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THTERL0C1C

roWVMUMI

ERTHKEli

UfclSICP

X offer the foJkwinft UMBdwKl* to *Mti«n 3291
U ) Oft pn«;o IBS, lta* 26, atrUo ant tha wrdi "nora tram
mm" and aubatitura tha word
(2) On pt|l IS6. iiwuinlufi with line 1,fltrikeout ©wythias
through llna l«
(*) OA f»£» m , una e, aha**,* "(a)" to *{#)••
(4) On pago id*, i&wi 9, *&aaga •(/)• to "(ft)*,
(i) On fn&o ltft, ooMndnoias with lino 101 ttrlko ©et ^vcry
thing through lint i n
Sootlan SE9 anando tho prorloioaa of tha Clayton Antltraot Aot
rtUtias to intarlaakliig dlrnWritM b i t m u book*. It aantalna «
aistir* of good and aril* It « m U il^Hfy tha provialatta of ox latino
low relating to dlraotori of national banka and antand than to aovor aloo
dlrootora of tate ba&ka which ara nasAwwra of tho (odoral Saaovao Syaton,
oteiah to vary ItilfiUt* ftH aomlwlohad In latann thaao daolrablo provial ana ara oortaln oaaapfclana and aaaaptiana vhlah havo nil tha aaraarka
of Iftrlst; boon inaortod In tha bill for tha garpaaa of ^omitting aano of
tho largo banka in tho finanaial dl at riot of Hon Tork oad othor largo
aitloa to oantlnaa intorloaklnr, rolntiowahtfia ohieh thay now havo oad to
aronta mm onoa* It woald porait than to aroata again interlocking rol*»
tlanahlpa aHlah knot baan outlawed ever alnoo Congrooe yaaeo* tha Clayton
Antltraat &o% in 1914 aa a rooalt of tha



laveetl^nticKu

• f •

The proeent lew forbid a t 4&mt«r of t national bank to b« »
dirootor of any otatr bonk exoept with the peraleeten of the Fnierol
eorve Beard !mI does m i mpply to lo&erloefcing direetoratee between Stoto
banks where no ontioual baafc la involved* &wmn though mmh State banks
nay bo mmmbmr* of tte Fedoral Weeerve yitoi.
The a>uso bill w-*ild entead the low to eevor btato Motor basks
of Che federal l««tm *jaten aa ««H m national bank*, n y w l the
authority of the Jederel Keeerve aeard to 1««m efeeial perwita for interleefcin* diretterates, aad safest It ate o prevision permitting the Beard to
wmkm e*eeptlo&* for oortoln elnsses of lnetitutlene by general regulations*
Hko * euate E1U w u U eirtead tho low to lnfcerleefclng dirootovmtoo
between t'toto nenfeer banks and oosttiai no prewielen authorising tho
Federal Peaerwefceondto nnkn exoeptlensi tot it ineer orates several
eaceeptles* la the law lteelf*
Tho asit important «f thooo la not OHO of the framO? »n—e rated
eseeptien«# but one Incorporated in the prohibition Itself by tho word a
than oaao^* which appear cm pa$t 18S# lino tb.

These wordo have thin

OffO#t 9
ihoraaa tho ?reeeat law forbids a dirooter of t national bonk to
be a dirooter of a*ar ether bonk and the £eose £111 woold forbid a dirooter
of a naober ban*. State or national, to bo a dirooter of any other bonk,
the -float* Kill weald nerely forbid o dirooter of a oewber bank to serve aa
dirooter of ''were than one* other bank* Time there ie hidden in the very
heart of the prohibition an esoeptlen whieh weald e^rsait a dirooter of nnjr




m b i f bonk, Stnte or notioiel, t© oerv© is * aireetor of any other one
towke
Tfcle would not only per* it o d lroetor of o &tnte wowbor bonk to
ootttlstto to bo o direetor of ©ay other beak# but would oloo permit a direotor of © notion*! book to beanie t direetor of ©ny othor ono bonk — sowo*
thing whloH lo now forbidden oxeopt by spooloi peraiooian of the *ederol
Roe©roo Boord.
fhooo throe little tardi Nwre then ono" wool* permit every dirooter of ony of the lor go benke lo «ell Street to be * direetor of cow
ether lor&e book lo Hell street. Thue, they mild permit the Bentaere
Treet oonpeny* with teenty d 1 reetoref to hove one of Ito dirootere on the
board of eneh one of' twenty other bunko In liew York* I*ikwwie©* the Smr*
onty fruot Cenpeny* with twenty-fire direetore, eould hove one of ito dlreetore on the boord of eooh one of toe«Kty»floo other benke In Hen York City*
Xho iitionel City ^enk, with nineteen director*, eould here one ef ito direetero on the benrd ef eooh one of nineteen other benke In Men Yerk Sltyt
end ee on* *y thio ©none* oil tho big benke In m i street ©©old be ee
olooely Interwoven thnt tl*y would oenetitute o werltoble money trust.

op with the benke In Senten, 'hlledelphi©, Pitteburgh, Clevelend, Chiengo,
end other gvont money center* ontll oil of the greet benke would be ee
olooely linked together by Interlooklag direetor© thnt no present of lorgo
properties* ©oold obtain bonking oeeewaodntlene without flrot ©btolnlng
the oengent end meeting the tevno of n ooa^erntively onoll group of men*




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4 *

rfci* %m o*»otly tho *ind of o l t o o t i o a tbot i u diooloood by tho
Pojo in^witipitlflfi unft which lad to tho ipMftflp of wstlcn 9 of tho Cloytoa

Ait*
In tIoo of tho o*tont t o ot-lofc tho ^ o lavootlgotiaa dtooloood
tho roprooontat ion o f

?# Mor^oa oc* CmvxR? on ttao boards of dirootoro

of staofstti <1 i f f Of out hsaks o a i othor f l s i M l t l 5. .not 11 ut lotto* I hovo tokoo
tho trouble t o lock op tho aoafeoro of tho* « * » l a iM>or*o ifioglotor of
rootoro.

X fewws thwt* i o u d d l t l o i t o oooorol of tho&i boisig oortisoro Ia

tho f » r l n t »

f i r m of Droa»I ond Company of MdladoipfcSa* «sl moa*

orooo etlaor forolga a«d ^owoitlo f i a o o o l o l loot l t « t lotto * too of tho port*
ooro aro dlrdotoro of tho Oooraaty ? m o t C o f u g r of Koo Torfc* throo of
ttosi wro dirootoro o f tho % » i o r « Tjpoot Coapooy of I t v York, tmd too of
thoa oro 41 rootoro of tho Sow Tort Troot Cos^ony*

oao of tMoi oro dlroo*

tor* of ootioool banks, booouoo tho Clsyton l i l forbids tltoa t o t o dlroo*
toro of national hoako*

I f 00 p o m l t thooo thro* l l t t l o words *aoro ttous

000" t o rooaia l a tho b i l l , Uowooor, tbsy oottld not only oowtlnoo t o t o
dirootoro of t i n Guaranty Troot Ceapmgr* tho ^aofcoro Troot conpaay, a a i

hooka*

l a t h i o oMwor thoy oould oaioml t h o l r loffcaoooo ovor othor floan*

o l a l lnotltwtloao ond orooto again a oltwotloa s l a i l a r t o t h a t

tflooloood

ty tho P0J0 lawootlgatloa and ootlsood by tho Cloytoa Aflft*
Thooo throo liiiiiio—• l l t t l o wordo "i»ro than oao", thoroforo,
would n u l l i f y t o a largo oxtont tho ?orpooo o a i o f foot o f tho cisgrtoa Aot*
They should bo otrloksa froa




i.-ill*

- » •

rara&roph auabored * (peg© 13&,

should also be atriekaa

out. It woald permit bonke loeated in different eitloe to havo interlockla& dirootore without tmy rootrletlona what©cover. It mild pomit oil of
the great benke la Boston, J*oo York, jltiladclpfeia, Pittaburgh, Cleveland,
Chicago end othor groat ftaaaolal ©outer*, to ho oo linked upfeyinterlockia« dirootore ea to eoaotitat© a neney truet of eueh wot poor that it
eeald hav© a strangle hold oa Aaerieen buelnoe© and control the cocnanio

eiaoo the paaang© of the Clayton Aot in 1M4, and wo ahoald not open the
door to lta ©reatloa again.
the paragraph ccneciMVwg an ft|« 18d, lino 10, would aaiwpft
all oxiottag interlockingrelationship©an! p©rait than to eon*fan© watll
Fohronry 1, 19*9, Saoh a portymwmmt would appear to ho reasonable i bat a
ainilar previa ion in tha original Clayton Aot enaoed Congrooe no ond of trow
ble and l*d to a ©ahotantial dininution of the offOoUioneoa of the law*
The effective date of oootion I of the original Clayton Aot wne
postponed for two y«nr©| and, before the aootioa bnoino effective, eo nnoh
proeoaro wao brought upon Oongreo© that it onandod the law oo ao to authorise the Moral linn <e Hoard to grant pemita allowing poroaan to eario
ao dirootore of not nor© thnn throe bank© within the prohibited elaoeoo
if they wore net in aobetaatlal competition. The reomlt io that there are
thonannd© of laterloo king direotoratoe which would have boon outlawed if
th© etotuto had been permitted to go into offoot without delay*
thlo bill would extend the Clayton *ot to eoeer state nmVtr
bonk©| and, if an p©etp©m it© effeotiwa data, the benhere will be baOk hero




•

#

•

to «nko exception* end w p t i a w uhieh will weterielly lapiir« If m t
utterly nullify, the of foot of thio eolutary amendment, I em afraid thet
hletery will repeat Itoolf an* thot coogroeo will yieU to the iapertnaltlea
of tho bottkore* Lot no oottlo tho fueatlen now for all tin* by aakln& thio
eeetlon effeetlwe Immediately*
A porogroph of aentien 8 of tho Claytaa Aat whioh would not bo
rop*olod would permit oil teak dlrootoro to aaree out thoir proaorti terme*
la othor werde, thoy oould oorwo until tho n o n l olootloe of dimeter*
neat January, netadthetendIxi^ thio enendaont* This would
enple tlan to amaye for tho aeaeaeary ohon^po In M r

th* !rn*nf

bonrdo of 4iroo»

ton | but aaald got tho twill oooo poor with by tho tHIHiii1 of January*
•vith tho aniatiag relationehipe onoo M o a up, tho proaouro on Comgree*
to
onond tho OWP
low would oRirw
not bo
noorlr www
no grant
end tho donetr wW
of n
rewwti*
ww ^^^^wmww
ww f n p w v
^nf^^ww w t w i w w o w m i K w *
an wwuPWwn»
w

tion of tho niatahe of 1»1« would bo greatly dlalalehed*