The Triumphs of a Prarie Populist

By Kurt Anderson

South Dakota cashes in with an aggressive, pro-business program

We are the bankingest town in the U.S.," declares Herb Bowden, president of Sencore Inc., a manufacturer of electronic-testing equipment. The town's mayor is more precise. "Citibank," Mayor Rick Knobe says proudly, "moved us from a known regional entity to a newcomer on the national and international scale."

Bowden and Knobe do not live in Miami or Chicago, Dallas or Los Angeles. Their improbable new financial capital: Sioux Falls, S. Dak. "We used to have such an image of cowboys and Indians," recalls Bowden, "when I would go to New York, the guys in the bar would give me a big war whoop. Now they say, 'Oh, you're from South Dakota, where you have good tax laws and where industry is moving in.' " Kind of stilted talk for bar chatter, perhaps, but apt. Sioux Falls (pop. 81,000) and the rest of South Dakota are in the midst of a self-made, state-wide economic renaissance. Says Governor William Janklow, 43, a rawhide Republican: "I showed 'em we can do business out here."

Indeed he has. Citibank, which has moved its credit-card operation to the city, broke ground in June for its third building in three years. With 1,200 employees in Sioux Falls, South Dakota's largest city, the bank is now the state's No. 3 employer. By 1985 Citibank expects to hire as many as 600 more people.

The boom is bigger, however, than just one bank. In the past decade the state's population increased by just 25,000 (to 690,000), but the number of nonagricultural jobs has grown by 60,000. South Dakota ranked third in the nation in per capita income growth in 1982.

Perhaps the state's main attraction for business is not what it has but what it does not have: pollution, congestion, crime (third-lowest rate in the U.S.), personal or corporate income taxes or, especially, restrictive banking laws. In 1980 the state became one of the first to abolish the usury limit on interest rates that banks may charge. In addition, Janklow, who then had been Governor barely a year, rammed a second bill through the legislature that included a specific invitation to an eager Citibank to relocate its credit-card computers. Financial institutions in Michigan and neighboring Nebraska have asked if they can transfer their credit-card operations too. Last spring Janklow persuaded the legislature to agree in effect that all is laissez-faire in economic war: South Dakota was the first state to make it easy for banks to buy insurance companies and thus expand their consumer services. The Governor mailed engraved announcements of the deregulation to the 100 largest U.S. banks. Last month Citicorp won the state banking commission's permission to buy a state-chartered bank in Rapid City.

The Governor has also given the state's more traditional enterprises special attention. The Milwaukee Road rail network went bankrupt in 1977 leaving farmers with no easy way to ship corn and wheat. Janklow engineered an improbable railroad resuscitation plan. With revenue from a special sales-tax increase, the state bought 1,316 miles of track and contracted with Burlington Northern to operate the freight trains. Earlier this summer, as Janklow drove through Mitchell (pop. 14,000), he shouted, "There's my railroad! Those are some of my rail cars!"

Janklow is not afraid to endorse what are usually Democratic policies, such as state bonding programs to provide low-interest loans to home buyers and students. Comments South Dakota Secretary of Water and Natural Resources Bob Neufeld: "Where in the Republican philosophy does it fit that a state should own its own railroads? The Governor fits into the mold of what you would call a progressive." Last fall Janklow won a second term, by law his last, with 71% of the vote, the greatest margin of victory ever in a South Dakota gubernatorial race.

The Governor's hard-charging style, encouraged by a better than 2-to-1 G.O.P. majority in the legislature, has its detractors. "At times I've felt he's the most dangerous politician I've ever met," says Republican State Senator Don Frankenfeld, manager of the E.F. Hutton office in Rapid City. "He would be much more comfortable in a benevolent dictatorship than a democracy." Asserts State Democratic Chairman Robert Williams: "He's a very strong person. I wouldn't call it a dictatorship, but it's as close as you can get."

Janklow's hip shots rattle some fellow Midwestern Governors as well. They are peeved by his raids on their states' business firms. Cracks Minnesota Governor Rudy Perpich about his western neighbor: "I concede only that they're No. 1 in prairie dogs." Perpich has reason to be resentful. Since 1969 as many as 100 Minnesota companies either have moved to South Dakota or have built new plants there.

Janklow has acquired an anti-Indian reputation, despite six years of service as a Legal Aid lawyer on his state's Rosebud reservation. A decade ago, as the state attorney general's chief prosecutor, he launched something of a one-man legal war against Dennis Banks and the American Indian Movement. When California Governor Jerry Brown refused to extradite Banks, who had jumped bail after a 1975 South Dakota riot and assault conviction and fled to California, Janklow announced that in retaliation scores of South Dakota defendants had been allowed to avoid prosecution on the condition that they move to California. Quiet discretion is not his strong suit. Earlier this year the Governor filed two libel suits against publishers because they had repeated an unproven allegation that Janklow raped an Indian teen-ager in 1967.

An exMarine, Janklow, 5 ft. 10 in. and 225 Ibs., calls himself "the world's best fat-man water skier." He has padded around the Governor's mansion in bunny pajamas. He drives a Corvette and a pick-up truck and, while Governor, has been ticketed for speeding on his Yamaha 1100 motorcycle. He presides over an annual birthday "sock hop" in a greaser's T shirt. But most of Janklow's constituents look beyond the quirks. Admits Frankenfeld: "He's given South Dakotans a sense of pride in their state they haven't felt before." --By Kurt Andersen. Reported by J. Madeleine Nash/Sioux Falls

With reporting by J. MADELEINE NASH This file is automatically generated by a robot program, so viewer discretion is required.