Early History of Banks and Banking


	This information appears in Chapter LXXX of "History of South 
	Dakota" by Doane Robinson, Vol. I (1904), pages 473-476 and was 
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CHAPTER LXXX

BANKS AND BANKING.

	During the fur-trading era in the Dakota country the fur companies of St. 
Louis were the bankers for all of this section.  Very little cash was brought up 
the river at any time. Payments for services or property were made in orders 
upon the company, and wages were left upon deposit there until the employe 
returned to civilization.  All purchases made in the wilder-ness were upon 
credit charged against the employe's account for wages.  So it was that there 
was scarcely any necessity for money.  Occasionally some thrifty frontiersman 
who had permanently established himself upon the upper river demanded and 
received his returns for labor, furs, or live stock in cash, that he might have 
the satisfaction of looking upon the coin, but when he had received it into his 
possession and the first enjoyment of its tangible presence was over he found it 
a real incumbrance to him.  His ordinary resource was to bury it in the earth.  
Among those who thus cached their gold was Dupree, Narcelle and Rencontre.

	Old Pierre Narcelle, who settled at the mouth of Chapelle creek in 1825, 
was employed by the American Fur Company at one thousand dollars per year and 
his expenses.  He thus told his story shortly before his death : "Instead of 
sending my money back to the states, I invested it in ponies and articles that 
the fur company did not want to handle. The ponies I sent out on the range with 
those belonging to the Indians. The articles that I bought I sent back to 
friends, who sold them at a good profit and the money was sent back to me.  My 
money in those days was always in gold and silver and as there were no banks 
within hundreds of miles there was nothing to do but bank in the ground.  In 
half a dozen places around my house between the years 1850 and 1860 I had at 
times from thirty thousand to sixty thousand dollars buried.  These places were 
known to all the members of the family, but to no other persons.  These banks 
were good enough and safe enough until the spring of 1861, when three of them 
broke and I lost seventy-two thousand dollars in gold and silver.  Just how my 
bank happened to break may be of interest to those who have lost money through 
the operations of dishonest cashiers. Out in front of the house was a beautiful 
little park of perhaps five acres.  It was filled with huge cottonwood trees.  
These were along the stream and deep down beneath their roots I placed my gold 
and silver wrapped in buckskin. All of these trees were marked and in the house 
I kept a plat, showing the location of each bag and the sum of money it 
contained. The winter of 1860-61 the snowfall was very heavy-at least three feet 
on the level.  When warm weather came the snow went off rapidly and there was 
every prospect of high water. The little bottom about the house had never 
overflowed, so we felt secure.  The house stood fully forty feet above the 
water, while the place where the money was buried was nearly as high.  Day after 
day the warm weather continued and the river kept rising.  Suddenly there was a 
cold spell and the flood was checked.  One day some Indians came down the river 
and told us there was a great ice dam at Farm Island, near Bad river, and that 
the water had backed up for miles.  That night the gorge broke and the water 
came down. When we arose in the morning the water had over-flowed the park in 
front of the house and had backed up to within a few feet of the door.  All day 
it continued to rise and at night it was on the floor and we moved out and took 
refuge in the barn, which was higher up the bank.  In the morning we were up 
bright and early, but a great change had come over the situation.  The house was 
still standing, but the bank where I had kept my money was gone.  There was 
nothing to mark its location except a waste of muddy water.  All of the trees 
which had marked the spots where the money was located had been washed out by 
the roots and had floated down stream.  After the water subsided the boys and 
myself hunted for the money, but not one cent did we find."

	Felix Duboise, who lived upon an island a little way below Chapelle creek, 
lost forty-five thousand dollars in the same flood.  His wife and four children 
and six hundred head of cattle also were lost.

	For ten years after the beginning of the permanent settlements at Yankton 
and in that vicinity no bank was established nor found necessary, but in 1869 L. 
D. Parmer established a bank in Yankton and for some years did a prosperous 
business.  His bank was situated on Second street between Douglas and Walnut, 
making it more tributary to the eastern, or Capitol street, section of the city, 
hence there was an immediate necessity for another bank upon Broadway.  This 
need was supplied in 1872 by Peter P. Wintermute, who continued in the business 
until his unfortunate trouble with General Edwin S. McCook, in September, 1873, 
which resulted in the killing of the latter. Governor Newton Edumuds thereupon 
undertook to close up Wintermute's affairs and upon that foundation the banking 
house of Edmunds & Winn was established and which in the course of time 
developed into the strong Yankton National Bank, still under the control of 
Governor Edmunds and his family. 

	In 1873 the First National Bank of Yankton was established by M. M. Parmer 
and Moses K. Armstrong, which a short time afterwards passed into the control of 
James V. and William H. McVey, who still own and manage it. The two national 
banks of Yankton are among the strongest and most conservative banks of the 
northwest.

	In 1878 L. D. Parmer's Bank, the original one, failed.  This was the first 
bank failure in South Dakota.   He effected a settlement with his creditors at 
forty cents on the dollar.  The second bank in South Dakota was established at 
Vermillion in 1871 by Vernette F. Prentice and Henry Newton and was known as 
Prentice & Newton's Bank.  Both gentlemen still reside at Vermillion, Mr. 
Prentice being the well-known partner in the firm of Lee & Prentice.  They 
conducted a safe business and conservatism has been characteristic of banking in 
Vermillion, where the business is now represented by the First National Bank, 
under the management of Hon. Darwin M. Inman, and the Clay County Bank, directed 
by L. T. Sweezy.  The third bank in Dakota was established at Elk Point in 1872 
and was known as the Union County Bank.  In 1873 E. E. Otis established the 
first bank in Sioux Falls, but he continued in business but a few months.  On 
June 5, 1874 John D. Cameron established the Bank for Savings which was operated 
for about two years.

	The banking history of Sioux Falls is interesting and shows the marks of 
several "campaigns that failed."  First and last, fifteen banks have been 
established there since Otis made his first venture, October 10, 1873.  Two 
national banks, the First National and the Dakota National, each with fifty 
thousand dollars capital, have failed and one other, the Union National, has . 
liquidated.  There remain in the city six strong banking institutions, each 
doing a safe and profitable business and representing more than six hundred 
thousand dollars of capital. They are the Sioux Falls National Bank, one hundred 
thousand dollars, C. E. McKinney, president, D. L. McKinney, vice-president, and 
C. L. Norton, cashier; Minnehaha National Bank, one hundred thousand dollars, P. 
F. Sherman, president, George Perry, vice-president, W. L. Baker, cashier; State 
Banking and Trust Company, W. C. Hollister, president, F. H. Hollister, cashier; 
Sioux Falls Savings Bank, R. B. Dennis, president, and W. G. Knappen, cashier; 
Security Savings Bank, J. N. Weston, president, and C. L. Norton, cashier; 
Central Banking and Trust Company, H. H. Natwick, president, and C. G. Leyse, 
cashier.

	The banks of Deadwood and Lead are exceptionally strong.  The American 
National and the First National of Deadwood and the First National of Lead, 
three great banks in alliance, have stood as a bulwark of financial integrity 
since their foundation, soon after the gold discoveries of 1876.  These banks 
came to the relief of the state in 1895, when the Taylor defalcation left the 
treasury empty, and provided the funds to bridge the state over the difficulty 
until the. treasury could he replenished through the regular channels.

	With the great homesteading and townbuilding boom, setting in about 1878. 
Banks sprung up everywhere, and though in the very nature of things some 
adventurers came and set up wild-cat and unstable banks, the great majority of 
the banks established in the early days were under the management of prudent men 
of high integrity, and a surprising number of the foundations, still the 
reliance and the pride of the several communities, date back to the early 
'eighties and have withstood the storms of two panics and still are enjoying the 
confidence and the prosperity due to honest management and fair dealing.  Among 
these old establishments of the newer era in South Dakota are the First National 
and Citizens' National of Watertown, the First National and Aberdeen National of 
Aberdeen, the three national banks of Pierre, the First National of Huron, the 
Fishback's and Morehouse banks of Brookings, Ruth & Carroll, of DeSmet, 
Kennedy's Bank and the First National of Madison, Uline, Kennefeck & Smith, of 
Dell Rapids, Lord's and Danforth's banks of Parker, Snow & Groot, of 
Springfield, Davidson's, at Mitchell, and Beebe, of Ipswich.  It is not intended 
to make invidious comparisons, but it is believed that the banks enumerated 
comprise the most of those which have continued under unchanged management from 
the foundation of the institutions soon after the towns were established in the 
days of the boom.  To this list may he added many others which successfully 
withstood the panic of 1893 and the terrible days following it.

	The banks of South Dakota are of three classes : National banks, under the 
supervision of the comptroller of the currency and regularly examined by the 
national bank examiner, and state and private banks, under the supervision of 
the public examiner, who examines into their condition at short intervals and to 
whom the banks are required to report upon call. The law affords the public 
every safeguard which can be devised and makes it extremely difficult for a 
rascal to engage in the banking business in South Dakota.

	The exceptional prosperity which has favored the people of South Dakota 
for the past six or seven years has reflected itself in the extension of banks 
and the increase of deposits, and this good condition in turn proved very 
attractive to the Yegg men, who swooped down upon our bauks in a manner to cause 
great alarm, but the enterprising managers were prompt to provide themselves 
with every protection against bank robbers which modern ingenuity has produced 
and the most invincible safes and sensitive systems of burglar alarms have 
rendered the Yegg business so hazardous that successful bank breaking is 
becoming very rare.

	There has been but little of the spectacular in South Dakota banking.  
Primarily of course conditions have not been favorable to much plunging, but 
financial Napoleons have not found favor, and however adventurous the South 
Dakotan may have been he has selected for his banker the man of calm pulse, 
conservative judgment and good habits.  In times of prosperity the banker has 
been the backbone of every enterprise for the advancement of the community and 
in times of adversity the community has looked to him for the assistance to tide 
over the emergency.  The bankers of South Dakota organized themselves into an 
association in 1884, being now the oldest bankers' association in the United 
States.  The present officers are: President, E. L. Abel, president First 
National Bank of Bridgewater; vice-president, W. A. Mackay, president banking 
house of Mackay Brothers, Madison; secretary, George C. Fullinweider, cashier 
Standard Savings Bank, Huron; treasurer, S. Drew, president Bank of Highmore.