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Before the

BOARD OF GOVERNORS
of the

FEDERAL RESERVE SYSTEM

In the Matter of:
TRANSAMERICA CORPORATION

Place Of Hearinp:

Washington,

Date Of Hearing.-

February

p.

11,

Pages

C.

19^9

8^9

-

900

Volume No.

COLUMBIA REPORTING COMPANY
Official Reporters

631 Pennsylvania Avenue, N. W*
W A S H I N G T O N 4, D. C.
REpublic 3601




EXecutive 1851

A

Cohn
1

I N D E X

2

WITNESS:

DIRECT

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M a r r i n e r S. Eccles (Resumed)

CROSS

REDIRECT RECROSS

840

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5
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7

a

EXHIBITS

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NUMBER:

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it
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RESPONDENT'S No. 6
RESPONDENT'S No. 7~A, B, Cs D

FOR IDENTIFICATION
841
873

EVIDENCE

ascl

Arms Cohn

839

UNITED STATES OP AMERICA

I

BEFORE

2

BOARD OP GOVERNORS OP THE FEDERAL RESERVE SYSTEM

3
4

IN THE MATTER OP

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6

TRANSAMERICA CORPORATION

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8

Room 1202,
Federal Reserve Board B u i l d i n g ,
Washington 25, Do C . ,
F r i d a y , February 11, 19^9•

9

10
1
?

The a b o v e - e n t i t l e d matter came on f o r f u r t h e r hear

12

i n g pursuant t o adjounrment, a t 10:30 o ' c l o c k a . nu

13

BEFORE:

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RUDOLPH M. EVANS, Member, Board o f Governors, o f
the Federal Reserve System,
Hearing O f f i c e r .
APPEARANCES:
J . LEONARD TOWNSEND, S o l i c i t o r , Board o f
Governors o f the Federal Reserve
System, Washington, D. C . , and
G. HOWLAND CHASE, A s s i s t a n t S o l i c i t o r , Board o f
Governors o f the Federal Reserve
System, Washington, D. C . ,
appearing on b e h a l f o f the Board.
SAMUEL B. STEWART, JR., AND
HUGO A. STEINMEYER, 300 Montgomery S t r e e t , San
F r a n c i s c o , C a l i f o r n i a , appearing
on b e h a l f o f Transamerica Corporation*

840

asc2

1

LI
THE HEARING OFFICER:

2
3

order,

W i l l t h e h e a r i n g come t o

please?

4

MARRINER S. ECCLES

5

t h e w i t n e s s on t h e s t a n d a t t h e t i m e o f t h e a d j o u r n m e n t ,

6

resumed t h e w i t n e s s s t a n d and t e s t i f i e d f u r t h e r as f o l l o w s :
CROSS EXAMINATION (Resumed)

7

BY MR- STEWART:

8
9

Q

Mr. E c c l e s , a t pages 533 t o 545 o f t h e r e c o r d , you

10

r e f e r r e d t o what you c a l l e d an i n d e r s t a n d l n g o r gentleman c s

11

agreement w i t h Mr. L . M. G i a n n l n i ,

12

I g a t h e r e d , I n e a r l y 1940,

t h a t any f u r t h e r expansion would n o t be u n d e r t a k e n w i t h o u t

13

a p p r o v a l by t h e r e g u l a t o r y a g e n c i e s , and you s a i d t h a t

14

gentleman*s agreement o r u n d e r s t a n d i n g was reached i n connec-

15

t i o n w i t h t h e agreement p a r t i a l l y n e g o t i a t e d by you between

16

t h e C o m p t r o l l e r ^ o f f i c e and t h e Bank o f America i n t h e s p r i n g

17

o f 1940.

18

about t h a t s o - c a l l e d u n d e r s t a n d i n g o r gentleman 9 s agreement?

I s h o u l d l i k e t o ask y o u some s p e c i f i c

that

questions

19

A

M r . Cushlng was a l s o .

20

Q

You s a i d Mr. Cushlng and Mr. G i a n n i n l were p a r t i c i p a n t s

21

i n that

22
23
24
25



A

I a a l d Mr. O l a n n i n i —

conference.
That i s r i g h t .

M r . Cushlng, w i t h M r .

Oiannini's

attorney.
Q

Yes.

Now, i s n $ t i t a f a c t , Governor, t h a t a f t e r a p -

p r o x i m a t e l y s i x weeks o f n e g e t i a t i © R # a t t h a t t i m e , t h e a g r e e -

\

asc3
841
mant n e g o t i a t e d w i t h t h e C o m p t r o l l e r s o f f i c e was reduced

z

to writing?

3

A

That i s

4

Q

I show you a paper and ask you i f t h a t i s a copy o f

5
6

t h e agreement w h i c h was reduced t o w r i t i n g a t that t i m e ?
A

7
8

right.

As I r e c a l l t h e c o n f e r e n c e , I would say t h a t i t i s .
t h i s paper
MR. STEWART:

I w i l l ask t h e r e p o r t e r t o mark/as t h e

Respondent*s E x h i b i t n e x t f o r

9

(The documento n d ee r r e d xth i bwas No.
marked R e s p r e f n t s E o i t

10

6 for

11

12

13
14
15
16

17

18
19
20
21

22
23
24
25




identification.

identification.)

BY MR. STEWART:
Q

I s n ' t i t a f a c t t h a t i n t h i s paper which has been

marked R e s p o n d e n t s E x h i b i t 6 f o r i d e n t i f i c a t i o n t h e r e i s n o t
one word about t h e u n d e r s t a n d i n g o r g e n t l e m a n ' s agreement that
you have r e f e r r e d t o ?
A

That i s c o r r e c t .

I t was d i s c u s s e d .

t h a t t h e r e s h o u l d be some way o f p u t t i n g i t

I thought

i n t h a t p a p e r , but

t h e a t t o r n e y s who were d i s c u s s i n g t h e t h i n g d i d n ' t

think

t h a t t h a t was a d v i s a b l e and t h a t I t would be i n a p p r o p r i a t e
t o do s o .
MR. STEWART:

I move t o s t r i k e o u t a l l o f t h e

answer a f t e r t h e words " I t i s c o r r e c t , n as u n r e s p o n s i v e

to

the question.
MR. TOWNSEND:

The w i t n e s s i s c e r t a i n l y

entitled

t o e x p l a i n h i s answer, may I t p l e a s e t h e Hearing O f f i c e r .

i

{

asc4

842.

1

THE HEARING OFFICER:

2

BY MR. STEWART:
Q

3

I w i l l l e t t h e answer s t a n d .

I s n ' t I t f u r t h e r t h e f a c t t h a t t h e agreement a t

that

4

t i m e was e x c l u s i v e l y w i t h t h e Bank o f America N a t i o n a l T r u s t

5

and Savings A s s o c i a t i o n ?

6

A

That i s

7

Q

And n e i t h e r Transamerlca C o r p o r a t i o n nor any o t h e r

8

correct.

company was a p a r t y t o t h a t agreement?
A

9

That i s c o r r e c t .

We, o f c o u r s e , discussed t h e ques-

10

t i o n o f T r a n s a m e r l c a , and as was I n d i c a t e d ,

11

was f u r n i s h i n g t h e capital t o c a r r y o u t t h e c a p i t a l

12

ments f o r t h e bank.
Q

13
14

Transamerlca
require-

But t h e r e was no o f f i c e r o f Transamerlca Corpora-

t i o n p r e s e n t a t any o f t h e c o n f e r e n c e s , was t h e r e ?
A

15

We had understood t h a t Mr. Mario G l a n n l n i was I n

16

c o n s t a n t t o u c h w i t h Mr. A . P.

17

time t o time

18

t h i s m a t t e r up and d i s c u s s I t w i t h h i s a s s o c i a t e s and w i t h

19

A . P.

20

Q

he

WOuld

As a m a t t e r o f f a c t ,

from

r e p o r t t h a t he would has t o t a k e

He d i d make i t c l e a r , t h o u g h , d i d n ' t t e , t h a t he

21

was a p p e a r i n g f o r and r e p r e s e n t i n g o n l y Bank o f America,

22

o f w h i c h he was p r e s i d e n t ?

23

A

The C o m p t r o l l e r was, o f c o u r s e , t h e one t h a t had

24

c a l l e d t h i s conference f o r t h e purpose o f c o n s i d e r i n g t h e

25

problems and t h e q u e s t i o n o f Bank o f America w h i c h was t h e




343

afee5

1

g r e a t , l a r g e p o r t i o n o f t h e Transamerica
MR. STEWART:

2

organization.

I move t o s t r i k e o u t t h e l a s t answer,

3

s i r , as u n r e s p o n s i v e and as s t a t i n g a c o n c l u s i o n o f t h e w i t -

4

ness.
MR. TOWNSEND:

5

I t h i n k , Mr. H e a r i n g O f f i c e r ,

6

t h a t statement I s r e a s o n a b l y h e l p f u l I n I n t e r p r e t i n g t h e

7

that

s i t u a t i o n t h a t Mr. Stewart I s a t t e m p t i n g t o develop.

8

THE BEARING OFFICER:

9

BY MR. STEWART:

10

Q

I w i l l l e t t h e answer s t a n d .

L e t me g e t i t c l e a r , M r . E c c l e s .

You t o l d me

11

I n answer t o a q u e s t i o n a few minutes ago t h a t t h e agreement

12

t h a t was made a t t h a t t i m e was e x c l u s i v e l y w i t h Bank o f

13

America.

14
15
16

A

Now, do you w i s h t o change t h a t answer a t
No, s i r ,

I d o n * t w i s h t o change i t ,

all?

the w r i t t e n

agreement.
Q

And you a l s o t o l d me, as I u n d e r s t o o d i t ,

that

17

t h e r e was nobody p r e s e n t a t t h a t t i m e on b e h a l f o f T r a n s -

18

america C o r p o r a t i o n ;

19

20
21
22

A

t i o n was c o n s t a n t l y under d i s c u s s i o n .
Q

But o n l y between r e p r e s e n t a t i v e s o f t h e Government

and r e p r e s e n t a t i v e s o f Bank o f A m e r i c a ;
A

That i s

24

Q

All




correct?

Hhe Transamerlca r e l a t i o n s h i p t o t h e whole s i t u a -

23

25

is that

is that

correct?

right.

right.

Don®t you know i t a l s o t o be t h e f a c t t h a t

every

asc6

844

1

a d d i t i o n a l b r a n c h o f Bank o f America, w h i c h has been opened

2

s i n c e t h e date o f those c o n f e r e n c e s , h a s been e s t a b l i s h e d w i t h

3

t h e expreso a p p r o v a l o f t h e C o m p t r o l l e r o f t h e Currency?
A

I c o u l d n « t say as t o

Q

/v

I s n ' t t h a t i n e v i t a b l y s o , Governor?
MR. TOWNSEND:

about

Because t h e r e have been some i n s i n u a -

t i o n s about i t whth I want c l e a r e d up on t h e r e c o r d .
THE WITNESS:

10
11

i s s o , why ask t h e Governor

it?

8
9

If it

MR. STEWART?

6
7

that.

I don®t r e c a l l — you a r e

referring

t o Bank o f America?
BY MR. STEWART:

12

13

Q

That i s what I

14

A

W e l l , o f c o u r s e , t h e Bank o f America b e i n g a n a t i o n a l

15

bank, i f

16

by t h e C o m p t r o l l e r o f t h e Currency and t h e C o m p t r o l l e r

17

t h e Currency o n l y .

18

Q

it

said.

opened any b r a n c h e s , t h e y would have t o be approved

Right.

That agreement, w h i c h you have

of

identified

19

as b e i n g t h e agreement n e g o t i a t e d a t t h a t t i m e , d i d n o t p u r -

20

p o r t t o Impose any r e q u i r e m e n t on T r a n s a m e r i c a 9 s

21

o f banks, d i d

acquisitions

It?

22

A

No, i t d i d n o t .

23

Q

And t h e C o m p t r o l l e r o f t h e Currency d i d n o t have

24

o r even c l a i m any c o n t r o l over Transamerica 9 s

25

o f a d d i t i o n a l banks, d i d he?




acquisition

345

SO?

!

|

2

j
Q
Do you t h e n base y o u r r e f e r e n c e t o an u n d e r s t a n d i n g
I
j o r gentleman 1 s agreement merely upon y o u r own i m p r e s s i o n s

3
4
5

6
7

3
9

10
11

12
13
14
15

1
6
17

18
19
20
21

22
23
24
25



A

He d i d n o t .

|

o f what somebody
A

s a i d i n t h e course o f t h o s e n e g o t i a t i o n s ?

I base i t upon a good d e a l o f d i s c u s s i o n had between

t h e whole group t h a t

met almost c o n t i n u o u s l y f o r s i x weeks

c o n s i d e r i n g t h i s m a t t e r , a b a s i c d i s c u s s i o n upon t h a t ,

that

t h e p r i m a r y purpose f o r t h e Board i n t e r v e n i n g i n a m a t t e r
t h a t i n v o l v e d t h e Bank o f America was i n o r d e r t o t r y t o come
t o some u n d e r s t a n d i n g w i t h r e f e r e n c e t o t h e whole Transamerica
operation.
Had t h a t n o t been i n t h e background, had i t n o t been t h e
primary consideration,

I d o n ' t t h i n k t h a t t h e Board, upon t h e

r e q u e s t o f Glannina, would have had t h e same i n t e r e s t

in

i n t e r v e n i n g merely t o g e t a temporary arrangement made w i t h
r e f e r e n c e t o t h e Bank o f America t h a t had b r o u g h t about — a
temporary arrangement made w i t h t h e Bank o f A m e r i c a , t h e
n e c e s s i t y o f w h i c h was because o f t h e c r i t i c a l a t t i t u d e

of

t h e S e c r e t a r y o f t h e T r e a s u r y and t h e F e d e r a l D e p o s i t
Insurance Corporation people.

As t h i s r e c o r d has shown,

t h e d e s i r e on t h e p a r t o f t h e o t h e r s u p e r v i s o r y

authorities

t o r e s t i s l n t h e Bank o f Ameica t h r o u g h v a r i o u s means,
i n g o f t h e r e p o r t o f t h e Bank o f America, t h e w i r e t o

publishdis-

c o n t i n u e t h e payment o f d i v i d e n d s , t h e I n d i c a t i o n t h a t t h e y
were g o i n g t o f i l e c e r t a i n c o m p l a i n t s and r e q u e s t t h e Board

846

sc8

1

t o b r i n g about a S e c t i o n 33 c a s e , a l l o f t h a t was I n v o l v e d I n

2

t h i s s i t u a t i o n and t h e Board was w i l l i n g t o I n t e r v e n e w i t h t h e

3

I d e a t h a t t h e r e be a s e t t l e m e n t o f t h e s e v a r i o u s

differences.

4

Q

That I s t h e d i f f e r e n c e s r e l a t i n g t o Bank o f America?

5

A

I t wasn't only t h a t .

I t wasn't only t h a t , but the

6

d i f f e r e n c e s t h a t I n v o l v e d t h e whole Transamerica o p e r a t i o n s

7

and I t s r e l a t i o n s h i p w i t h Bank o f A m e r i c a .

8

say i n c o n n e c t i o n w i t h c e r t a i n p r a c t i c e s , as I r e c a l l ,

9

t h e Transamerica and t h e Bank and t h e s u b s i d i a r i e s o f T r a n s -

10

I was g o i n g t o
between

america and t h e Bank.

11

Q

Have you f i n i s h e d ?

12

A

Yes.

13

Q

Governor, can you r e c a l l s p e c i f i c a l l y what i t was

14

t h a t anybody s a i d I n t h e course o f t h o s e n e g o t i a t i o n s w h i c h

15

gave y o u t h e i m p r e s s i o n you t e s t i f i e d t o g e t t i n g and who i t

16

was t h a t s a i d I t ?

\7

as I

18

I would l i k e t o g e t t h a t as

specifically

can.
A

I c a n ' t g i v e i t t o you any more s p e c i f i c a l l y ,

be-

19

cause t h e d i s c u s s i o n was so g e n e r a l and I t was spread over

20

such a p e r i o d o f t i m e and t h e r e were so many people r e p r e -

21

s e n t i n g t h e v a r i o u s agencies o f t h e Bank i n v o l v e ^ i n t h i s c o n -

22

f e r e n c e t h a t I d o n ' t remember any s p e c i f i c statement by any

23

one p e r s o n .

24

Q

25



The n e t o f i t i s , t h e n , t h a t t h e r e was n o t h i n g p u t

i n t o a w r i t t e n agreement about a r e s t r i c t i o n on Transamerica

ac9

847

I

and t h e r e i s n o t h i n g t h a t you can s p e c i f i c a l l y a t t r i b u t e

2

t o any s p e c i f i c p e r s o n .

orally

I t was merely t h e i m p r e s s i o n t h a t

y a i g o t f r o m t h e g e n e r a l course o f t h e n e g o t i a t i o n s ?
4

A

That i s

5

Q

I s n ' t i t a f a c t t h a t when you f i r s t

right,
telephoned

6

t o M r . L . M. Q i a n n i n l , r e s p e c t i n g t h e Temple C i t y

7

Bank a c q u i s i t i o n , as you t e s t i f i e d on d i r e c t , and made

a

r e f e r e n c e t o t h i s s o - c a l l e d g e n t l e m a n ' s agreement o r u n d e r -

9

s t a n d i n g , he c a t e g o r i c a l l y denied t h a t he had had any such

10

National

u n d e r s t a n d i n g o r agreement w i t h you o r w i t h anybody?

11

A

I w o u l d n ' t say he c a t e g o r i c a l l y denied

12

Q

How would you p u t I t ,

13

A

What Mr. O i a n n l n i — he was not a n t a g o n i s t i c a t

it.

sir?
all

14

and he s a i d t h a t he was s o r r y t h a t t h e Board f e l t t h a t way

15

and t h a t he h a d n ' t understood t h a t t h a t I s what was e x p e c t e d .

16

Q

17

from yours?

18

A

Yes, y e s , t h a t was q u i t e

19

Q

There was no m i s u n d e r s t a n d i n g about

20

A

I t was q u i t e a p p a r e n t . I f

21

I n o t h e r words, h i s u n d e r s t a n d i n g was d i f f e r e n t

a t t h e t i m e , he had f o r g o t t e n

apparent.
It?

i t w a s n ' t any d i f f e r e n t

it.

22

MR. STEWART:

23

(Answer read by t h e r e p o r t e r . )

24

THE WITNESS:

25




i t wasn 8 t d i f f e r e n t ,

W i l l you read t h e end o f t h e answer?

I f , at the time of the

discussion,

i f he had t h e aame v i e w t h a t I had

848

SClO
i

a t t h e t i m e , t h e n , c e r t a i n l y , when I t a l k e d t o him he

2

d i d n ' t have t h a t v i e w .

3

g o t t e n t h e u n d e r s t a n d i n g or whether he ever had t h e u n d e r -

4

standing.

I d o n ' t know whether he had f o r -

I c a n ' t speak f o r Mr. M a r i o O i a n n i n l .
B Y ® . STEWART:

5

Q

6

L e t us t i e i t down t o t h e one t e l e p h o n e c o n v e r s a -

7

tion.

I s i t p e r f e c t l y c l e a r a t t h e t i m e o f t h e Temple C i t y

8

N a t i o n a l B a n k a c q u l s i t l o n , when you t e l e p h o n e d M r . M. L .

9

Q i a n n i n i and made r e f e r e n c e t o t h i s s o - c a l l e d g e n t l e m a n ' s

10

agreement o r u n d e r s t a n d i n g , he made i t c l e a r t o y o u t h a t a t

1!

l e a s t as o f t h a t t i m e he d i d n ' t have t h e same u n d e r s t a n d i n g

12

t h a t y o u had?

13

A

That i s

14

Q

Now, you have t e s t i f i e d on y o u r d i r e c t

15

correct.
examination

about v a r i o u s c o n v e r s a t i o n s w i t h t h e s t a f f o f t h e Board and

16 w i t h r e p r e s e n t a t i v e s o f t h e o t h e r r e g u l a t o r y agencies r e s p e c t
17

i n g y o u r d e s i r e t o have Transamerica C o r p o r a t i o n submit any

18 proposed new a c q u i s i t i o n s o f banks t o t h e Board f o r a p p r o v a l
19

b e f o r e consummating t h e purchase.

You, I t a k e i t ,

have

20

s t u d i e d t h e l e g a l r i g h t s and d u t i e s o f t h e Board i n t h a t

21 r e g a r d ?
22

A

I could correct t h a t

23

Q

All right,

24

A

That i t was my d e s i r e - - i t

25



statement.

sir.
would appear f r o m t h e

way you p u t t h e q u e s t i o n t h a t I was t h e o n l y one on t h e Board

sell

849

J

t h a t had any I n t e r e s t I n o r any d e s i r e t o c o n t r o l o r c u r b t h e

2

Transamerlca e x p a n s i o n .

3

A

Q

That I s n o t

true.

You were t a k i n g t h e l e a d e r s h i p I n t h e n e g o t i a t i o n s ,

however, were you n o t ?
A

I was t h e Chairman o f t h e Board and as t h e Chairman

6

o f t h e Board I was p o s s i b l y more I n v o l v e d I n t h e n e g o t i a t i o n s

7

than others.

8

on d i f f e r e n t conferences a t d i f f e r e n t t i m e s , e i t h e r w i t h me

9

or alone.

However, M r . McKee and Mr. Ransom were a l s o

I was n o t always I n a l l o f t h e c o n f e r e n c e s ,

In

either

10

w i t h t h e Transamerlca people o r t h e s u p e r v i s o r y a g e n c i e s , but

11

t h e whole q u e s t i o n i s a q u e s t i o n t h a t was d i s c u s s e d w i t h t h e

12

Board and t h e s t a f f was c o n s t a n t l y c o n s i d e r i n g t h e q u e s t i o n ,

13

t h e problems, w i t h t h e s t a f f s o f

14

Q

the other supervisory agencies.

A l l r i g h t , s i r . Now, w i t h t h a t c l a r i f i c a t i o n o f t h e

15

background, my q u e s t i o n was, you have s t u d i e d t h e l e g a l r i g h t s

16

and d u t i e s o f t h e Board i n t h a t r e g a r d , h a v e n ' t you?

17
18

19

A

I w o u l d n ' t know.

I w o u l d n ' t say that . I had s t u d i e d

t h e l e g a l r i g h t s and d u t i e s .
Q

You mean t h a t b e f o r e t a k i n g t h a t p o s i t i o n you

20

d i d n ' t f a m i l i a r i z e y o u r s e l f w i t h what y o u r l e g a l r i g h t s and

21

d u t i e s were?

22

23
24
25



A

No, we always — t h e Board always a c t e d upon t h e

a d v i c e o f t h e i r s t a f f people and t h e i r
Q

That i s what I mean.

s u b j e c t , d i d n * t you?

lawyers.

You d i d t a k e a d v i c e on t h a t

!scl2

850

t

A

But I d i d n ' t s t u d y t h e l e g a l r i g h t s o f t h e Board.

2

Q

A l l r i g h t * You t o o k a d v i c e on I t and f a m i l i a r i z e d

3

; yourself with

4

A

5

and upon t h e

6

Q

It?

We a d v i s e d or we a c t e d upon t h e a d v i c e o f c o u n s e l
I n f o r m a t i o n p r o v i d e d by t h e

staff.

And on t h e b a s i s o f t h a t a d v i c e which you r e c e i v e d

7

a t t h e t i m e , you know, d o n ' t j o u , M r . E c c l e s , t h a t under t h e

8

p r e s e n t law and t h e law as i t e x i s t e d t h r o u g h o u t t h e p e r i o d

9

under c o n s i d e r a t i o n i n t h i s case, y o u r Board had no l e g a l

10

a u t h o r i t y t o require a corporation t o o b t a i n the Board's

11

a p p r o v a l o f any o t h e r r e g u l a t o r y agency b e f o r e i t bought t h e

12

a s s e t s o r s t o c k o f a bank.

13

A

We knew t h a t we had no l e g a l a u t h o r i t y t o s t o p and

14

c u r b a bank h o l d i n g company f r o m b u y i n g e i t h e r t h e s t o c k o f

15

a bank o r t h e a s s e t s o f a bank.

16

Q

And I say,you a l s o knew at t h e same t i m e t h a t you

17

had no l e g a l a u t h o r i t y t o r e q u i r e t h e c o r p o r a t i o n t o

18

o b t a i n t h e B o a r d ' s a p p r o v a l i n advance o f a purchase o f

19

such a s s e t s o r s t o c k ?

20

A

We knew t h a t and we —

21

Q

You r e p e a t e d l y sought t h a t a u t h o r i t y w i t h o u t

22
23
24
25



success f r o m t h e Congress, d i d n ' t you?
A

I t h i n k t h e f i r s t t i m e t h a t t h e Board sought t h e

a u t h o r i t y by l e g i s l a t i o n was i n 19^6.
Q

But you have made s e v e r a l appearances a t one t i m e o r

851

sel3
J
f

a n o t h e r r e q u e s t i n g such a u t h o r i t y , h a v e n ' t you?
A

3

W e l l , p r i o r t o t h i s t i m e t h e C o m p t r o l l e r , t h e Sec-

r e t a r y o f t h e T r e a s u r y , Chairman o f t h e F e d e r a l D e p o s i t

In-

surance C o r p o r a t i o n had had two b i l l s i n t r o d u c e d i n Congress
5

t h a t w e r e , I t h i n k b o t h o f them would have b r o u g h t a

/

d e a t h sentence — had w i t h i n them a d e a t h sentence f o r bank

7

h o l d i n g companies.
The Board always f e l t t h a t t h e Banking A c t o f 1933,

8

9

w h i c h , f o r t h e f i r s t t i m e , r e c o g n i z e d t h e need o f

regulating

10

bank h o l d i n g companies, gave t o t h e Board t h e

11

a u t h o r i t y over bank h o l d i n g companies and gave them t h e power

12

t o i s s u e o r t o deny t h e v o t i n g p e r m i t s , t h a t i s , a p e r m i t

13

by t h e h o l d i n g company t o v o t e s t o c k o f t h e bank, w h i c h t h e y

14

acquired.

15

and I am sure by Senator G l a s s , who sponsored t h a t

16

l e g i s l a t i o n , t h e Congress had passed i t ,

17

an adequate a u t h o r i t y t o enable t h e Board t o c o n t r o l t h e e x -

18

pansion of

19

o f s t o c k i n o t h e r banks.

20

t h e Transamerlca has been t h e o n l y bank h o l d i n g company t h a t

21

has a c q u i r e d s t o c k i n o t h e r banks w i t h o u t a d v i s i n g w i t h t h e

22

Board and t o a s c e r t a i n whether or n o t i t was a g r e e a b l e

23

o r whether or n o t t h e y would i s s u e o r g i v e a v o t i r i g v p e r m i t •

24

25



Q

supervisory

I t was e x p e c t e d , a n t i c i p a t e d by t h e Board,

t h a t t h a t would be

bank h o l d i n g companies t h r o u g h t h e

If

acquisition

As I have I n d i c a t e d , I t h i n k

that

I may g e t back t o t h e p o i n t , t h e p o i n t i n so f a r

a s i t r e l a t e d t o Transamerlca and n o t t h e o t h e r companies

is

scl4

852

I

c o n c e r n e d , I s where a company chose, as d i d T r a n s a m e r i c a ,

2

menSLy t o make an Investment I n a bank, e i t h e r by p u r c h a s i n g

3

I t s s t o c k or I n some o t h e r way, and w i t h o u t s e e k i n g a v o t i n g

4

p e r m i t , y o u knew and were a d v i s e d by y o u r a t t o r n e y s a t t h e

5

t i m e t h a t t h e Board had no a u t h o r i t y t o r e q u i r e

6

o f t h a t p r o p o s i t i o n t o t h e Board f o r advance a p p r o v a l ,

7

d i d n ' t you?

a

A

I knew a t what t i m e ?

9

Q;

At t h e t i m e o f t h e s e n e g o t i a t i o n s i n 1940,

submission

respecting

10 w h i c h you t e s t i f i e d ,
!1
12
13

14
15

>6
i7
18

19

20
21

22
23

24
25



A

Oh, y e s , we had found o u t by t h a t t i m e t h a t

—

phi

#2

853

1

Q

T h a t t h e lam d i d n ' t c o v e r t h a t

2

A

T h a t t h e law had a l o o p h o l e i n i t

situation?
that

Transamerica

3

had f o u n d and u s e d and no o t h e r bank h o l d i n g company had used

4

it*
Q

5

And when y o u f o u n d o u t , as y o u have t e s t i f i e d you

6

d i d , f r o m y o u r l a w y e r s t h a t t h e B o a r d had no a u t h o r i t y i n

that

7

s i t u a t i o n , y o u d i d t h e r e a f t e r seek t h a t a u t h o r i t y f r o m t h e

3

Congress, d i d n ' t

you?

9

A

We d i d i n 1 9 4 0 — 1 t h i n k i t

10

0

A l s o 1945o

11

A

I

12

1946*

don ^ t t h i n k t h e b i l l was i n 1945.

Wasn't i t

you I d e n t i f i e d

14

I think i t

c o v e r e d i n each o f t h o s e t h r e e b i l l s

A

That i s

16

Q

And y o u s o u g h t t h a t a u t h o r i t y ,

correct.
t h e n , on a t

least

17

t h o s e t h r e e o c c a s i o n s and Congress d i d n o t pass any o f

18

bills,

did

correcto

A

That i s

20

Q

All right,

sir.

Now, I s h o u l d l i k e t o

clarify

21

c e r t a i i phases o f y o u r t e s t i m o n y and o f t h e B o a r d ' s

22

3 9 , w h i c h was t h e memorandum c o n c e r n i n g t h e c o n f e r e n c e

23

February 18, 1943, which you i d e n t i f i e d .




those

it?

19

25

that

yesterday?

15

24

was

D u r i n g t h e war p e r i o d —
Q

13

was 1946 o r 1 9 4 7 .

I

Is that

Exhibit
of

clear?

h n you B o a r d * s E hbt 3 9 , w h i c h you
ad
x i i

identified

as t h e memorandum w h i c h was p r e p a r e d s u b s e q u e n t t o t h e

conference

ph2

854

between M r , A. P. G l a n n l n l and c e r t a i n members o f t h e Board
h e l d on F e b r u a r y 1 8 , 1943•
(Discussion o f f the r e c o r d . )

o

BY MR. STEWART:
Q

Now, I d i r e c t y o u r a t t e n t i o n t o t h e l a s t

sentence

7

o f t h e second p a r a g r a p h o f t h a t memorandum, b e g i n n i n g w i t h

8

t h e word " h o w e v e r . "

Do you see t h a t ?

I think i t

i s on Page 2 ,

9

A

The l a s t sentence o f w h i c h , you say?

10

Q

Of t h e second paragraph o f t h e memorandum, w h i c h

11

reads—

12

A

"In this

13

Q

No, w h i c h r e a d s , "However, when h i s a t t e n t i o n was

14

connection"-

d i r e c t e d t o the f a c t s of the Board's

participation"—

15

A

Oh, y e s .

16

Q

— " i n t h e n e g o t i a t i o n s l e a d i n g up t o t h e 1939-19^0

17

agreement and t o t h e promises o f t h e G i a n n i n i i n t e r e s t s

18

t h a t c o n n e c t i o n , he had l i t t l e t o

19
20

in

say."

I f u r t h e r d i r e c t your a t t e n t i o n t o your testimony
a t Page 575 o f t h e r e c o r d i n t h i s p r o c e e d i n g t o t h e e f f e c t

21 t h a t i t was p o i n t e d out t o Mr. G i a n n i n i a t t h e F e b r u a r y , 1943
22

meeting t h a t you had u n d e r s t o o d i n c o n n e c t i o n w i t h y o u r 19^0

23

n e g o t i a t i o n s w i t h t h e Bank

24

t i v e s , " t h a t t h e expansion program t h a t had been p r e v i o u s l y

25

undertaken would n o t be c o n t i n u e d and t h a t no f u r t h e r




America o f f i c e r s and r e p r e s e n t a -

expansion

|ph3

855

< w o u l d be u n d e r t a k e n t h r o u g h t h e a c q u i s i t i o n o f t h e s t o c k o f
r

o t h e r banks w i t h o u t f i r s t t a k i n g up t h e m a t t e r w i t h t h e Board,

i

W i l l you p l e a s e p o i n t o u t t o me, i f you can,

in

Board 1 s E x h i b i t 3 9 , where t h e r e i s any r e f e r e n c e t o any such
: !occurrence?
1
A
7

I d o n ' t f i n d t h a t i n t h i s memorandum,the

language t h a t I used i n t h e d i r e c t

specific

examination.

8

Q

Do you f i n d a n y t h i n g t h a t i s s u b s t a n t i a l l y

9

A

The f a c t t h a t — y e s , I f i n d t h i s and as I r e c a l l

10 i t was t h e way t h e conference ended,

that?
it,

that—

u

Q

What page, Mr. Eccles?

12

A

I am n o t t h i n k i n g o f any p a r t i c u l a r q u o t a t i o n , and

is

I t h i n k you might agree w i t h

this—

14

Q

I j u s t want t o l o c a t e i t on ray c o p y .

15

A

W e l l , he had r e f e r r e d t o s i t u a t i o n s t h a t t h e y

16

felt

some o b l i g a t i o n t o go t h r o u g h and t h a t he would f a v o r an agree

17 ment t h a t t h e r e would be no f u r t h e r expansion i f

such an agree

is

ment was e n t e r e d i n t o w i t h a l l h o l d i n g companies.

However, he

19

s a i d t h a t he would have t o t a k e i t u p , and as t h i s

language

20

says h e r e , " w i t h h i s b o y s . "

21
22
23

That was t h e o n l y commitment w i t h r e f e r e n c e t o t h e
question of f u r t h e r
Q

Yes.

expansion.

W e l l now, I am v e r y g l a d t o have t h a t

testi-

24

mony and t h a t w i l l save some o t h e r questions I was g o i n g t o

25

ask you l a t e r , b u t b e f o r e we l e a v e t h e q u e s t i o n I d i d ask y o u ,




bh4

8^6

1

I would Just l i k e t o g e t i t c l e a r whether i n a p p r o v i n g t h a t

2

memorandum, B o a r d ' s E x h i b i t 39$ as s t a t i n g what you c a l l e d

3

on d i r e c t

4

you mean t o say t h a t i t

5

t h a t meeting some promises o f somebody were brought t o

6

Mr. A . P. O i a n n i n l ' s a t t e n t i o n , r e f e r r i n g again t o t h e sen-

7

tence t h a t I quoted t o you a moment ago?

10

did

i s your b e s t r e c o l l e c t i o n t h a t a t

That sentence, Mr* E c c l e s , i s on

Page 2 o f the memorandum, the l a s t sentence i n t h e paragraph,
appearing and b e g i n n i n g a t t h e t o p 0
THE WITNESS:

11
12

g i s t o f what was g e n e r a l l y d i s c u s s e d , "

MR. TOWNSEND:

8
9

ffthe

"However, when h i s a t t e n t i o n was

d i r e c t e d t o the f a c t s — "
BY MRo STEWART:

13
14

Q

That i s t h e sentence.

15

A

What was your q u e s t i o n w i t h r e f e r e n c e t o t h a t ?

16

Q

Hy q u e s t i o n was whether you meant, i n a p p r o v i n g

17

t h a t memorandum as a c o r r e c t statement o f t h e g i s t o f what

18 was d i s c u s s e d , you meant t o i m p l y t h a t t h e r e were some
19

p a s t promises o f somebody t h a t were b r o u g h t t o Mr. A . P*

20

O i a n n i n i ' s a t t e n t i o n a t t h e time?

21

A

That i s

22

Q

D i d you mean t o i m p l y t h a t ?

23

A

That I s

24

Q

W i l l you s t a t e s p e c i f i c a l l y whose promises and what

25



correct.

right*

promises you mean t o t e s t i f y were b r o u g h t t o Mr 0 G l a n i n n j J s

ph5
1

857

at ni n a t a t e
t e to
t h t i
m?
A

A

W e l l , t h e same promises t h a t have a l r e a d y been

t e s t i f i e d t o w i t h r e f e r e n c e t o Mr. Mario G i a n n l n i and Mr.
Cushing.
Q

You mean t h i s i m p r e s s i o n t h a t we have discussed

e a r l i e r t h i s morning t h a t you g o t out o f t h e 1940 meeting?
A

7

And t h a t Mr* McKee g o t and t h a t t h e e n t i r e Board

8 g o t as a r e s u l t o f our r e p o r t i n g t o t h e Board.
Q

9

And t h a t when you discussed i t w i t h Mr. L . M.

10 G i a n n l n i —
11

MR. TOWNSEND:

12

THE WITNESS:

D i d you f i n i s h your answer?
And I was g o i n g t o say t h e impression

13

o f t h e o t h e r s u p e r v i s o r y a g e n c i e s , Mr. Crowley and Mr. Delano

14

got.

15

MR. STEWART:

I move t o s t r i k e out a l l o f t h e

16 r e s t o f the answer o f t h e w i t n e s s a f t e r t h e word "yes* as n o t
17
18

responsiveo
MR. TOWNSEND:

I submit i t i s q u i t e e x p l a n a t o r y o f

19

t h e e n t i r e s i t u a t i o n t h a t Mr. Stewart wants t o i n q u i r e a b o u t .

20

It seems t o me t h a t he c a n ' t haye a

21

s t r i k e out what he doesn*t want t o h e a r .

22

MR. STEWART:

l?yes-*

o r "no" and t h e n

And i t i s a l s o , s i r , a statement o f

23

t h e w i t n e s s ' c o n c l u s i o n s and guesses as t o the s t a t e o f mind

24

o f o t h e r people n o t on the w i t n e s s stand 0

25

have t h e i r c o n c l u s i o n s , t h e y ought t o




I f we are g o i n g t o

testify.

ph6

858
MRo TOWNSEND:

1

There has a l r e a d y been t e s t i f i e d

2

I n t o t h i s r e c o r d , may i t p l e a s e t h e H e a r i n g O f f i c e r ,

3

v e r y s h o r t l y b e f o r e these conferences, or v e r y s h o r t l y

4

t h e s e conferences w i t h t h e T r e a s u r y i n 1940, t h a t Messrs.

5

Delano and Crowley i n i t i a t e d a Board l e t t e r t o t h e G i a n n i n i « s ,

6

i n w h i c h a p o l i c y o f agreement was d i s c u s s e d *

7

I may c e r t a i n l y a r g u e , i t

seems t o me, t h a t

that
after

that

3

p o l i c y c o u l d have d e f i n i t e l y been r e l a t e d back t o t h e v e r y

9

c o n f e r e n c e s and d i s c u s s i o n s and u n d e r s t a n d i n g s t h a t t h i s

10

ness has t e s t i f i e d

12

Maybe t h e y can b e , b u t t h e y h a v e n 1 t

been y e t .
THE HEARING OFFICER:

13
14

concerning.

MR* STEWART:

n

wit-

W i l l you s t a t e , Governor E c c l e s ,

whether y o u r answer was e x p l a n a t o r y o f your s t a t e m e n t o r n o t ?
MR. TOWNSEND:

15

Do you u n d e r s t a n d t h e q u e s t i o n ?

and

16

MR. STEWART:

17

and I t h i n k i t w i l l be p e r f e c t l y

18

THE WITNESS:

19

(The q u e s t i o n and answer was r e a d by t h e R e p o r t e r . )

20

MR* STEWART:

21

clear

Read t h e q u e s t i o n .

That i s t h e p o i n t r i g h t t h e r e *

He

i m m e d i a t e l y says " Y e s , " and Mr. McKee and t h a t and t h a t *

22

MR* TOWNSEND:

23

m i n u t e , Mr. E c c l e s .

24

assistanto

25

observation.




May I suggest we r e a d t h e q u e s t i o n / a n s w e r

That c e r t a i n l y i s p e r t i n e n t .

Just a

The H e a r i n g O f f i c e r I s t a l k i n g t o h i s

Whan he i s t h r o u g h w i t h t h a t I want t o make an

xah7

859
THE HEARING OFFICER:

»

r.

Governor E c c l e s , d i d you

i n t e n d t o anfewer "yes? and t h e balance o f t h e s t a t e m e n t

Is

an e x p l a n a t i o n o f y o u r answer?
THE WITNESS:

Yes, t h a t I s

THE HEARING OFFICER:

right.

Then t h e w i t n e s s 1 answer

will

stand.
BY MR. STEWART:

7

8

9

Q

And t h a t I m p r e s s i o n t o w h i c h you t e s t i f i e d I s t h e same

I m p r e s s i o n w h i c h you have a l r e a d y t o l d us t h i s morning Mr.

10

L . M. G i a n n l n i d i s a g r e e d w i t h and s a i d was d i f f e r e n t

from

11

h i s u n d e r s t a n d i n g when you b r o u g h t i t ip t o him f o r t h e

12

time, Is that

first

correct?

13

A

Yes, t h a t i s c o r r e c t *

14

0

All right.

Now, r e f e r r i n g a g a i n t o y o u r t e s t i m o n y

15

a t Page 576 o f t h e r e c o r d , where the f o l l o w i n g appears:

16

"Question:

17

r e f e r r i n g t o M r . G i a n n l n i . "Answer:

18

t e l l us.

19

f i g u r e d were some oommitments t h a t l i e w a s n ' t a t l i b e r t y

20

t e l l u s , and t h a t he would expect t o consummate those d e a l s

21

and t h e n any f u r t h e r expansion would n o t be u n d e r t a k e n i f

22

arrangement c o u l d be worked o u t t h a t h i s p e o p l e would agree

23

t o and t h a t would b e , a l s o , a c c e p t a b l e t o o t h e r bank h o l d i n g

24

companies."

25




D i d he t e l l you what d e a l s t h e y w e r e ? " — t h e " h e "
No, he d i d n ' t .

He d i d n ' t

He s a i d t h e r e were some $ that t h e y had what he
to

You d i d n o t mean by t h a t t e s t i m o n y , d i d y o u , Mr.

an

ph6
860
1

E c c l e s , t o I m p l y t h a t Mr. G i a n n i n i d e c l i n e d t o g i v e you any

2

i n f o r m a t i o n t h a t you asked f o r a t t h a t February 19^3 meeting?

3

A

Ho.

He o n l y d e c l i n e d t o g i v e us t h e

information

4

w i t h r e f e r e n c e t o , I t h i n k i t was two o r t h r e e b a n k i n g

5

s i t u a t i o n s t h a t t h e y had been n e g o t i a t i n g

6

Q

7

for.

He d i d t e l l you t h a t t h e r e were two o r t h r e e commit-

ments t h a t —

8

A

That i s

9

Q

And he t o l d you something about them, d i d n ' t he?
MR, TOWNSEND?

10

11

THE WITNESS:
them t h a t I

No, he d i d n ' t t e l l us a n y t h i n g about

recall.

BY MR. STEWART:

14
15

Had you f i n i s h e d your answer t o t h e

other question?

12

13

right.

Q

L e t me c a l l y o u r a t t e n t i o n t o t h e s t a t e m e n t ,

I

16

b e l i e v e on Page k o f B o a r d ' s E x h i b i t 3 9 , r e a d i n g as f o l l o w s :

17

"And whatever p l a n m i g h t be a d o p t e d , he w o u l d l i k e t o be

18

p e r m i t t e d t o c a r r y o u t commitments i n two s i t u a t i o n s w h i c h

19

had n o t been b r o u g h t t o t h e a t t e n t i o n o f t h e B o a r d , one

20

a p p a r e n t l y i n w r i t t e n f o r m , i n v o l v i n g an exchange o f N a t i o n a l

21

C i t y s t o c k now h e l d by T r a n s a m e r l c a , and a n o t h e r n o t i n w r i t i n g

22

where he f e l t , n e v e r t h e l e s s , a moral o b l i g a t i o n w h i c h he

23

t h o u g h t was f u l l y as b i n d i n g as a w r i t t e n commitment."

24
25



L e t me c a l l your f u r t h e r a t t e n t i o n t o t h e statement
i n the conclusions l i s t e d i n B o a r d s E x h i b i t 39, i n Conclusion

ph6

861

1 No.

" P r o v i d e d a l l t h e banks w h i c h t h e y now have c o u l d

2

be r e t a i n e d t o g e t h e r w i t h t h e two r e g a r d i n g w h i c h M r . G i a n n l n i

3

s a i d he had o u t s t a n d i n g commitments."
He d i d a t l e a s t t e l l you t h a t much about them,

4
5
6
7

8

9

10
11
12
13

14
15

16
17

18
19
20
21

22
23
24
25




d i d n ' t he?
A

Oh, y e s .

Yes, he t a l k e d v e r y f r e e l y and t h e atmos-

p h e r e , I w o u l d s a y , under t h e c i r c u m s t a n c e s , c o n s i d e r i n g t h e
was
disagreements t h a t e x i s t e d , / f e o r d l a l .

The Board was e x t r e m e l y

a n x i o u s and Mr 0 A . P. seemed t o be anxious t o be a b l e t o
r e a c h some s a t i s f a c t o r y a c c o r d , and we spent a good p a r t

of

t h e day i n t h e d i s c u s s i o n .
Q

My q u e s t i o n , s i r , I s t h a t M r . A» P. G l a n n i n l d i d

n o t r e f u s e t o g i v e you any i n f o r m a t i o n you asked f o r a t t h e
t i m e about t h o s e commitments, d i d he?
A

Well, yes.

He would n o t g i v e us any more I n f o r m a t i o n

than i s indicated t h e r e .
Q

D i d you ask f o r any more?

A

Y e s , we d i d .

Q

What d i d you ask f o r t h a t he d i d n ' t g i v e you?

A

We asked him about whether t h e y wefre s u b s t a n t i a l

i n s t i t u t i o n s o r whether t h e y were—what we asked h i m , we
were t r y i n g t o a s c e r t a i n t h e importance o f t h e commitments
and he s a i d t h a t he d i d n ' t f e e l t h a t he was a t l i b e r t y

to

t e l l us and we d i d n * t press him any f u r t h e r .
Q

I want t o be v e r y c l e a r about t h i s , Mr. E c c l e s , because

phlO

862

?

I

t h i n k I t o n l y f a i r f o r me t o t e l l you t h a t i t

i s my u n d e r -

2

s t a n d i n g f r o m Mr* GUannini t h a t you d i d n ' t ask him f o r any

3

more t h a n he t o l d you about t h e commitments*
Now, do you d i s a g r e e w i t h t h a t ?

4
5

A

We d i d what we c o u l d t o f i n d o u t .

6

Q

D i d you ask him f o r any more i n f o r m a t i o n about t h e

7

S
9

commitments he d i s c u s s e d t h a n he v o l u n t a r i l y gave you?
A

As I r e c a l l , we t r i e d t o f i n d out what t h e commit-

ments w e r e , whether t h e y were s u b s t a n t i a l o r o t h e r w i s e , and

10 he s a i d t h a t he d i d n ' t f e e l a t l i b e r t y t o t e l l us a n y t h i n g
n
12

13
14

15

f u r t h e r about them a t t h a t
Q

time.

And you are sure o f t h a t i n y o u r own memory, even

though I t e l l you h i s memory I s i n c o n s i s t e n t w i t h t h a t , a r e you?
A

That i s my r e c o l l e c t i o n and I r e c a l l

discussing—

M r . McKee r a i s i n g t h e m a t t e r l a t e l y — n o t l a t e l y , I mean c o n -

16 s i d e r a b l y a f t e r t h i s p e r i o d , a f t e r i t became known t h a t one
17

o f those commitments was t h e C i t i z e n ' s Bank, I r e c a l l

18

M r . McKee r a t h e r laughed about t h e m a t t e r and s a i d t h a t

19

c e r t a i n l y A* P* gave t h e I m p r e s s i o n t h a t t h e y were u n i m p o r t a n t

20

commitments, and when i t

21

i n Los Angeles w i t h t h i r t y some-odd b r a n c h e s , i t p r o v e d t o

22

be a b i g shock t o a l l o f us*

23

Q

that

t u r n e d o u t t o be t h e C i t i z e n ' s Bank

You knew f r o m t h e f a c t t h a t he t o l d you t h a t

It

24

i n v o l v e d an exchange o f N a t i o n a l C i t y s t o c k , t h a t i t was n o t

25

j u s t an o r d i n a r y , l i t t l e d e a l , d i d n ' t you?




p h l l

863
A

We

i

B a n k

z

o f

c o u r s e ,

4

a n

o u t f i t

s

s t o c k ,

knew

b u t

h a d

i t

we

n o

w i t h

i n v o l v e d

d i d n « t

I d e a

know

t h a t

t h i r t y

o r

a n

e x c h a n g e

o f

N a t i o n a l

how

f o r t y

a n

was

I t

l a r g e

a l l

d e a l

a

b r a n c h e s

i n

C i t y

e x c h a n g e

t h a t

t h e

a n d

w e ,

I n v o l v e d

C i t y

o f

L o s

A n g e l e s .

*

Q

Y o u

t h e

d i d

n o t

t e s t i m o n y

mean

t e s t i m o n y

q u o t e d

t o

y o u

a

y o u

few

h a v e

g i v e n

h e r e ,

8

to deny the accuracy of Board's Exhibit 39, did you, Mr. Eccles?

m i n u t e s

a g o ,

A

H o ,

Q

And you s t i l l say that Exhibit 39 is an accurate

9

1
0

d i d

I

t h e

7

I

t h a t

b y

n o t ,

n

statement in the middle of Conclusion No.

j2

c o n c l u s i o n

13

r e a c h e d

54

b e

is

s a i d

o f

was

t h a t

r e t a i n e d ,

h e

h a d

t h e

c o n f e r e n c e ,

a l l

o f

t o g e t h e r

t h e

w i t h

o u t s t a n d i n g

16

MR.

MR.

STEWARTs

is

w i t h

y o u r s .

19

I t

i s

t h e

MR.

d i d

b a n k s ,

t h e

What

My

t h e

t e n t a t i v e

w h i c h

t w o

t h e y

r e g a r d i n g

page

c o p y

STEWART:

You

i s

d o e s

p a r a g r a p h

TOWNSENDs

MR.

20

o f

c o n c l u s i o n s

now

h a v e ,

w h i c h

c o u l d

M r .

O i a n n a n l

c o m m i t m e n t s ?

TOWNSEND:

17

one

that at the

t h a t

n o t

r u n

on?

p a g e

f o r

page

n u m b e r e d

d i d n ' t

r e a d

t h e

w h o l e

p a r a g r a p h ,

y o u ?

21

N o ,

I

o n l y

r e a d

t h e

p a r t

o f

i t

t h a t

y o u r
22

r e l a t e d

23

b u t

24

25




i t

t o

t h i s

d o e s n ' t

s u b j e c t .

h a v e

I

a n y t h i n g

d o n ' t

t o

do

m i n d / r e a d i n g

w i t h

w h a t

we

r e a d s

as

t h e

a r e

r e s t ,

t a l k i n g

a b o u t .

'

MR*

TCWNSEND:

The

p a r a g r a p h

f o l l o w s :

dhm5

864

1

"That c o n f r o n t e d w i t h t h e p o s s i b i l i t y o f f r e e z i n g o r a

2

d e a t h sentence f o r bank h o l d i n g companies, he was w i l l i n g

3

t o accept some s o r t o f an arrangement w h i c h would r e s t r i c t

4

f u r t h e r expansion o f t h e Transamerlca Group u n l e s s r e q u e s t e d

5

by t h e F e d e r a l s u p e r v i s o r y a u t h o r i t i e s , p r o v i d e d a l l

6

banks w h i c h t h e y now have c o u l d be r e t a i n e d , t o g e t h e r w i t h t h e

7

two r e g a r d i n g w h i c h Mr. G l a n l n n i s a i d he had o u t s t a n d i n g

8

commitments a"
THE WITNESS:

9

the

What was t h e q u e s t i o n ?

BY MR. STEWART:

10

Q

11

The q u e s t i o n was t h a t b y y o u r t e s t i m o n y here

in

12

answer t o t h e s e l a s t s e v e r a l q u e s t i o n s , you d i d n o t mean t o

13

suggest t h a t t h e l a s t p o r t i o n o f t h a t C o n c l u s i o n No. k 9 w h i c h

14

Mr. Townsend has Just r e a d , was i n any way i n a c c u r a t e ,

15

you?

16

A

No.

I think that that i s very

did

definitely—even

17

w i t h o u t r e a d i n g t h i s , I r e c a l l t h a t M r . G i a n n i n i was anxious

18

t o r e t a i n a l l o f t h e banks t h a t t h e y h a d , i f such an a r r a n g e -

19

stent was e n t e r e d i n t o .

20

Q

And such an arrangement was I n d i c a t e d t o be an

21

agreement t o t h e Board a t t h a t t i m e w i t h o u t any f o r m a l a g r e e -

22

aent b e i n g made on i t ?

23

A

The Board a t t h a t t i m e made no commitment whatever*

24

Q

I u n d e r s t a n d , n e i t h e r t h e Board n o r M r . G i a n n i n i

25



bade any f i n a l commitment a t t h a t t i m e , b u t t h a t was t h e

Phl3

865

1 substance of what was being discussed at that tine, wasn't
2 it?
..

A

That was the substance of what was being discussed.

Q

And at the conclusion of that conference, referring

5 to two paragraphs above where the numbered paragraphs begin,
* I think i t i s on Page 5 of the exhibit, let m direct your
e
7 attention to the sentence beginning,

,;At

the conclusion of

8 the conference, i t was understood that he*—that is Mr.
9 Giannlni—"expected to discuss the possibilities of the
1 situation with his son and others to w o he referred as
0
hm
n

'his boys'."

1
2

That also is correct, isn't i t , Mr. Eccles?

1
3

A

Yes, as 1 recall.

1
4

Q

And i t is also correct as indicated in the f i r s t

15 paragraph following Conclusion No. 5 on the next page, "that
1 the conference ended without any directives, as Mr. Giannlni
6
1 stated he wanted to report the conversations to his associates
7
1 and i t was understood that the Board or a committee of Board
8
1 members would, likewise, report the discussions to the other
9
2 Federal supervisory agencies."
0
2
1

That is correct, isn't it?

2
2

A

Yes.

2
3

Q

And isn't i t a fact tW; Mr. Giannlni no more under-

2 took to commit the active, managing officers of either Trans4
2 america Corporation or Bank of Amerioa to any agreement than
5



phlk

1 d i d t h e Board undertake t o commit t h e o t h e r F e d e r a l s u p e r 2

v i s o r y agencies t o an agreement a t t h a t time?

3

A

I t h i n k t h a t speaks f o r

4

Q

That i s my i n t e r p r e t a t i o n o f i t , s i r .

5
6

itself.
I Just wanted

t o be sure t h a t you agree w i t h t h a t .
A

E x c e p t , I would l i k e t o c a l l y o u r a t t e n t i o n t o

/

t h i s p a r t : " t h a t i n t y p i c a l A . P. f a s h i o n , he wanted t o know

8

why, under such c i r c u m s t a n c e s , we d i d n ' t t a k e over t h e banks

9

and r u n the o u t f i t .

He accepted, a p p a r e n t l y w i t h o u t r e s e r -

10

v a t i o n , the i d e a t h a t he was t h e dominant or

controlling

tl

f i g u r e i n t h e Transamerica Oroup and i t s b a n k i n g I n t e r e s t s ,

12 r e g a r d l e s s o f any t e c h n i c a l o r l e g a l q u e s t i o n o f c o n t r o l and
13

t h a t when he spoke he r e p r e s e n t e d a l l , any o r a l l o f them t o

14

w h i c h he might be r e f e r r i n g . 1 1
Regardless o f t h a t c o n c l u s i o n i n t h e memorandum,

15
16

he d i d make i t c l e a r a t t h e end o f t h e meeting t h a t he

17

had t o t a k e t h e m a t t e r up w i t h h i s son and t h e o t h e r a c t i v e

18 o f f i c e r s t o whom he r e f e r r e d as " h i s boys* b e f o r e he c o u l d
19

make any commitments, d i d n ' t he?

20

A

That i s

right.

21

Q
L

R e f e r r i n g p a r t i c u l a r l y t o t h e second sentence

in

22

the t h i r d paragraph o f the memorandum, I don»t know whether

23

t h a t i s on Page 2 or Page 3 o f jtoicr copy, and t o Conclusion

24

No. 4 , you w i l l f i n d i n b o t h o f those places t h e phrase

25

quested by t h e a p p r o p r i a t e s u p e r v i s o r y




authoritieso"

"re-

Phl5
I s n ' t i t a f a c t , Mr* E c c l e s , t h a t t h e c o n v e r -

I
2

s a t i o n a c t u a l l y proposed s u b m i s s i o n b y t h e bank h o l d i n g comp a n i e s o f proposed a c q u i s i t i o n s t o t h e s u p e r v i s o r y a u t h o r -

4

i t i e s f o r advance a p p r o v a l , r a t h e r t h a n t h a t t h e h o l d i n g

3

companies w o u l d s i t i d l y b y , a w a i t i n g r e q u e s t s from t h e

6

s u p e r v i s o r y a u t h o r i t i e s as t o when t h e y m i g h t make an a c -

7

quisition?
I s that question clear?

8

9

A

I w o i d n ' t be c e r t a i n o f

that.

10

Q

I n any case, t h e i m p o r t a n t t h i n g was t h a t

there

n

was t o be advance a p p r o v a l , r e g a r d l e s s o f whether t h e

12

i n i t i a t i o n o f t h e r e q u e s t came f r o m t h e Board o r f r o m t h e

13

corporation?

14

A

Yes a

That was t h e p r i n c i p a l

objective.

15

Q

Yes.

I n C o n c l u s i o n No. 5 o f t h e memorandum,

it

16

i s s t a t e d t h a t such an arrangement was c o n t i n g e n t i n h i s

17

m i n d , t h a t i s , i n M r . A . P . ' s m i n d , upon a l l o t h e r bank

18

h o l d i n g companies b e i n g s u b j e c t t o c o r r e s p o n d i n g

restrictions.

I s n ' t i t a f a c t , G o v e r n o r , t h a t you agreed t o

19
20

u n d e r t a k e t o o b t a i n t h e consent o f a l l o t h e r bank h o l d i n g

21

companies t o such r e s t r i c t i o n s a t t h a t

22

23

A

I am n o t c e r t a i n whether we agreed t o u n d e r t a k e

that or n o t .

24

Q

25

that i t




time?

A g a i n , t o be f a i r w i t h y o u , I want you t o know
i s Mr* A. P. G i a n n l n i ' s r e c o l l e c t i o n t h a t you d i d

phl6

I

most d e f i n i t e l y u n d e r t a k e t h a t

commitment.

Now, do you agree w i t h h i s r e c o l l e c t i o n o f

2
3

868.

that

or not?
MR. TOWNSEND:

/

B e f o r e you answer, M r . E c c l e s ,

I

5

suggest t h a t you r e f r e s h y o u r r e c o l l e c t i o n b y f u r t h e r

6

ence t o t h e document i n t h e l a s t p a r t o f t h e p a r a g r a p h J u s t

7

p r e c e d i n g t h e l a s t paragraph on Page 4 .
MR. STEWART:

8

9

refer-

I f the Hearing O f f i c e r please, the

w i t n e s s has n o t I n d i c a t e d any need t o r e f r e s h h i s

10

I

11

recollection.

t h i n k he can determine t h a t w i t h o u t s u g g e s t i o n s by c o u n s e l

i n the midst of cross examination.
MR. TOWNSEND:

12
13

We a r e a f t e r t h e t r u t h i n t h i s pro-

ceeding.

14

MR. STEWART:

15

MR. TOWNSEND:

16

c o u n s e l on e i t h e r s i d e .

17

was no need t o make i t a v a i l a b l e , Mr. H e a r i n g O f f i c e r .

18

c o u l d have p u t M r . Eccles on t h e s t a n d and have him t e s t i f y

19

w i t h o u t any r e g a r d t o what was t h e r e c o r d e d c o n v e r s a t i o n a t

20

the time.

21

o f a l l t h e Board members, t h a t p a r t w h i c h would s a t i s f y Mr.

22

S t e w a r t and t h a t p a r t w h i c h perhaps

23

We c e r t a i n l y

are.

Not a t r i c k y exchange between
We have made t h i s a v a i l a b l e .

I

We p r e f e r r e d t o p u t on t h e r e c o r d e d c o n v e r s a t i o n s

I

didn't.

t h i n k t h a t i s p e r f e c t l y a p p r o p r i a t e h e r e , so

24

l e t ' s g e t a t t h e t r u t h and n o t a t a l o t o f t r i c k y

25

t h a t a r e aimed a t e s t a b l i s h i n g some t r i c k y




There

questions

answers.

ph!7
i

869
MR. STEWART:

I f the Hearing O f f i c e r p l e a s e ,

2

resent the comment o f counsel.

3

about t h i s q u e s t i o n i n g .

I

There i s n ' t any t r l c k l n e s s

I am t r y i n g t o get a t the t r u t h .

I am even c a l l i n g the a t t e n t i o n o f the witness t o the s t a t e o ments t h a t have been made t o him by my c l i e n t , so t h a t he
6

w i l l know e x a c t l y what he i s faced w i t h and i n the answers

7

t h a t he i s g i v i n g .

8
9

As t o t r l c k l n e s s , counsel has g i v e n me a few papers
which he has s e l e c t e d from the f i l e s and has most p o i n t e d l y

10 and o b v i o u s l y refused t o give me other papers which have been
11 requested r e p e a t e d l y throughout t h i s proceeding and which
upon
12

13
14
15
16
17
18

19

20
21

22
23
24
25




he i n s 1st p e e p i n g behind locked doors and away from my s i g h t .
I t h i n k there i s enough t r l c k l n e s s here w i t h o u t
aspersions being cast upon an open q u e s t i o n .
THE HEARING OFFICER:

Statements by counsel on e i t h e r

s i d e c o n t r i b u t e v e r y l i t t l e t o the r e c o r d and I suggest
i n t h i s instance the s o l i c i t o r f o r the Board await u n t i l
l a t e r , when ample o p p o r t u n i t y w i l l be a f f o r d e d him on r e d i r e c t examination.
Proceed, Mr. S t e w a r t .
MR. STEWART:

There i s an unanswered q u e s t i o n .

Can the Stenographer f i n d i t ?
(The pending question was read by the R e p o r t e r . )
THE WITNESS:

I t h i n k t h a t , as I r e c a l l , we t o l d

Mr. G i a n n l n i that we would make such an u n d e r t a k i n g , but

phl8

8?0

1

t h a t inasmuch as a l l t h e o t h e r h o l d i n g companies had n o t

2

u n d e r t a k e n any a c q u i s i t i o n o f bank s t o c k s w i t h o u t

3

i t u p , t h a t t h e r e would b e , o f c o u r s e , some q u e s t i o n as t o

4

why t h e y s h o u l d e n t e r i n t o such an arrangement -9 b u t we w o u l d

5

be w i l l i n g t o do so and I t h i n k t h a t a t l e a s t ray r e c o l l e c t i o n

6

I s t h a t t h e o t h e r bank h o l d i n g companies s h o u l d be w i l l i n g

7

e n t e r i n t o such an arrangement.
MR. STEWART:

8
9

taking

I s t h i s a convenient time f o r

usual mid-morning recess,

to

the

sir?

iO

THE HEARING OFFICER:

H

(Recess t a k e n o )

12

THE HEARING OFFICER:

13

to

We w i l l r e c e s s f o r t e n m i n u t e s .

The h e a r i n g w i l l p l e a s e come

order.

14

(Discussion o f f the r e c o r d . )

15

BY MR. STEWART:

16

Q

Governor E c c l e s , i s n ' t i t a f a c t known t o you t h a t

17

a few weeks a f t e r M r . G i a n n l n i « s c o n f e r e n c e w i t h t h e members

18

o f t h e B o a r d , and on A p r i l 6 , 19^3, a f u r t h e r c o n f e r e n c e was

19

h e l d between Governor John McKee and Mr. D r e i b e l b l s ,

20

A t t o r n e y f o r t h e Board o f Governors and Mir. C h a r l e s W. OBLlins,

21

an a t t o r n e y r e p r e s e n t i n g Transamerica C o r p o r a t i o n and t h e Bank

22

o f America on t h e same s u b j e c t ?

23

24
25



A

I d o n ' t r e c a l l such a c o n f e r e n c e b e i n g h e l d .

wasn't i n attendance.
Q

General

I

I may—

W e l l , you d i d know about t h e c o n f e r e n c e , d i d n ' t you?

P
?

871

1 9

A

I may have known about i t a t t h e t i m e , b u t I

don't

s- r e c a l l whether o r n o t I was i n f o r m e d .
i

Q

You d o n ' t r e c a l l b e i n g informed t h a t a t suoh a con-

ferenoe the conclusions reached a t the February conference
n were reviewed?
"
7

i

A

I do n o t .

Q

I take i t , t h e n , t h a t you d o n ' t know about t h e

8 questions which were r a i s e d by Mr. McKee a t t h a t meeting?
9

A

I do n o t .

I was—during t h a t p e r i o d i t was the

10 middle o f the w a r , and as Chairman o f the Open Market Comn

m i t t e e , h a n d l i n g a l l o f the war f i n a n c i n g and o t h e r respon-

1 s i b l l i t i e s t h a t I had, I was p r e t t y w e l l occupied w i t h even
2
> more i m p o r t a n t matters t h a n the Transamerlca case.
3
14

Q

D o n ' t you r e c a l l l e a r n i n g a t t h a t time t h a t Mr.

is McKee r a i s e d questions w i t h Mr. C o l l i n s as t o whether the
16 Board would adhere t o the conclusions reached a t the February
17 meeting i n r e s p e c t t o the i m m i g r a t i o n o f banks owned by
is Transamerlca and those I n v o l v e d i n the e x i s t i n g commitments
19 which had been mentioned by Mr. G i a n n l n i ?
20

A

I r e c a l l no p a r t of the conference.

I was not i n

21 attendance a t the conference.
22

MR. STEWART:

23

MR. TOWNSEND:

24

MR. STEWART:

May I have the l e t t e r , please?
I would r a t h e r you make t h e demand.
I have asked counsel t o produce

25 from the Board's f i l e s a copy o f a l e t t e r dated A p r i l 13, 19^3,



88^
ph20

872

1 w r i t t e n b y M r . A , P. G i a n n l n i t o M r . C h a r l e s W. C o l l i n s ,
2

w h i c h copy I u n d e r s t a n d was d e l i v e r e d b y M r . C o l l i n s t o Mr.

o

McKee a t a subsequent m e e t i n g on A p r i l 15$ 19*K3•
MR. TOWNSEND:

4
5

Of c o u r s e , I have t h e copy o f t h e

l e t t e r and I have no o b j e c t i o n t o c o u n s e l s e e i n g i t ,

C H e a r i n g O f f i c e r approves t h e t u r n i n g o f t h e B o a r d ' s
7

the

files

over t o c o u n s e l .

8

THE HEARING OFFICER:

9

MR. STEWART:

10

if

it

No o b j e c t i o n .

This, of course, i s n ' t f i l e s ,

sir,

i s o n l y one l e t t e r .
I

U

ask that t h e paper produced by t h e S o l i c i t o r

for

12

t h e B o a r d , c o n s i s t i n g o f an o r i g i n a l , d a t e d A p r i l 15$ 19^3*

13

f r o m Charles W* C o l l i n s t o Governor John K. McKee, and a

14

copy o f a l e t t e r f r o m M r . G i a n n l n i t o Mr. C o l l i n s ,

:5

A p r i l 13* 19^3* and a l s o a copy o f a memorandum e n t i t l e d

16

"Summary Statement o f P o l i c y , " A p r i l 6 , 19^3, by Governor

17

John K . McKee ( w i t h whom was M r . Jo P . D r e i b e l b i s ,

dated

General

18 A t t o r n e y ) , o f t h e Board o f Governors o f t h e F e d e r a l Reserve
19

System, t o M r . Charles Wo C o l l i n s , c o u n s e l f o r Transamerica

20

C o r p o r a t i o n and Bank o f America N. T . & S . A . , t o g e t h e r

21

a copy o f a t e l e g r a m sent by Mr. C o l l i n s t o Mr. A. P.

22

G i a n n l n i on A p r i l 1 2 , 19^3{ I ask t h a t those papers be marked

23

as Respondent's E x h i b i t s 7 - A , 7~B, 7 - C , and 7-D f o r

24

cation.

25



THE HEARING OFFICER:

with

identifi-

They may be so marked.

hZl

873
(The documents r e f e r r e d t o were marked
Respondent's E x h i b i t s 7 - A , 7 - B , 7-C,
and 7-D f o r i d e n t i f i c a t i o n .

I
^

I*

BY MR. STEWART:

3

Q

I show you, Governor E c c l e s , the f o u r papers which

have Just been marked r e s p e c t i v e l y 7 - A , 7 - B , 7-C, and 7-D
C f o r i d e n t i f i c a t i o n , and ask you I f those papers came t o your
7

a t t e n t i o n a t or about A p r i l 15, 19^3?

8

t o the f a c t t h a t on the f i r s t paper, 7 - A , your name appears

9

w i t h a checkmark opposite

10

A

1

d i r e c t your a t t e n t i o n

it.

I have no r e c o l l e c t i o n o f having seen the papers

11

and 1 , o f course, would have t o assume r e s p o n s i b i l i t y f o r

12

having seen them even though I may not have seen them, because

13

the amount o f papers t h a t are c i r c u l a t e d among the Board

14

members are v e r y , v e r y e x t e n s i v e , covering every s u b j e c t , of

15

course, which each I n d i v i d u a l member o f the Board has an

16

equal r e s p o n s i b i l i t y f o r , and so I have o f t e n l e f t i t up t o

17
18

19

20

21
22
23
24
25




my ass 3d; a n t , my o f f i c e t o read papers and t o check them,
is
unless they f e e l t h a t It/Something t h a t should s p e c i a l l y be
brought t o my a t t e n t i o n .
Q

That a s s i s t a n t a t t h a t time was Mr. Lawrence

C l a y t o n , was i t ?
A

Mr. Thurston, as w e l l as Mr. Clayton, and l i k e w i s e

my s e c r e t a r y , Miss Egbert and Miss Benton.

There were f o u r

people i n my o f f i c e , i n my immediate o f f i c e .
Q

And the checkmark on the E x h i b i t 7 - A , opposite your

ii.

fph22

874

I

1

name, i n d i c a t e s a t l e a s t t h e paper came t h r o u g h y o u r

2

and you had an o p p o r t u n i t y t o examine I t , whether you r e c a l l

3

a c t u a l l y doing i t or n o t , doesn't
A

4

office

it?

I t went t h r o u g h e v e r y Board member's o f f i c e and

5

e v e r y s t a f f h e a d ' s o f f i c e who had a n y t h i n g t o do w i t h t h e

6

m a t t e r , and t h e r e i s a checkmark o p p o s i t e a l l o f them and

7

t h e r e i s no i n i t i a l

8

a paper, I i n i t i a l
Q

9

on any o f them.

V e r y o f t e n when I see

it,

C a l l i n g your a t t e n t i o n t o E x h i b i t 7-B, which i s

10

t h e second o f t h e papers i n t h e group t h a t you have i n y o u r

11

hand, I w i l l ask you i f you a r e f a m i l i a r now w i t h t h e substance

12

of that
A

13
14

letter?
I would have t o r e a d t h e l e t t e r t o answer t h a t

question.
Q

15

I d o n ' t r e c a l l ever h a v i n g seen o r r e a d t h e
I w i l l ask you now t o r e a d i t and see i f t h a t

letter.
re-

i
16

fleshes

your

17

Have you f i n i s h e d r e a d i n g t h e l e t t e r ,

18
19

A

22

Yes s i r .

sir?

I d o n ' t r e c a l l h a v i n g seen o r r e a d t h e

letter.

20
21

recollection.

Q

Your p r e s e n t b e s t r e c o l l e c t i o n i s t h a t you never

saw thet l e t t e r b e f o r e I handed i t t o you here t h i s m o r n i n g ,
is that

23

correct?

A
Q

24

That i s

correct.

Now t h a t you have r e a d t h e l e t t e r and know what was

25



in i t

and know t h e d a t e f r o m w h i c h i t has been i n t h e B o a r d ' s

Ip3
a23
I

8 7 5

files,

I s n ' t I t c l e a r t o you that the Board a t l e a s t had the

2 o p p o r t u n i t y t o know and those of them who r e a d the letter
3 a t t h a t t i m e knew t h a t as o f A p r i l 1 5 , 19^3, Mr. A . P .
G i a n n l n i r e g a r d e d h i m s e l f as f r e e o f any and a l l

tentative

commitments d i s c u s s e d a t t h e F e b r u a r y meeting because o f t h e
B o a r d ' s subsequent e f f o r t t o change t h e terms o f t h e proposed
7

8
9

agreement?
A

Y e s , I would t a k e I t f r o m t h e l e t t e r t h a t t h i s was,

i n e f f e c t , n o t i c e t o t h e Board t h a t he d i d f e e l

10

Q

F o r t h e reason t h a t 1 have s t a t e d ?

11

A

That i s r i g h t .

12

Q

All right, sir,

free—

Just so t h a t t h e r e c o r d may be c l e a r

13

as t o what those q u e s t i o n s r e l a t e d t o , I w i l l r e a d t h a t one.

14

I w o n ' t p u t t h e whole t h i n g i n a t t h i s

15

MR. TOWNSEND:

time.

B e f o r e you d o , M r . S t e w a r t , I s h o u l d

16

l i k e t o s u g g e s t , Mr. H e a r i n g O f f i c e r , t h a t t h e l e t t e r has

17

n o t y e t been p r o p e r l y i d e n t i f i e d and t h a t u n t i l such t i m e

18

t h a t i t i s p r o p e r l y i d e n t i f i e d and p u t i n t o t h e r e c o r d i n t h i s

19

c a s e , t h a t i t would be i n a p p r o p r i a t e f o r c o u n s e l t o r e a d i t ,

20

not t h a t I have any o b j e c t i o n t o i t s b e i n g i n t r o d u c e d a t

21

t h i s t i m e i n t o e v i d e n c e , b u t I t h i n k i n o r d e r t o keep t h e

22

r e c o r d s t r a i g h t t h a t we ought t o proceed i n a f a s h i o n t h a t

23

Ls i n accordance w i t h customary p r o c e d u r e

24
25




MR. STEWART:

I am a l i t t l e b i t s u r p r i s e d a t

c o u n s e l ' s statement i n view o f t h e f a c t t h a t he produced i t

ph24

876

I from the f i l e s .

My only reason f o r not p u t t i n g I t i n evidenoe

2 a t t h i s time i s t h a t we are s t i l l on the Board's ease and i t
3 seems t o me more appropriate t o w i t h h o l d p u t t i n g any of the
4

Respondent's E x h i b i t s i n evidenoe u n t i l we get t o Respondent's

5

oase, but I t h i n k the record would be c l e a r e r as t o the subject

6 of my l a s t questions of Mr. Eccles i f t h i s l e t t e r t h a t he has
7

examined and commented on were read i n t o the r e c o r d ,
MR. TOWNSEND:

8

That, cf course, can be done a t the

9 appropriate t i m e , or i f Mr. Stewart wants t o read the e n t i r e
»0 f i l e i n t o the record, I am p e r f e c t l y agreeable t o h i s doing
11

i t , but I d o n ' t want him p i c k i n g out one of these documents

12 and reading only the one document.
13

I f Mr. Stewart wants t o

read the e n t i r e set of papers i n t o the record, I have no

14 o b j e c t i o n .
15
16

MR. STEWART:

As i n the case of some previous o f f e r s

of ray f r i e n d , I have no desire t o read more than one l e t t e r ,

17 but I won't object t o h i s p u t t i n g i n any p a r t of the f i l e

that

18 he wants t o .
19

THE HEARING OFFICER:

I t w i l l be s a t i s f a c t o r y t o

20 read the l e t t e r , Mr. Stewart, w i t h the understanding t h a t
21 you w i l l put i t i n evidence at the proper time.
22

MR. STEWART:

23

MR. TOWNSEND:

Yes s i r .
What about my o b j e c t i o n , Mr. Hearing

24

O f f i c e r , against h i s reading only a p o r t i o n of the group at

25

t h i s time?




877.
1

THE HEARING OFFICERS
MR. STEWART:

3

The o b j e c t i o n I s

overruled.

T h i s appears t o be a copy o f a l e t t e r

on Bank o f America. N a t i o n a l T r u s t and Savings A s s o c i a t i o n
l e t t e r h e a d , A . P. G i a n n i n i , Chairman o f t h e Board o f D i r e c t o r s ,

5
6

7
8
9

10
n
12

13
14
15

San F r a n c l s o o , C a l i f o r n i a , A p r i l 13* 1943.

The address i s

t o M r . Charles W. C o l l i n s , A t t o r n e y - a t - l a w , N a t i o n a l Press
B u i l d i n g , Washington, D. C.
"Dear C h a r l i e :

Your l e t t e r o f A p r i l 7» w h i c h

a r r i v e d h e r e on S a t u r d a y , t h e 1 0 t h , and y o u r t e l e g r a m o f
A p r i l 12, are strong i n d i c a t i o n s of the p r a c t i c a l

impossibility

o f c a r r y i n g out t h e program w h i c h was agreed t o i n t h e f r i e n d l y
c o n f e r e n c e w i t h c e r t a i n members o f t h e Board o f Governors o f
t h e F e d e r a l Reserve System on F e b r u a r y 18.
" A f t e r your f i r s t

t a l k w i t h Governor McKee,

f o l l o w i n g t h e c o n f e r e n c e , you w i l l r e c a l l y o u r r e p o r t

to

16

me, t h a t I t was u n d e r s t o o d t h a t I had agreed t o

17

' f r e e z i n g ' p r o p o s a l s , p r o v i d e d t h e same w o u l d be e q u a l l y

18

a p p l i c a b l e t o o t h e r banks and h o l d i n g companies; t h a t I was

19

t o endeavor t o secure t h e commltement t o t h a t e f f e c t by

20

c o r p o r a t i o n s w i t h w h i c h I am a s s o c i a t e d ; t h a t Chairman E c c l e s

21

would u n d e r t a k e t o o b t a i n l i k e commitments f r o m o t h e r c o r -

22

p o r a t i o n s concerned; and t h a t t h e Board would a l s o endeavor

23

t o o b t a i n t h e c o o p e r a t i o n o f t h e o t h e r two b a n k i n g a g e n c i e s .

24

" P u r s u a n t t o t h i s u n d e r s t a n d i n g and p r e l i m i n a r y t o

25



certain

a f o r m a l commitment on t h e p a r t o f Transamerlca C o r p o r a t i o n

ph£6

878

1 and Bank of America, I express t o you my r e c o l l e c t i o n of
2

the elements of our agreement.

A f t e r going over them w i t h

3

Governor McKee and h i s counsel, you r e p o r t i n a memorandum

4

accompanying your l a s t l e t t e r , and i n your telegram of

5

yesterday, c e r t a i n v i t a l changes i n the agreement.

6

stance, i t i s proposed t h a t Transamerlca Corporation should

7

agree t o cease a c q u i r i n g holdings of stock I n a d d i t i o n a l

8

banks, except upon the recommendation and approval of the

9

Board o£ Governors of the Federal Reserve System.

For i n -

I t was

10

d i s t i n c t l y understood t h a t upon the consummation of the p r o -

11

gram, n e i t h e r Transamerlca Corporation nor other bank h o l d -

12

i n g companies would acquire any i n t e r e s t i n any other bank

13

or banks without o b t a i n i n g the p r i o r approval or consent o f

14

the Board of Governors of the Federal Reserve System.

15

"Now a f u r t h e r r e s t r i c t i o n i s proposed t o the e f f e c t

16 t h a t such a c q u i s i t i o n s must await the 'recommendation*
17

the Board of Governors.

18

of

Such a r e s t r i c t i o n i s obviously

Improper and was not agreed t o .

19

" I r e c a l l s t a t i n g at the conference t h a t we were

20

not e s p e c i a l l y f e a r f u l of the a n t i c i p a t e d e f f e c t s of a n t i -

21

h o l d i n g company l e g i s l a t i o n and t h a t we assumed t h a t any

22

such l e g i s l a t i o n would have reasonable regard f o r e x i s t i n g

23

situations.

24
25



" I t appears t h a t Governor McKee now assumes t h a t
i t i s unnecessary t o secure commitments from other bank

ph27

3?9

1

h o l d i n g companies such as I s d e s i r e d f r o m Transamerica

2

C o r p o r a t i o n and f r o m Bank o f America*

3

a r e n o t n e c e s s a r y f r o m o t h e r bank h o l d i n g companies and

4

o t h e r b a n k s , t h e y , o f c o u r s e , a r e n o t necessary f r o m T r a n s -

5

amerlca C o r p o r a t i o n o r Bank o f A m e r i c a .

6

and do n o t now seek any e x c e p t i o n a l

7

11 As

I f sueh commitments

We have never sought

treatment.

I s t a t e d a t t h e c o n f e r e n c e , we ask o n l y t o

8

be p l a c e d upon a p l a n e o f e q u a l i t y w i t h o t h e r s .

I t was my

9

u n d e r s t a n d i n g t h a t any commitment o f Transamerica C o r p o r a t i o n

10

and t h e Bank would be c o n d i t i o n e d upon s i m i l a r commitments

n-

b y o t h e r s and t h a t t h e Board was t o p r e s e n t t h e program t o

12

t h e o t h e r s u p e r v i s o r y agencies *

13

p o l i c y by t h e Board o r o t h e r s u p e r v i s o r y a u t h o r i t y

14

t o a l l banks and h o l d i n g companies w i l l , o f c o u r s e , be r e -

15

s p e c t e d by us i n t h e f u t u r e , as a l l such e x p r e s s i o n s have

16

been observed i n t h e p a s t .

17

Any l a w f u l d e c l a r a t i o n o f
applicable

" I r e p e a t , we have no s p e c i a l i n t e r e s t i n a n t i -

18

h o l d i n g company l e g i s l a t i o n and we w o u l d n o t t h i n k o f s u r r e n d -

19

e r i n g our e q u a l r i g h t s as American c i t i z e n s as an inducement

20

t o t h e avoidance o f l e g i s l a t i o n w h i c h may be t h o u g h t b y some t o

21

be u n d e s i r a b l e .

22

t h e g a n d e r , so f a r as we are concerned.

23

What i s sauce f o r t h e goose i s sauce f o r

"Another p o i n t of d i f f e r e n c e i s t h a t w h i l e i t

24

conceded t h a t banks have a l e g a l r i g h t t o a c q u i r e a s s e t s

25

and assume l i a b i l i t i e s

is




o f o t h e r banks i n t h e p l a c e where t h e

jph28

880

1 bank has an o f f i c e , I t I s now d e s i r e d t o d i s c r i m i n a t e against
2

Bank o f America i n t h i s respect by r e q u i r i n g i t t o agree

3

f o r m a l l y t h a t i t w i l l not so exercise i t s c h a r t e r power.

4

I r e c a l l v e r y d e f i n i t e l y t h a t there was no such agreement

5

a t the conference and I t h i n k a l l who were t h e r e w i l l remember

6

t h a t the l e g a l r i g h t s of any e x i s t i n g bank or banks were

7

not t o be c u r t a i l e d i n t h i s respect so l o n g as t h e r e would

8

be no r e s u l t i n g increase i n banking o f f i c e s of the purchasing

9

bank i n the p a r t i c u l a r l o c a t i o n .

This i s the exercise of

10

a c h a r t e r power which i s common t o a l l banks and which they

II

may have occasion t o exercise a t any t i m e .

1
2

"We have not assented and w i l l never assent t o any

13

attempt t o d i s c r i m i n a t e against Bank of America i n t h i s

14

r e s p e c t , nor w i l l we ever concede t h a t p u b l i c a u t h o r i t i e s may

15

p r o p e r l y f a v o r the exercise of such a c h a r t e r power by

e

1 c e r t a i n types o f u n i t or branch banks o n l y .
6
17

" I am p e r f e c t l y w i l l i n g t o c a r r y out a l l o f the

18

agreements t o which I expressed assent d u r i n g our February

19

conference, but achievement of the purposes t h e r e expressed

20

cannot be a t t a i n e d i f v i t a l changes are i n s i s t e d upon.

21

I am m i n d f u l , t o o , t h a t the comments made by Honorable Leo

22

T . Crowley, Chairman o f the Federal Deposit Insurance Corpor-

23

atfon, and Honorable Marriner S. E c c l e s , Chairman of the Board

24

of Governors of the Federal Reserve System, concerning Trans-

25

amerlca C o r p o r a t i o n and Bank of America a t r e c e n t hearings




881

ph29

v b e f o r e the Banking and Currency Committees of the Senate
2 and House of Representatives, do not promote the s p i r t o f
3 accord which seemed t o p r e v a i l a t those conferences.
4

"Consequently, these appearances o n l y add t o the

5 d i f f i c u l t y of removing the elements which have
6 f r i c t i o n i n the p a s t .

engendered

The impressions l e f t by them are

7 so d i s t o r t e d and u n f a i r t h a t perhaps thorough • a i r i n g '

all

8 along the l i n e would be a good t h i n g .
9

" A l t o g e t h e r , C h a r l i e , i t would appear, n o t w i t h -

10 standing my
n

accustomed u r b a n i t y and the earnestness o f

my desires f o r c o n s t r u c t i v e cooperation, t h a t as an emissary

1 of peace and harmony I am a dismal f a i l u r e .
2

I am somewhat

13 chagrined t o have t o go before our Board of D i r e c t o r s today
1 and confess t o them t h a t the e n t e r p r i s e upon which I v o l u n 4
is

t a r l l y engaged w i t h glowing prospects of success has come

1 t o nought.
6

I f they w i l l act on my recommendation, i t

will

1 be t h a t e f f o r t s a t f u r t h e r understandings be committed t o
7
is

other hands.

1
9

"You are authorized t o convey these sentiments

2 t o Governor McKee and the other gentlemen who were present
0
2 at the conference.
1
2
2
23

Kind regards.

S i n c e r e l y , signed A. P.

Giannlni."
Do you want t o read any of the r e s t of i t a t t h i s

24

t i m e , or you can do i t when i t comes around t o you.

25

have p h o t o s t a t s of those made.




I may

jphBO

882
BY MR* STEWART:

1
7

Q

M r . E c c l e s , do you r e c a l l t h a t a t some t i m e

in

3

t h e e a r l y p a r t o f t h e y e a r 1 9 ^ 2 , t h e Board o f G o v e r n o r s ,

4

o f w h i c h you were t h e n c h a i r m a n , had an agreement w i t h t h e

5

C o m p t r o l l e r o f t h e Currency and t h e F e d e r a l D e p o s i t I n s u r a n c e

6

C o r p o r a t i o n t h a t y o u r Board and those o t h e r two bank s u p e r -

7

v i s o r y agencies as w e l l would d e c l i n e p e r m i s s i o n f o r

8

a c q u i s i t i o n , d i r e c t l y o r i n d i r e c t l y , o r any a d d i t i o n a l b a n k i n g

9

o f f i c e s o r any s u b s t a n t i a l i n t e r e s t t h e r e i n b y Transamerlca

the

10

C o r p o r a t i o n , Bank o f America N a t i o n a l T r u s t and Savings

11

A s s o c i a t i o n , o r any u n i t o f t h e Transamerlca Group, as you

12

c a l l them?

13
14
15

A

I t h i n k t h a t l e t t e r was p u t i n t h e r e c o r d a day o r

two ago*
Q

And t h e l e t t e r t o w h i c h you r e f e r i s t h e l e t t e r

to

16

Transamerlca C o r p o r a t i o n , d a t e d F e b r u a r y I k , 19*12, w h i c h has

17

been marked Board 6 s E x h i b i t 35 i n t h i s case?

18

A

That i s c o r r e c t .

19

Q

And t h a t was t h e f o r m a l n o t i f i c a t i o n t o Transamerlca

20
21
22
23

That i s t h e

letter*

o f t h e agreement t o w h i c h I r e f e r r e d i n my p r e v i o u s q u e s t i o n ?
A

The u n d e r s t a n d i n g between t h e t h r e e

supervisory

agencies *
Q

Yes*

I s n t i t a f a c t t h a t p u r s u a n t t o t h a t agreement,

24

t h e Reserve Board has r e f u s e d e v e r y a p p l i c a t i o n p r e s e n t e d t o

25

i t , r e l a t e d t o banks o r b a n k i n g o f f i c e s i n the S t a t e o f




i

883

bh31

)

C a l i f o r n i a i n w h i c h Transamerica C o r p o r a t i o n had any i n -

2

t e r e s t o f any k i n d whatsoever f r o m F e b r u a r y

3

date?

19^2 t o

4

A

I think that is

correct.

5

Q

And, a l s o , i s n ' t i t a f a c t t h a t p u r s u a n t t o t h a t same

6

agreement, t h e Board imposed a c o n d i t i o n w h i c h was l a t e r

7

s u b j e c t o f l i t i g a t i o n , i n w h i c h t h e Court o f Appeals o f

8

t h i s D i s t r i c t h e l d t h e c o n d i t i o n t o be a l e g a l — a

9

upon t h e membership i n t h e F e d e r a l Reserve System o f t h e

10
11
12
13

P e o p l e ' s Bank o f Lakewood V i l l a g e ,
A

the

condition

California?

There was a condition o f membership, I t h i n k ,

imposed,

as you i n d i c a t e .
Q

And t h a t c o n d i t i o n r e a d as f o l l o w s , d i d n ' t

it,

14

Governor:

15

Board o f Governors, t h e F e d e r a l Reserve System, Transamerica

16

C o r p o r a t i o n , o r any u n i t o f t h e Transamerioa Group,

17

Bank o f America N a t i o n a l T r u s t and Savings A s s o c i a t i o n , o r any

18

h o l d i n g company a f f i l i a t e o r any s u b s i d i a r y t h e r e o f

19

d i r e c t l y o r i n d i r e c t l y t h r o u g h t h e mechanism o f l p a n s f o r

20

t h e purpose o f a c q u i r i n g bank s t o c k o r i n any o t h e r manner

21

any I n t e r e s t i n such b a n k s , o t h e r t h a n such as may a r i s e o u t

22

o f u s u a l c o r r e s p o n d e n t bank r e l a t i o n s h i p s , such b a n k , a f t e r

23

60 days o f w r i t t e n n o t i c e o f t h e F e d e r a l Reserve System,

24

w i t h d r a w f r o m membership i n t h e F e d e r a l Reserve System."

25



A

what I t

I f , without p r i o r w r i t t e n approval of the

including

acquires,

shall

I d o n ' t r e c a l l t h e c o n d i t i o n , b u t i f you say t h a t
i s , I am w i l l i n g t o a c c e p t t h a t .

is

88^

Arms
M i l l a r«
MR. TOWNSEND:

1
2

I read t h a t from the record I n the

case.

3

THE WITNESS:

4

BY MR. STEWART:

5

Q

Yes.

Now, Mr. Eccles, you are f a m i l i a r , are you n o t ,

6

w i t h the requirements of Section 12b

7

Bank, t h a t the Board of Governors o f the Federal Reserve

8

System take i n t o

9

s i d e r a t i o n o f the a p p l i c a t i o n o f a member bank t o e s t a b l i s h

10
11
12
13

COIB

of the Federal Reserve

i d e r a t l o n c e r t a i n f a c t o r s i n the con-

branches ?
A

I c o u l d n ' t say t h a t I am f a m i l i a r w i t h t h a t s e c t i o n .

I f you w i l l read me what i t i s , I might be.
Q

Let me r e f r e s h your r e c o l l e c t i o n .

That i s the

14

s e c t i o n , s i r , which provides t h a t upon an a p p l i c a t i o n by a

15

member bank t o e s t a b l i s h branches, the Board must consider

16

the f i n a n c i a l h i s t o r y and c o n d i t i o n of the bank, the adequacy

17

<£ i t s o a p l t a l s t r u c t u r e , i t s f u t u r e earnings prospects, the

18

general character of i t s management, the convenience and needs

19

o f the community t o be served by the bank and whether or not

20

I t s corporate powers are consistent w i t h the purposes of t h e

21

section.

Do you r e c a l l i t now?

22

A

Yes.

23

Q

And you have been f a m i l i a r w i t h t h a t a l l the time

24
25



you have been a member of the Board, haven't you, Governor?
A

What happened i n collection w i t h membership i n the

dhm2

885

i

s y s t e m , t h e San F r a n c l s e o Reserve Banks have t h e i r

2

examiners u s u a l l y make an e x a m i n a t i o n and make a r e p o r t .

3

That r e p o r t i s c o n s i d e r e d b y t h e B o a r d ' s s t a f f , t h e Board

i

l a w y e r s , and one memter o f t h e Boad has t h e assignment f o r

the

Board o f a problem o f t h e q u e s t i o n s o f bank membership, bark
i e x a m i n a t i o n s and o t h e r r e l a t e d s u b j e c t s and t h e m a t t e r s o f
7

membership come b e f o r e t h e Board a f t e r t h e y have been processed

8

w i t h t h e s t a f f and t h a t p a r t i c u l a r bank memta*, and i f t h e r e

9

any q u e s t i o n o f a n y t h i n g unusual o r d i s a p p r o v a l , i t

10

up s p e c i a l l y w i t h t h e B o a r d .

11

circulation.

12

is

is

taken

q u e s t i o n o f membership o f any b a n k .

O t h e r w i s e , t h e y a r e approved on

That i s t h e procedure w i t h r e f e r e n c e t o t h e

13

Q

That i s t h e normal procedure?

14

A

That I s n o t n o r m a l .

15

Q

That I s nek t h e procedure t h a t t h e Board has f o l l o w e d

That i s t h e r e g u l a r

procedure.

16

i n t h e case o f a p p l i c a t i o n s r e l a t e d t o banks i n w h i c h T r a n s a m e r l

17

was I n t e r e s t e d s i n c e F e b r u a r y 14, 1942, i s

18

A

it?

T h a t would be an unusual s i t u a t i o n and would no

19

doubt be b r o u g h t t o t h e a t t e n t i o n o f t h e B o a r d .

20

s a i d t h a t t h e assignment i n t h i s p a r t i c u l a r case o f M r . McKee,

21

a Board member, i t was an assignment and e v e r y a p p l i c a t i o n

I have m e r e l y

22

t h a t came I n would be processed and t h e e o n d i t l o n o f member-

23

s h i p t h a t you r e f e r t o was no doubt a c o n d i t i o n t h a t t h e l a w y e r s

24

f o r t h e B o a r d , the examiners f o r t h e Board» t o g e t h e r w i t h M r .

25

McKee, recommended.




The Board accepted t h e i r

recommendation.

dhm3

1

886.

Q

My p o i n t , s i r , i s t h a t you have t o l d us t h e p r o -

2

oedure t h a t i s n o r m a l l y followed by t h e Board f o r t h e a p p l i c a -

3

t i o n o f t h e c o n d i t i o n s s e t o u t i n S e c t i o n 12B o f t h e F e d e r a l

4

Reserve A c t .
MR. TOWJJSEND:

5

J u s t a moment.

I am j u s t w o n d e r i n g ,

6

M r . S t e w a r t , i f you a r e n o t r e f e r r i n g I n 12B t o r e q u i r e m e n t s

7

r e l a t i n g t o I n s u r e d banks.
MR. STEWART:

8
9
10

the other

By c r o s s r e f e r e n c e i n c o r p o r a t e d

section.
MR. TOWNSEHD:

Not i n r e s p e c t t o b r a n c h e s .

11

s e c t i o n you a r e r e f e r r i n g t o t a l k s

12

membership.

13

about t h e p e o p l e ' s Bank Case.

14

record s t r a i g h t

15

in

about c o n d i t i o n s

I t h i n k you want S e c t i o n 9, I f you are

The
of
talking

That I s a l l I wanted t o g e t t h e

on.

MR. STEWART*

I am n o t t a l k i n g about t h e P e o p l e ' s

16

Bank Case, e x c e p t as one i l l u s t r a t i o n o f t h e a p p l i c a t i o n b y

17

t h e Board o f i t s

18

policy.

MR. TOWHSEND:

I n any e v e n t , I j u s t wanted t h e

19

r e c o r d t o show tt&

20

t o I n s u r e d banks and t h a t w h i l e i n s u r e d banks a d m i t t e d t o

21

membership r e q u i r e t h e Board t o do c e r t a i n t h i n g s , t h a t

22
23
24
25



S e c t i o n 12B i s a p p l i c a b l e i n i t s

entirety

the

s u b j e c t o f branches o f i n s u r e d banks n o r m a l l y w o u l d , except
i n t h e absence o f a member bank, would be a c t e d upon s o l e l y
by t h e FDIC and o n l y i n t h e case where i t

I s a member bank

t h a t a p p l i e s f o r b r a n c h e s , does t h e Board a c t

thereunder.

i dfcsA

887
1
2

MR. STEWART:

I thank counsel f o r h i s reminder b u t ,

of course, t h a t i s not what I am t a l k i n g about i n my question,

i

MR. TOWNSEND:

You have c e r t a i n l y confused me,

then, and I am Just wondering I f the witness c o u l d n ' t

like-

wise have been confused, because I thought you were t a l k i n g
^ i about the People's Bank Case and drawing t o the a t t e n t i o n of
7

the witness the procedure t h a t was followed i n t h a t case, which

8

i s q u i t e d i f f e r e n t from the question of the establishment of

9

a branch.

to
n

MR. STEWART:

I w i l l see i f I can

e l i m i n a t e the confusion.

1
2
1
3

No, I am n o t .

BY MR. STEWART:
Q

I t i s a f a c t , i s i t n o t . Governor Eccles, t h a t

u

the f a c t o r s a p p l i c a b l e under the law t o the consideration of

is

a p p l i c a t i o n s of s t a t e member banks f o r branches —

1
6

MR. TOWNSEND:

1
7

MR. STEWART:

is

Not under 12B but Section 9.
Under the second paragraph o f

Section 9 are the same as those which I have p r e v i o u s l y c a l l e d
t o your a t t e n t i o n i n Section 12B(g).

20

i t h i n k , s i r , t h a t f o r our present purposes we can

21

dispose o f the p o i n t t h i s way:

22

s l i g h t disagreement between counsel and me as t o the exact

23

sections here and I cannot locate a t the moment the s e c t i o n

24

which I have i n mind, but I t h i n k f o r the purpose of —

25




MR. TOWNSEND:

There seems t o be some

There i s the p r o v i s i o n w i t h respect

dhm5

888

1

t o n a t i o n a l b a n k s , w h i c h i s t h e sane w i t h r e s p e c t t o s t a t e

?

member b a n k s .

3

here a r e a p p l l o a b l e I n e i t h e r o f t h o s e c a s e s .

4

a requirement of approval.

Hone o f t h e c o n d i t i o n s w h i c h you have r e a d

MR. STEWART:

5

Well, a l l r i g h t .

I t is

just

Without t a k i n g the

6

t i m e t o go i n t o wftfc t h e e x a c t r e q u i r e m e n t s a r e i n the

statute

7

as t o a n a t i o n a l bank or as t o a s t a t e member bank o r as t o

8

an i n s u r e d bank, w h i c h i s n e i t h e r a n a t i o n a l nor a s t a t e

9

member bank,

t h e p o i n t t h a t I want t o make c l e a r on the

10

r e c o r d , Governor, i s t h i s :

11

c r i b e d , w h i c h was n o r m a l l y f o l l o w e d i n t h e case o f a p p l i c a -

12

t i o n s f o r b r a n h e s , w h i c h had t o be processed by t h e Board

13

was n o t f o l l o w e d a f t e r F e b r u a r y 14, 19^2, i n t h e case o f

14

a p p l i c a t i o n s r e l a t i n g t o banks i n w h i c h Transamerlca C o r p o r a -

15

t i o n had an I n v e s t m e n t .
THE WITNESS:

16

The procedure w h i c h you have d e s -

Is that

correct?

You mean I n c o n n e c t i o n w i t h t h e i r

17

a p p l i c a t i o n f o r membership o r t h e i r a p p l i c a t i o n f o r

18

e s t a b l i s h m e n t o f a branch?

19

the

BY MR, STEWART:

20

Q

Correct„

21

A

Yes, I would t h i n k , i n view o f t h e r e c o r d ,

22
23

that

would be t r u e .
Q

Tlsfc means t h e n , d o e s n ' t i t , Governor, t h a t b y t h a t

24

agreement o f t h e Board o f Governors w i t h t h e two o t h e r bank

25

s u p e r v i s o r y agencies o f the government and n o t w i t h s t a n d i n g the




dtoa£

889.

)

p r o v i s i o n s o f t h e F e d e r a l Reserve A c t and t h e n a t i o n a l banking

2

l a w s , d e s i g n a t i n g t h e procedure and f a c t o r s t o be c o n s i d e r e d
upon v a r i o u s k i n d s o f a p p l i c a t i o n s , t h e B o a r d , i n e f f e c t ,

4

agreed w i t h t h e o t h e r agencies t h a t i n t h i s p a r t i c u l a r

z>

t h a t I s , o f a p p l i c a t i o n a f f e c t i n g banks, i n w h i c h Transamerlca

t

C o r p o r a t i o n had an i n t e r e s t , i t would d i s r e g a r d I t s d u t y under

7

t h e law and deny a l l such a p p l i c a t i o n s r e g a r d l e s s o f t h e

8

merits of the

9

case,

application.

MR. TOWNSEND:

A t t h i s p o i n t may i t please t h e

10

H e a r i n g O f f i c e r I r i s e t o o b j e c t on t h e ground t h a t t h e q u e s t i o n

11

i s w h o l l y and c o m p l e t e l y a r g u m e n t a t i v e .

12

conclusion of t h i s witness.

13

r e s e r v e d f o r M r . S t e w a r t ' s f i n a l argument, wherever t h a t

14

may b e , i n c o n n e c t i o n w i t h what t h e s e f a c t s add up t o .

15

seems t h a t i t

16

f a s h i o n i n w h i c h he i s a t t e m p t i n g t o do w i t h t h e w i t n e s s on

17

t h i s s u b j e c t . I f he asks about t h e f a o t s , I have no o b j e c t i o n ;

18

i f he asks about c o n c l u s i o n s , i n w h i c h he has made s t a t e m e n t s

19

as f r e e l y as he made i n t h e l a s t one, I most c e r t a i n l y

20

I am e n t i t l e d t o

21

It

I t c a l l s f o r tto

i s a m a t t e r w h i c h can bob be

It

i s e n t i r e l y i n a p p r o p r i a t e f o r h i m t o argue i n t h e

think

object.

MR. STEWART:

I f r o & y concede t h a t i t c a l l s f o r a

22

c o n o l u a i o n w h i c h I am e n t i t l e d t o on c r o s s .

23

question being argumentative, I t h i n k the Hearing O f f i c e r

24
25



As t o t h e

w i l l r e a l i z e t h e r e i s no argument i n v o l v e d . I t i s a r e q u e s t
f o r the witness* conclusion t o the e f f e c t stated i n the question.

dhm7

890.

1

I t i s t h e f i r s t q u e s t i o n o f t h e k i n d I have p u t t o

2

witness.

3

THE HEARING OFFICER:

4

h u t t h e w i t n e s s may answer i t ,

b

THE WITNESS:

The q u e s t i o n i s

this

argumentative,

i f he chooses.

The l e t t e r o f F e b r u a r y 1 4 t h , t h a t

6

M r . S t e w a r t had me read seems t o me t o be an adequateanswer

7

t o t h a t q u e s t i o n and I have n o t h i n g f u r t h e r t o s a y .
MR. STEWART:

8
9

All right, sir.

You mean t h e

w h i c h has been marked as B o a r d ' s E x h i b i t 35 i n t h i s

10

THE WITNESS:

11

case?

BY MR. STEWART:

12

Q

That i s

letter

correct.

Now, M r . E c c l e s , do you r e c a l l t h a t i n or about t h e

13

month o f June 19*13 Transamerica C o r p o r a t i o n was p r e p a r i n g t o make

14

a p u b l i c d i s t r i b u t i o n o f 100,000 shares o f Bank o f America

15

s t o c k w h i c h i t t h e n owned?

16

MR. TOWNSEND:

17

MR. STEWART:

I asked h i m I f he r e c a l l e d .

18

THE WITNESS:

What was t h e date you s a i d ?

19

B3f MR. STEWART:

20

Q

I f you know.

I n o r about t h e month o f June, 19^3.

That

is

21

J u s t a few months a f t e r t h i s F e b r u a r y 19^3 conference you have

22

been t a l k i n g a b o u t .

23
24
25



A

I do n o t r e c a l l t h a t d i s t r i b u t i o n .

The o n l y d i s -

t r i b u t i o n I can r e c a l l I s t h e — I t h i n k i t was t h e

first

d i s t r i b u t i o n t h a t t h e y made a t t h e t i m e t h a t t h e v o t i n g p e r m i t

^mB

891.

was b e i n g c o n s i d e r e d when t h e y were r e d u c i n g t h e i r

holdings,

I t h i n k , t o 42 p e r c e n t .
Q

Let m

c a l l your a t t e n t i o n , s i r , t o t h e language

I used i n my q u e s t i o n *

I t h i n k you may n o t have c o r r e c t l y

understood me*
The occurrence t o w h i c h I am r e f e r r i n g i s n o t a
/

d i s t r i b u t i o n t o stockholders, but a public d i s t r i b u t i o n or

8

s a l e o f 100,000 shares o f Bank o f America s t o c k , owned b y

9

Transamerlca *

10

A

I do n o t r e c a l l

11

Q

You do n o t r e c a l l

12

A

I do n o t r e c a l l

13

\4
15
16

17

18
19
20
21

22

23
24
25



that*
that?

that*

892

Arms
M i l l a rP
Q
I

I take i t then t h a t you do not r e c a l l the public

announcement about t h a t issue a t the time and about the
various investment banking f i r m s t h a t Mere I n t e r e s t e d i n i t ?
A

/

R

Now t h a t you mention i t , I do have some hazy

r e c o l l e c t i o n about i t , but I d o n ' t remember any d e t a i l s «

6

Q

Perhaps i t w i l l help r e f r e s h your r e c o l l e c t i o n i f

7

I t e l l you t h a t one of the investment banking f i r m s which had

8

been p u b l i c l y announced as being i n t e r e s t e d i n t h a t issue was

9

the F i r s t Boston Corporation, the Chief Executive O f f i c e r

10

of which was m*. A l l e n Pope0

11

A

I believs vaguely I do.

I t seems t o me t h a t Mr.

12

Pope c a l l e d me up or c a l l e d McKee and McKee spoke t o me about

13

the Board and the supervisory agencies' r e l a t i o n to Transamerlca

14

and whether or not we were g e t t i n g along.

15

that.

16

Q

I seem t o remember

I t h i n k now your memory I s being stimulated t o the

17

p o i n t t o which my questions were addressed.

18

ahead and t e l l us about t h a t .

19

A

1

Just go r i g h t

r e c a l l t h a t the f a c t s were reported t o 1%. Pope,

20

somebody connected w i t h them, and I take your word t h a t i t wasn't

21

F i r s t National.

22

Q

F i r s t of Boston.

23

A

I don't recall that.

I t h i n k merely the f a c t s of

24

the s i t u a t i o n t h a t existed a t t h a t time between t h e supervisory

25

agencies was reported,,




dhmk

1

893
Q

And t h a t was a f t e r Mr. Pope's company's I n t e r e s t

2

I n t h i s proposed d i s t r i b u t i o n had been p u b l i c l y announced,

J

wasn't

<

j
6

A

it?
I w o u l d n ' t say t h a t .

I don't r e c a l l .

I wouldn't

know whether i t was or n o t .
Q

Do you r e c a l l the f a c t t h a t a f t e r t h i s

conversation,

7

t o which you have r e f e r r e d , i n f a c t Immediately t h e r e a f t e r t h e

8

F i r s t Boston Corporation p u b l i c l y announced i t s withdrawal

9

any p a r t i c i p a t i o n i n t h a t issue?

10

A

I do not r e c a l l t h a t .

11

Q

All right.

fm

I s n ' t i t customary, Mr.

Eccles,

in a l l

12

of the bank r e g u l a t o r y agencies f o r any agency which b e l i e v e s

13

t h a t there has been a v i o l a t i o n of any law which i t has

14

r e s p o n s i b i l i t i e s t o a d m i n i s t e r , t o n o t i f y the p a r t y believed

15

t o be i n v i o l a t i o n and i n v i t e I n f o r m a l comments upon the

16

q u e s t i o n i n advance of the f i l i n g o f f o r m a l charges and

17

i n i t i a t i o n of any f o r m a l complaint or proceeding?

18

A

I t seems t o me t h a t t h i s whole record i s r e p l e t e w i t h

19

e f f o r t s t o come t o some s o r t o f an agreement and I c e r t a i n l y

20

would not agree t h a t the Transamerlca Corporation and Bank o f

21

America was not f u l l y advised and informed, c e r t & n l y as t o

22

the f e e l i n g of the Board w i t h reference t o t h i s s i t u a t i o n and

23

c e r t a i n l y i f t h e y d i d n ' t expect, and c e r t a l f t y I do not see,

24

i n view of the r e l a t i o n s h i p s t h a t have been brought out h e r e ,

25

t h a t t h e y w o u l d n ' t expect the Board t o use any powers or




dhra3

894

1

a u t h o r i t i e s o r t h a t i t thoqfet t h a t i t h a d , o r t o c a r r y out any

2

o b l i g a t i o n t h a t i t f e l t t h a t I t had under t h e s t a t u t e t o b r i n g

3

about a c o n d i t i o n t h a t was more s a t i s f a c t o r y t h a n t h e

4

t h a t e x i s t e d and i f you a r e r e f e r r i n g t o t h e p r e s e n t case,

5

would seem t o me t h a t the Transamerlca people over t h e yeas

6

have had adequate n o t i c e as t o t h e way t h e Board and o t h e r

7

s u p e r v i s o r y agencies f e l t w i t h r e f e r e n c e t o t h i s

8

unbridled expansion.
MR. STEWART:

9

condition
it

continued,

M r . H e a r i n g O f f i c e r , I move t o

strike

10

o u t t h e answer as w h o l l y unresponsive t o t h e q u e s t i o n and

11

a r g u m e n t a t i v e and i f t h e r e i s any doubt about i t ,

12

j u s t l i k e t h e stenographer t o r e - r e a d the q u e s t i o n .

13

I would

M r . E c c l e s , i t seems t o me, has been t r y i n g t o a n t i c i p a t e

14

t h e n e x t f o u r q u e s t i o n s t h a t he t h o u g h t I was g o i n g t o a s k ,

13

I n s t e a d o f answering the q u e s t i o n I
THE WITNESS:

16

17

I have misunderstood t h e

question,

I am s o r r y .

18
19

if

asked.

MR. STEWART:

I t h i n k you d i d , s i r .

May I have t h e

answer s t r i c k e n ?

20

MRo TOWNSEND:

I submit t h a t a l l o f t h i s i s

pertinent

21

and r e l e v a n t and i f , as M r . S t e w a r t s a y s , h i s

22

been a n t i c i p a t e d , maybe we have s h o r t e n e d t h e p r o c e e d i n g

23

somewhat.

24
25



MR. STEWART:

q u e s t i o n s have

No, I t h i n k we have o n l y l e n g t h e n e d

May I have t h e answer s t r i c k o n end I w i n s t a r t

over?

it.

dhuA

895
THE HEARING OFFICER:
MR. STEWART:

2

Then

You may l e t t h e answer s t a n d .

I w i l l repeat the question.

BY MR. STEWART:
t)

Q

i s n ' t I t customary, M r . E c c l e s , and r e g a r d l e s s

of

c

what you d i d h e r e , i s n ' t I t customary I n a l l o f t h e hank

/.

r e g u l a t o r y agencies f o r any agency w h i c h b e l i e v e s t h a t t h e r e

7

has been a v i o l a t i o n o f any law w h i c h i t has r e s p o n s i b i l i t i e s

8

t o a d m i n i s t e r , t o n o t i f y t h e p a r t y b e l i e v e d t o be i n

9

and i n v i t e i n f o r m a l comments upon t h e q u e s t i o n i n advance of

violation

10

f i l i n g f o r m a l oharges i n t h e i n i t i a t i o n o f any f o r m a l c o m p l a i n t

11

or proceeding?

I s n ' t that

customary?

12

A

Well, i t apparently wasn't —

13

Q

You can answer t h a t yes o r n o , c a n ' t y o u , M r . E c c l e s ?

14

A

I was j u s t g o i n g t o say t h a t i t

i s n ' t always done.

15

I have i n mind t h e t i m e when t h e T r e a s u r y , S e c r e t a r y o f the

16

T r e a s u r y , f i l e d t h e i r case w i t h t h e SEC a n d , a t t h e t i m e , t h e y s e n t

17

the w i r e , w i t h reference t o the discontinuance of

18
19

20

21

Q

You mean, s i r , t h a t i t

dividend.

i s n ' t always done I n t h e case

o f Transamerica?
A

W e l l , i t w a s n ' t done i n t h a t I n s t a n c e .

would say t h i s ,

Now,

I

i n answer t o y o u r q u e s t i o n —

22

Q

i s n ' t i t customary g e n e r a l l y ?

23

A

I would say t h a t i f

— l e t me p u t i t t h i s way:

I

24

w o u l d say t h a t no a c t i o n would be b r o u g h t a g a i n s t any c o r p o r a -

25

t i o n o r i n d i v i d u a l , f o r t h a t m a t t e r , b y government agencies




if

dhm5

896

1

t h e y f e l t t h a t w i t h o u t c o n f e r r i n g w i t h them and a d v i s i n g w i t h

2

them, i f t h e y f e l t t h a t adequate n o t i c e had n o t been g i v e n ,

3

t h a t adequate e f f o r t had n o t been made, i f t h e y f e l t

4

s i t u a t i o n c a l l e d f o r such c o n s u l t a t i o n i n o r d e r t o be e m i n e n t l y

5

f a i r and c o n s i d e r a t e i n t h e m a t t e r , and I f e e l i n t h i s

6

t h a t t h e Board —

the

instance

7

Q

Now you a r e a n t i c i p a t i n g me a g a i n ,

8

A

( C o n t i n u i n g ) has been more t h a n f a i r i n g i v i n g t h e

9

sir.

Transamerica C o r p o r a t i o n adequate n o t i c e as t o i t s

attitude

10

and as t o i t s d e s i r e and as t o i t s e f f o r t t o e i t h e r

11

l e g i s l a t i o n o r t o c a r r y o u t what was t h e I n t e n t o f t h e Congress

12

i n e x i s t i n g l e g i s l a t i o n or t o use such o t h e r l e g i s l a t i o n as

13

was a v a i l a b l e t o

14

get

it.

MR. STEWART:

A g a i n , s i r , I move t o s t r i k e o u t

that

15

p o r t i o n o f the answer w h i c h f o l l o w e d my I n t e r r u p t i o n as b e i n g

16

unresponsive.

17

THE HEARING OFFICER:

18

BY MR. STEWART:

19

Q

^he answermay s t a n d .

M r . E c c l e s , h a s n ' t t h e custom o f advance n o t i f i c a -

20

t i o n and o p p o r t u n i t y f o r I n f o r m a l comments b y one accused by a

21

bank r e g u l a t o r y agency been u n i f o r m l y f o l l o w e d I n your

22

e x p e r i e n c e i n Washington, w i t h t h e e x c e p t i o n o f t h e

23

I n s t a n c e s you have mentioned i n v o l v i n g Transamerica C o r p o r a t i o n ?

24

A

So f a r as I know, so f a r as I know t h a t i s

25

Q

And a t 3eat up t o t h e end o f t h e y s a r 19&1, you novo?




true.

897.
I

suggested t o any o f f i c e r o f Transamerlca C o r p o r a t i o n , o r so f a r

2

as you know, n e i t h e r d i d any o t h e r member o f t h e B o a r d ,

3

t h a t t h e r e was any o b j e c t i o n by r e a s o n o f the C l a y t o n A c t
t o I t s a c q u i s i t i o n s o f banks o r t o t h e e s t a b l i s h m e n t

of

j

a d d i t i o n a l branches by any bank I n w h i c h i t had an i n v e s t m e n t ,

6

d i d you?

7

A

I t has been b r o u g h t o u t h e r e , t h e q u e s t i o n o f t h e

8

a u t h o r i t i e s , t h e o b l i g a t i o n o f t h e Board under t h e C l a y t o n

9

A c t had n o t been b r o u g h t t o t h e a t t e n t i o n o f t h e Board by

TO

c o u n s e l o f t h e Board u n t i l 19 — I t h i n k i t was —

11

Q

44?

12

A

1944, a f t e r c e r t a i n Supreme C o u r t d e c i s i o n s ,

13

w h i c h were t h e reasons and t h e b a s i s f o r b r i n g i n g t o t h e

14

a t t e n t i o n o f t h e Board t h e i r a u t h o r i t i e s and o b l i g a t i o n under

15

the C l a y t o n A c t .

16

c e r t a i n l y c o u l d n o t have c a l l e d t h e a t t e n t i o n o f Transamerlca

17

t o t h e C l a y t o n A c t , because i t h a d n ' t been b r o u g h t t o

18

attention.

19
20

21

Q

T h e r e f o r e , t h e B o a r d , up t o t h e end o f 1941

their

W e l l , d i d you o r , t o t h e b e s t o f y o u r knowedge,

any o t h e r members o f t h e Board a t any subsequent d a t e ,
t o the a c t u a l formal f i l i n g o f the complaint i n t h i s

prior

proceed-

22

i n g , d i s c u s s w i t h any o f f i c e r o f Transamerlca C o r p o r a t i o n

23

your c l a i m t h a t i t s a c t i v i t i e s c o n s t i t u t e d a v i o l a t i o n o f t h e

24

Clayton Act?

25




A

I ( M n ' t , b u t I c o u l d n ' t s a y what any o t h e r member

dhmT

1
2
3
4

1
5
6

8 $3

o f t h e Board o r t h e s t a f f may have done.
Q

And t h a t i s s o , I n s p i t e o f the custom t h a t you

t e s t i f i e d t o and t h a t you knew about?
A

Is that

correct?

W e l l , i n c o n n e c t i o n w i t h what I have s a i d b e f o r e ,

I would say y e s .
Q

D i d n ' t you g i v e c o n s i d e r a t i o n , M r . E c c l e s , some

7

y e a r s ago t o t h e p o s s i b i l i t y o f s e l l i n g y o u r banks, o r r a t h e r

8

t h e banks i n w h i c h t h e E c c l e s I n v e s t m e n t Company i s

9

t h e F i r s t S e c u r i t y B a n k s m U t a h , Idaho and Wyoming, t o T r a n s -

10
U
12
13
14

interested,

america C o r p o r a t i o n ?
A

I never d i d .

I t h i n k t h a t Transamerica

indicated

t h a t t h e y may be i n t e r e s t e d i n a c q u i r i n g them.
Q

D i d n ' t some o f t h e o f f i c e r s o f t h o s e banks, w i t h

your knowledge, d i s c u s s the p o s s i b i l i t y o f such a s a l e ?

IS

A

They d i d n o t .

16

Q

At least i f they did I t ,

17

knowledge, i s t h a t

i t was n o t w i t h your

right?

18

A

i t was n o t w i t h my knowledge.

19

Q

D i d n ' t you g i v e c o n s i d e r a t i o n , p r i o r t o t h e year

20

19*3 # t o t h e p o s s i b i l i t y o f a c c e p t i n g a p o s i t i o n y o u r s e l f

21

as an o f f i c e r o f t h e F i r s t N a t i o n a l Bank o f P o r t l a n d , Oregon.

22

I n w h i c h Transamerica has an i n v e s t m e n t ?

23
24
25



A

I was i n d i r e c t l y

Importuned t o go t o t h a t bank.

I t was i n d i c a t e d t h a t I c o u l d do so —
Q,

By whom?

dhm8

899.
A

i

But I never — as I r e c a l l , I am n o t sure whether

2

M r . A . P. G i a n n i n i , M r . B e n n e t t , M r . S t e w a r t , t h r o u g h what

3

source t h a t I n f o r m a t i o n came t o me.
Q

When you say " M r . S t e w a r t " , you d o n ' t mean me, do

•
5

A

X meant M r .

7

Q,

D i d n ' t you d i s c u s s t h a t p o s s i b i l i t y o f your g o i n g

r.

you?
Ashly S t e w a r t .

8

t o t h e F i r s t N a t i o n a l o f P o r t l a n d w i t h M r . Lawrence C l a y t o n a t

9

the t i m e he was n e g o t i a t i n g f o r an o f f i c i a l p o s i t i o n i n the

10

Bank o f America?

11

A

I don't recall that I

did.

12

Q

Do you r e c a l l t h a t t h a t c o n s i d e r a t i o n o f a p o s i t i o n

13

i n P o r t l a n d f o r y o u r s e l f , whatever c o n s i d e r a t i o n i t was, was

14

g i v i n g d u r i n g t h e years o f 19^0

15

A

I d o n ' t r e c a l l what t h e p e r i o d was.
MR. STEWART:

16

and 19*1-1?

I see the p r e - d e t e r m i n e d adjournment

17

hour i s about here and counsel has j u s t handed me a paper

18

w h i c h I w i l l have t o read b e f o r e proceeding w i t h t h e next

19

q u e s t i o n s , so perhaps t h i s might be an a p p r o p r i a t e t i m e t o

20

adjourn.
THE HEARING OFFICER:

21

22
23

I would l i k e t o read a l i t t l e

notice.
"Counsel, i n r e a d i n g t h e r e c o r d , I n o t i c e a few

24

i n s t a n c e s where t h e r e are t y p o g r a p h i c a l e r r o r s or t h e wrong

25

word i s used.




B e f o r e the r e c o r d bocomes more v o l u m i n o u s , may




dhm9

900

1

I

2

p o s s i b l e , agree on the necessary c o r r e c t i o n s .

3

a m o t i o n may be made f o r t h e agreed c o r r e c t i o n s .

4

do n o t agree on any such c o r r e c t i o n s , b u t s t i l l d e s i r e them

5

t o be made, separate motions may be presented f o r t h a t purpose» f !

6

suggest t o counsel t h a t t h e y examine t h e r e c o r d and,

MR. TOlflBSEND:

if

Thereafter,
If

counsel

May I s a y , M r . Hearing O f f i c e r ,

7

t h a t we have c o n s u l t e d between sessions and have undertaken

8

t o a t t e m p t , b e f o r e t h e h e a r i n g s resume i n C a l i f o r n i a , t o agree

9

on a r e v i s e d f o r m o f t h e r e c o r d .

10

THE HEARING OFFICER:

11

The meeting w i l l a d j o u r n o r recess u n t i l 10:30

12
13

That i s e n t i r e l y

satisfactory.

Monday morning i n t h i s room.
(Whereupon, a t 1:00 o f c l o c k p . m . , t h e h e a r i n g was

14

recessed, t o reconvene a t 10:30 o f c l o c k a . m . , Monday,

15

F e b r u a r y 14, 1 9 ^ 9 0

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17

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19

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22
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