THE FAMOUS BANK CASE 



business, was called the Scandinavian-Ameri- 

 can. It was supposed to be one of the 

 strongest banks in the Northwest. Of a sud- 

 den the people of the state were astonished 

 to learn that the state banking board, ignor- 

 ing the state bank-examiner, had descended 

 upon the Scandinavian-American, objected to 

 the presence among its assets of the League's 

 postdated checks, declared 50 per cent, of the 

 farmers' notes it held to be worthless,^ an- 

 nounced the bank to be insolvent, ordered it 

 to be closed, and placed a receiver in charge. 



The law apparently intends that banks 

 shall be closed only upon the report of a state 

 bank -examiner. It is unfortunate for any 

 theory of good faith in these transactions that 

 there was no report of a state examiner in this 

 case, and that just before the closing of the 

 bank the state examiner, Lofthus, had been 

 sent out of the state by the majority of the 

 banking board. The action may have been 

 innocent enough, but it gave to the subsequent 

 proceedings an appearance of unfairness, since 

 Lofthus was generally trusted and might be 

 depended upon to make an impartial exami- 

 nation of the bank's affairs, if he had been so 

 requested. It appears that no such request 

 was made of him. 



The sudden closing of the bank created a 



^ Many of these notes were contributions to or loans made by the 

 League. 



311 



