The nonpartisan leader. [volume], October 28, 1915, Image 6

About The nonpartisan leader. [volume] (Fargo, N.D.) 1915-1921

Image provided by: State Historical Society of North Dakota

                
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PAGE SIX
A
Another sensational chapter of
North Dakota Finance is disclosed in
petition filed and granted by Judge
ff. A. Coffey of the Fifth Judicial Dis
trict, Stutsman County, and in a,n
action Before that Court in which
Michael Murphy, receiver of the Me
dina State Bank is plaintiff and L. B.
Hanna, E. J. Weiser and the First
•National Bank of Fargo, a corpora
tion, are made defendants.
Medina State Bank.
This story of the closing of the
Medina State Bank by the State Bank
examiner at Medina, Stutsman Coun
ty, in January, 1914, although care
fully suppressed by the Press of the
State, has finally come to- light
through the filing of a petition by its
receiver, Michael .Murphy, in which
he petitions the Court for an order
autorizing him to institute and prose
cute an action to recover assets of
the bank apiproximating $25,000 or
$30,000.
.The Medina State Bank was up un
til January 1914 a going Banking in
,s stitution performing the regular
functions of the Banking business.
About this time several heavy drafts
fj2L
f- ,, 7 -^r
NATION that fails to protect its farmers is destined to
decay. The vitality and soundness of a nation depends
upon the economically secure condition of the agriculturist
of that nation.
Exploit and crush the farmer and you have undermined the
corner-stone of civilization.
Permit the omnipresent trust to bleed and sap. the life out
of the agricultural class and you endanger the American Republic
and threaten an untimely senility to our national existence.
In his "The Rise of Christianity," the German writer, Kalthoff,
speaking of the farmers in ancient Rome, says:
"The noble Roman becomes a relentless exploiter of the poor
peasant. He is a speculator on a grand scale and menaces the
State."
Speaking of the result of this treatment accorded the peas
ants Tiberius Gracchus says:
"The wild beast has its cavern and its den every one of
them has its place of refuge. But those who are called the lords
of the earth have nothing left but light and sunshine. There is
not a stone that they can call their own and lay their weary
heads to rest on."
History further informs us that every effort to revive the
dying Roman world completely failed. It failed because by kill
ing off the independent, land-owning farmer they thereby under
mined and finally destroyed the very foundation of popular gov
ernment.
For, as David Lubin says, the state may be compared to a
tripod of which one of the supports is labor, another commerce,
and the third agriculture.
The first two are mainly urban and constitute the pro
gressive elements of society. The farmers, largely rural, usually
are conservative. And a reasonable degree of conservativeness
is essential to strike a balance with the sometimes too radical
elements. But with the farming element killed off there was no
balance left.
It is, therefore, of the highest importance that the state
governments, especially in sections of the country where, agri
culture predominates, give careful and serious attention to the
economic needs of the farmer. And indeed the National govern
ment should give the subject aggressive consideration. In the
past our national and state governments have devoted entirely
too much attention to helping "infant industries," by grants,
loans, advances and concessions, to manufacturing and trans
portation concerns to the neglect of the agricultural interest of
the country.
The wealth of the nation primarily eminates from the farm
and a policy that neglects to give the farmer efficient service is
suicidal in the extreme.
It is sometimes objected that to make possible more credits
for the farmer simply puts the farmer that much more in debt.
But this argument will not hold good when both a long-time, low
interest rate System is taken in connection with a better market
ing system. With a better marketing system the farmer would
get more profits for his produce and would require less credits.
THE NONPARTISAN LEADER
By Otto T. Monroe
Are the Bank Wreckers Busy
upon its cash reserve placed it in
rather an embarrassing position un
less it could immediately negotiate
some of its notes and securities. A
great deal of the paper held by the
bank consisted^ of second and third
mortgages, which though perfectly
good and sound would require con
siderable time to convert into cash
at their face value.
The receiver sets up that the de
fendants and financial concerns in
which they were interested were cred
itors of the bank to the amount of
several thousand dollars and holders
of its stock as collateral security.
Naturally the directors of the Me
dina State Bank turned to them in
this critical time of the bank's need
and at a conference between the
bank's officers ind L.-B. Hanna and
E. J. eWiser, directors of the First
National Bank of Fargo, an arrange
ment was made whereby the officers
of the Medina State Bank returned to
their sorely pressed institution not
with low bowed head and stooping
jfioulders but lighter of heart and
with assurance that suecor was close
at hand,
By Aug. Wolversen
a
The petitioner sets forth that a
short time prior to "the closing of the
Medina State Bank, L. B. Hanna and
!E. J, Weiser, directors of The First
National Bank of Fargo, agreed with
the officers of the Medina State Bank
that they would sehd- a man out to
the Medina State Bank to investigate
the value of its assets, and agreed if
his report was favorable that they,
Hanna and Weiser, would furnish and
suppily the bank with funds to meet
any run on it and to pay all its
creditors and depositors in the usual
course of business and to keep the
bank ojpen and running as a. going
institution.
That L. B. Hanna and E: J. Weiser
agreed that immediately upon receiv
ing the report they Would send Gor
don H. Nesbit, who was the Cashier
of the First National Bank of Fargo,
out to Medina for the Fjurpose of se
lecting from the assets, of the Medina
State Bank such notes and assets as
he might deem advisable and suffi
cient to protect and secure Hanna
and Weiser in advancing the money.
That Hanna and Weiser immediate
ly afterward sent out one Frank
As the profits of the farmer increased Jthe amount of credits re
quired would decrease until finally none would be needed.
One objection urged to the Raiffeisen credit system of Ger
many is that it accepts as members of the co-operative banks only
land owners. This, it is pointed out will not help the tenant, who
has no land.
But thei'e are other systems that have rendered valuable
service, especially to tenants.
The one \ve have in mind is not a new and untried plan,
but one that has been well tested and proved successful. That
is the plan, in effect in New Zealand.
The government of New Zealand issues and sells bonds, the
income from which is loaned to settlers at 5 per cent interest for
periods varying from 20 to 36^ years, depending on the character
of security. This money is loaned on the amortization plan. For
example, a $1,000 20-year loan at 5 per cent interest would all be
paid off in twenty annual payments of $80.24 each. The first year
the interest would be $50 and the amount of amortization would
be $30.24.- The seqpnd year the interest would be $48.48 and the
amortization would be $31.76. So that each year the interest
decreases and the amortization increases, yet the total never
exceeds $80.24. In the twentieth year the interest is $3.82 and the
amortization is $76.42.
This plan is also in effect in Australia, the Philippine
Islands and several Provinces of Canada.
Under this system the economic saving is great. The overr
head charges are small compared to those of private money lend
ing agencies. New Zealand, for instance, sells her bonds in the
open money market as low as 3 and 3% per cent. And yet she
nets on an average in recent years of more than $300,000 annually.
The possibilities for such a system in this country is beyond
the dreams of the most optimistic. New Zealand with a popula
tion of only 1,100,000, about half the population of the state of
Virginia, loaned to its settlers, with their farms as security, over
$60,000,000 at the rate of 5 per cent interest and for periods
varying from 20 to 36% years.
That amount was loaned to 32,738 settlers, one hundred
less than the number of white tenants in the .State of Virginia.
The average loan was $2,000 and already 45 per cent of the loains
have been repaid. Only 33 out of the 32,783 failed to make" their
payments.
7
It will be recalled that North Dakota has a law that permits
the State to loan funds obtained from school lands, but it has
not worked very well, possibly due to the fact that it is in the
hands of its enemies instead of its friends. As long as-those who
profit by loaning money execute the laws any law that will inter
fere with their business will get little attention.
Oklahoma has such a law and has loaned to farmers since
1907 more than $4,000,000. These loans are now made for only
five years and it is planned to change the time to ten years.
The only way to get good results from such a system is to
have the matter in the hands of the friends and beneficiaries of
the system. This can done only by the farmers getting control
of the State government.
Tucker who made an investigation of
the assets and condition of the bank
and reported favorably back to Hanna
and Weiser, .and that immediately
after Tucker made his. report to
Hanna'and Weiser," Gordon H. Nesbit"
came out to the -bank and, selecting
.notes and securities belonging to the
Medina State Bank, which the peti
tioner, Michael Murphy, believes ag
gregate between $25,000 and 35,000
carried them away. -'"is*" 1
The petition goes""on 'fto** state: "U*
'•'That after receiving, taking away
and retaining the said assets of the
said Medina State Bank as aforesaid,
the said L.- B. Hanna and E. J. Weiser
neglected and refused and still neg
lect and refuse to perform and carry
out Jhe termgi of their said
ft
5
agree- ffijjSjfci v-
sfp
ment and neglected and refused* to %&&&
furnish or Supply any funds or mon-
ies for the purposes above set fortl\
or for any purpose, but on the con
trary permitted the State Bank Ex
aminer of the State of North Da
kota to .take charge of and to close
said Bank, all, to the damage of said
Medina State Bank in the jsum of
about -$75,000.
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