Public banking in North Dakota


North Dakota is one of the three most conservative states in the United States, according to Gallup. Wyoming is number one, with self-identified conservatives outnumbering self-identified liberals by 35 percentage points. In North Dakota and Mississippi, the percentage is 31 points.

Yet many progressive social and environmental activists look to an old North Dakota institution for inspiration. That’s the Bank of North Dakota (BND). It is the only publicly owned bank in the United States.

The bank provides cheap loans to farmers, college students and businesses. During the 2008 economic meltdown, the BND did quite well.

It was created as a result of a populist revolt by farmers, sick of being screwed over by predatory big banks in Minnesota’s Twin Cities, Chicago and New York. In 1915, a failed flax farmer and former Socialist Party organizer named A.C. Townley founded a movement called the Non Partisan League (NPL).

The NPLers entered the Republican primaries in a disciplined manner, holding preliminary local meetings where everybody openly discussed the issues. In 1917, three quarters of the Republicans and almost all of the Democrats in the state legislature were in the NPL caucus. By 1919, the NPL controlled the governorship and elected a U.S. congressman.

They established not only a publicly owned bank but also created socialized flour mills, grain elevators, a railroad, meatpacking houses and hail insurance. They pushed through significant reforms such as advanced versions of workers’ compensation, income and inheritance taxes, a strong mine-safety law and limits to legal injunctions on strikes.

The NPL spread throughout the Midwest and the Pacific Northwest. It even branched out into Canada where it would inspire the creation of the Cooperative Commonwealth Federation (CCF), which would merge with the Canadian Labour Congress to become today’s democratic socialist New Democratic Party (NDP). It is Canada’s third largest party best known for creating a single payer health care system in the province of Saskatchewan in the early 1960s. For years, NDPers in the national parliament pushed a national single payer system which would be created in 1968 by a Liberal Party government.

The U.S. NPL wasn’t as successful as the NDP. It faced fierce attacks by the big banks, but was able to elect a governor twice during the Great Depression. Nevertheless, the NPL declined in power and merged with North Dakota’s Democratic Party in 1956. But the socialized bank and grain mill still exist.

Public banking advocates hope the successes of the BND will help their movement the way that the example of the NDP’s single payer health care system in Saskatchewan spurred the development of a national reform in Canada.

The bank is the depository for all state tax collections and fees. They plow those deposits back into the state of North Dakota in the form of loans. This boosts agriculture and economic development.

Ellen Brown, founder of the Public Banking Institute, argues that Americans could save $1 trillion over 10 years by financing infrastructure through publicly owned banks. She notes that the BND is funding infrastructure at 2 percent annually:

“In 2015, the North Dakota legislature established a BND Infrastructure Loan Fund program that made $50 million in funds available to communities with a population of less than 2,000, and $100 million available to communities with a population greater than 2,000. These loans have a 2 percent fixed interest rate and a term of up to 30 years. The proceeds can be used for the new construction of water and treatment plants, sewer and water lines, transportation infrastructure and other infrastructure needs to support new growth in a community.”

In April 1997, a massive flood wiped out the city of Grand Forks. There were 50,000 evacuees and the property losses were over $3.5 billion. The BND swiftly came to the rescue with nearly $70 million in credit lines before the state received laggard Federal Emergency Management Agency reimbursements.

This bank isn’t a gambling casino but a careful institution. As BND president Eric Hardmeyer said in a 2009 Mother Jones interview:

“We’re a fairly conservative lot up here in the upper Midwest and we didn’t do any subprime lending and we have the ability to get into the derivatives markets and put on swaps and callers and caps and credit default swaps and just chose not to do it, really chose a Warren Buffett mentality — if we don’t understand it, we’re not going to jump into it. And so we’ve avoided all those pitfalls.”

The BND has a very non-political stance. Public banking advocate Matt Stannard raises some vexing questions about this on the “Cowboy on the Commons” blog. He says “BND created the infrastructure for North Dakota’s oil boom, and if the state were to commit to a truly proactive transition to renewable and clean energy (it has taken baby steps), the BND would make it happen financially — with an efficiency that would put the rest of the country to shame.”

Stannard notes something more disturbing. The BND has provided millions to fund law enforcement expenses at Standing Rock. He says “the actions illustrate the folly of pushing for state and local control without accompanying universal human and environmental rights.”

Stannard says public banking advocates “ought to emphasize the ways public control of state and municipal finance can fund new structures of work and production that neither exploit nor extract. That has always been the most powerful argument for public banks.”

On Feb. 11, there will be a conference on public banking at the First United Methodist Church, 1421 Spruce St., in Boulder from 12:30 to 3:30 p.m. There is a suggested donation but no one will be turned away.

For more information, see

This opinion column does not necessarily reflect the views of Boulder Weekly.

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