Investigation of State's bank is for the benefit of | at phe ae : mi : : EN are) sy difference of ‘opinion ‘on that score; a0. attempt: 0h ke Investigation. . 2 E .Yet the house auditing committee inventi sis for newspaper ‘attacks on thedank n is_a"showy place to provide ab orth Dakotw for abe purpose Z oy: to<destroy the people's coutuence fn jthe bank’ antl. wake wollen iehephat put matenient is quite correct that I haye refused to testify? “thavs ¥ “i ‘ he is ie y been tl tructi relives eri it ; ery’ cotrtesy hax héen offered ‘the: auditors hired. hy. the; ppliticians: n ioe re Se cane gies aUeae iota aaa hostile to the Bank of North Dakotas.every caurtesy and opportunity bas been offeyeil to the honse auditing. commuttee. or its employes to find out whatever to refrain. from, going, into..these matters that disturb confidence, sed on confidence, No man will use a bank which. makes’ brag ie ci tlils ‘and~ Fhe commission has objected, however, to n;mock inyegtigation staged merely, for the purpose of creating newspaper propaganda ; of distorting details. and reledsing false impressions by delibgrate, inisrapresentatiop,. , i ot ei Tee Two complete. audits'\of the affgirs of the Bank of North Dakota have it of Bishop, Brissman & Co.; the other was by the oth audits are im substantial agreement. Nothing ‘A. sore {thumb In all the attacks on the: Institution made before the house auditing committee. \ Davee os | )H. A. Paddock, secretary of the Tudustrial commission, in his report-on the: Bank of North Dakota submitted to the dhouse, senate aud secretary of state, reveals the error of fact in the commentaries of the, Bishop, Brissman company’s report. Ve says: ‘ t 14 U “In the face of fallfng prices and heavy withdrawals of funds by institu- tjons outside the state, the Bank of North Dakota has used its resources in an effort to prevent disaster from falling \upon. the financial institutions within the state. This. is in marked ‘contrast. to! the action of the. Federal Reserve bank of this district, which forced vast amounts of liquidation within’ the » state. of North Dakota at a time-when it> wes. extending, further credi£ to e reserve bank also refused to extend credit to enable the farmer to hold his qrop for a reasonable price, at the same time that it was extending credits in su i manne that the milling interests of ‘the Twin Cities were enabled to use thoxe credits to hold. the same crop after it got into thelr hands.” ‘ ies ‘ ‘ ek pace Hostile: Banks Get Aid:'From Bank ‘of N, D, “The Bank .of North Dakota was ¢reg' fis a people's, bank and is, being ~cun for the benefit-of the people, which: ns its /policy with. reference to the, situation just discussed. Jn ‘pursuing thf ‘policy of beat to. pyeserve the welfare of all’ the people of North’ Dakota, including gll § tions, the Bank of North Dakota has'‘in many cases ‘assisted ‘fmancial <nstitu- tions the, officers of which were doing their .tmost to. destroy ,the Bank of North Dakota, and irrespective of whnt the-future attitude of such financial~ institutions may be, the management of))the Bank .of*North Dakota has announced that it intends to continue, to operate: tn, th manner best fitted to other sections of the same district. serve the-interegts of all.the people of the’ state. i . The foneyoine, repory was_offered to legi rs, whose“ efforts, to, destroy confidence’ the Bank of North Dakota were later 'to-come,out into the open. Despite charges to the-contiary, atiy\unblased tngpectiod of: the Joans and discount and redeposit records of the’ institution ‘will revegl that those com> munities which are potoriously hostile; to- the: reanel Hamers and labor who, elected the present administration have xecelved their full_share-of puplic funds‘as well. as those which have. supported: the; present administration, ; Were. sincere efforts on the part of the press and the politicians, opposed to.the administratlon,.made to set the actual facts. before the, Pupiles the fairness with which, egch community has been treated according .to ityneeds and the re: oapeen of The Bank of North Dakota would be as clear &s day. thetead of that, the ‘so-called “investigation” has become the stamping ground. for politicians,,... What was purported to-be a falp inquiry into the business and condition of the Bank of North Dakata-has falled reveal any unsoundness: of. policy. or practise; but..it has, Itted. the politicians eyery opportunity to mislead, distort, over-emphasize ‘and. misfepresent , not) only the Bank,of, North, Dakota, but members of the Industrial gomimission, Wild, unsustained cliarges have been made with one and: one -enly object, in view. ‘That object. is the: heailities in the press politically. hosti¢.to the organized farmer and \labor government. BS Pea eee On December 31st, the Rank’ of North Dakota's: balance\sheet showed a preat for the eighteen months pf its operation ‘of $135,998.50. But it is wnother, and more significant point that Mr, ,Paddgck in is report, calls to he particular ‘attention ofthe legislature.”: /2° A ; . A A Farm Mortgage Bankers In Field Again The bank was’ organized for service, rather thay profit, and Mr. Paddoct points to the remarkable, farm ‘Tonn record matte by the institution, It will be recalled that although no one has questioned the soundness gf North’ Dakota. bonds gs, security, certain intyrests, workiig,{hroug ame hannals have managed to hold. up, the sale of the state's bonds. pite that fact, the Bank of North Dakota, crippled as it'was*by this conspiracy, went ahead with its farin Joans as best it could beca Of. the ‘pressing need: of the Mr. Paddoek!s report says: 4 / Rees nker's conservatism has been used in’ t! amotnt per agre loaned’ by the Bank “of North, Dakota de-up, to December 31st, 1920,-was:only $14.12, while valuation per acre of all land in the:state’in 1820 was market valuecwas prohably well above $30, lism has afso been used in'the! total amot rd with the legal: adit authorized. Yi made be slaw. creating th wth Dakota, it is,permitted to.make farm loans_ fy a amount not exce: ) per cent-of it pital.and 20 per ‘céut of its deposits, On July j1 . it-had made: Joans ,t6* the. amount ‘of $2, if ¢ ratte and Lad siderable améunt pf such loans ,ready..to. close, . ‘Tig loans. they amounted: to, only, G1’ per :cent of the legal limit and only SL percent Of the sinking! fands then’ on deposit. On October THth, 1920, the farm 1 amounted fovonly 75 per cent of the legal Umit and only, 85 per cent of the sinking fands-then fp deposit. 3 “The initiated) measure ‘supported by; the. Nor¥r-Dakotg, Bankers’ ‘associa- tion, passed in the-general election in November, 1920, wes desighed to destroy the Bank of Nort¥# Dakota. Prior to the passage’ of. this law, mortgage loan companies yefused. to loan money./in the sta competition with the Bank of North Dakota 6 per cent interest rate, eae x oe e “Immediately after- the’ passage of this: law,, mort, loan compan representati' at a meeting-in the Twin Cities, annow that ‘bey would resune making loans:ijn North Dakota. ‘They did this under the iression that the Bank of. North Dakota. was destr and they: would no longer: have to compete“with a 6 pep-ceit interest rate. ;Their: rate had always been and ‘is now, on the averagé/ approximately 8.7 per cent per annum.” ‘Thus the initiated law, bac by the North Dakota Bankers’ association, compelled the Bank of North’ I ta to slop making-farm loans. because it destroyed the fundamental service performed. by. the‘ banksthut is, the con- centration of public funds, 2 babs tae r Officers of the bank andthe Industrial commission did not quit fighting, however and forced to ‘adopt a new policy bythe. initiated law, took: steps which will bring about the sale of the farm lodn bonds in time, so farm 1 Bs end be’ continued.:> AeE ie TheAndustrial commission thus has heen foreed to fight from eyery le to preserve the credit machitfe of the state so that: it would operate for the ° advantage of the péople rather than for private privilege. Seeking to-destroy confidence in the Bank of North Dakota, the ¢ffort also_ has been made to destroy confidence in the officers of the institution. a ineial Institu- ; rin loay business of the. ‘ yY . Bankers. < Malicious Misrepresentation on part of anti-administration press agents, ‘Audit shows sound- o invokes People’s Common. ton when any. breath directed ‘obably would be, disastro1 Te wall a9 all others {m the ation. are in a con Anping he. condition of a bunk might, aud ¢ Cathro, explaining his stand, said: : 5 ‘Mr, Chairman aud. gentlemen of the committee; Ihave been wondering atnte less I appear before you prepared to submit to such tion 9s. you:may. wigh to mak examidla, T have not refused, but have pleaded mats 108 king. telling the world the size of his deposits and loans, Bankers know consider the information which comes to them throygh/ their business. confidenflal, A violation of such confideuce. is classed as one of thé i crimes ‘a banker can ‘commit.’ > Gay “The Fargo Forum catries an drticle this morning that I am afraid ‘to produce any of ‘the records (of the bawk). There are uo defalcatfons, tio -bank and have, not been, so there is no ‘reasoh why I should produce the ‘records, . | ~ es “We'are just emerging from a Rerlod of inflation, For four years our state has ‘had poor, crops. Loans’ of\banks have ‘steadily increased during thay period: The last crop’season has seen a drop in farm prices of more than one-half. The period of adjustment is at hand. | Several. banks hive already closed their doors, \Public, confidence is.shaken. Anything which tends to disturb public confidence at this time means that-many more banks will be forced to*close their doors. If they do close, it will bring untold hardship: to, thousands of their patrgns. " ‘ LE \'“Even the large bankers of the Twin Cities recognize this, and brought Anfluence ‘to bear to. have the call for publicatiom\of bank statements. with drawn, When I was in. Minneapglis about the 23rd of November, a. conference was being held of. the creditors’ of one, of the banks in’this state, trying to be afraid to: arpange. some plan’ to carry thé bank over. One of the bankers left the Ar ; conference and came to me—L was jot in the conferenee—and said: Fae “For God's sake wire Governor Frazier and have him get ‘the state bank examiuer to pull off the call for publica of those statements, If the people realize the vast.amount of borrowed money these banks have up ‘there, andthe small reserve, they. will lose confidence pad withdraw théir’ deposits, not only outsife, the state, but in North Dakota. Many people in Minnesdta will pull out fheir_money.’ ‘| ‘ ; ‘a ) 7 “I salt “Why, yes, I will do that.’ and immediately wrote out a telegtag and sent it. The Bank-of North Dakota has been, doing business with about efglit’out of nine hundred hanks in. this state, and therefore a publication of the deposits and logns of those. banks Tojght do“more to destroy confideneethan anything that could be done. Neither the Industrial comission’ nor, myself, would ‘be ® party to..sueh. di jopure, aes biti OK UeeN CARES ay ‘ i _3 “Your auditors, have had ‘access ¥ the bank’s records, You; ‘yourself, have-been’ asked to graming hem, our auditor's reports set out all” the -Infornigtion. for ich you:ask “me. /Yoor. newspupermen have, had access to these reports, “and they, having Nid consideration of the results, have used d.with-the state's bank’in either, That fact has stood out Ike embezklements and no so-called ‘Jeague puper”, no post-dated checks in‘ the x : (cis iain 4 That call was not, pyblished in ‘an. effort to retain confidgnce. ~ that ififormation in a fajse and misleading way; in a manner calculated by, them.to cause as much disturbance of, public thereby destroy. g. large number of banks,” ‘ + “In, view of that“ situation,” Mr. Cathro continued, “I, myself, and: the IndustyJal, coninission,. feel, that it 1s impossible for" ys longer -to Profect: the banks and their confidence. If'@jsaster comes to tho ae it has been In’ spite of our efforts, from. the: mistptorms tion, belng- spread by ‘the. press: agetife in this hearing, which ts causiag\more harm than the actual facts as they are. “T have only one request to\make and that is that you do’ not confine“ine in my testimony ‘of. this subj to any few banks. I haye said that the policy. of. the, Bank .of. North Dakofa, -in the.main, was to eave th money where we found it, In the ‘localities where it originated. “I'still. insist tHHE Ve correct. You canno& prove or disprove the policy by considering any one bank or group of banks, but you must. consider them all, the entire eight hundred. \ ‘ “T'therefore, at this time; request that a& we proceed with, my. tegtimony I be permitted to, give you gretit ncoranhign A Spans pitts ‘Tall the facts, and not merely the facts whtch partisan counsel may wish to elidt,. ‘In closing, let me,gtaterthat the rec have at all times been open to you and your counsel, and. [wish further to state that I want to offer you a special invitation, either singly ar.{n a,body, to, go into the hank gad ‘ook: over our records, to gather some idea of the large amount of records’ to be gone into, which you cannot get excépt by a visit to the bank itself. I thank you.” Immediniely, pn the heels of this statement, ‘as show there was contiict over the figuras inthe audit, which the house ‘committer had in. {i possession, Mr. Cathro. testified : 2 ie “There has, neyer been bypught to. my attention anything that would cause ine: to don >t.it.in apy substantial manner * <8 ys eee The ouly objection offered to the auditor's report by. Mr. Catbro were the conclusions, drawn: by the head of the audjtfirm,. which were discoun, fenanced by..the.facta inthe situation over which the bapk had"ao'conttot, such’as the passage of the initiated law. ~ + * efi? The Industt i! commission and ‘Mr. Cathra opposed to the last of their regourggs: Uhese ts to,teae down: confidence in’ tie whole Ganking systen of the commonw ar aden it 5 : sf. irdered to Pay Obligations’: After this, action of the, house dpvestigating Conimitfee, in order” to" saTe- self so far ‘a8 possible, the r of action ons The Indugtrial: commiagion 3 regi ford iy yment, if necessary, checks, {fom political subdivisions: and’ the: 'stak gonfidence as possible, : apd treasurer, with ‘the exception. of those. tor, the public schools, the Bs penal, charitable’and ‘edueational institutions. Tolitical shally ale 3 <tadilng - inet deposits, ip. the. state ,bank. were exenipted. This’ a needed to protect the Bank of North Dakota ‘against further déaigged with-. drawals. At the same tiie, the policy of leniency. toward, the private banking system ; was necessarily. gbandoned, ‘because the Youse audit committee destroyed the fruits of that policy. he , S58 Share The responsibility, rests; upon’ the political, conspirators. Ppt mn © Collectors were ordered sent out fo every bank inthe state to. demaid payment from the private. bankers of their obligations to ‘the Bank of North Dal (he statement of. position-of the Industrial, commission gald: ¥ : lany private banks have alle. neglectéd and refused to pay funds: due to the Bank of North Dakota when-called upon, giving as their reason paar crop conditions and. failyre of the people to megt.their obligations. x ». "The Bank of North pakoial has endeavored to be as lenient as possible with such private. banking\institutfons in-forcing paymgnt of such obligations. Dajota, was embarrassed gnd in financial -stringencies, when.as a fact ith only diffigulty. oxas, the inability. of the privately oWned panks -brivate banking system to meet its obligations, due to such private baakets and such private bankisg. system baxipg extended more: loans. thay ey should have; having failed, to_keep a. sufficient amount of reserve and wel yale to. meet checke-upon demand deposits made with them. i “The_press: of the state: is trying to conceal the. fact. that, the. fi ;Btringency is due tp, the failure,of private banks aud bankers to meet thelr obligations, Now in order that the Bank of North Dakota may he‘ 7 to collect a portion of those funds* which are due it, the management! ry tH bank is fereby directed to send out,collectars to force payment. of obligations the, matter tg. the atate: due ity/ard in case payment Js not made, to v 5 ’ ° ee ee 5% fer,” Cathro Fights Vicious Drive on Banks : \""Pirmers, labor snd. huisiness, mop of the whole: tate f Credit and banking are built on confidence: Destroy .{t and the whol semmission’s desire is simply to eet the facta. this politi 4 structure comes.tumbjing, down.’ Although evepy. rtupity was gffered the yeu. With. the facts, the people will know. where to pl Nouse audit committee to Tearn“each and all detatls in connection/ with sthe:: Thege:attempts te. bring dewn the whole credit structure 6f ty Bank of North Dakota, the effort was made to force the officers of the -ehance that ‘Political capital may be made out of if, are. mor peer Judgement. They represent: more. than an infameus stab at the o institution, to divulge: the affairs of private banks in all parts of the state. It will be remembered that the Bank of North Dakota does business with more’ thant pen North Dakota, .* ges ve ai 74 : Ht also, will be;remembered that the finaneial ‘conditlén of thi tate, as - THE INDUSTRIAL COM MISSION OF THE STATE OF NORTH DAKQTA North Dakota "ameng ae sietar States of the Uni . They il atcoethed ighumanity, because swel every indi inthe than, Woman er chilg—tu involved: 7 he nr” che Ste —OF every | on left 5 xf “Private banking institutions have charged that the Bank of North~ ae a N A, th, iy, ss Pe j ay : Sh ve saa] f ne ‘ ‘ ‘ ’ “ Ne . - ¢ Se é . g a U Le / R ; ‘ Gs “ ’ Se f Pg > Zz i } \ \et t f KR y \ E “ >» Q ’ \ \ ee 6 SK Te ) Sg. TF { Poo \ : 7 J iD : Ny Pe | ‘ . \ ‘ X q a4