Pierre weekly free press. (Pierre, S.D.) 1889-19??, 1915-09-30
COMMISSION
WILL "STAND PAT' ON
LOCAL RESERVE ORDER
Board Issues Formal Statement
on Alleged Reasons for
This Restriction.

Pierre. S. D.. Sept. 24-The bank
guaranty commission has announced
it's adherence to the ruling that all
state banks must keep SO per cent OF
their reserve in the state reserve
South Dakota. This ruling must be
complied with before November l5.
The commission and the governor
heard a re presentation Of banker last
week, hostile to this measure. but
have not changed their course. The
banking department makes the fol-
lowing statement of reasons:
The prime object of the ruling is TO
throw about the banks every safe
guard possible with a view of ulti-
mately eliminating bank failures
among the state banks in South Da-
kota. This result is expected to be
accomr lished in part by reason OF the
fact that if so per cent of the reserve
of The state banks is required to be
kept within state banks in South
Dakota, the public examiner will have
knowledge of the condition existing in
both the depositing and the depository
banks and, accordingly, may take such
steps or such precaution in the inter-
est of the depositing bank as the con-
ditions may warrant.
"A second principal object of the
ruling is to require the actual de-
posits and money, bringing to the citi-
Gems Of the state to be deposited with
IN depositaries or reserve agent banks
within South Dakota, and as a result
the aggregate deposits Of the state will
be increased and, accordingly. the
state will be increased in the same
proportion.
Since we have a depositors' guar
,nty law. it is essential that every
venue of protection be used for the
protection of bank deposits and thus
make failure impossible and eventual
y, as a result, invite or entice hun
.reds of thousands OF even millions of
dollars from seclusion or dormant
places, either in this state or in other
states, into the banks of South Da-
kota.
"As to the actual figures in the
showings, the June 10 call of state
borrowed by South Dakota state
banks from all sources, as follows:
Borrowed fr..a South Dakota
Borrowed from National banks ~
within South Dakota..."........ 1870, 221.6 81
Borrowed from all banks outside
South NEUTRALITY-SUSPICIOUS.. 1922, 81
crhese figures Include ali amounts sets; ' So 70
'owed, on both bills payable and redis-
:ounts.)
The reserves of the State banks, June
Is, 1915, were:
Cash on hand within State
banks in South Dakota .......$ 1926, a4, 90
Deposited In State banks in
South Dalbota l. 400 541 IL
Total reserve in State banks.s 4.42s, 266. ss
Deposited in National banks in
south Dakota ."..:...........$ 4,651, 05.6 3
Deposited in all banks outside
South Dakota ....."...-..... 1856, oos. Is
Aoldl sic. 3d.. 9C7 Sc
"Thirty-five Of the larger banks of
me state have no deposits Of reserve
IN either state or national banks in the
state Of South Dakota; 276 state banks
IN South Dakota have no state bank de-
posltary within South Dakota: 81
banks have reserves slightly under 20
per cent of their deposits; 1872 banks
Y more tina 80 per cent of their
current reserve outside South Dakota.
Under the ruling 403 banks would
be required to readjust their reserve
accounts, and as a result there would
be returned to state bank depositaries
In South Dakota $3,5sS, 1874. This adjust
ment would increase the loaning ca
paclty of the state banks, at the min
mum figure, rs per cent Of the above
amount, or s2,359,000 and the loaning
capacity would be further increased by
\ redeposit Of funds by any bank act
;ng as a reserve agent for another bank.
and thus as a result Of the return Of
The money from outside depositaries.
the actual loaning capacity would be-
Increased $2,359,000, and an additional
i1S,750 for each redeposit Of $25, 900.
"One result of requiring SO, 1858, 1874 Of
the reserve of state banks returned to
be deposited In state banks. within the
state of South Dakota, the deposftors,
| p1l aro nfu fund uyn,,1d Io {,o.z-