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DEPOSITOR’S GUARANTY FUND COMMISSION

The Depositor's Guaranty Fund Commission was created in 1917 (S. L. 1917, Ch. 126) and consisted of the Governor, State Examiner, and three members appointed by the Governor for three-year terms. In 1923 the membership of the Depositor's Guaranty Fund Commission was changed to include the Governor, the manager of the Bank of North Dakota, and three gubernatorial appointees serving three-year terms. The purpose of the Depositor's Guaranty Fund Commission was to administer the Depositor's Guaranty Fund and to review applications from banks interested in participating in the program. The object of the Depositor's Guaranty Fund was to encourage savings by insuring bank deposits and to entice out-of-state investors to deposit funds in North Dakota banks. In 1921, the Depositor's Guaranty Fund Commission was given authority to supervise liquidation of insolvent banks and in 1923 was allowed to administer insolvent banks. The Depositor's Guaranty Fund was inadequate because it required participating banks to pay only one twentieth of one percent of its deposits into the Fund. The Fund was therefore unable to guarantee deposits that were lost due to the collapse of a large number of banks in North Dakota during the 1920s. The Depositor's Guaranty Fund was repealed in 1929 (S. L. 1929, Ch. 122). The public often misunderstood the actual functions and scope of responsibility of the Depositor's Guaranty Fund. Many believed the Depositor's Guaranty Fund could and would provide full compensation in the event savings deposits were lost due to a bank failure. This of course was not the case since the Depositor's Guaranty Fund was not designed to handle the catastrophic number of bank failures through the 1920s. Over 300 banks closed from the time of passage of the Depositor's Guaranty Fund Act in 1917 until it was repealed in 1929. An initiated constitutional amendment requiring the state to cover the approximately $25 million worth of deposits lost by insolvent banks was disapproved by voters on November 6, 1928. The law repealing the Depositor's Guaranty Fund was referred and approved by voters on June 25, 1930. See: Department of Financial Institutions

CHRONOLOGY

1917       The Depositor's Guaranty Fund Commission (S. L. 1917, Ch. 126) existed until 1929 and legislation allowed the state to be divided into eight districts and permitted more deputy examiners to be hired (S. L. 1917, Ch. 219).

1919       The State Examiner was appointed to the State Auditing Board and served from 1919 until 1965.

1921       The Depositor's Guaranty Fund Commission was given authority to supervise liquidation of insolvent banks.

1923       The Depositor’s Guaranty Fund Commission was allowed to administer insolvent banks.

1927       The State Examiner now served four-year terms (S. L. 1927, Ch.260).

1928       An initiated constitutional amendment requiring the state to cover the approximately $25 million worth of deposits lost by insolvent banks was disapproved by voters on November 6, 1928.

1929       The Depositor's Guaranty Fund was repealed in 1929 (S. L. 1929, Ch. 122).
 
1930       The law repealing the Depositor's Guaranty Fund was referred and approved by voters on June 25, 1930.

1931       The Legislature required the State Examiner to “exercise constant supervision over the affairs of all financial corporations within the state”.  Legislation also created the State Banking Board and the Department of Banking, and required the State Examiner to appoint no more than thirteen deputies and to establish six districts across the state.  There was a repeal of legislation from the Compiled Laws of North Dakota of 1913 and chapters from Session Laws dating from 1919, 1923, 1925, 1927, and 1929 (S. L. 1931, Ch. 96).   An amendment was made to the organization, government, and operation of annuity, safe deposit, surety, and trust companies (S. L. 1931, Ch. 93). The Legislature was also requested to provide regulation of building and loan associations within the state and for the organization and operation of the associations (S. L. 1931, Ch. 94).

SERIES

30593 Depositor’s Guaranty Fund. Record of Bank Contributions to Depositors’ Guaranty Fund.
30927 Depositor’s Guaranty Fund. Correspondence.
30928 Depositor’s Guaranty Fund. Depositor’s Guaranty Fund Commission Minutes.
30929 Depositor’s Guaranty Fund. Claims Register.
30930 Depositor’s Guaranty Fund. Payment Register.
30931 Depositor’s Guaranty Fund. Claims Docket.
30932 Depositor’s Guaranty Fund. Register of Depositors’ Guaranty Fund Depositories.
30933 Depositor’s Guaranty Fund. Abstracts of State Bank Deposits.
30934 Depositor’s Guaranty Fund. Receipt and Disbursement Record.
30935 Depositor’s Guaranty Fund. Daily Abstracts of Certificates Issued and Dividends Paid.
30936 Depositor’s Guaranty Fund. Record of Bank Examiner’s Expenses.
30937 Depositor’s Guaranty Fund. Register of Dividends Paid to State Bank.

SOURCE

Gray, David P.  Guide to the North Dakota State Archives, 1985.
North Dakota State Legislature Session Laws.

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