History of Public Banking

The Quakers in the colony of Pennsylvania introduced public banking in North America. Other colonial governments and 19thcentury states also established publicly-owned banks. The State of North Dakota embraced the idea in 1919.For the last century, North Dakota has been the soleU.S. state toownand operate its own depository bank. Several US territories now have them as well.

By early 2009, in the throes of the Great Recession,North Dakota was also the only U.S. state to holda budget surplus, and it had the lowest unemployment rate and loan default rate in the country. Ithasthe highest number ofcommunity banks per capita, indicating that the presence of a state-owned bank supports local private banking.

The Bank of North Dakota was founded to ensure a dependable supply of affordable credit tothe state’sfarmers, ranchers and businesses.Withoutaccess toaffordable credit, Americans who do not possesssubstantial wealth cannot investin their families and businesses to ensure a financially securefuture.

Today, the Bank of North Dakota makes low-interest loans to students, small businesses and entrepreneurs. It partners with private banks to provide a second marketfor affordable mortgages and it supports local governments by buying municipal bonds, which are used to finance public projects such as roads and schools. To learnmore about the Bank of North Dakota, click here.

States and municipalities have the potential to leverage their existing revenues to do much more good than they are currently doing. The Public Banking Institute worksto explore this potential and inform the public and its governments about it.