attention. Serious abuses in grain grading and marketing had
been pointed out by the State Bankers' Association as far
back as 1906. The Legislatures in 1909 and 1911 passed an
amendment to the constitution, ratified by popular vote in 1912,
which made it legal to provide for a state-owned terminal grain
elevator. A second amendment for a terminal elevator within
the state became effective in 1914. The Legislature of 1913 laid
a tax to create a fund to build a terminal elevator and the Board
of Control was authorized to prepare plans. In 1915 the Board
reported against the whole plan, the tax was repealed and no
appropriation made.
In the spring of 1915 a movement was begun to organize the farmers politically upon the following platform: (i) state ownership of terminal elevators, flour-mills, packing-houses and cold-storage plants; (2) state inspection of grain and grain dock- age; (3) exemption of farm improvements from taxation; (4) state hail insurance on an acreage basis; (5) rural credit banks operated at cost. The movement was so successful that by Nov. 26,000 members had joined the Non-Partisan League.
The first state convention was held at Fargo March 28 1916, and a full state ticket was nominated. At the primary election in June all the nominees supporting the League were elected, with the exception of the state treasurer. The Legislature was divided ; the House was controlled by the supporters of the League, the Senate by its opponents.
The 1917 Legislature provided for: (i) state grain grading; (2) Torrens title registration; (3) state guarantee of deposits in state banks; (4) reduction of assessments on farm improvements to 5%; (5) a state highway commission; (6) a tripling of the former appropriation for rural schools.
After the United States entered the World War the state prepared to take its part and a special session of the Legislature was called for Jan. 1918. A Seed and Feed Loan Act was passed to relieve drought-stricken farmers in the western part of the state. Special county bonds could be issued under this law to provide funds, and possible conflict with the work of the Federal Land Banks was obviated by a special issue of state indemnity bonds to protect Federal loans to farmers. A moratorium was laid on all debts of men in the national service and a State Council of Defence created.
The adoption of a new industrial programme by the farmers of the state in 1918 was not the result of any sudden impulse or mere theory. The investigations of the faculty of the state Agricultural College supplied the foundation for the new system of grain marketing. For instance, President E. F. Ladd of the college gave scientific proof of the loss of fertility that followed the constant shipping of grain out of the state. The annual loss to the soil he estimated at 46,018,440 Ib. of nitrogen; 44,648,760 Ib. of phosphoric acid; 10,700,200 Ib. of potash and 1,787,280 Ib. of lime. He showed, also, by experiments in the model flour- mill at the college that the grain grades of the Minneapolis Chamber of Commerce were not based on the flour-producing quality of the various crops handled by them, but were arbitrary, and that they tended to deprive the farmer of any possibility of raising grain at a profit. The methods used by the wheat buyers and millers at Minneapolis, St. Paul and Duluth had been care- fully studied by the same investigators and their conclusions were well known throughout the state.
On this solid foundation of research and practical experience was built the programme of legislation carried through after the election of 1918.
At the same election several important amendments to the state constitution were ratified. The first subject dealt with in these amendments was the power of the people to pass on or to initiate legislation and a similar power to propose and adopt constitutional amendments without the action of the state Legislature. The specific provisions in these amendments require the signatures of 10,000 voters to a petition calling for a referendum on any law. A majority vote at an election is required to pass or repeal a law so initiated or referred. An amendment to the constitution may be proposed by a petition signed by 20,000 voters, and if approved by a majority of the votes cast on the measure at the special election, it becomes a part of the constitution. The second subject dealt with was the power of the state or of a municipality to engage in any industry
or business. The third subject was the debt limit of the state, at that time 8200,000 ; the amendment authorized the state to borrow up to 82,000,000 on state bonds, all above that amount to be secured by first mortgages on real estate at not more than one-half its value or upon the full value of state-owned utilities or industries. If state- owned public utilities or industries are offered as security for bond issues, the amount of the issue must not exceed 10,000,000. Other amendments gave the Legislature power to exempt from taxation all personal property and to levy an acreage tax on farm-land to provide funds for a state system of hail insurance. These amend- ments were adopted at the elections in Nov. 1918 by an average vote of over 48,000, and opposed by a vote of about 32,000. At the same elections the Non-Partisan League obtained control of both Houses of the Legislature and elected their candidates for all but one of the state offices.
With the whole machinery of the state in the farmers hands, their legislative programme was enacted into law at the following session. There was created an Industrial Commission, consisting of the governor, the attorney-general and the commissioner of agri- culture and labour, which was given power: (i) to manage, operate and control all state-owned utilities, industries and business projects created by law; (2) to purchase or lease sites for these industries; (3) to sell all such property and to fix prices of all products of these industries; (4) to provide funds by the sale of bonds for the carrying- on of the state-owned industries and other business undertakings. There was also created a Mill and Elevator Association placed under the Industrial Commission. In Aug. 1919 a small mill and elevator were purchased at Drake, in McHenry county, on the Soo railway. In Nov. 1919 Grand Forks was chosen as the site of the projected three-unit mill and elevator and in the following spring construction began. The structure was planned to cost approxi- mately 81,500,000, with a daily producing capacity of 3,000 bar. of flour, and a storage capacity of 1,659,500 bus. of grain and 70 car- loads of flour. The annual grinding capacity of the mill was to be 900,000 bar. of flour, which would fully supply home consumption. The production of a corresponding amount of mill-feed for live stock was to be one of the most important results of the new project, since it would tend to overcome the loss of fertility which always overtakes a producing area that rests its prosperity upon a single crop manufactured and consumed elsewhere. The grain-grading law marks the culmination of a long struggle on the part of the farmers to secure fair grading of grain. It provides that elevators buying grain in North Dakota shall grade it rather according to its milling and baking value than according to its physical char- acteristics. It has been estimated by experts of the North Dakota Agricultural College that this law should save growers in the state about $11,000,000 annually.
Another state institution vitally connected with the industrial programme of 1919 is the state Bank of North Dakota, which began business July 28 1919 as an institution founded, owned and con- trolled by the state. It is the legal depository of all state bonds issued for the purposes of all the business enterprises under con- trol of the Industrial Commission. It was originally the legal depository of the funds of all local governments such as cities, counties and school districts, but this provision was repealed by an initiated law adopted at the state election in Nov. 1920. The bank pays from 2 to 3 % interest on the checking accounts of all public funds and from 4 to 6 % on time deposits, but these rates are sub- ject to change. The public funds are redeposited in the banks of the state with special reference to local needs.
Up to 1921 the bank had not been opened to private depositors but early in that year the policy was changed so as to make the bank a general bank of deposit, with branches to be established throughout the state as needed to carry on this phase of its work. It is authorized to loan on first mortgages on real estate in North Dakota up to one-half value of the security, providing funds for the purpose by the sale of real-estate mortgage bonds. Loans are also authorized on warehouse receipts issued by the Industrial Commission or by any licensed state warehouse up to 90% of the value of the property covered. The amount of the real-estate loans is limited to 30% of the bank's capital and 20% of its deposits. The loans require payment of fixed annual instalments. In 1921 these annual instalments were 7% of the loan principal, 6% for interest and 1% for principal. The unpaid balance is added to the 30th instalment of interest and principal in liquidation of the loan. The state guarantees all deposits of this bank and also all bonds that are handled for the state. The average rate of interest in the state is fixed by the operation of the state bank as a loan agency at 6% or at 6-25% plus commission, while the previous average rate in 1916 was 8-7% on farm mortgages, plus commission.
The laws providing for the Industrial Commission and for the Bank of North Dakota were carried at a referendum election in June 1919 by an average vote of over 61,000 against a little over 49,000. The constitutionality of the laws was tested by two suits, appealed to the U.S. Supreme Court. The decision of this court, given June I 1920, upheld the lower courts in declaring the laws constitutional. In its decision the court said: " Under the peculiar conditions existing in North Dakota, which are emphasized in the opinion of its highest court, if the state sees fit to enter upon such enterprises as are here involved, with the sanction of its constitu-
