North Dakota’s economy, relying heavily on the unpredictable weather, has always been volatile. Cycles of drought and harsh winters can make it hard to earn a living.
The situation was made worse in the early 1900s when farm suppliers increased their prices and banks raised interest rates on farm loans. Frustrated by an economic environment seen as unfair, A.C. Townley organized the Nonpartisan League. The intent of the organization was to protect the farmer. When the League gained control of the governor’s office and legislature in 1918, the platform included the establishment of the Bank of North Dakota, which opened in 1919. But challenges arose almost immediately.
On this date in 1920, the League’s newspaper warned of a “scheme to kill the people’s bank,” blaming big city “bank wreckers” and “grain gamblers” who felt their profits were threatened by having a state bank.
The harvest of 1920 wasn’t a record breaker, but it was adequate, and farmers looked forward to be able to pay their bills. Big city traders, however, forced the price of grain below the cost of production. Farmers refused to sell, which meant they had no money for loan payments, which left the bank struggling.
In addition to these outside interests putting pressure on the state bank, the situation was exacerbated by the Nonpartisan League’s purchased of the Scandinavian American Bank in 1917. By 1919, it was in financial difficulty. It went into receivership in 1921 after audits revealed worthless loans and incompetent management. Many people assumed that the Scandinavian Bank of Fargo was the same as the Bank of North Dakota, and the state bank suffered from guilt by association. North Dakotans doubted the financial ability of the Industrial Commission, the bank managers, and the League itself.
The bank problems furnished ample ammunition for League opponents who associated it with communism. North Dakotans were soon portrayed as ignorant dupes, with a newspaper in Washington state writing: “No wonder that the Nonpartisan bunk became so popular in North Dakota. The census taker found only five bathtubs in four counties. Uncleanliness and ignorance are ever companions.”
In spite of challenges, the Bank of North Dakota survived. Today the bank lives up to its original mandate to help the state grow while not damaging other financial institutions.
Dakota Datebook written by Carole Butcher
Sources:
- Nonpartisan Leader. “Bank Wreckers Trying to Ruin a Whole State.” Minneapolis. 12/13/1920. Page 1.
- Bank of North Dakota. “History of BND.” https://bnd.nd.gov/history-of-bnd/ Accessed 12/6/2023.
- Popular Resistance.Org. 100 Years: The Bank of North Dakota. https://popularresistance.org/north-dakota-public-bank-nonpartisan-league-gains-support/ Accessed 11/8/2023.
