The Nonpartisan Leader Newspaper, October 13, 1919, Page 8

T St A e e o A N b e i : i i | ! | | i { t What the Bank of the People Has Done Six Months After Organization Began, North Dakota Institution Has Cut Interest Rate, Built Up State’s Credit and Mobilized State Funds- Bismarck Bureau, Nonpartisan Leader. HE hollow mockery of the great .buncombe, by which big busi- ness, through many decades, has deluded the people that any collective business enterprise would be a failure has been re- vealed by the Bank of North Dakota. Six months ago organization of the bank began. Only a few weeks ago the working staff was far enough along toward organization so that it could be considered that the bank was doing business. For no longer ago than July 28 the first deposits were received. Yet this recard, unequaled in American history, which itself is a history of ingenuity in rapid or- ganization of huge enterprises, is shown in its true magnitude by a comparison with other public or- ganizations. For instance, it was more than a year after the federal reserve bank act passed that the federal reserve banks were opened. Yet the task was relatively no greater than that which faced the people of North Dakota. More than a year and a half was needed for the Federal Land bank to get into operation. But no efficiency nor sound policy was sacrificed because of the neccessity of speed in organization. Big business says that when you eliminate the mo- tive of private profit from an organization, that you wipe out the possibility of good service. Yet the Bank of North Dakota was organized, not for profit, but for public service. And thus big busi- ness’ myth is exploded, because enthusiasm for public service has been ‘proved to be as great an incentive to progress as private profit. Here was an institution to be formed which could be. considered a success when it should have at- tained: First—The competitive power against private ex- tortionists that would free the people of North Dakota from the clutches of the money trust. Second—A demonstrable reduction in interest rates on farm mortgages that would prove that the first aim had been realized: Third—The accumulation of liquid cash re- sources that would provide the people of the state not only with the capital to pay for improvements on their land and lift the burden of unfair interest charges off their backs, but at the same time put the state in a financial condition that would permit it to help the producers at crop-moving time to hold for better prices and remove them from their previous condition of servitude to the middleman., PURPOSE TO REDUCE . " WIDE PRICE SPREAD The third principle is the heart of the state’s industrial program, of which the state bank is the first step, because, es- sentially, the purpose of the program is to reduce the “spread” between the pro- ducer and the consumer, which is nothing more than legalized robbery. /// upon which they might enter - LA Now here is what the Bank of North liakota has accomplished: It has mobilized all public funds of the state for the service of the producers. It has cut interest rates on farm loans from the average of 8.7 per cent prevailing under the old regime to 6 per-cent on all its loans. It has banished the fear of the mortgage shark because it had evolved an amortization plan by which the borrower pays off the prin- cipal of his loan at the rate of 1 per cent per annum. In other words, the borrower of $1,000 pays 7 per cent, or $70, for 30 years and at the end of that time owes neither principal nor interest. It has raised the interest rate on public « funds to 4 per cent, collected from private banks acting as depositaries. The old rate, where public funds remained under local juris- diction, was 8 per cent—when it was collected. But in many cases it was not collected. The Bank of North Dakota allows local .commu- nities 2 per cent interest on public funds. It has served not only to build up the credit of the state as a whole, but it has in no way disturbed the banking functions of the local communities; it-has merely unified them for the state as a whole. ¢ These are achievements of record. They- are ac- complishments that mean the turning point in the history and financial progress of the state. Yet they represent Herculean tasks performed within a short space of time. Big business, through its prostitute press, will recognize none of the deci- sive performances of a people’s institution which it can not control.” But underground, not only in its newspapers but through its henchmen and ignor- ant lip-servers, it is striving in every nasty little way it can to destroy-the confidence of the people, not only in the institution but in the men at the head of it. To the credit of the better intelligence of the people of North Dakota, these hostile in- terests are not succeeding in their unceasing cam- paign. ; The' accomplishments of the Bank of Noxth Dakota even at this early day are big history. They represent a huge task performed. The in- dustrial commission, F. W. Cathro, later to become director general, and J. R. Waters, manager of the - institution, embarked upon an uncharted sea just six months ago. Mr. Waters was appointed April 4, this year, as manager of the bank. Mr. Cathro was called from Bottineau, where he had been in the banking busi- ness for 27 years, on April 9 to work with the com- mission and the manager on the plan of operation. There was no precedent to follow. Authority for the establishment of the bank was vested in ~ Above—The working force of the Bank of North Dakota. Below—Left, counting room of the bank; right, main lobby. ' PAGE EIGHT the industrial commission by the legislature. With no guide, with no like institution in existence in the history of the United States, with specific na- tive conditions: that required a thorough knowledge of agricultural, commercial and financial problems peculiar to North Dakota; with no chance to copy other institutions in' the thousands of details in- volved in originating the bank, it was neccessary to begin with absolutely nothing to work on but the prime purposé of the people—to build the machinery that would make things easier for the producers of the wealth of the state. ABSENCE OF RED TAPE ENABLED QUICK ORGANIZATION Formulation of the policy of the bank itself, un- der what the people have come to know as bureau- cratic methods, easily would have taken a year’s time, with plenty of excuse for so doing. Instead of that, however, Mr. Cathro and Mr. Waters, un- der authority of free action wisely granted by the industrial commission, went at it, unencumbered by red tape, outlined their program, conferred with ' the bankers of the state, and threshed over and evolved the policy of the institution, from which there has been no batk step to date. Bankers who were- opposed to the institution had to confess not only its fairness, but its practicability. Hundreds of forms had to be prepared and printed; and they had to be designed to the minutest accounting detail. Other records had to be designed. It is significent of the care shown that none of these records has failed to meet the purpose conceived. _Regulations, ‘bylaws and rules and orders had to be drawn up. Equipment had to be manufactured and as- sembled and installed. < The working force had to be drawn together - and organized. Regulations with banks had to be establish- ed. This included dealings with nearly 200 correspondent banks within the state; with many others outside of the state. ) Relations “with nearly 4,000 treasurers of public corporations had to be established and co-ordinated. The banking force got into its offices in Bismarck only on May 17. The first deposits were received July 28. In the eight weeks intervening at the time this article was written, more than $16,000,- 000 in deposits have been put on the books. Despite the magnitude of this task, only 23 per cent of the $100,000 appropriated by the legis- lature for the purpose of organizing the institution was spent. The bank is paying its own way. Yet one of the greatest arguments which private busi- ness interests have used to keep the people from going into business for themeslves is that public institutions are bound around with red tape and spend money like it was water—because “there is no incen- tive for profit.” Typical of thq criticisms arising from (Continued on page 14) R R B SR R S e e PN § i |} - Al