City of Hustle, page 24
At first, several influential bankers expressed concerns that Citibank would go after their customers. For his part, Janklow emphasized all the benefits this could mean for South Dakota. He also told the bankers they could kill it if they wanted to. Charlie told the bankers Citibank would accept whatever restrictions they decided to impose.
When the Q and A session was over, three bankers—Bill Dougherty, the former lieutenant governor and one of the founders of SunBank in Sioux Falls; Harold Torness, from the Sisseton bank; and Chuck Seaman, from the Warner bank—stood up and expressed their support for the invitation. Janklow recalled:
I’ll never forget those three in a row. [Then] we went around the room. It was just like everybody coming to the rail at a revival, one after the next, signing up for Jesus. The next thing I know, they got around to the president (Glenn Waltner of Freeman), and he said, “Well, when you left the room governor, we were gonna hold a secret meeting and vote on it. But it sounds like everybody but me has voted, and you can count me in.”
Moments later, the Executive Committee of the Bankers Association passed a resolution supporting a bill to invite Citibank.
Later, Charlie Long expressed how radically different the South Dakota bankers had been compared to what he encountered in Missouri. His meeting with the bankers in Missouri was very unpleasant; he felt beat up by them. In South Dakota, he saw everyone in the room together, and on the spot, he was able to address their concerns.
It was quite a statement about the progressive attitude of South Dakota’s bankers that they would all be willing to set aside parochial concerns to accomplish something much bigger for the state.
The Citibank Bill
Work continued on the bill to invite Citibank. On March 12, the last legislative day (a day normally reserved solely for considering vetoed bills), the legislature suspended its rules and allowed the bill to be introduced, acted upon without the usual public hearings and without the usual second reading. And so HB 1370 was introduced, passed by the Senate (33–1) and the House (64–2), and signed by the governor. With an emergency clause, it went into effect immediately.
Although the Session Laws of 1980 unapologetically referred to the legislation as the Citibank Bill, the authorization was not limited to Citibank. It also allowed other out-of-state holding companies to come here as long as they satisfied three requirements: first, the holding company could establish only one bank in South Dakota; second, the bank must have capital of at least $25 million; and third, the bank must operate out of a “single office . . . at a location which is not likely to attract customers from the general public.”
To anyone who didn’t know what was going on, this might seem like an odd invitation. But these conditions were not a problem for Citibank. They ultimately invested $250 million in capital, and it wasn’t interested in competing with South Dakota banks.247
Next Steps for Citibank
There was still a lot of work to be done, including the regulatory approval Citibank needed to obtain. Federal Reserve approval was especially critical to South Dakota, because although Citibank had assured Janklow it would hire a minimum of 300 to 500 South Dakota workers, it left open the potential for significantly more if the Federal Reserve would approve moving the entire credit card operation to our state. Neither commitment was in writing though—it was all based on a handshake.
Complicating things was the fact that some members of Citibank’s board were not thrilled with the idea that they would be moving this massive operation and many jobs to South Dakota in the midst of a national recession. They were taking a lot of heat from the public and the New York media. So Governor Janklow had to continue to give this a lot of attention, so much so that the Citibank board began to affectionately refer to him as the director emeritus.
The New York Times seemed shocked that Citibank would go through with this. Here’s what the Times reported on June 29, 1980:
It sounded like saber rattling, but Citibank really means it: It has signed a one-year lease for three floors of the . . . Western Bank building . . . in downtown Sioux Falls . . . that will serve as a temporary base of operation [and] is negotiating the purchase of 10 acres . . . where it plans to build its permanent headquarters. . . . And Richard D. McCrossen, the newly-appointed head of the operation expects to close on the purchase of a home in nearby Brandon next month.
The New York legislature’s resolve weakened when Citibank announced it was leaving, and on November 24, 1980, it enacted a moratorium on its usury limit. But by then it was too late. On February 19, 1981, Citibank (South Dakota), N.A. received its charter from the comptroller of the currency and officially opened for business.
Six months later, August 16, 1981, the New York Times noted New York’s belated but unsuccessful attempt to salvage the situation:
Alarmed, New York followed suit [by changing its usury law]—but Citibank had promised South Dakota, and that promise it did keep. Did this herald a sweep of business to South Dakota? . . . Well, First Bank System of Minneapolis did warm up to South Dakota. . . . But no one else has.
State leaders who knew what was actually happening found parts of this report amusing because first, there were several substantial operations that had come or were in serious negotiations to come to South Dakota, and second, First Bank System had operated in South Dakota since 1929.
Richard McCrossen
The day the Citibank bill passed, Charlie Long called Richard McCrossen (Citibank South Dakota’s first president) and blurted out, “Dick, you’re going to love South Dakota,” then abruptly hung up. I’ve wondered if that was a prediction or an order.
McCrossen got Citibank off to a great start as he led the organization’s move here and built the operation into the most profitable part of Citibank’s business. He was a strong, disciplined leader, and he left no doubt among his troops that he had high expectations of them, which, I might add, they were very reluctant to disappoint.
Dick McCrossen was determined to make Citibank work for South Dakota as well as South Dakota did for Citibank. It was evident from the community involvement of the entire Citibank South Dakota executive team that this was a commitment they all shared, and it became a permanent part of the corporate culture of the Sioux Falls bank.
Walter Wriston, Citibank’s chairman, and John Reed, his successor, could not have been more pleased with how well things were turning out in South Dakota. Large New York companies bad-mouthed Sioux Falls and warned Wriston that South Dakotans would be undependable workers, but Citibank found the opposite to be true. One executive observed that “South Dakotans worked harder than New Yorkers,” which allowed the Sioux Falls bank to perform the same work with fewer employees. Wriston was also impressed that a letter could make it from Long Island to Sioux Falls a half-day faster than a letter from Long Island to Manhattan.
More Big Things
Subsequent to Citibank’s initial move to Sioux Falls, several other credit card banks came to South Dakota. These entrants included, among others, First City Bank, a South Dakota affiliate of a Houston-based organization, which opened in Sioux Falls, and First National Bank of Omaha, which began issuing cards through its affiliate in Yankton. An existing Sioux Falls-based institution, First PREMIER Bank, through its PREMIER Bankcard division, entered the credit card business in 1989 and today is one of the top twenty Master Card issuers in the United States.
Since then, there have been several key banking developments for South Dakota. In 2004, Wells Fargo, N.A. designated Sioux Falls as its main office. Its CEO at the time, Dick Kovacevich, had been a top executive with Citibank and was personally familiar with the quality of Citibank’s South Dakota experience. In 2008, Wells Fargo acquired Wachovia Bank and consolidated the two banks in 2010, which made it a $1.2-trillion bank with its main office in Sioux Falls. Then in 2011, Citibank (South Dakota) merged with Citibank, N.A., and Citibank, N.A. designated Sioux Falls as its main office. It, too, was a $1.2-trillion bank.
When 2011 came to a close, two of the four largest financial institutions in the United States had designated Sioux Falls as the home of their main offices, making South Dakota number one among all states in banking assets, a position it held from 2011 to 2018. Today, it ranks number two, closely behind Ohio, the home of JP Morgan Chase Bank’s charter.
Additional favorable legislation has led to South Dakota’s growth in other segments of the financial services industry. Sioux Falls is also the home of the nation’s largest prepaid card issuers, MetaBank and Bancorp Bank. South Dakota is recognized nationally as one of the best states in which to site long-term (so-called “dynasty”) trusts, and consequently, the state now hosts over 100 trust companies, which hold assets from all over the world in excess of $350 billion. Banks have come here because South Dakota has had a solid reputation established over four decades, with all the components of a good environment for banks: reasonable regulation and taxes, a talented, educated, experienced, and conscientious workforce, and a strong communications, technology, and distribution infrastructure. Just as important—our policymakers have for the most part been predictable in showing their belief in the value of an industry that’s benefited our state in so many ways.
The 1980 legislation and the journey of Citibank to South Dakota is an extraordinary part of the state’s history. While it was never part of anyone’s grand design, there can be no doubt that the 1980 legislation has had a transformational impact on South Dakota well beyond anything anyone could have imagined. It has brought billions of dollars to our state, opened the door to many promising careers, significantly expanded the technological capabilities of our state, and greatly enhanced our state’s investment in research and education. It has also brought us closer to the larger world and given us a new sense of potential.
Yet this could have simply been a missed opportunity that none of us would have ever heard about if Governor Janklow—in that moment on Valentine’s Day 1980, when he met with Charlie Long—had simply said, “Charlie, with only two legislative days left, there is no way I can get this done.”
But luckily for Sioux Falls and South Dakota, that was not in the nature of Governor Janklow.
Sources
Bingner, Gary. South Dakota Banking: The Lowdown of High Finance in Middle America, A History of the Citibanking Revolution, 1980–1983. Unpublished record of events at behest of Governor Janklow. Available at the State Library in Pierre, South Dakota.
Ethan G. Sribnick, A Legacy of Innovation. Philadelphia: University of Pennsylvania Press, 2008.
Frontline. “The Secret History of the Credit Card.” PBS. Aired, November 23, 2004.
Independent Community Bankers Association of South Dakota, Inc. v. Board of Governors of the Federal Reserve System, 838 F.2d 969 (8th Cir. 1988).
David E. Lindsey, Athanasios Orphanides, and Robert H. Rasche, “The Reform of October 1979: How It Happened and Why,” Federal Reserve Bank of St. Louis Review, March/April 2005, Part 2, 187–236. https://doi.org/10.20955/r.87.
Marquette National Bank of Minneapolis v. First of Omaha Service Corp., 439 U.S. 299 (1978).
South Dakota Legislative Research Council, Legislative Record, 1980 and 1988 Sessions.
Zweig, Phillip L. Walter Wriston: Citibank and the Rise and Fall of American Financial Supremacy. New York: Crown Publishers Inc., 1995.
* * *
247 Note: In 1988, Michigan National Corporation, in reliance on the statute enacted by the passage of the Citibank Bill, applied to and received approval from the Federal Reserve Board of Governors to establish a national bank in South Dakota from which to conduct Michigan National’s credit card business. The Independent Community Bankers of South Dakota appealed the board’s decision. The Eighth Circuit Court of Appeals observed that the statute violated the United States Constitution because the “restrictions [the statute] imposes on an out-of-state bank holding company’s ability to compete in local markets are precisely the type of ‘parochial’ regulations the Commerce Clause prohibits.” So the Court remanded the case to the Board of Governors to withhold approval until South Dakota modified its statute to bring it into conformity with federal law. The Court’s decision was delivered on January 28, 1988. The legislature, which was in session at the time, repealed the offending language three weeks later (as part of HB 1314), and with an emergency clause, the repeal went into effect immediately when it was signed by Governor George Mickelson on February 20, 1988. Ironically, while the ICBA succeeded in convincing the Eighth Circuit Court that the statute created by the Citibank Bill was constitutionally flawed, the Court’s proposed remedy ultimately led to the repeal of the provision that was most critical to getting bankers to support passage of the Citibank Bill in 1980.
City of Stone
April White
From a distance, the quarries expanding just east of Sioux Falls in the late 1880s were a dark scar across the prairie. But up close, the exposed quartzite formed a brilliant rainbow. The rock face was streaked with cherry red, royal purple, and chocolate brown. Elsewhere, even without the benefit of polishing, the stone glowed pink, lilac, and peachblow, the warm, orange-red hue of a Dakota sunset.248
Early white explorers in the region had marveled at the beauty of this unusual material. The artist George Catlin, who visited the Coteau de Prairies plateau in the 1830s, painted canvases of the region’s Indigenous people mining the red pipestone found between layers of quartzite; the soft stone had been prized by the tribes for centuries to make tools, ornaments, and ceremonial pipes. But it was the harder rock that entranced Catlin. “I became completely surprised and charmed; and I resolved to procure specimens of every variety,” he wrote. He broke off “small bits from them with my hammer; until I had something like a hundred different varieties, containing all the tints and colours of a painter’s palette.”249
Decades later, though, the white settlers of Sioux Falls saw something very different when they looked at the outcroppings that dotted the landscape. They saw the promise of prosperity. A city could be built—both literally and economically—from the same stone that formed its namesake cataract.
The stone that would become known, for a time, as “Sioux Falls granite” or “Sioux Falls jasper” began as sediment deposited at the bottom of a long-lost sea that stretched from the Arctic Ocean to the Gulf of Mexico. As quartz crystal and silica built up, so did the heat and pressure, until about 1.7 billion years ago when the sand recrystallized as quartzite, a stone so dense it is stronger than steel.
The durability must have appealed to members of the Western Town Company of Dubuque, Iowa, who staked their claim on 320 acres on the western bank of the Big Sioux River in 1857. They built Sioux Falls’s first hotel, the Dubuque House, from rough-hewn blocks of the abundant stone. The hotel did not last, but the stone did. Abandoned and likely burned during the Dakota War of 1862, the Dubuque House was razed when town development began again in the 1870s. The salvaged rock was repurposed to construct the city’s first brewery on Main Avenue. E. A. Sherman, one of Sioux Falls’s first citizens, used the stone for many of his buildings, and in 1880, architect W. L. Dow used it in his debut commission, the Dakota Territorial Penitentiary, the first of many projects he would design from quartzite over the next two decades.250
The earliest buildings were formed from the most easily accessible stone, wherever glacial and water erosion had exposed the rock face. The inmates themselves quarried the quartzite for their prison from the grounds of the penitentiary, and the mills growing up along the Big Sioux cut the stone directly from its banks, forever reshaping the river. But these small deposits could not meet the growing demand for stone. Quartzite, it was said in the tone of immoderate enthusiasm characteristic of the city’s early days, “combine[d] beauty and strength more perfectly than any other stone in America.”251 It was marketed as “indestructible,” and the supply was described as “inexhaustible.”252
C. W. Hubbard was among those who recognized the money to be made. Originally from Vermont, Hubbard had come west in the 1870s, settling first in St. Paul and then relocating to Sioux Falls in about 1881 to oversee the construction of the Queen Bee Mill. The project was the most ambitious the Dakota Territory had ever seen: the massive seven-story mill was designed to produce 1,200 barrels of flour a day. But the waterpower from the river was insufficient to meet the demands of the mill, and it never operated at full capacity. By 1883, the company was bankrupt.253
Despite that failure, Hubbard still saw opportunity in the region’s natural resources. The Queen Bee Mill had been constructed of Sioux Falls quartzite, and as early as 1883, Hubbard was operating a quarry of his own. Those early years in the stone business were rocky ones. Some of the city’s biggest names—Seney and Drake among them—jostled for the best sites, and charges of bribery, theft, and trespass flew. When the dust finally settled in 1886, Hubbard had established himself six miles southeast of Sioux Falls at the Ives quarries, so named for an early settler in the area. With a contract from Kansas City for 1,200 yards of paving stone, the business expanded from two stone cutters to 100 in just a few months, and the Illinois Central extended its tracks to the quarry. In 1887, Hubbard incorporated as the Sioux Falls Granite Company.
In the late 1880s, the quartzite business seemed as indestructible as the stone itself. The Sioux Falls Granite Company and at least four other quarrying businesses nearby—the Minnehaha Granite Company, the Sioux Falls Quarry Company, Drake’s Monarch Quarries, and Jasper Stone Quarry—shipped stone to Omaha, Chicago, and Detroit, along with countless cities in between. In Sioux Falls, the schools were made of quartzite (among them, All Saints, the South Dakota School for the Deaf, the Lincoln School and the Lutheran Normal School); the houses of the city’s well-to-do were made of quartzite (architect W. L. Dow’s house, fittingly, sat on a quartzite foundation); the shops and offices that lined Main Avenue and Ninth Street were made of quartzite; even the streets were paved with quartzite, a luxury more common in larger cities. In 1888, Hubbard’s quarries produced hundreds of thousands of stones to line Phillips Avenue between Fifth and Twelfth Streets, the first finished road in the territory.
When the Q and A session was over, three bankers—Bill Dougherty, the former lieutenant governor and one of the founders of SunBank in Sioux Falls; Harold Torness, from the Sisseton bank; and Chuck Seaman, from the Warner bank—stood up and expressed their support for the invitation. Janklow recalled:
I’ll never forget those three in a row. [Then] we went around the room. It was just like everybody coming to the rail at a revival, one after the next, signing up for Jesus. The next thing I know, they got around to the president (Glenn Waltner of Freeman), and he said, “Well, when you left the room governor, we were gonna hold a secret meeting and vote on it. But it sounds like everybody but me has voted, and you can count me in.”
Moments later, the Executive Committee of the Bankers Association passed a resolution supporting a bill to invite Citibank.
Later, Charlie Long expressed how radically different the South Dakota bankers had been compared to what he encountered in Missouri. His meeting with the bankers in Missouri was very unpleasant; he felt beat up by them. In South Dakota, he saw everyone in the room together, and on the spot, he was able to address their concerns.
It was quite a statement about the progressive attitude of South Dakota’s bankers that they would all be willing to set aside parochial concerns to accomplish something much bigger for the state.
The Citibank Bill
Work continued on the bill to invite Citibank. On March 12, the last legislative day (a day normally reserved solely for considering vetoed bills), the legislature suspended its rules and allowed the bill to be introduced, acted upon without the usual public hearings and without the usual second reading. And so HB 1370 was introduced, passed by the Senate (33–1) and the House (64–2), and signed by the governor. With an emergency clause, it went into effect immediately.
Although the Session Laws of 1980 unapologetically referred to the legislation as the Citibank Bill, the authorization was not limited to Citibank. It also allowed other out-of-state holding companies to come here as long as they satisfied three requirements: first, the holding company could establish only one bank in South Dakota; second, the bank must have capital of at least $25 million; and third, the bank must operate out of a “single office . . . at a location which is not likely to attract customers from the general public.”
To anyone who didn’t know what was going on, this might seem like an odd invitation. But these conditions were not a problem for Citibank. They ultimately invested $250 million in capital, and it wasn’t interested in competing with South Dakota banks.247
Next Steps for Citibank
There was still a lot of work to be done, including the regulatory approval Citibank needed to obtain. Federal Reserve approval was especially critical to South Dakota, because although Citibank had assured Janklow it would hire a minimum of 300 to 500 South Dakota workers, it left open the potential for significantly more if the Federal Reserve would approve moving the entire credit card operation to our state. Neither commitment was in writing though—it was all based on a handshake.
Complicating things was the fact that some members of Citibank’s board were not thrilled with the idea that they would be moving this massive operation and many jobs to South Dakota in the midst of a national recession. They were taking a lot of heat from the public and the New York media. So Governor Janklow had to continue to give this a lot of attention, so much so that the Citibank board began to affectionately refer to him as the director emeritus.
The New York Times seemed shocked that Citibank would go through with this. Here’s what the Times reported on June 29, 1980:
It sounded like saber rattling, but Citibank really means it: It has signed a one-year lease for three floors of the . . . Western Bank building . . . in downtown Sioux Falls . . . that will serve as a temporary base of operation [and] is negotiating the purchase of 10 acres . . . where it plans to build its permanent headquarters. . . . And Richard D. McCrossen, the newly-appointed head of the operation expects to close on the purchase of a home in nearby Brandon next month.
The New York legislature’s resolve weakened when Citibank announced it was leaving, and on November 24, 1980, it enacted a moratorium on its usury limit. But by then it was too late. On February 19, 1981, Citibank (South Dakota), N.A. received its charter from the comptroller of the currency and officially opened for business.
Six months later, August 16, 1981, the New York Times noted New York’s belated but unsuccessful attempt to salvage the situation:
Alarmed, New York followed suit [by changing its usury law]—but Citibank had promised South Dakota, and that promise it did keep. Did this herald a sweep of business to South Dakota? . . . Well, First Bank System of Minneapolis did warm up to South Dakota. . . . But no one else has.
State leaders who knew what was actually happening found parts of this report amusing because first, there were several substantial operations that had come or were in serious negotiations to come to South Dakota, and second, First Bank System had operated in South Dakota since 1929.
Richard McCrossen
The day the Citibank bill passed, Charlie Long called Richard McCrossen (Citibank South Dakota’s first president) and blurted out, “Dick, you’re going to love South Dakota,” then abruptly hung up. I’ve wondered if that was a prediction or an order.
McCrossen got Citibank off to a great start as he led the organization’s move here and built the operation into the most profitable part of Citibank’s business. He was a strong, disciplined leader, and he left no doubt among his troops that he had high expectations of them, which, I might add, they were very reluctant to disappoint.
Dick McCrossen was determined to make Citibank work for South Dakota as well as South Dakota did for Citibank. It was evident from the community involvement of the entire Citibank South Dakota executive team that this was a commitment they all shared, and it became a permanent part of the corporate culture of the Sioux Falls bank.
Walter Wriston, Citibank’s chairman, and John Reed, his successor, could not have been more pleased with how well things were turning out in South Dakota. Large New York companies bad-mouthed Sioux Falls and warned Wriston that South Dakotans would be undependable workers, but Citibank found the opposite to be true. One executive observed that “South Dakotans worked harder than New Yorkers,” which allowed the Sioux Falls bank to perform the same work with fewer employees. Wriston was also impressed that a letter could make it from Long Island to Sioux Falls a half-day faster than a letter from Long Island to Manhattan.
More Big Things
Subsequent to Citibank’s initial move to Sioux Falls, several other credit card banks came to South Dakota. These entrants included, among others, First City Bank, a South Dakota affiliate of a Houston-based organization, which opened in Sioux Falls, and First National Bank of Omaha, which began issuing cards through its affiliate in Yankton. An existing Sioux Falls-based institution, First PREMIER Bank, through its PREMIER Bankcard division, entered the credit card business in 1989 and today is one of the top twenty Master Card issuers in the United States.
Since then, there have been several key banking developments for South Dakota. In 2004, Wells Fargo, N.A. designated Sioux Falls as its main office. Its CEO at the time, Dick Kovacevich, had been a top executive with Citibank and was personally familiar with the quality of Citibank’s South Dakota experience. In 2008, Wells Fargo acquired Wachovia Bank and consolidated the two banks in 2010, which made it a $1.2-trillion bank with its main office in Sioux Falls. Then in 2011, Citibank (South Dakota) merged with Citibank, N.A., and Citibank, N.A. designated Sioux Falls as its main office. It, too, was a $1.2-trillion bank.
When 2011 came to a close, two of the four largest financial institutions in the United States had designated Sioux Falls as the home of their main offices, making South Dakota number one among all states in banking assets, a position it held from 2011 to 2018. Today, it ranks number two, closely behind Ohio, the home of JP Morgan Chase Bank’s charter.
Additional favorable legislation has led to South Dakota’s growth in other segments of the financial services industry. Sioux Falls is also the home of the nation’s largest prepaid card issuers, MetaBank and Bancorp Bank. South Dakota is recognized nationally as one of the best states in which to site long-term (so-called “dynasty”) trusts, and consequently, the state now hosts over 100 trust companies, which hold assets from all over the world in excess of $350 billion. Banks have come here because South Dakota has had a solid reputation established over four decades, with all the components of a good environment for banks: reasonable regulation and taxes, a talented, educated, experienced, and conscientious workforce, and a strong communications, technology, and distribution infrastructure. Just as important—our policymakers have for the most part been predictable in showing their belief in the value of an industry that’s benefited our state in so many ways.
The 1980 legislation and the journey of Citibank to South Dakota is an extraordinary part of the state’s history. While it was never part of anyone’s grand design, there can be no doubt that the 1980 legislation has had a transformational impact on South Dakota well beyond anything anyone could have imagined. It has brought billions of dollars to our state, opened the door to many promising careers, significantly expanded the technological capabilities of our state, and greatly enhanced our state’s investment in research and education. It has also brought us closer to the larger world and given us a new sense of potential.
Yet this could have simply been a missed opportunity that none of us would have ever heard about if Governor Janklow—in that moment on Valentine’s Day 1980, when he met with Charlie Long—had simply said, “Charlie, with only two legislative days left, there is no way I can get this done.”
But luckily for Sioux Falls and South Dakota, that was not in the nature of Governor Janklow.
Sources
Bingner, Gary. South Dakota Banking: The Lowdown of High Finance in Middle America, A History of the Citibanking Revolution, 1980–1983. Unpublished record of events at behest of Governor Janklow. Available at the State Library in Pierre, South Dakota.
Ethan G. Sribnick, A Legacy of Innovation. Philadelphia: University of Pennsylvania Press, 2008.
Frontline. “The Secret History of the Credit Card.” PBS. Aired, November 23, 2004.
Independent Community Bankers Association of South Dakota, Inc. v. Board of Governors of the Federal Reserve System, 838 F.2d 969 (8th Cir. 1988).
David E. Lindsey, Athanasios Orphanides, and Robert H. Rasche, “The Reform of October 1979: How It Happened and Why,” Federal Reserve Bank of St. Louis Review, March/April 2005, Part 2, 187–236. https://doi.org/10.20955/r.87.
Marquette National Bank of Minneapolis v. First of Omaha Service Corp., 439 U.S. 299 (1978).
South Dakota Legislative Research Council, Legislative Record, 1980 and 1988 Sessions.
Zweig, Phillip L. Walter Wriston: Citibank and the Rise and Fall of American Financial Supremacy. New York: Crown Publishers Inc., 1995.
* * *
247 Note: In 1988, Michigan National Corporation, in reliance on the statute enacted by the passage of the Citibank Bill, applied to and received approval from the Federal Reserve Board of Governors to establish a national bank in South Dakota from which to conduct Michigan National’s credit card business. The Independent Community Bankers of South Dakota appealed the board’s decision. The Eighth Circuit Court of Appeals observed that the statute violated the United States Constitution because the “restrictions [the statute] imposes on an out-of-state bank holding company’s ability to compete in local markets are precisely the type of ‘parochial’ regulations the Commerce Clause prohibits.” So the Court remanded the case to the Board of Governors to withhold approval until South Dakota modified its statute to bring it into conformity with federal law. The Court’s decision was delivered on January 28, 1988. The legislature, which was in session at the time, repealed the offending language three weeks later (as part of HB 1314), and with an emergency clause, the repeal went into effect immediately when it was signed by Governor George Mickelson on February 20, 1988. Ironically, while the ICBA succeeded in convincing the Eighth Circuit Court that the statute created by the Citibank Bill was constitutionally flawed, the Court’s proposed remedy ultimately led to the repeal of the provision that was most critical to getting bankers to support passage of the Citibank Bill in 1980.
City of Stone
April White
From a distance, the quarries expanding just east of Sioux Falls in the late 1880s were a dark scar across the prairie. But up close, the exposed quartzite formed a brilliant rainbow. The rock face was streaked with cherry red, royal purple, and chocolate brown. Elsewhere, even without the benefit of polishing, the stone glowed pink, lilac, and peachblow, the warm, orange-red hue of a Dakota sunset.248
Early white explorers in the region had marveled at the beauty of this unusual material. The artist George Catlin, who visited the Coteau de Prairies plateau in the 1830s, painted canvases of the region’s Indigenous people mining the red pipestone found between layers of quartzite; the soft stone had been prized by the tribes for centuries to make tools, ornaments, and ceremonial pipes. But it was the harder rock that entranced Catlin. “I became completely surprised and charmed; and I resolved to procure specimens of every variety,” he wrote. He broke off “small bits from them with my hammer; until I had something like a hundred different varieties, containing all the tints and colours of a painter’s palette.”249
Decades later, though, the white settlers of Sioux Falls saw something very different when they looked at the outcroppings that dotted the landscape. They saw the promise of prosperity. A city could be built—both literally and economically—from the same stone that formed its namesake cataract.
The stone that would become known, for a time, as “Sioux Falls granite” or “Sioux Falls jasper” began as sediment deposited at the bottom of a long-lost sea that stretched from the Arctic Ocean to the Gulf of Mexico. As quartz crystal and silica built up, so did the heat and pressure, until about 1.7 billion years ago when the sand recrystallized as quartzite, a stone so dense it is stronger than steel.
The durability must have appealed to members of the Western Town Company of Dubuque, Iowa, who staked their claim on 320 acres on the western bank of the Big Sioux River in 1857. They built Sioux Falls’s first hotel, the Dubuque House, from rough-hewn blocks of the abundant stone. The hotel did not last, but the stone did. Abandoned and likely burned during the Dakota War of 1862, the Dubuque House was razed when town development began again in the 1870s. The salvaged rock was repurposed to construct the city’s first brewery on Main Avenue. E. A. Sherman, one of Sioux Falls’s first citizens, used the stone for many of his buildings, and in 1880, architect W. L. Dow used it in his debut commission, the Dakota Territorial Penitentiary, the first of many projects he would design from quartzite over the next two decades.250
The earliest buildings were formed from the most easily accessible stone, wherever glacial and water erosion had exposed the rock face. The inmates themselves quarried the quartzite for their prison from the grounds of the penitentiary, and the mills growing up along the Big Sioux cut the stone directly from its banks, forever reshaping the river. But these small deposits could not meet the growing demand for stone. Quartzite, it was said in the tone of immoderate enthusiasm characteristic of the city’s early days, “combine[d] beauty and strength more perfectly than any other stone in America.”251 It was marketed as “indestructible,” and the supply was described as “inexhaustible.”252
C. W. Hubbard was among those who recognized the money to be made. Originally from Vermont, Hubbard had come west in the 1870s, settling first in St. Paul and then relocating to Sioux Falls in about 1881 to oversee the construction of the Queen Bee Mill. The project was the most ambitious the Dakota Territory had ever seen: the massive seven-story mill was designed to produce 1,200 barrels of flour a day. But the waterpower from the river was insufficient to meet the demands of the mill, and it never operated at full capacity. By 1883, the company was bankrupt.253
Despite that failure, Hubbard still saw opportunity in the region’s natural resources. The Queen Bee Mill had been constructed of Sioux Falls quartzite, and as early as 1883, Hubbard was operating a quarry of his own. Those early years in the stone business were rocky ones. Some of the city’s biggest names—Seney and Drake among them—jostled for the best sites, and charges of bribery, theft, and trespass flew. When the dust finally settled in 1886, Hubbard had established himself six miles southeast of Sioux Falls at the Ives quarries, so named for an early settler in the area. With a contract from Kansas City for 1,200 yards of paving stone, the business expanded from two stone cutters to 100 in just a few months, and the Illinois Central extended its tracks to the quarry. In 1887, Hubbard incorporated as the Sioux Falls Granite Company.
In the late 1880s, the quartzite business seemed as indestructible as the stone itself. The Sioux Falls Granite Company and at least four other quarrying businesses nearby—the Minnehaha Granite Company, the Sioux Falls Quarry Company, Drake’s Monarch Quarries, and Jasper Stone Quarry—shipped stone to Omaha, Chicago, and Detroit, along with countless cities in between. In Sioux Falls, the schools were made of quartzite (among them, All Saints, the South Dakota School for the Deaf, the Lincoln School and the Lutheran Normal School); the houses of the city’s well-to-do were made of quartzite (architect W. L. Dow’s house, fittingly, sat on a quartzite foundation); the shops and offices that lined Main Avenue and Ninth Street were made of quartzite; even the streets were paved with quartzite, a luxury more common in larger cities. In 1888, Hubbard’s quarries produced hundreds of thousands of stones to line Phillips Avenue between Fifth and Twelfth Streets, the first finished road in the territory.
