NORTH DAKOTA, United States

IT has no automatic tellers or drive-up windows, doesn’t issue credit cards, and tends only a few thousand chequing and savings accounts. Its only location is a glass, steamboat-shaped headquarters near the Missouri River, where the business moved from its original 1919 home in a former auto assembly plant.

The Bank of North Dakota — the only state-owned bank in the United States — might seem to be a relic. It was the brainchild of a failed flax farmer and one-time Socialist Party organiser during World War I.

But now officials in other states are wondering if it is helping North Dakota sail through the national recession.

Gubernatorial candidates in Florida and Oregon and a Washington legislator are advocating the creation of state-owned banks in those states. A report prepared for a Vermont House committee last month said the idea had “considerable merit”. Liberal film-maker Michael Moore promotes the bank on his website.

“There’s a lot of hurt out there, a lot of states that are in trouble, and they’re tying the Bank of North Dakota together with this economic success that we’re having right now,” said the bank’s president, Eric Hardmeyer.

Hardmeyer says he’s received “tons” of inquiries about the bank’s workings, including questions from officials in California, Michigan, New Mexico, Ohio, and Washington state. North Dakota has the nation’s lowest unemployment rate at 4.4 per cent, soaring oil production and a robust state budget surplus — but Hardmeyer says the bank isn’t responsible for the prosperity.

“We are a catalyst, perhaps, or maybe a part of it,” he said. “To put this at our feet is flattering, but it frankly isn’t true.”

The Bank of North Dakota serves as an economic development agency and “banker’s bank” that lessens the loan risks of private banks and helps them finance larger projects. It offers cheap loans to farmers, students and businesses.

The bank had almost US$4 billion in assets and a US$2.67- billion loan portfolio at the end of last year, according to its most recent quarterly financial report. It made US$58.1 million in profits in 2009, setting a record for the sixth straight year. During the past decade, the bank funnelled almost US$300 million in profits to North Dakota’s treasury.

The bank has the advantage of being the repository for most state funds, which can be used for loans and occasional relief for private banks that need a jolt of cash during sluggish credit markets.

“We think of ourselves as kind of a little mini-Federal Reserve,” Hardmeyer said.

The state earns roughly 0.25 per cent less interest than state agencies would get from a commercial institution. The bank also pays no state or federal taxes and has no deposit insurance; North Dakota taxpayers are on the hook for any losses.

The Bank of North Dakota was a cornerstone of the agenda of the Nonpartisan League, a farmers’ political insurgency spawned by anger about outside control of North Dakota’s credit and grain markets.

Founded in 1915 by AC Townley, who became a Socialist Party organiser after he went broke raising flax in western North Dakota, the NPL advocated state-owned banks to provide low-interest farm loans, along with state flour mills, grain elevators, meat-packing houses and hail insurance.

Supporters gained control of the legislature and the governorship within five years. The movement’s power quickly waned, but two of its state-owned businesses survived — the Bank of North Dakota and a state flour mill and grain elevator in Grand Forks.

From the 1940s until the early 1960s, the bank served mostly as a public funds depository and municipal bond buyer, said Rozanne Enerson Junker, author of a 1989 history of the bank. Its economic development activity has greatly expanded since.