View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

S t r i c t l y Confidential
Not for release

August 31, 1945

Approximately twenty-six (26) applications for
branches for Bank of America National Trust and Savings
Association are now pending, raising once more the question
of permitting further expansion of this branch system i n
Following the policy formulated by the late
President Roosevelt, i t has been the practice of this
office during the past six years to restrain as much as
possible the growth of monopoly i n West Coast banking etna
credit f a c i l i t i e s which seems inherent i n the expansionist
program of the Bank of America and Transamerica, both of
which are dominated by the so-called Giannini interests.
This policy of restraint has received the active support
and cooperation of both the Board of Governors of the
federal Reserve System and the Federal Deposit Insurenee

It i s deemed appropriate to set forth very

b r i e f l y the bases of this general policy, without specifying i n detail the supervisory problems which have been
encountered in carrying i t out.


Bank of America operates through two so-called main
offices and almost five hundred branches throughout the State
of California - many times more branches than any other bank
i n the United States.

For some years, i t s deposits have

grown more rapidly than those of any other bank i n the country.
In total resources, i t is the second largest bank i n the
world, and i s rapidly overtaking the Chase National Bank of
New York, the only larger bank i n existence.

In fact, i t

already has several times as many depositors as Chase or any
other bank; i t has more business -loans outstanding than any
other bank; and whereas Chase i s one of a number of huge
"corporation" banks i n the nation's f i n a n c i a l center, which
could be replaced by the numerous other large ban&s located
there, Bank of America is a Titan whose a c t i v i t i e s cover an
immense state and affect the whole Y/est Coast, and whose
collapse and replacement would involve an economically destructive upheaval.
The following figures bring out the situation clearly:
Bank of America's deposits on June 30, 1^45 were
$4,500,000,000, constituting approximately 40$ of a l l
deposits i n California banks*

Its approximately five

_ r >

hundred branches amount to almost half of the banking offices
of the state, and are located in over 300 communities. There
were 595 banks and brajiches i n the Transamerica bank group
on June 30, 1945, located in Arizona, California, Nevada,
Oregon and Washington, out of a t o t a l of 1,461 banks and
branches i n those five stetes.

The Transamerica banks

and branches constituted approximately 50$ of a l l banking
offices i n California, 60% i n Nevada, and 34JS i n Oregon,
They held approximately 41% of a l l bank deposits i n California, 79$ of a l l deposits i n Nevada, and 43$ i n
Throughout their history, Bank of America and
Trensamerica Corporation have been dominated by a small
group of men who have pursued an aggressive and ruthless
policy of expansion, and have engaged in a variety of
banking and non-banking a c t i v i t i e s , some being of a highly
speculative character.

The management of the bank has

been o.f the promotional type, and the results of i t s lack
of conservatism became apparent i n the early 1930's, when
i t s condition was such as to create considerable doubt as
to whether i t should be permitted to resume operations
after the banking holiday.

It was only consideration of


the serious effect on the whole West Coast which forced
a reluctant decision to permit the Bank of America to
reopen at that time.

Today i t s condition i s very much

improved - by virtue of general economic and war conditions, not by virtue of management.

A study of the

development of the Giannini empire even during the last
twelve years w i l l disclose that the promotional attitude
s t i l l predominates.
In the light of this brief description, i t w i l l not
be d i f f i c u l t to see the application of certain basic principles and policies which render i t inappropriate, except
to meet -compelling local need, for the Comptroller to authorize Bank of America to establish additional branch offices.
F i r s t of these principles i s the American government policy
against monopoly, unfair competition, and absentee ownership,
and i n favor of small businessses, free competition, and l o c a l
ownership and control.

The Comptroller i s not charged with

the enforcement of the anti-trust laws, but he should and does
exercise his discretionary power i n the l i g h t of the purposes
which the statutes i n thie f i e l d were designed to achieve.
The opportunity to monopolize the f i e l d and prevent
the development of new competition i s greater i n banking
than i n most industrial and commercial f i e l d s . Furthermore,


monopoly i n banking i s singularly dangerous because of the
influence banks exercise over the entire economy through
control of credit and l i q u i d funds.
Even apart from the foregoing, the potential disastrous
effects of a failure of a branch-bank system of such magnitude render inadvisable the authorization of further expansion
of i t s branch network

Bank of America i s i n relatively

sound condition today and i t s failure with i n the foreseeable
future is improbable.

However, supervisory authorities

must always bear i n mind the p o s s i b i l i t y of bank failures
due to rapid changes i n economic conditions or to unsound
and speculative management, and policies should be adopted
which w i l l minimize the harm resulting from the collapse
of any one institution.

The primary obligation of the

Comptroller, in exercising his discretion regarding the
chartering of new banks, the granting of branch permits,
etc., is the maintenance of a safe and sound banking system.
Any further growth of Bank of America - and consequent increased dominance i n California banking - is undesirable
from this point of view.
The enormous importance of banks to modern industrial
l i f e gives r i s e to another danger implicit i n the existence
of a banking i n s t i t u t i o n of the unparalleled power and extent


of Bank of America*

Banking has long been r ecog&ised as a

matter requiring governmental supervision and control, and
the federal statutes provide general sanctions designed to
enable the supervisory authorities to maintain safe and
sound banking practices and to prevent violations of the
banking laws.

Unfortunately, these sanctions - for example,

the forfeiture of a bank's charter - are extremely drastic.
Where a single bank i s badly managed, or resistant to proper
supervisory requirements, these sanctions can be brought to
bear, and this p o s s i b i l i t y alone is sufficient to make the
vast majority of banks receptive to criticisms, corrections,
and recommendations.

But any responsible o f f i c i a l hesitates

to invoke such sanctions where the offending bank furnishes a
major part of the banking f a c i l i t i e s of a great State; the
hazards involved i n mere unfavorable rumors regarding a bank
make bank supervisors reluctant even to threaten the use of
a serious sanction.

Being f u l l y av/are of this situation,

the management of a mammoth, many-branched institution can
sometimes defy governmental regulation, and violate almost
with impunity the laws enacted by Congress for i t s control
and the protection of the public.

The history of Bank

-7of America reveals just such a situation and attitude.
Even i n the case of a branch bank system of comparable size with an outstanding record of safe, sound and
conservative management, the foregoing principles would
dictate the greatest caution i n the handling of applications
for new branches.

The fact that the record of Bank of

America cannot be so characterized simply renders more
imperative the policy which the Comptroller has followed
in t h i s case.
In regard to the twenty-six (26) applications for
branches with which we are presently confronted, no departure
is contemplated from the basic policy of restraining a l l
possible any further expansion of the Giannini banking interests.

Some twenty (20) of these applications cazi and should

be rejected.

However, i n approximately a half dozen cases

the communities involved are entitled to more adequate
banking accommodation, and careful investigation f a i l s to
reveal any practical method of securing such additional
accommodation save through granting to the Bank of America
permission to establish branches at these points.
There is considerable pressure from these communities
and from their representatives i n Congress.

For six years


there has been no increase i n the number of branches of
the Bank of America, although during that period this
state, which permits branch banking, has grown enormously
i n population and financial resources and pern.its i n corsiderable number have been granted to competing institutions.
In the light of these facts i t would seem judicious
to authorize branches of the Bank of America i n the few
exceptional cases mentioned.

To refuse would penalize the

l o c a l camnainities involved and might give some weight to
the charge of arbitrary and prejudicial conduct of this
A brief resume of thirteen (13) of the pending
applications i s attached hereto.

The balance are s t i l i

under investigation by f i e l d representatives

Preston Delano

August 13,1945

Manchester and Crenshaw Boulevards
Inglewood, Los Angeles County




Existing f a c i l i t i e s :



Branch of Bank of America
Branch of Security-First Nat. Bank
Branch of Citizens National Trust &
Savings Bank within one block
of proposed site of this

Should be rejected <LS area already
has adequate banking service.

Wilshire Blvd. and Fairfax Ave.
City of Los Angeles



63,000 estimated i n this l o c a l i t y

Existing f a c i l i t i e s :


This area, i s now being served by
thirteen (13) banking units, the
national bank units of ih ich are
5 branches of Bank of America
2 branches of Citizens National T&S Bank
1 branch of Security-First National Bank
1 branch of iknk of America is four (4)
short blocks from Wilshire & Fairfax

Should be rejected as area already has
adequate banking service.


Magnolia Boulevard and Hollywood Way,
Burbank, California



Existing f a c i l i t i e s :



None i n immediate area
Two branches of Bank of America One of Security-First Rational and
One of California Bank within radius
of 2 miles.

Although close, should probably be granted.
The particular l o c a l i t y i n which i t i s proposed
to establish this branch i s i n need of banking
service, and a branch would serve a public

Crenshaw Boulevard and Rodeo Road,
City of Los Angeles



Population of this area d i f f i c u l t to estimate
as examiner concludes proposed branch would
only be of service to a circle with radius of
600 yards*

Existing f a c i l i t i e s :


3 branches of Bank of America are
within two (2) miles, and one branch
i s within 4 1/2 miles of this location.
Security-First National is establishing
branch less than one mile from this

Should be rejected as area has adequate
banking f a c i l i t i e s .


Pacific Ave. and Pine St.,
Stockton, California



Area 12,000 to 15,000

Existing f a c i l i t i e s :


No banks i n this trading area.

Should be granted- AmericaiTrust Company has
already been granted permission by the State
Superintendent to establish a branch i n this
v i c i n i t y but the concentration of population
indicates that two branches can be supported.

Lynwood, California




Existing f a c i l i t i e s :

Branch of Security-First National Bank

Should be rejected. Entire community is primarily
residential. With the return to normal postwar
conditions, i t appears highly improbable that
public necessity w i l l require other than existing
banking f a c i l i t i e s . Examiner Goddard doubts that
two branches are justified, particularly in view
of the large number of banking offices within a
short radius of this town.
Within a radius of five (5) miles there are:
10 branches of Bank of America
6 branches of other banks
2 independent banks


San Gabriel, California




Existing f a c i l i t i e s :


1 branch of California Bank

Should be granted.
There is a real
need for additional banking f a c i l i t i e s
The one branch of the California
Bank does not meet the situation.

y /

Costa tfesa,
Orange County.



Normally 2,500; war a c t i v i t i e s have increased
i t t o 5,000.
Costa Mesa i s an unincorporated village at the junction point of
two highways about 14 miles south of Long

Existing f a c i l i t i e s :


Branch of Bank of America at Newport
Beach 2 miles away and at Balboa^ 4
miles distant. Many other banking
f a c i l i t i e s within 7 miles.

Should be rejeoted. E i s t r i c t Chief Irwin
Wright comments "The present business boom
i n t h i s village is obviously of a temporary
nature, and with the cessation of h o s t i l i t i e s
there w i l l be a contraction in business and
ulatxon to the noint where maintenance of
ranch bank woulcl be wholly unjustifiable.''



Wilshire Boulevard and Fourteenth St.,
Santa Monica, California



25,000 i n area

Existing f a c i l i t i e s :



One state bank
2 branches of Security-First Nat. Bank
1 branch of California Bank
1 branch of Bank of America

Should be rejected as area already
has adequate banking service.

American Avenue and Anaheim Street,
Long Beach, Los Angeles County.



The 1940 figure was 50,000, wartime activities
have increased this figure to about 62,000.

Existing f a c i l i t i e s :


3 branches
2 branches

of Bank of America
of Security-First Nat. Bank
State Department has just
branch of California Bank.

Should be rejected. Careful survey f a i l s to
disclose the need for additional banking


Lower Lake
Lake County, California




Existing f a c i l i t i e s :


Should be granted.
This community
i s entitled to branch service.

12* Glendale Park District
Glendale, Los Angeles County.


16,000 area
Existing f a c i l i t i e s : i national bank and branch thereof
2 branches of Bank of America
2 branches of Security-First Nat. Bank

Should be rejected.
The Glendale Park
District is a residential d i s t r i c t so closely
tied i n with the business d i s t r i c t of
Glendale that a branch at that point is in
the opinion of the examiner unjustified.
There appears to be no reason to believe that
residents i n the proposed area w i l l refrain
from customary habit of going to town tc
conduct banking or other business.

- 7 —


Sherman Oaks
Los Angeles County




Existing f a c i l i t i e s :

" f a c i of
l i t yBank
" (asof distinguished

Should be granted.
Because of close of
h o s t i l i t i e s this " f a c i l i t y " now being
terminated and should be replaced by a