In the summer of 1923 gas topped 29 cents a gallon in Rapid City. That price seems like a bargain now, but by the standards of the day anything over 20 cents a gallon was considered exorbitant.
South Dakota's governor was then Bill McMaster. He responded to the high gas prices by ordering the state highway department to begin selling gas at its district offices for 16 cents a gallon. McMaster directed state officials to buy gasoline in Chicago and ship it by tank car to Rapid City and Deadwood in addition to seven East River cities.
The oil companies were outraged, and cries of "socialism" were heard. But the "Governor's Gas War" was successful in forcing prices down at the commercial pumps. Thereafter every time the gas stations tried to raise their prices the Republican McMaster responded with another state sale.
South Dakota's war on high gas prices received nation-wide attention and triggered price reductions throughout the Midwest and eventually from coast to coast. An Associated Press Story of 1923, dateline Chicago, said "The whole gasoline price evolves about the South Dakota situation, as it did when the original reduction made Monday was followed by price cuts in all parts of the country."
Motorists were delighted with the low prices. South Dakota's politicians involved the state in several other projects normally reserved for the private sector. They initiated state ownership of a cement plant, a coal mine, and several grain elevators.
The U.S. Supreme Court finally stepped in and ruled that selling gas was not a proper function of state government.
10/01/03