North Dakota bank a model for our state

By Rap Lewis

Guess which state has the nation’s only state-run bank.

Now guess which state is not running a budget deficit despite today’s terrible economic climate.

If you guessed North Dakota – Bing

Since 1919, the state-owned Bank of North Dakota has faithfully lived up to its mission: To promote the development of agriculture, commerce and industry in North Dakota. To carry out that mission, the bank works cooperatively with other financial institutions to provide the necessary funds.

In the process, Bank of North Dakota makes a profit. In 1945, it began transferring part of that profit to the state’s General Fund. Since then, its capital transfers have become the norm, adding $500 million to state revenue. As a result, while other states (including Washington) are floundering in debt, North Dakota’s state budget is balanced.

And the bank’s wholesome lending practices have a good deal to do with the state’s unemployment rate, among the lowest in the nation.

The bank has bipartisan support, but North Dakota is a strongly Republican state. Bank of North Dakota is administered by the governor, the attorney general, and the commissioner of agriculture – all Republicans.

The broad range of its financing programs helps to explain its popularity: It provides farm and ranch financing, small business loans, and loan funds for community, rural and regional development.

In 1967, Bank of North Dakota made the nation’s first federally-insured student loan. It continues today to provide a variety of loans for students seeking post-secondary education.

The bank was born to address the crisis in North Dakota agriculture in the early 1900s. At that time, grain prices were suppressed by out-of-state grain dealers. Prices of farm supplies soared. So did the interest rates on farm loans. By 1919, state ownership and control of marketing and credit agencies was widely demanded. The legislature responded by establishing Bank of North Dakota and the North Dakota Mill and Elevator Association. They continue to flourish today.

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