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The New Federalist January 26, 1998 Pages 5-7

Amerian Almana
The Amerian !ystem Prini"le
William Lemke and the Bank of North Dakota
By Richard Freeman

#hester Frit$ %i&rary, '( )* N( +a,)ta
The original Bank of North Dakota. Inset: William Lemke as a young man.
-n 1919, .illiam %em,e reated the /an, )* N)rth +a,)ta, in the traditi)n
)* the Amerian !ystem ")liies )* A&raham %in)ln0s e)n)mi m)&ili$a-
ti)n )* 1861-65, )* Ale1ander 2amilt)n0s First Nati)nal /an,, and )*
/en3amin Fran,lin0s *)unding )* the 4e"u&li(
The )riginal legislati)n reating the /an, )* N)rth +a,)ta ga5e it wide-
ranging ")wer as a state-)wned, "u&li redit, anti-usury de5el)"ment &an,(
-ts &)ld harter em")wered it t) )nentrate de")sits *r)m state agenies,
and t) issue &)nds *)r the *inaning )* large-sale in*rastruture, h)me
&uilding, and agriulture( F)r a &rie* time, the /an, )uld als) dis)unt
"ri5ate &an, l)ans, in )rder t) in3et new li6uidity int) N)rth +a,)ta0s
"ri5ate &an,ing system(
The /an, had &een )rgani$ed &y the N)n"artisan %eague 7NP%8, a m)5e-
ment )* *armers and "r)duers esta&lished in 1915, )* whih %em,e &eame
the leader( -t engaged in an all-)ut war with the *inanier )ligarhy, "i5)ted
ar)und the Angl)-+uth m)narhy, whih had illegally installed the '(!(
Federal 4eser5e !ystem in 1919 t) )ntr)l Ameria0s redit and m)netary
")liy, and thene t) im")se a ")liy )* usury(
This %)nd)n-entered )ligarhy *)rged a tri"le-headed 3uni)r )ligarhy in
Ameria-)nsisting )* the grain artel, the rail artel, and the &an,ing artel
:whih )"erated *r)m a &ridgehead in ;innea")lis, ;innes)ta( -ts
"ur")se was t) undermine the Amerian re"u&li( At the turn )* the entury,
the artels inreasingly l))ted the *armers )* Ameria( They ran the entral
")rti)n )* the 'nited !tates as their "ers)nal sla5e "lantati)n< the *armers
&eame indentured hattel, hained &y high inde&tedness, and reei5ing
*r)m the grain )m"anies )nly )ne-hal* t) tw)-thirds )* the 5alue )* their
r)"( The *arm e)n)my &egan t) deay(
The /an, )"ened its d))rs )n July 28, 1919( =5er the ne1t three years, the
tri"le-headed )ligarhy did e5erything in its ")wer, legal and illegal, t)
&an,ru"t and destr)y the /an, and its de5el)"ment "ers"eti5e( This
&eame )ne )* the de*ining &attles )* the early "art )* the 2>th #entury(
?ah "hase )* &attle was trum"eted ar)ss the )untry &y news"a"ers suh
as The New York Times, whih thunder)usly atta,ed %em,e and the NP%(
Amerians t)), sides )n the /an, 6uesti)n( Ar)ss the )untry, milli)ns )*
*armers, w)r,ers, and &usinessmen su"")rted the /an,(
.hy was this *ight s) im")rtant@ N)rth +a,)ta0s tiny ")"ulati)n was less
than that )* any )* Ameria0s 5> largest ities at the time(
.illiam %em,e 71878-195>8, as a re"resentati5e )* a generati)n &)rn
sarely 15 years a*ter A&raham %in)ln0s Presideny, aggressi5ely &r)ught
%in)ln0s Amerian !ystem )* ?)n)mis int) the 2>th #entury( Alth)ugh
there is a limit t) what a state de5el)"ment &an, an a)m"lish, sine
*undamental e)n)mi s)luti)ns usually in5)l5e nati)nal )r internati)nal
)n*igurati)ns, n)netheless, as a germ-"rini"le whih an s"read t) )ther
states and &e)me the &asis *)r nati)nal "r)grams 7e1atly what .illiam
%em,e had in mind8, a state &an, an ha5e a ")wer*ul im"at( Further,
within that "ers"eti5e, a state &an, an ad5ane state de5el)"ment, d)ing
what is n)t the "r)5ine )*, )r d)ne &y the *ederal g)5ernment(
%em,e &elie5ed:as did #)tt)n ;ather, /en3amin Fran,lin, 2enry #lay,
2enry #arey, %in)ln, and 2amilt)n &e*)re him:that in a re"u&li, the
nati)n-state an inter5ene t) &e a *)re *)r the a)m"lishment )* g))d,
thr)ugh anti-usury, anti-sla5ery, dirigisti state-*)stered and -*inaned
e)n)mi de5el)"ment( This )ne"t deri5es *r)m the thin,ing )* the great
"hil)s)"her and sientist A)tt*ried .ilhelm %ei&ni$, wh)se ideas hel"ed
*)und Ameria( 'nder the general wel*are lause )* the #)nstituti)n, the
state *)sters the well-&eing )* its iti$ens, &y "r)5iding #lassial eduati)n
t) de5el)" the )gniti5e ")wer )* the mind( -t issues and m)&ili$es hea"
and a&undant redit t) manu*aturing, agriulture, )nstruti)n, mining,
trans")rtati)n, and in*rastruture(
This )mmitment led Ameria int) &e)ming the greatest industrial-
agriultural re"u&li in the w)rld, &y the turn )* the 2>th #entury(
?)n)mist %ynd)n %a4)uhe has re5ealed that the underlying BseretB t)
why this meth)d :&ased in the Plat)ni traditi)n:w)r,s, lies in the
de5el)"ment )* the ")wer )* reas)n( -n his reent "iee BThe .ells )*
+))m,B %a4)uhe wr)te,
The anti-entr)"i generati)n )* net "hysial-e)n)mi "r)*ita&ility,
lies within the a"aity )* the indi5idual human mind t) generate
5alidated dis)5eries )* new "rini"le, and t) transmit th)se
dis)5eries t) )ther minds &y meth)ds )* )gniti5e re"liati)n( This
is e**eted thr)ugh the generati)n and disseminati)n *)r "ratie )*
5alid dis)5eries )* "rini"le, dis)5eries whih are )riginally
generated, and re"liated within the s)5ereign )gniti5e "r)esses )*
the indi5idual mind(
1
The transmissi)n )* these sienti*i dis)5eries t) the e)n)my, thr)ugh the
mahine t))l "rini"le and in*rastruture, "r)dues an inrease in the
a"ital-intensi5ity and ")wer-intensi5ity )* the "r)duti5e m)de )* the
e)n)my, whih, when 3)ined t) the im"r)5ed )gniti5e ")wers )* la&)r,
inreases the rate )* anti-entr)"i e)n)mi ati5ity( ;an inreases mastery
)5er nature(
'nder the New C)r, &an,ing h)uses )* J(P( ;)rgan, et al(, the nati)n0s
railr)ads were trans*)rmed *r)m an engine )* de5el)"ment, int) an instru-
1 %ynd)n 2( %a4)uhe, Jr( BThe .ells )* +))m,B EIR, D)l( 2E, N)( 51, +e( 19, 1997,
""( 12-9>(
ment *)r s"eulati)n, and *)r g)uging the *armer with sandal)usly high rail
rates *)r m)5ing grain t) mar,et(
Ao!e: a train of the ".#. $ilitary Railroad% constructed y Lincoln&s "nion
forces. Left: Araham Lincoln. Belo' right: (.). $organ.
Lemke&s *o+Thinkers
+uring the *irst hal* )* the 2>th #entury, %em,e had se5eral Amerian
!ystem, anti-*ree trade )-thin,ers, wh) ated as he did, t) )rder Ameria0s
e)n)my a)rding t) these "rini"lesF !en( Ae)rge N)rris )* Ne&ras,a,
wh) *athered the Tennessee Dalley Auth)rity< !en J)hn Geny)n )* -)wa,
wh) intr)dued legislati)n *)r a nati)nal in*rastruture )mmissi)n in 1925<
#arl +( Th)m"s)n, wh) headed the Pu&li =wnershi" %eague, whih
)rgani$ed *)r the &uilding )* "u&li utilities and in*rastruture, inluding the
#hiag) sewage system and numer)us dams and waterways< 4)&ert
.agner, !r(, wh) *)ught *)r in*rastruture and la&)r ")wer< 4)&ert
%aF)llette, !r(, and s) *)rth(
/y the early 192>s, they had *)rmulated e5erything ")siti5e that was t)
&eame the 199>s New +eal( The ")m")us "resum"ti)n that %)rd J)hn
;aynard Geynes had t) )me *r)m )lla"sing ?ngland, with his ne)-
;althusian ide)l)gy, t) instrut the "))r &a,ward Amerians )n h)w t)
&uild in*rastruture, is a&surd(
+uring the 192>s, %em,e and the mem&ers )* the N)n"artisan %eague were
la&elled ultra-#)mmunists, and a)lytes )* %enin< during the 199>s, when
%em,e ran *)r President )* the 'nited !tates )n the 'ni)n Party ti,et, he
was alled a right-wing "aran)id and anti-!emite( /)th harateri$ati)ns
were lies(
The starting ")int *)r the truth is that %em,e )nsidered A&raham %in)ln t)
&e Bthe greatest President Ameria e5er had(B -n a 1999 &)),, %em,e
6u)ted an edit)rial *r)m the )ligarhy0s m)uth"iee, the Times )* %)nd)n,
whih may ha5e &een slightly edited &y the time %em,e g)t his hands )n it,
&ut n)netheless aurately re*lets /ritish thin,ing( The Times edit)rial
atta,ed %in)ln0s green&a, urreny ")liy, whih %em,e su"")rtedF
-* that mishie5)us *inanial ")liy whih had its )rigin in the N)rth
Amerian re"u&li during the #i5il .ar in that )untry sh)uld &e)me
indurated d)wn t) a *i1ture, then that g)5ernment will *urnish its
m)ney with)ut )st( -t will "ay )** its de&ts and &e with)ut a de&t( -t
will ha5e all the m)ney neessary t) arry )n its )mmere( -t will
&e)me "r)s"er)us &ey)nd "reedent in the hist)ry )* the i5ili$ed
g)5ernments )* the w)rld( The &rains and wealth )* all )untries will
g) t) N)rth Ameria( That go!ernment must e destroyed, )r it
will destr)y e5ery m)narhy )n this gl)&e( 7?m"hasis in )riginal(8
-n 1992, %em,e was eleted &y the "e)"le )* N)rth +a,)ta t) the '(!(
2)use )* 4e"resentati5es, ser5ing in 1999E1, and then in 19E9-5>( =ne )*
his *irst ats in #)ngress was t) intr)due 2(4( 989E, a /ill ?sta&lishing the
/an, )* the 'nited !tates, that w)uld a&)lish the Federal 4eser5e /)ard )*
A)5ern)rs and esta&lish a /an, )* the 'nited !tates( 2e wr)te that the
"ur")se )* the "r)")sed /an, was t) generate a&undant redit t) *inane
B"u&li w)r,s and internal im"r)5ements whene5er and where5er there was
unem"l)yment( This w)uld "re5ent en*)red idleness and w)uld utili$e the
la&)r that is n)w g)ing t) waste(B
This thin,ing in*used %em,e0s suess*ul and )urage)us e**)rt t) reate the
/an, )* N)rth +a,)ta(
North Dakota (oins the "nion
+uring the "eri)d *r)m 1875 until 19>>, when the re"u&lian a""r)ah t)
e)n)mis was in e**et, N)rth +a,)ta "r)gressed *r)m &eing a relati5ely
&a,ward wasteland int) a state with a gr)wing ")"ulati)n and e)n)my<
*r)m the turn )* the entury )nward, under the )ligarhial m)del, the
e)n)my and )nditi)ns )* li*e regressed(
'" until the 187>s, the +a,)ta Territ)ry, )m"rised )* what is n)w N)rth
and !)uth +a,)ta, )nsisted )* l)ng strethes )* "lains, d)tted with
m)untains and ri5ers( There were *ew inha&itants )ther than hunters and
tra""ers(
/ut in the "eri)d 1861-65, the "r)teti)nist dirigisti e)n)mi ")liies )*
the %in)ln administrati)n, "r)dued gr)wth *)r the entire nati)n( %in)ln
"ut an end t) the s)urge )* sla5ery, and de*eated the #)n*ederate insurre-
ti)n( -n s) d)ing, he needed t) m)&ili$e the e)n)my *)r war, &ut his
")liies went *ar &ey)nd that( They inludedF
H A)5ernment su&sidies, &)unties, grants )* land, and )ther measures t)
&uild the railr)ads( 'nder this ")liy, Amerian rail tra,age m)re than
6uintu"led, *r)m 91,>>> miles in 186> t) 167,>>> miles in 189>( The
trans)ntinental rail system was &uilt(
H The de5el)"ment )* the mahine t))l "rini"le, under the guidane )*
%in)ln0s great ad5iser, 2enry #arey(
H 'nder the in*luene )* the 19th-entury rail Bsiene dri5er,B whih
demanded 5ast am)unts )* steel *)r l))m)ti5es, tra,s, rail &ridges, et(,
the steel industry was &uilt( This was assisted &y #arey )lla&)rat)rs
Th)mas !)tt and Andrew #arnegie(
H The granting )* large trats )* '(!( g)5ernment-)wned lands and
territ)ries t) settlers, "r)5ided that they w)uld de5el)" the land( This was
*)stered &y the 2)mestead At, and the Tree #laim and Pre-em"ti)n Ats(
H The hartering )* land grant )lleges, whih &eame the s,elet)n *)r many
)* t)day0s state uni5ersity systems(
H The esta&lishment )* a regulated nati)nal &an,ing system, with the
reati)n )* the ateg)ry )* nati)nally hartered &an,s, and the re-esta&lish-
ment )* a single nati)nal '(!( urreny, t) &e used t) *inane gr)wth(
%in)ln had t) und) the treaher)us w)r, )* President Andrew Ja,s)n, wh)
had destr)yed the !e)nd /an, )* the 'nited !tates, thus unleashing a ha)s
)* *ly-&y-night Bwildat &an,s(B Furtherm)re, &y 186>, there were 7,>>>
se"arate and aut)n)m)us urrenies in Ameria, m)stly issued &y "ri5ate
&an,s(
-n 1862 and 1869, %in)ln and the '(!( #)ngress "assed the nati)nal
/an,ing Ats, whih reated IE5> milli)n in '(!( Bgreen&a,sB 7&eause )*
the )l)r )* the in, )n the &ill8( This was a nati)nal s)5ereign urreny(
/an,s )&tained these green&a,s *r)m the g)5ernment &y "ledging their
h)ldings )* '(!( g)5ernment &)nds against them( The &an,s then lent and
irulated the green&a,s t) *inane industrial and agriultural gr)wth(
The resulting e1"l)si5e gr)wth trans*)rmed the *arm states( 4ailr)ads riss-
r)ssed the area, &ringing with them terminals, ele5at)rs, ad5aned *arm
e6ui"ment, nati)nal mar,ets, et( #ities s"rang u", and attrated &y this
direted gr)wth, "e)"le m)5ed int) the ;idwest and Plains !tates( 'nder
the im"etus )* this ")liy, in 188>, the '(!( g)5ernment and territ)rial land
)**ies assigned a&)ut 2 milli)n ares t) settlers in the +a,)ta Territ)ry< &y
188E, )5er 11 milli)n ares had &een trans*erred t) settlers(
A)rding t) the 12th #ensus )* the 'nited !tates, in 188>, the area )* the
+a,)ta Territ)ry, had a ")"ulati)n )* )nly 9E,896( Ten years later, in 189>,
it had gr)wn t) 182,719, a *i5e*)ld inreaseJ =ne-6uarter )* the state0s
")"ulati)n were newly arri5ed ?ur)"ean immigrants, m)stly *r)m Aermany
and !andina5ia(
N)rth +a,)ta0s rih "lains were ideal *)r wheat *arming, "r)duing a 5ery
high grade )* winter wheat, and als) s"ring wheat, "r)duing 5ery high-
6uality *l)ur( N)rth +a,)ta &eame a leading wheat-"r)duing state 7a
")siti)n it still h)lds t)day8(
-n 1889, )n the &asis )* this gr)wth, the '(!( #)ngress di5ided the +a,)ta
Territ)ry int) N)rth and !)uth +a,)ta, and admitted &)th as new states int)
the 'ni)n(
/ut the /ritish )ligarhy saw this "lenti*ul de5el)"ment, and s)ught t) "ut
an end t) it( -n 1875, the %)nd)n *inaniers )rhestrated the "assage )* the
'(!( !"eie 4esum"ti)n At 7it went int) e**et in 18798, whih retired:
i(e(, destr)yed:a ")rti)n )* the green&a,s, and "ut the '(!( )n a de*lati)n-
aryK)ntrati)nary g)ld standard(
T) rule this area, %)nd)n set u" the ;innea")lis head6uarters )* the artels(
Fr)m here, the tri"le-headed )ligarhy ran the Plains !tates:*r)m -)wa t)
the +a,)tas:as a sla5e "lantati)n, whih su&3eted the *armer t) re"eated,
se5ere l))ting, threatening his 5ery e1istene(
*artels and "sury
T) understand what %em,e )n*r)nted, let us e1amine this tri"le-headed
artelF
H The &an,ing artel and usuryF the #ity )* %)nd)n, )"erating thr)ugh .all
!treet, and se)ndarily, s)me &an,s in #hiag), )ntr)lled the ;innea")lis
&an,ing sene, harged usuri)us interest rates< N)rth +a,)ta0s nati5e &an,s
had minusule a"ital &ases, and were easily )rdered ar)und(
The *armer had t) &)rr)w t) *inane "urhases )* *arm mahinery and
in*rastruture, as well as s"ring "lanting( A 1915 study &y '(!( #)m"tr)ller
)* the #urreny J)hn !( .illiams, )n the lending "atterns )* all nati)nally
hartered &an,s, *)und that tw) )ut )* e5ery three N)rth +a,)ta nati)nally
hartered &an,s harged interest rates )* 1>L )r higher, at a time when 1>L
was de*ined as the usury limit( Nearly hal* these &an,s harged interest
rates )* 12L )r m)re( !tate-hartered &an,s harged interest rates as high as
9>LJ
The &an,s als) harged 5ery high *ees, )*ten e6ual t) se5eral "erentage
")ints )* the l)an, t) )riginate the l)an(
H The Arain #artelF led &y the Pills&ury and Pee5y *amilies, wh) were s))n
t) &e 3)ined &y the trans"lanted ?ur)"ean grain-trading *amilies )* Andre,
Fri&)urg, +rey*us, and ;a;illan, this artel )wned all the im")rtant mills
t) whih *armers *r)m N)rth +a,)ta, and the surr)unding states, had t) shi"
their grain t) &e milled int) *l)ur( N)rth +a,)ta had n) inde"endently
)wned grain mill )r ele5at)r( The artel als) )ntr)lled the grain e1hanges
in +uluth and ;innea")lis, and "aid ridiul)usly l)w "ries t) the *armers
*)r their grain( The artel heated the *armer, under"aying him *)r his grain(
=ne meth)d )* heating was undergrading 7!ee Ta&le 1(8
The ele5at)r )"erat)r, &y this deli&erate undergrading, sim"ly "aid the
*armer 9>-E>L less than his wheat was w)rth( The ele5at)r )"erat)r, )r the
grain artel-)wned e1hange trader in ;innea")lis, "),eted the the*t-
"r)*its *r)m the di**erene(
TABL, -
"ndergrading y Duluth ,le!ator% -./0
/ushels /ushels
4eei5ed !hi""ed
N)( 1 N)rthern 99,711 196,288
N)( 2 1E1,E55 E67,76E
N)( 9 272,>E7 219,5E9
N)( E 2>1,267 N)ne
N) Arade 116,>21 N)ne
4e3eted 59,7E2 N)ne
=n hand 7all grades8 12,799
The grades )* N)rth +a,)ta wheat areF N)( 1 2ard, N)( 1 N)rthern, N)( 2,
N)( 9, N)( E, N) Arade, and 4e3eted( -n 1915, +r ?dwin %add, "r)*ess)r
)* hemistry at the N)rth +a,)ta !tate Agriultural #)llege, and *))d
)mmissi)ner )* N)rth +a,)ta, using an e1"erimental mill, re")rted that
wheat graded N)( E was *)und t) ma,e 67(99L *l)ur< N)( 9 wheat t) ma,e
69(E1L *l)ur< and N)( 1 wheat t) ma,e 7>(11L *l)ur< s) the di**erene in
ma,ing *l)ur &etween the N)( 1 and the N)( E wheat was )nly 9L, &ut a N)(
E graded wheat *ethed a muh l)wer "rie than N)( 1(
A 19>6 re")rt &y the N)rth +a,)ta /an,ers0 Ass)iati)n, whih in5estigated
grain-mar,eting "raties, *)und, as the ta&le sh)ws, that at )ne +uluth
ele5at)r )"erat)r 7usually a &an, )r railr)ad )m"any8 graded 79L )* the
wheat that it &)ught *r)m the *armer, as N)( 9 )r N)( E grade, )r l)wer< &ut
a*ter mi1ing a little &it )* higher graded wheat int) the l)wer graded &ins, it
s)ld m)re than 75L )* the e1at same wheat at N)( 2 )r N)( 1 grade(
Turn of the century steam+1o'ered tractors% a technological inno!ation made
1ossile y Lincoln&s American #ystem 1olicies.
-t didn0t end there( The *armer had t) "ay a )mmissi)n e6ual t) 1L )* the
5alue )* the wheat, t) the ele5at)r )"erat)r )r the e1hange-trader *)r its
grading and handling the grain(
H The 4ail #artelF at its a"e1 were tw) ma3)r lines, the N)rthern Pai*i 44
and the Areat N)rthern 44, whih ser5ed the u""er ;idwest and #entral
Plains )* the 'nited !tates( These lines were )wned &y the New C)r,
&an,ing h)uses )* J(P( ;)rgan, ?dward 2arriman0s /r)wn /r)thers
2arriman, and the Ja)& !hi** and .ar&urg *amily-)wned Guhn %)e&
in5estment *irm( =ne an instrument *)r nati)nal de5el)"ment, the railr)ads
were n)w an instrument )* s"eulati)n:the &an,s re"eatedly l))ted the
railr)ads and dr)5e them int) &an,ru"ty:and )* g)uging, harging the
*armer sandal)usly high rail rates *)r m)5ing grain t) mar,et(
F)r e1am"le, a *armer "aid I91(8> t) shi" a 6>,>>>-")und ar )* wheat *r)m
;in)t t) Arand F)r,s, N)rth +a,)ta, and then m)re t) shi" t) ;innea")lis(
The *armer sim"ly )uld n)t esa"e the shi""ing *ee:e5en i* he s)ld the
wheat t) a l)al grain ele5at)r, the shi""ing harge was ta,ed )n, as "art )*
the )st )* Bgetting the wheat t) mar,et(B
N)rth +a,)ta had n) inde"endent, indigen)usly )wned rail line(
-n all, assessing the )m&ined e**et )* the multi"le l))ting, the tri"le-
headed )ligarhy "ratied "rimiti5e aumulati)nF l))ting s) se5ere that
the *armer was *)red t) anni&ali$e his "lant and e6ui"ment, his s)il, and
the li5ing standard )* his *amily( This aused a &rea,d)wn in "r)duti)n,
&el)w the &rea,e5en le5el needed *)r )ntinued sur5i5al, threatening the
*armer and agriulture itsel* with annihilati)n(
The emergeny alled *)r a leader wh) )uld shi*t the "aradigmF rush the
)ligarhy and its ")liy )* usury, and re5i5e the 2amilt)n-%in)ln meth)d
)* anti-usury, "r)-de5el)"ment e)n)mis(
.illiam %em,e was &)rn )n Aug( 19, 1878, in Al&any, ;innes)ta, and
m)5ed with his *amily t) Arand F)r,s in the +a,)ta Territ)ry in 1881( 2is
*ather, Frederi, %em,e, had &een &)rn in 18E9 in =ttend)r*, Prussia,
m)5ing with his "arents t) Ameria in 1851( -n 1861, as the #i5il .ar
eru"ted, Frederi, 3)ined the 'ni)n Army, ser5ing with #)m"any ?, Third
.is)nsin #a5alry, whih, during the war, st)""ed the insurreti)nary
#)n*ederate Army0s ad5ane at !t( %)uis, ;iss)uri( Frederi, %em,e
str)ngly su"")rted %in)ln and the 'ni)n( T) Frederi,, %in)ln was the
man wh) sa5ed Ameria(
/i)gra"her ?dward /la,)r&y, in his &i)gra"hy )* %em,e, Prairie Rebel:
The Public Life of William Lemke, re")rted,
.hen in #)ngress Ms)metime a*ter 1999N, .illiam %em,e realled
that his *ather distrusted the /ritish &eause he &elie5ed they had
"r)l)nged the M#i5ilN .ar &y hel"ing the !)uth with the intenti)n )*
3)ining Frane in a su&se6uent "artiti)n )* the 'nited !tates(
That 5iew )* /ritain:whih )rhestrated the #i5il .ar, in )rder t) "artiti)n
and )u"y the 'nited !tates:was the uni5ersal, and aurate, 5iew )*
alm)st all 'ni)n 5eterans )* the #i5il .ar, and )* m)st Amerians during
the 186>s( This )utl)),, assimilated *r)m his *ather, remained ingrained in
.illiam0s thin,ing, sha"ing it in a "assi)nate way *)r the rest )* his li*e(
-n 19>>, Frederi, %em,e was eleted t) the l)wer h)use )* the N)rth
+a,)ta !tate %egislati5e Assem&ly, ser5ing )nly a year &e*)re he died( 2e
su"")rted legislati)n de*ining usury and regulating interest rates:an issue
whih .illiam w)uld later ham"i)n(
Lemke ,nters )olitics
.illiam %em,e attended the 'ni5ersity )* N)rth +a,)ta, and then )&tained
a law degree at Cale 'ni5ersity in 19>5( 2e &eame a lawyer, &ut his
)nerns led him int) ")litis, and *)r him, that meant ad5)ating A&raham
%in)ln0s e)n)mis( As we shall d)ument &el)w, %em,e *)ll)wed
%in)ln0s "r)-de5el)"ment ")liies ")liies in his *ight *)r the /an, )*
N)rth +a,)ta, and als) in his all *)r the reati)n )* a /an, )* the 'nited
!tates(
N)rth +a,)ta had had s)me ")litial *arm m)5ements in the "ast( -n the
188>s, s)me N)rth +a,)ta *armers 3)ined the nati)nal P)"ulist Party, whih
trans*)rmed *arm "r)test int) a m)5ement that "r)tested real e)n)mi
in3usties, &ut whih )**ered n) direti)n *)r a s)luti)n t) the in3usties(
+uring the *irst deade )* the 19>>s, a gr)u" )* N)rth +a,)ta and
;innes)ta *armers *)rmed the !)iety )* ?6uity, whih, a)rding t) )ne
hist)ry, was Ban )rgani$ati)n *)stering "r)duers0 and )nsumers0
))"erati5esB and was B*)ught t))th and nail &y the "ri5ate )r")rati)ns
whih denied it aess t) the regular hannels )* trade, 5irtually "re5ented
its )&taining redit, and issued )ntinu)us "r)"aganda against it(B
-n 1911 )r 1912, %em,e 3)ined the !)iety )* ?6uity as its lawyer, &e)ming
ati5e in all as"ets )* its w)r,( A "rime )nern )* the !)iety )* ?6uity
was t) get N)rth +a,)ta t) )nstrut a state-)wned grain ele5at)r( N)rth
+a,)ta had n) inde"endent grain ele5at)r system, 3ust as it had n) netw)r,
)* grain mills( /ut suh a state-)wned ele5at)r w)uld grade the *armer0s
grain *airly, and harge him a reas)na&le st)rage rate(
-n 19>9, the N)rth +a,)ta legislature had a"")inted a /)ard )* Arain
#)mmissi)ners t) study whether the legislature sh)uld )nstrut a grain
ele5at)r( The /)ard re")rted *a5)ra&ly(
2)we5er, the N)rth +a,)ta state )nstituti)n re6uired an amendment &e
"assed, in the *)rm )* a &all)t re*erendum, &e*)re the legislature )uld
auth)ri$e the &uilding )* an ele5at)r( -n a)rdane with that, tw) re*erenda
were "laed )n the &all)t and "assed, )ne in 1912, the )ther in 191E, eah
time &y a three-*)urths ma3)rity )* the 5)ters( The *irst auth)ri$ed the state
t) )nstrut a grain terminalKele5at)r in a state )ther than N)rth +a,)ta< the
se)nd re*erendum auth)ri$ed )nstruting a terminal within the state( -n
1919, the legislature e5en "assed a ta1 le5y )* )ne-eighth )* a mill )n all
"r)"erty, t) raise the *unds needed t) )nstrut the terminal(
2
2)we5er, the
;innea")lis-&ased three-headed )ligarhy, alarmed &y the "r)")sal,
su&se6uently a3)led and )wed the N)rth +a,)ta legislature int) re3eting
the "r)")sal(
-t was lear that, in the *ight t) de*eat the trium5irate )ligarhy, the !)iety
)* ?6uity and )ther e1isting )rgani$ati)ns were t)) te"id, and w)uld n)t
sueed( .hat was needed was an )rgani$ati)n with a strategi sense,
)urage, and an a&ility t) d) mass )rgani$ing( -n 1915, the N)n"artisan
%eague was *)rmed( -t w)uld &e una**iliated and )utside the tw) ma3)r
")litial "arties:hene the name Bn)n"artisanB: &ut w)uld run its
andidates inside th)se "arties, while )ntinuing t) d) mass )rgani$ing )*
the ")"ulati)n ar)und its )ne"ts and ")litial direti)n(
%em,e m)5ed int) the N)n"artisan %eague 7NP%8 sh)rtly a*ter its *)unding(
The NP%0s leadershi" was led &y a three-mem&er e1euti5e )mmitteeF
%em,e< Fred .))d, a t)"-*light *armer )rgani$er, and Arthur #( T)wnley,
"resident )* the NP%, *r)m 1915 t) 1921, and, with his &r)ther, the largest
*la1-gr)wer in N)rth +a,)ta, with 8,>>> ares(
9
The N)n"artisan %eague0s mem&ershi" ame *r)m n)n-)n5enti)nal gr)u"sF
the !)iety )* ?6uity, the Nati)nal Farmers 'ni)n, the !)ialist Party '!A,
elements )* the )ld P)"ulist and Pr)gressi5e Parties, the Arange, 5ari)us
)ther *arm )rgani$ati)ns, and a num&er )* inde"endents( ?ah )* these
gr)u"s w)uld laim that it was res")nsi&le *)r the NP%0s direti)n, and
while they did e1ert s)me in*luene )5er the NP%, it was inreasingly
%em,e, and his Amerian !ystem e)n)mis, whih sha"ed NP% ")liies(
2 A mill is a unit )* m)netary 5alue e6ual t) a th)usandth )* a '(!( d)llar(
3 -n 1912, a*ter se5ere )ld weather and sn)w damaged the *la1 r)", s"eulat)rs
*inished it )**, *)ring the "rie )* *la1 d)wn t) I1 "er &ushel( .hen T)wnley went
&an,ru"t, with I8>,>>> in de&t, he deided t) ta,e )n the s"eulat)rs( -n 191E, he 3)ined
*)res with the !)ialist Party, heading its B)rgani$ati)n de"artment,B whih all)wed
n)n-!)ialists t) w)r, with the Party with)ut 3)ining it( T)wnley le*t the )rgani$ati)n
a*ter a year(
First Bank of the "nited #tates% )hiladel1hia% )ennsyl!ania.
The ill introduced y Lemke in -.22 The first ".#. Treasury #ecretary%
to estalished the third Bank of the Ale3ander 4amilton.
"nited #tates.
The N)L&s Fi!e+)oint )rogram
-n signing u" su"")rters, the NP% )rgani$ed ar)und a sh)rthand *i5e-")int
"r)gram(
1( !tate )wnershi" )* terminal ele5at)rs, *l)ur mills, "a,ing h)uses and
)ld-st)rage "lants<
2( !tate ins"eti)n )* grain and grain d),age<
9( ?1em"ti)n )* *arm im"r)5ements *r)m ta1ati)n<
E( !tate hail insurane )n the areage ta1 &asis<
5( 4ural redit &an,s )"erated at )st( T)day, m)st )* these issues seem
remar,a&ly n)n-re5)luti)nary, &ut at that time, they seemed 6uite radial(
4es"eting P)int 1, in a "red)minantly *arm state, terminal ele5at)rs, *l)ur
mills, "a,ing h)uses and )ld-st)rage "lants )nstitute in*rastruture, in
e**et( The )ligarhial trium5irate ran these )"erati)ns m)n)")listially,
&l),ing the entrane int) this *ield )* any inde"endent &usinessmen wh),
while ma,ing a *air "r)*it, w)uld still &e interested in ,ee"ing the *arm
e)n)my ali5e, and *armers with it( Thus, while it an &e de&ated whether
"u&li )r "ri5ate )wnershi" was &est, the )"erati5e ")int was t) get the state
int) ati)n t) &rea, the a&uses )* the )ligarhy(
4es"eting P)int 9, i* a *armer im"r)5ed the land, he was e1em"t *r)m
"aying ta1es< it was the s"eulat)rs, wh) &)ught th)usands )* ares )* land,
&ut ne5er made im"r)5ements )n it, wh) w)uld &ear the highest ta1(
The /an, )* N)rth +a,)ta emerged *r)m P)int 5(
Already, &y the *all )* 1915, a*ter )nly hal* a year in e1istene, the NP%0s
news"a"er, the Leader, was g)ing )ut t) 18,>>> su&sri&ers(
-n ;arh 1916, the NP% held a n)minating )n5enti)n t) elet a slate )*
andidates t) run in the *all statewide eleti)ns( ;any )* the t)" "e)"le
n)minated &y the NP% were %em,e0s ass)iatesF *)r e1am"le, the NP%0s
andidate *)r A)5ern)r, %yn J( Fra$ier, had &een %em,e0s r))mmate at the
'ni5ersity )* N)rth +a,)ta, and was a l)se )lla&)rat)r< an)ther )lleague
)* %em,e, Neil #( ;ad)nald, was n)minated as the %eague0s andidate *)r
su"erintendent )* eduati)n( !e5eral %em,e ass)iates *r)m the !)iety )*
?6uity were als) n)minated(
The NP% h)se t) run its slate )* end)rsed andidates in the 4e"u&lian
Party "rimary( -t made this deisi)n *)r tw) reas)nsF *irst, the 4e"u&lians
had &een *)unded as the "arty )* %in)ln 7alth)ugh they were n) l)nger s)
in "ratie8< se)nd, the 4e"u&lian Party su"")rt &ase was twie as large
as that )* the +em)rats in N)rth +a,)ta
The eleti)n results stunned the nati)nF the NP% andidates w)n e5ery ")st
they ran *)r inside the 4e"u&lian Party, *r)m %yn J( Fra$ier running *)r
A)5ern)r, )n d)wn( ;)re)5er, the NP% w)n )ntr)l )* the 4e"u&lian
Party mahine, a"turing en)ugh 4e"u&lian "reint )mmitteemen seats
t) elet .illiam %em,e as hairman )* the 4e"u&lian Party )* N)rth
+a,)ta( The )ld 4e"u&lian B!talwarts,B as they were alled, )ntr)lled &y
the &an,s and the grain artel, were in sh),(
This 5it)ry &rings t) mind the %a4)uhe m)5ement0s stunning ;arh 1986
5it)ry in the -llin)is +em)rati Party0s "rimary *)r %t( A)5ern)r and
!eretary )* !tate( As with the %a4)uhe 5it)ry, the %eague0s 5it)ry
reated an u"r)ar(
Lemke and World War I
As 4e"u&lian Party state hairman, in the *all 1916 eleti)n, %em,e
m)&ili$ed t) de*eat .))dr)w .ils)n0s &id *)r reeleti)n as President )* the
'nited !tates, &eause he ,new that .ils)n w)uld &ring the 'nited !tates
int) the First .)rld .ar )n the side )* its l)ng-time enemy, /ritain( %em,e
&i)gra"her /la,)r&y, wr)te regarding %em,e0s 5iews during .)rld .ar -,
BN)t )nly at this time &ut thr)ugh the "eri)d )* .)rld .ar --, he &elie5ed
that the str)ngh)ld )* th)se wh) start and run all wars was in the /ritish
-sles and Frane 7%em,e t) A(F( #aldwell, !e"tem&er 21, 19998(B
-ndeed, /ritain &egan )rhestrating the First .)rld .ar, during the last
deade )* the 19th #entury as a means )* &l),ing the de5el)"ment )* an
alliane )* the 'nited !tates, 4ussia, Aermany, and #hina *)r the "ur")se )*
&uilding rail-entered de5el)"ment )rrid)rs ar)ss the ?urasian landmass(
N)netheless, in the N)5em&er general eleti)ns, des"ite %em,e0s e**)rts,
.ils)n arried N)rth +a,)ta:&y a small margin:and the nati)n &y a
wider margin(
-m")rtant )ut-)*-state *igures, suh as 4e"u&lian !enat)r Ae)rge N)rris )*
Ne&ras,a, t)ured the state )n &ehal* )* %eague andidates( -n the *all
eleti)ns, a ")litial re5)luti)n )urredF the %eague andidates, n)w the
4e"u&lian Party standard-&earers, w)n N)rth +a,)ta0s t)" state )**ies(
%yn J( Fra$ier was eleted A)5ern)r, and .illiam %anger w)n the ")siti)n
)* Att)rney Aeneral(
E
The %eague w)n a ma3)rity )* the seats in the !tate
Assem&ly, and a si$ea&le min)rity in the !enate(
N)L Legislation
-n the 1917 legislati5e sessi)n, the NP% "assed legislati)n, se5eral "iees )*
whih %em,e hel"ed sha"e, whih inluded, a)rding t) )ne hist)rianF
A state grain grading system< "r)")sed )nstituti)nal amendments
regarding w)men su**rage in s)me eleti)ns< e1em"ti)n )* *arm
im"r)5ements *r)m ta1ati)n< a state &an, de")sit guarantee law< a
nine-h)ur day *)r w)men< a T)rrens land title registrati)n law<
regulati)n )* railr)ads< and tre&ling )* *unds *)r rural eduati)n(
!)me )* these sh)w the in*luene )* %em,e and the NP%( F)r e1am"le, the
tre&ling )* *unds *)r rural eduati)n re"resented a seri)us )mmitment t) the
minds )* the state0s iti$ens( The state &an, de")sit guarantee law, in the
e5ent )* &an, *ailure, antii"ated, and, in "art, set the gr)unds *)r, the '(!(
#)ngress0 ad)"ti)n )* the Federal +e")sit -nsurane #)r")rati)n 7F+-#8
system in 1999(
The %eague did e5en &etter in the 1918 eleti)ns, reeleting its slate )*
)**iers *)r t)" statewide ")sts, and a"turing a tw)-thirds ma3)rity in &)th
the state Assem&ly and !enate( The N)n"artisan %eague *elt that n)w was
the time t) "ush *)r the /an, )* N)rth +a,)ta(
-n the 1919 legislati5e sessi)n, the NP%-4e"u&lians *irst intr)dued a &ill
t) reate a state industrial )mmissi)n, a three-man &)dy made u" )* the
three highest eleti5e ")stsF the A)5ern)r, #)mmissi)ner )* Agriulture and
%a&)r, and Att)rney Aeneral( -t w)uld )5ersee the /an, )* N)rth +a,)ta,
and a"")int managing )**iers t) run the &an, )n a day-&y-day &asis(
The -ndustrial #)mmissi)n "lanned )ut the state0s industrial "r)gram, and
the /an, was, e**eti5ely, the *inaning and im"lementati)n arm )* the
"r)gram(
4 The )"")rtunist %anger w)uld s))n turn against the N)n"artisan %eague and the /an,
)* N)rth +a,)ta( 2is re"utati)n as B.ild /illB %anger the g))d *arm leader, seems t) &e
largely a myth, &uilt &y %)nd)n-direted hist)rians wh) are )"")sed t) %em,e and, &y
&uilding u" %anger, wish t) &ury the re"utati)n )* %em,e(
2ist)rian 4)1anne ?mers)n Jun,er re")rted in her &)),, The Bank of North
akota: !n E"#eriment in $tate %wnershi#, that
The #)mmissi)n0s ")wer was wide-ranging( -t was em")wered t)
manage, )"erate, )ntr)l, and g)5ern all utilities, industries,
enter"rises and &usiness "r)3ets, n)w )r herea*ter esta&lished,
)wned, underta,en, administered )r )"erated &y the state( Penal,
harita&le )r eduati)nal instituti)ns were e1e"ti)ns(
The /an, )* N)rth +a,)ta &ill ame ne1t( -t had a wide-ranging mandate:
in *at, it "aralleled the mandate )* the -ndustrial #)mmissi)n(
-n the language )* the )riginal at reating the /an,F
1( The /an, )* N)rth +a,)ta, *)r "ur")ses )* en)uraging and
"r)m)ting agriulture, )mmere, and industry, shall engage in the
&usiness )* &an,ing, and shall esta&lish a system )* &an,ing )wned,
)ntr)lled, and )"erated &y the !tate( -t shall &e alled the /an, )*
N)rth +a,)ta( ( ( (
9( The &usiness )* the /an, may inlude anything that any &an, may
law*ully d), e1e"t as restrited &y the At(
E( All state, )unty, t)wnshi", munii"al, and sh))l distrit *unds,
and *unds )* all "enal, eduati)nal, and industrial instituti)ns, and all
)ther "u&li *unds shall &e de")sited in the /an, )* N)rth +a,)ta
within three m)nths *r)m the "assage )* this At(
5( All de")sits in the /an, are guaranteed &y the !tate( ( ( (
6( The /an, may l)an *unds t) )ther de"artments, instituti)ns,
utilities, industries, enter"rises )* &usiness "r)3ets )* the !tate, whih
shall &e returned with interest t) the /an,( -t an als) ma,e l)ans t)
the !tate, )r t) )unties, ities, )r ")litial su&di5isi)ns )* the !tate, )r
t) state )r nati)nal &an,s( -t ann)t ma,e l)ans )r gi5e redit t) any
indi5idual, ass)iati)n, )r "ri5ate )r")rati)n, e1e"t *irst m)rtgages
)n real estate in the !tate )* N)rth +a,)ta Mi(e(, *arm m)rtgage l)ansN(
Am)unt )* the l)ans )uld n)t e1eed )ne-hal* the 5alue )* the real
estate seurity( %)ans )uld als) &e seured &y wareh)use reei"ts
Mi(e(, wareh)use reei"ts issued against the *armer0s grain when held at
a state-)wned grain ele5at)r:4?FN( ( ( (
8( The At &e delared an emergeny(
Ta,en as a t)tality, these "r)5isi)ns made the /an, )* N)rth +a,)ta a
")tentially 5ery ")wer*ul instrument, as it )uld *inane any in*rastrutural,
industrial, )r agriultural "r)3et deemed in the interest )* ad5aning the
gr)wth )* N)rth +a,)ta 7its l)ans t) indi5idual "ri5ate &usinesses had t) &e
entered int) )n a 3)int "artii"ati)n l)an &asis with a "ri5ate &an,8(
The /an, had )ne additi)nal *eature, re")rted )n &y Alan !( T)stle&ee in his
192E &)),, The Bank of North akota: !n E"#eriment in !&rarian Bank'
in&:
The /an,0s relati)n t) the e1isting redit struture was t) &e similar t)
that )* a *ederal reser5e &an, t) the mem&er &an,s in its distrit ( ( ( it
was t) &e the enter )* a "art learing and )lleting system< it was t)
*urnish its redit t) the "u&li "rimarily thr)ugh the medium )* the
l)al &an,s whih w)uld redis)unt with the #entral /an,(
Thus, in its )riginal *)rm, the /an, )* N)rth +a,)ta was t) &e the
intermediary *)r "r)5iding li6uidity t) the "ri5ate &an,ing system )* N)rth
+a,)ta, thr)ugh dis)unting the *inanial "a"er that the indi5idual "ri5ate
&an,s "resented, and &y that means, ma,ing *unds a5aila&le t) them *)r
lending )ut( -* a small N)rth +a,)ta &an, wanted t) ma,e a l)an t) a
*armer, &ut la,ed the *unds, it )uld dis)unt a )mmerial "iee )* "a"er
with the /an,, and get the *unds( This intriguing *eature was ne5er "ut int)
e**et(
A state-)wned "u&li redit &an,, suh as the /an, )* N)rth +a,)ta, was n)t
new t) Ameria( /en3amin Fran,lin had ad5aned the idea during the early
18th #entury( +uring the 19th #entury, 1> states esta&lished wh)lly )r
"artly state-)wned &an,s( =* these 1> state &an,s, tw):Dirginia0s and
Gentu,y0s:sur5i5ed int) the 2>th #entury(
The de&ate )n the /an,, and the )m"ani)n industrial )mmissi)n, was
*er5ent( NP%K4e"u&lian 4e"resentati5e Airdell Patters)n stated )n the
*l))r )* the legislature thatF
.e ha5e &r),en the gr)und and gr)wn )ur wheat and then we ha5e let
&ig &usiness d) the rest( /ig &usiness has weighed it, graded it,
arranged *)r its trans")rtati)n and s)ld it, and then "aid us s) little *)r
it that we ha5e t) g) &a, and &)rr)w *r)m them t) struggle )n *)r
an)ther year( .e ha5e "aid them e1t)rti)nate interest rates )n the
m)ney they ha5e st)len *r)m us(
A third )m"ani)n &ill auth)ri$ed the state t) issue &)nds t) *und state-
)wned "r)3ets, whih &)nds w)uld &e s)ld thr)ugh the /an, )* N)rth
+a,)ta(
=n Fe&( 19, 1919, the N)rth +a,)ta 2)use 5)ted u" the -ndustrial #)mmis-
si)n and the /an, )* N)rth +a,)ta, &y tw)-thirds )* th)se "resent:the
ma3)rity re6uired t) delare eah )* the &ills an emergeny measure( That
meant that the /an, w)uld &e esta&lished )n a *ast-tra,( N) delays w)uld
&e &r)),ed< it w)uld ha5e t) &e )"erating within 9> days )* the law0s
"assage(
=n Fe&( 25, the day )* the *inal legislati5e sessi)n *)r the year, the !enate
mem&ers m)5ed en masse int) the 2)use ham&er, whih had &een
de)rated with nati)nal &anners( Gn)wing that they were ma,ing hist)ry,
legislat)rs set u" m)5ie ameras in the ham&er t) re)rd e5ery detail )* the
sessi)n, with the intent )* irulating the *ilm thr)ugh)ut the 'nited !tates(
A*ter the *)rmalities, legislat)rs r)se t) sing "atri)ti s)ngs(
Lemke&s *once1t of ,conomics
The )nsidera&le ")wers )* the /an, )* N)rth +a,)ta, enumerated a&)5e,
ame straight *r)m the %in)ln )ne"t )* the use )* the state( Alth)ugh
.illiam %em,e wr)te little )n the /an, )* N)rth +a,)ta "er se, he did say,
in se5eral l)ati)ns, that in his mind, the /an, )* N)rth +a,)ta and his dra*t
&ill *)r a /an, )* the 'nited !tates, were interhangea&le )ne"ts( Thus, it
is a""r)"riate t) interru"t )ur st)ry at this ")int, t) ela&)rate the higher-le5el
"rini"les that guided %em,e0s 5iews )n the su&3et(
A&raham %in)ln, li,e Ale1ander 2amilt)n &e*)re him, &elie5ed that it is
the nati)n-state that has s)5ereign res")nsi&ility *)r issuing redit:n)t the
"ri5ate &an,s, and n)t s)me B4)&ins)n #rus)eB )m"anies trading sea
shells( Thus, in the "eri)d 1862-6E, as "art )* his swee"ing &an,ing and
m)netary re*)rm, %in)ln direted his Treasury +e"artment t) issue IEE>
milli)n in '(!( urreny n)tes, alled green&a,s( This *inaned the war t)
rush the #)n*ederay, and the industrial and in*rastruture "r)grams
%in)ln initiated(
-n his 1999 &)),, C)u and Your (one), %em,e wr)te that the green&a,s
Bha5e &een tal,ed a&)ut with )ntem"t &y e5ery internati)nal &an,er, &y
e5ery )u")n li""er and &y e5ery m)ney hanger(B
%em,e assertedF
-* e5er a m)nument sh)uld &e ereted t) an inanimate )&3et, then it
sh)uld &e ereted in mem)ry )* the ser5ies )* the 'nited !tates n)tes
:the Bgreen&a,s(B !uh a m)nument w)uld gi5e us new )urage
and h)"e, and w)uld assist materially in &ringing a&)ut a m)netary
system that w)uld ser5e all the "e)"le and n)t 3ust a *ew internati)nal
mani"ulat)rs(
At the time that %em,e was writing, there were I9E7 milli)n )* the
Bgreen&a,sK'nited !tates n)tesB still in irulati)n, )nstituting a&)ut 1>L
)* the "hysial urreny su""ly( %em,e $er)ed in )n the *at that, while
%in)ln did issue Treasury de&t, he issued IEE> milli)n in urreny 7had he
als) issued that as de&t, the ati)n w)uld ha5e added a huge interest )st8(
!aid %em,eF
-* in 1862 President %in)ln and #)ngress had s)ld &)nds in "lae )*
issuing Bgreen&a,s,B then at *i5e "erent )m")und interest, these
&)nds w)uld t)day am)unt t) )5er I12 &illi)n Min interest and
"rini"alN( -n additi)n t) sa5ing the nati)n &illi)ns, ( ( ( these
irulating as m)ney ( ( ( ha5e many times m)re than "aid in ser5ie
*)r that war:in e1hanging )mm)dities and hel"ing reate wealth(
%em,e saw the /an, )* N)rth +a,)ta as a ste""ing st)ne t) )nstruting a
Nati)nal /an,( -n 1999, %em,e intr)dued 2)use 4es)luti)n 989E, BA /ill
?sta&lishing the /an, )* the 'nited !tates,B whih was the )**iial name
gi5en t) the First Nati)nal /an, 71791-18118 and !e)nd Nati)nal /an,
71816-18968( ?5en th)ugh %em,e stated a disagreement with Ale1ander
2amilt)n, and threw in s)me language reminisent )* Th)mas Je**ers)n )r
Andrew Ja,s)n, he was lear en)ugh )n in)r")rating the im")rtant
*eatures )* 2amilt)n0s First Nati)nal /an,( As )"")sed t) a #entral /an,,
whih is the "ri5ate t))l )* *inanier &andits, a Nati)nal /an, )"erates *)r
the s)5ereign "ur")se )* the nati)n, em")wered, in the 'nited !tates, &y the
Aeneral .el*are #lause )* the #)nstituti)n(
%em,e enumerated the ")wers )* suh a &an, in his &ill( -n a)rd with
Artile -, !eti)n 8, Part 5 )* the #)nstituti)nF
The /an, )* the 'nited !tates will &e the instrument thr)ugh whih
the #)ngress )* the 'nited !tates will )in and issue the m)ney and
regulate the 5alue there)*( ( ( (
MFurther,N /e it enated &y the !enate and 2)use )* 4e"resentati5es )*
the 'nited !tates )* Ameria in #)ngress assem&led, That *)r the
"ur")se )* en)uraging and "r)m)ting agriulture, )mmere, and
industry, and *)r the "ur")se )* *inaning the g)5ernment )* the
'nited !tates and the 5ari)us de"artments there)*, and "r)5iding the
"e)"le )* the 'nited !tates and the 5ari)us !tates and ")litial
su&di5isi)ns there)*, with a s)und and elasti nati)nal urreny and
medium )* e1hange, the A)5ernment )* the 'nited !tates shall
engage in the &usiness )* &an,ing, and *)r that "ur")se there is here&y
esta&lished a system )* &an,ing )wned, )ntr)lled, and )"erated &y
the 'nited !tates, in its s)5ereign and g)5ernmental a"aity, under
the name )* the /an, )* the 'nited !tates(
%em,e )ntinued thatF
The A)5ernment will issue *i5e &illi)n d)llars )* urreny t) &e
,n)wn as B'nited !tates ;)ney,B ( ( ( !uh n)tes will &e *ull legal
tender *)r all "u&li and "ri5ate de&ts( ( ( ( They will &e seured &y
the g)ld and sil5er n)w in the 'nited !tates Treasury )r &uried &y it in
su&terranean 5aults(
-n 199E, the *igure )* I5 &illi)n was a 5ery )nsidera&le am)untF -ts
issuane w)uld ha5e nearly d)u&led the '(!( urreny in irulati)n( The
,ey was that the /an, w)uld e1tend the m)ney t) large-sale in*rastruture
"r)3ets( !ine many )* these "r)3ets were initiated &y, )r under the
su"er5isi)n )*, the indi5idual states, the m)ney w)uld &e e1tended t) th)se
states )r their B")litial su&di5isi)ns,B i(e(, )unty and l)al g)5ernments(
%em,e "r)")sedF
The &an, will trans*er *unds t) the Treasury )* the 'nited !tates *)r
"u&li w)r,s and *)r "u&li e1"enditures as direted *r)m time t) time
&y Ats )* #)ngress(
And *urther,
MThe '(!( urreny n)tes w)uld &e l)anedN *)r "u&li w)r,s and
internal im"r)5ements whene5er and where5er there was unem"l)y-
ment( This w)uld "re5ent en*)red idleness and w)uld utili$e the
la&)r that is n)w g)ing t) waste:la&)r l)st *)re5er(
As a result )* e1tending a&undant redit t) in*rastruture and nati)n-
&uilding, %em,e was ertain that the /an,0s dirigism w)uld *)ster e1"l)si5e
e)n)mi gr)wthF
Ai5e t) this &an, the )ntr)l )* the m)ney and the redit )* this nati)n
( ( ( let it su""ly us with am"le units )* e1hange with whih t)
measure the energy )* )ur "e)"le:and then we will ne5er again *ind
a )nditi)n where milli)ns are hungry:where e5erything is t) &e
d)ne and n)thing is &eing d)ne(
2e added,
The 'nited !tates, &eause )* its great natural wealth and unlimited
res)ures )* raw material and s,illed w)r,men, has, thr)ugh its e5er-
inreasing mehanial in5enti)ns and hemial dis)5eries, &e)me
sel*-su**iient and a&le t) de5el)" e)n)mi *reed)m *)r all( -t an
and will a&)lish ")5erty &y an e5er-inreasing and higher standard )*
li5ing, n)t )* the *ew, &ut )* the many(
%em,e said,
MThe /an, )uld lendN at a uni*)rm ser5ie harge Minterest rateN n)t
t) e1eed )ne "erent "er annum( -t )uld ma,e l)ans t) !tates and
")litial su&di5isi)ns whene5er and where5er there was unem"l)y-
ment(
The 1L interest rate t) &e harged *)r /an, l)ans *)r in*rastruture was
im")rtant t) %em,e, and he reiterated it thr)ugh)ut his li*e( As an anti-usury
measure, he th)ught that the Nati)nal /an, sh)uld harge n) m)re than the
administrati5e )st )* the l)an, and this he re,)ned t) &e 1L(
%em,e s)**ed at the &an,ers wh) demanded that the Federal 4eser5e gi5e
them the n)tes whih it generated &y &uying '(!( Treasury seurities, i(e(,
m)neti$ing the *ederal de&t( %em,e wr)te, sarastiallyF
-* the A)5ernment sh)uld ta,e s)me )* this m)ney away *r)m the
internati)nal &an,ers and use it )n &ehal* )* all the "e)"le as it was
intended t) &e used, &y the #)nstituti)n )* the 'nited !tates, then the
.all !treet interests w)uld yell B*iat m)ney(B M/utN it is sound
money when the A)5ernment gi5es it t) the &an,s *)r n)thing(
M?m"hasis in )riginal(N
%em,e )nluded thatF
e5ery&)dy ,n)ws that this nati)n has &e)me great &eause )* the
"r)gressi5e and aggressi5e genius )* its "e)"le:&eause )* the
"r)duti)n and reati)n, and n)t the destruti)n, )* wealth(
2e alled *)r the a&)liti)n )* the "ri5ate-&an,-)wned, usury-"ratiing
Federal 4eser5e !ystem, t) &e re"laed &y his "r)")sed /an, )* the 'nited
!tates(
%em,e did n)t ha5e all )* these 5iews *ully w)r,ed )ut in the *irst deades
)* this entury( /ut the )re )* his 5iew was already in "lae, and this
higher "rini"le in*)rmed his *ight *)r the /an, )* N)rth +a,)ta(
The %)nd)n-direted rail, grain, and &an,ing artel &eame alarmed when
the N)n"artisan %eague was *)rmed in 1915, and its alarm grew &y lea"s
and &)unds, as the NP% w)n the 1916 statewide eleti)ns, and then the 1918
eleti)ns, a"turing a tw)-thirds ma3)rity in the &)th h)uses )* the N)rth
+a,)ta legislature( This alarm grew t) "ani "r)")rti)ns when in Fe&ruary
1919, the NP%-s")ns)red /an, )* N)rth +a,)ta "assed the state legislature,
with a sheduled )"ening date )* July 28, 1919(
-n additi)n, %eague )rgani$ing had s"read t) set u" a**iliated )rgani$ati)ns
in ;innes)ta, -)wa, !)uth +a,)ta, Gansas, Ne&ras,a, .is)nsin, ;)ntana,
-dah), .ashingt)n, Te1as, and #)l)rad), during the "eri)d 1917-19( The
NP%0s nati)nal head6uarters was n)w ;innea")lis, h)me )* the grain artel(
The artel )ligarhy had &een )rgani$ing against %em,e and the NP% sine
1915, using e5ery means, *air and 7m)stly8 *)ul, t) d) s)( /ut in 1917, the
tri"le-headed )ligarhy la&elled the NP% a sediti)us )rgani$ati)n< )n-
duted a am"aign )* "hysial h))liganism, inluding &eatings and
destruti)n )* "r)"erty< and had harges )* sediti)n &r)ught against the
NP% in the )urts(
F)r the ne1t *)ur and )ne-hal* years, the )ligarhy0s atta,s &eame a
)unter")int t) what the NP% w)uld a)m"lish, and inluded, am)ng )ther
ats )* "er*idyF an attem"t t) ha5e the /an, delared un)nstituti)nal and
shut d)wn 7a ase that went all the way t) the '(!( !u"reme #)urt8< a 4ed
!are with-hunt against %em,e and the %eague< and *inanial war*are
whih &r)ught the &an, t) &an,ru"ty(
The res)ures that the )ligarhy )mmitted t) this am"aign were e1tra-
)rdinary *)r the time, and *)r this "art )* the w)rld( Their )"")nent, %em,e
and the NP%, a small, *arm-&ased )rgani$ati)n, with *ew material res)ures,
under atta, *r)m a %)nd)n-&ased )mmand enter, the m)st *)rmida&le
*)re )n ?arth( .hat the )ligarhy *)und m)st terri*ying in the NP%-led
m)5ement *)r a state-)wned de5el)"ment &an,, was n)t sim"ly the /an,0s
im"ressi5e ")wers, &ut the 5ery "rini"le )* the Amerian !ystem )*
?)n)mis whih it em&)died, and ,e"t ali5e( The "aram)unt danger t) the
artelF the s"read )* this "rini"le and "ratie t) the rest )* Ameria( -t
might e5en &e ad)"ted &y the nati)nal g)5ernmentJ
*harges of #edition
The )"ening sal5) ame with the )ligarhy0s harges )* sediti)n against the
%eague, *)ussing )n the NP%0s anti-/ritish stane, with the intent )*
sending its leaders t) 3ail and there&y &rea,ing the )rgani$ati)n( Pri)r t)
Ameria0s entering .)rld .ar -:that is, while this )untry was still neutral
:the N)n"artisan %eague am"aigned against Ameria0s &e)ming /ritain0s
ally in the war( ;illi)ns )* Amerians wh) were n)t mem&ers )* the %eague
shared this 5iew( 2)we5er, *)ll)wing Ameria0s entry int) the war, the NP%
su"")rted the war e**)rt( -n ;ay 1917, the NP% "ut )ut a statement whih
readF
.hate5er ideas we as indi5iduals may ha5e had, as t) the wisd)m )*
)ur nati)n engaging in this war, we reali$e that a risis n)w )n*r)nts
us in whih it &e)mes neessary that we all stand unreser5edly
"ledged t) sa*eguard, de*end, and "reser5e )ur )untry(
-n ma,ing this delarati)n )* )ur ")siti)n we delare une6ui5)ally
that we stand *)r )ur )untry, right )r wr)ng, as against *)reign
g)5ernments with wh)m we are atually engaged in war( !till we
h)ld that when we &elie5e )ur )untry wr)ng, we sh)uld endea5)r t)
set her right(
At the l)se )* this war ( ( ( "ri5ate m)n)")lies must &e su""lanted &y
"u&li administrati)n )* redit, *inane, and natural res)ures( The
rule )* ( ( ( s"eulat)rs must &e )5erthr)wn i* we are t) "r)due a real
dem)ray(
#h))sing t) ign)re the reality )* the NP% ")siti)n, the tri"le-headed
)ligarhy ")rtrayed the NP% as a sediti)us )rgani$ati)n gi5ing aid t)
Aermany during the "eri)d )* .)rld .ar -( 'sing this "rete1t, the )ligarhy
im")sed a reign )* terr)r( The &)),, Political Prairie *ire: The Non#arti'
san Lea&ue, +,+-'.. &y 4)&ert ;)rlan, re")rted what trans"ired in
;innes)ta in the *all )* 1917 and winter )* 1917-18, alth)ugh the same
thing was ha""ening in )ther statesF
The &rea,ing u" )* %eague meetings either &y l)al )**iials )r &y
m)&s was alm)st standard "ratie, and 5i)lene &eame ( ( ( m)re
)mm)n( %eague )rgani$ers and s"ea,ers in s)me )unties were
&eaten, tarred, and *eathered, and threatened with lynhing, whih in
se5eral instanes alm)st )urred( ( ( ( =ne *armer with a Aerman
name was Bde")rtedB *r)m 4), #)unty:ta,en ar)ss a state line
l)thed in h)t tar and t)ld ne5er t) return(
;erhants with %eague sym"athies *)und their st)re *r)nts "ainted
yell)w and their wind)ws smashed( ( ( ( The edit)r )* the Park
Re&ion Echo, wh) had re")rted *a5)ra&ly )n a %eague meeting, ame
t) his )**ie in the m)rning t) *ind the d))r )"en, his lin)ty"e
smashed, his "ress damaged &ey)nd re"air, and his )rres")ndene
*iles st)len( ;any a gathering )* *armers was greeted with mud,
r)tten eggs, st)nes, &u,ets )* yell)w "aint, )r the &last )* a *ire h)se,
whih in )ne ase was said t) ha5e t)rn a si1-m)nth-)ld &a&y *r)m its
m)ther0s arms( -n m)re than )ne ase 2)me Auards were utili$ed in
&rea,ing u" these meetings( %)al law en*)rement )**iials in a
num&er )* instanes )"enly threatened the use )* *)re against %eague
)rgani$ing )r s"ea,ing, yet did n)thing t) restrain the lawless ati)ns
)* sel*-styled Bl)yalists(B
The "ress "layed its "art( -n !e"tem&er 1917, the %eague )rgani$ed a
Pr)duers0 and #)nsumers0 #)n*erene in !t( Paul, ;innes)ta, attended &y
8,>>> %eague su"")rters inside, and alm)st an e6ual num&er )utside( The
meeting had little t) d) with the war issue( 4)&ert %aF)llette, !r( s"),e(
A*ter the e5ent, in res")nse t) a he,ler, %aF)llette 7wh) was als) anti-
/ritish8 n)netheless said, sine the '(!( was already at war, that B.e Mthe
'(!(N had a grie5ane against Aermany(B The Ass)iated Press 6u)ting him
saying, B.e had n) grie5ane against Aermany(B ?ight m)nths later, in ;ay
1918, the Ass)iated Press admitted that it had Bmade an un*)rtunate err)r,B
&y the inlusi)n )* the w)rd Bn)B in %aF)llette0s statement( At the time )*
AP0s *alse re")rting, the (innea#olis /ournal alled %aF)llette the B*ugle-
man )* sediti)n,B and Angl)"hile Teddy 4))se5elt la&elled %aF)llette the
B2un within )ur gates(B
The ;innes)ta Pu&li !a*ety #)mmissi)n &eame the )ligarhy0s instrument
*)r hauling nati5e N)rth +a,)tans and %eague mem&ers *r)m )ther states
int) ;innes)ta )urts( %eague mem&ers were harged with &l),ing
enlistment in the military, and ma,ing sediti)us s"eehes( -n the ma3)r
sh)w-trial, N)n"artisan %eague "resident A(#( T)wnley was hauled &e*)re a
;innes)ta 3udge( The *i1ed 3udge denied T)wnley the a&ility t) "resent
5ital e5idene in his de*ense( -n mid-July 1918, he was )n5ited )*
sediti)n and sentened t) 9> days in 3ail( A *ew years later, the 'nited !tates
!u"reme #)urt re*used a writ )* certiorari0 T)wnley went t) 3ail(
The %eague *)ught )urage)usly against this atta,, whih t)ld the a5erage
%eague mem&er that his )rgani$ati)n had drawn the ire )* 5ery ")wer*ul
*)res(
The Inde1endent 5oters Association
/y 1918, the )ligarhy had deided that it needed an )n-the-sene ")litial
*r)nt gr)u" in N)rth +a,)ta( -t *)rmed the -nde"endent D)ters Ass)iati)n,
)r -DA( ;)ney was la5ished )n this )rgani$ati)n(
The &)), The Bank of North akota: !n E"#eriment in $tate %wnershi#,
re")rtedF
The ma3)rity )* Mthe -DA0sN *inanial &a,ing ame *r)m large
)r")rati)ns, mainly the &an,ing, railr)ad, and grain trusts )*
;innea")lis(
The -DA "u&lished reams )* literature against the %eague( -n A"ril 1919,
three m)nths &e*)re the /an, )* N)rth +a,)ta e5en )"ened *)r &usiness, the
-DA launhed a lawsuit against the /an, )* N)rth +a,)ta, harging it with
misusing ta1"ayer m)ney, and 5i)lating the #)nstituti)n )* the 'nited
!tates(
The tri"le-headed )ligarhy shamelessly su""lied its )wn lawyers t) handle
and argue the ase( The three lead lawyers *)r the -DA law suit against the
/an, wereF
H N(#( C)ung:att)rney *)r se5eral grain-milling )m"anies and *)r the
N)rthern Pai*i 4ailr)ad(
H Tray /angs:att)rney *)r .estern 'ni)n, the 4ed 4i5er #)m"any, and
se5eral tele"h)ne )m"anies(
H #(J( ;ur"hy:att)rney *)r the Areat N)rthern 4ailr)ad(
The Areat N)rthern and the N)rthern Pai*i were the tw) lead *)res in the
rail artel< .estern 'ni)n was )ntr)lled &y J(P( ;)rgan /an, and the
Guhn %)e& in5estment &an, )* the .ar&urg *amily and Ja)& !hi**< and
the utility and tele"h)ne )m"anies were )wned t) a signi*iant e1tent &y
.all !treet and /)st)n &an,s(
The -DA ase was ,n)wn as $cott 10 *ra2ier0 !)tt was the name )* )ne )*
the allegedly aggrie5ed N)rth +a,)ta ta1"ayers< Fra$ier was the name )*
the A)5ern)r )* N)rth +a,)ta( The ase was m)re ")"ularly ,n)wn as BThe
F)rty-Tw) Ta1"ayers0 !uit,B &eause it was *iled in the name )* E2
ta1"ayers, )ne *r)m eah )* E2 N)rth +a,)ta )unties 7the state had 59
)unties all t)ld8(
=n June 1E, 1919, Federal +istrit Judge #harles ?( Amid)n, wh) heard the
ase, deli5ered his deisi)n that the )urt did n)t ha5e 3urisditi)n( The
"lainti**s had *ailed t) sh)w that the am)unt in )ntr)5ersy e1eeded the
re6uired I9,>>>, and did n)t dem)nstrate that the ta1ing ")wer )* the state
was &eing used *)r a "ri5ate "ur")se( Thus, the -DA *ailed t) win its suit(
The NP%-led N)rth +a,)ta g)5ernment initiated a B*riendly suitB:Areen 5(
Fra$ier: whih was &r)ught &e*)re the N)rth +a,)ta !tate !u"reme #)urt,
&y *i5e /urleigh #)unty *armers( The )urt ruled in *a5)r )* the NP%0s
B*riendly suit(B
The -(D(A(0s lawyers a""ealed &)th the BF)rty-Tw) Ta1"ayers0 !uitB and
Areen 5( Fra$ier rulings t) the '(!( !u"reme #)urt( -t w)uld &e m)re than a
year &e*)re the !u"reme #)urt w)uld hear the arguments( +uring that inter-
5al, the ")ssi&ility that the -DA might win its ase and the /an, &e ruled
un)nstituti)nal, hung li,e a sw)rd )* +am)les )5er the /an,(
Federal Reser!e De1ression
-n mid-1919, the Federal 4eser5e /)ard )rhestrated a nati)nal de"ressi)n,
whih de5astated N)rth +a,)ta( The NP% and the /an, )* N)rth +a,)ta
had &een set u" t) )5erturn the Federal 4eser5e0s interest rate and redit
ditat)rshi"( +uring .)rld .ar -, the '(!( e)n)my had &een geared u" *)r
war m)&ili$ati)n t) an im")rtant e1tent 7alth)ugh n)where near the le5el )*
.)rld .ar --8( -n mid-1919, the Fed 3a,ed u" interest rates, and reated a
redit runh( Ar)ss the )untry, industry and agriulture &u,led( The
Areat +e"ressi)n )* the 199>s had its )rigin in "art in this redit runh, as
well as in the terms )* the Dersailles Peae Treaty and the disastr)us
e)n)mi ")liies )* #al5in #))lidge( The agriultural set)r did n)t
re)5er *r)m this 1919 runh *)r nearly 2> years( Alth)ugh )asi)nal
slight u"ti,s )urred, the '(!( agriultural set)r was in a de"ressi)n *r)m
1919-2> right thr)ugh the mid-t) late 199>s( The *arm de"ressi)n &r)ught
hard times t) the N)rth +a,)ta *armers, &an,ru"ting many )* them and
reating a risis in the state(
This risis re"resented the )nditi)ns whih were the /an, )* N)rth
+a,)ta0s raison d3etreF its missi)n t) lend when the Federal 4eser5e reated
the )nditi)ns in whih n)rmal hannels )* lending )uld n)t )r w)uld n)t(
2)we5er, the /an, was n)w 5ulnera&le, thr)ugh its Ahilles heelF it didn0t
ha5e m)ney t) lend( This the )ligarhy s)ught t) e1"l)it(
To be continued