“Socialism has no place in North Dakota,” his campaign tweeted in February.
It was quickly pointed out, however, that the state boasts two institutions with socialist roots: the Bank of North Dakota and the North Dakota Mill and Elevator. Burgum oversees both as chairman of the Industrial Commission.
The only state-owned bank in the country will mark 100 years in operation Sunday, July 28, with a community celebration the next day. The event, which will be held at its Bismarck headquarters, will include food vendors, speakers and tours of the bank’s museum.
The festivities come as Republicans across the country, including President Donald Trump, raise the specter of socialism while political figures on the left, including some Democratic presidential candidates, advocate for policies like Medicare for All and the Green New Deal to combat high health care costs and climate change.
But in North Dakota, where Republicans control the Legislature and hold every statewide elected seat, the bank continues to find widespread support. State lawmakers passed a resolution recognizing “Bank of North Dakota Day” earlier this year.
“There’s no denying that it’s a socialist institution,” said Mike Jacobs, the former Grand Forks Herald publisher who was commissioned by the bank to write a book on its history. “That doesn’t mean it’s un-American. This is the legitimate product of a state in the United States deciding that this was an alternative that made sense.”
The bank traces its origins to farmer frustration over high interest rates and the Nonpartisan League movement that came to power in 1918. The next year, the state Legislature established the Bank of North Dakota and the state-owned flour mill in Grand Forks.
Though the bank technically started operations earlier in the state Capitol, bank officials use the July 28 date as its anniversary because that’s when it opened its doors on the corner of Seventh Street and Main Avenue in Bismarck. It’s now located just across town near the Missouri River.
For his part, Burgum said he wouldn’t describe the bank as a socialist institution.
“I see it as something that promotes capitalism,” he said. “It’s a tool that helps us build a robust, locally owned banking system.”
Republican Sen. John Hoeven, who was the bank’s president in the 1990s, echoed that sentiment and described it as more of an economic development agency.
“Really, every state has economic development agencies,” he said. “And that’s really the role of the Bank of North Dakota. It is not to compete with private banks — it is to complement and support them.”
Indeed, the Bank of North Dakota doesn’t operate like a typical commercial institution. It’s not a member of the Federal Deposit Insurance Corp., known as the FDIC. And while people can open checking accounts there, it doesn’t have an ATM.
Instead, the bank participates in business loans with commercial institutions, offers student loans and holds the state government’s funds, among other functions. In 2018, it recorded $7 billion in assets with a record $159 million in profits.
Lawmakers relied on $140 million from the bank to balance the state’s budget in the 2019-21 biennium. In its latest annual report, the bank said it returned more than $1 billion to the state in its history through the general fund, infrastructure, disaster relief and other programs.
Bank President Eric Hardmeyer said the financial crisis a decade ago is continuing to drive interest in North Dakota’s model across the country. He planned to meet with New York state officials at the end of August.
Still, the state of North Dakota continues to stand alone in owning a bank. A 2011 report prepared for a Massachusetts state commission exploring the idea warned of heavy startup costs.
“I don’t think it could happen today anywhere else,” said North Dakota Bankers Association President and CEO Rick Clayburgh. “If we did not have a Bank of North Dakota … and our government leaders were thinking ‘let’s create one here in the state,’ I’m sure our organization would be fully opposed because of the unknown.”
Moreover, Clayburgh agreed the idea would fall flat if it were proposed here today because critics would label it a socialist invention. But like Burgum and Hoeven, Hardmeyer shied away from that description.
“This is leveraging public dollars with private dollars to advance certain social goods,” he said. “I don’t really like getting into branding it as a socialist bank or any of that, because I understand the negative connotations with that.”
A new generation of socialists, meanwhile, voiced some support for the bank. In a statement, the Red River Valley Democratic Socialists of America praised the Bank of North Dakota as a “profitable state-owned enterprise whose continuous profits both belie criticism of state ownership and whose revenue has aided the state in good times and bad.” But the organization said the bank has “operated on a much less activist model than it otherwise could have.”
Jacobs said the bank’s success shows that the “s-word on its face is not in and of itself a cause to reject something.”
“Nor is it necessary a cause to embrace it,” he added. “It just happened to work.”