Saturday news. (Watertown, S.D.) 19??-19??, 1915-11-04
THE BANKING DEPARTMENTS RULING.

recent ruling with regard to reserves held by the state banks.
1t is the possible effect of such ruling that we have in mind.
Hitherto state banks have been allowed to carry their
reserves where they please-inside the state or outside the
state, with natioal banks or with state banks.
The state banking department now rules that fifty per
cent of these reserves shall be held within the state and must
be placed with state banks at the reserve centers, if not kept
on hand in cash.
For instance, a bank having one hundred thousand dol
lars in deposits must retain as available cash, either within
its own vaults or on deposit with other state or national banks
subject to call, a certain percentage of the total The bank
ing departments new ruling requires that fifty per cent Of
the reserve-that Is, one-half of the stipulated percentage Of
the whole-must be held either within the banks own vaults
or must be kept on deposit with state banks.
Inasmuch as there are but six reserve cities in the state,
Watertown being one of them, this ruling means that one-half
Iof the total reserve Of all the state banks must be retained
either within the banks vaults or must be deposited in one or
more of these six reserve centers, with state banks only, cut
ting out the national banks. The national bankers of the state
are testing in the courts the right of the state banking depart
ment to enforce this ruling.
The state banking department holds that the rule is nee
Iessary in order to afford the department some sort of control
over the reserve; furthermore, that the ruling will result in
retaining within the state a larger sum of money to be loaned
to the people of the state.
This ruling, according to the logic of the state banking
department, will reduce the rate of interest, for money within
the state must become more plentiful after the ruling becomes
operative, if the departments theory is well founded.
But it should be borne in mind that, so far as the average
citizen IS concerned, the measure of benefit will be largely de-
termined by the proportionate decrease of the rate of interest.
f interest rates fail to come down, the benefits, speaking from
the standpoint Of the average citizen, will not be perceptible
Such benefits as accrue at all, if the interest rate is not affect
ed, will go to the state banks at the reserve centers and not
to the people-which will amount to but a transference of the
profits from national and outside bankers to state bankers
within the state.
We are not taking into account the possible effect upon
local commercial interests in the matter of short-time accommo|
datlons-thls is a point which will not appeal to the average
citizen, and, therefore, will be eliminated from his calculations
Then it resolves into this: that in order to demonstrate the
benefits which the state banking department AYERS must fol
low its recent ruling, interest rates must decrease within a
reasonable period following the taking effect of the ruling,
namely, January l, 1916.
We shall await with some degree of curiosity, to say the
least, the effect Of the departments ruling.
Judge Gray, of the steel trust, comes along at this late
date and declares that Vanderbilt never said "The public be
damned!' Well, then, what did he say?
The great trouble with this proposition to allow the great
corporations to make charges for their services that shall guar
antee them a certain interest on their Investments lies IN the
fact that unless the average producer is rated at a certain per
Isonal worth, based upon a sort Of cash value, and unless the
great source Of all wealth, land, IS permitted to get into the
same class, the scheme will be altogether one-sided.
If Germany's food supplies hold out, the allies will be a
long time getting the kaisers forces whipped.
IF a newspaper told all that it knows its editor would be
sent to the pen for criminal libel. And sometimes much that
it tells concerning what it knows isn't true. So there you are!
It's a personal matter-this thing Of getting married.
and the president has a right to place another first lady Of
The land into the White House if he chooses, but all the same
there are thousands of people who wish he wouldn't.
There isn't any great alarm over the South Dakota gov
|ernorship, SO far as public discussion goes. The farmers are
TOO busy taking care Of their crops and getting their fall plow-
ing done to become excited over political matters.
Mr.. McReynolds, secretary of the republican national COM
mittee, having Travelled over the country, is saying that the
republicans will have clean sailing in 1916. Mr.. McReynolds
lis optimistic, of course, but there are many things that might
seriously interfere with The republican program.
There's a great deal of nonsense in some of the talk about
rural credits. 1T sounds sort Of deferential to farmers to de
clare In favor Of rural credits. But all is not always exactly
as it sounds! Politicians are going to take advantage of the
situation. We shall not have rural credits In fact until some
plan is devised to separate it from ordinary commercial