Northwestern Bank Failures

The failure of many northwestern banks in recent years has proved a political as well as a business factor of great interest and importance. In the last 3 1/2 years, 512 banks have been closed in four northwestern states, as follows: Minnesota, 73; Montana, 122; North Dakota, 194; South Dakota, 123. Of these, 59 were national and 453 state banks. These failures occurred out of a total of 2,675 state and 691 national banks, or 3,366 altogether.

Throughout these states there were more banks per capita in 1921 than anywhere else in the country--a result of War-time prosperity on the wheat farms. Particularly under state laws, charters were issued entirely too readily. Compared with one bank to every 9,920 people in New York State and to every 6,660 people in the eastern states as a whole, Montana had a bank for every 1,370 inhabitants, South Dakota one to every 921, and North Dakota one to every 768. The capitalization of these mushroom northwestern banks was also very small. South Dakota had 45 banks capitalized at only $5,000.