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GROUP NO. 1 c 0 P T FIftBT T85ST ASD EAVIMS 3AMt OF FASACSBA, CALirOKSlA January 15* 1942 Jtr. William A. Bay, Preaidant, Federal J&eserve Bank of San Francisco, San Francisco, C a l i f o r n i a . Besr S i r i F i r s t Tru.-t and Savings Sank o f Faaadena has under c o n s i d e r a t i o n c e r t a i n changes l a i t e c o r p o r a t e s t r u c t u r a l a l s o haa under c o n s i d e r a t i o n t h e e s t a b l i s h m e n t of s e v e r a l branch banks, and 1MB l e t t e r i s w r i t t e n f o r the p u r pose of securing: the necessary approval t rough you from Federal Reserve Board. I t *113., of course, be supplemented by such f o r m a l a p p l i c a t i o n s fee Federal Keaerve r e g u l a t i o n s may r e q u i r e . FIRSTt As tc the changers i n the c o r p o r a t e s t r u c t u r a l I n 1934 the a r t i c l e s o f i n c o r p o r a t i o n o f t h i s bank were amended tc p r o v i d e f o r t h e issuance o f 30,000 shares of p r e f e r r e d stock and o f 40,000 aha r * s o f comnon atoek, both &esse having a par v a l u e o f $25*00 per share. The m V r c f shares p r e s e n t l y o u t s t a n d i n g o f the two classes are 13,000 shares o f p r e f e r r e d and 27,000 shares o f coseaon, a t o t a l c a p i t a l steek s t r o o t u r e o f 11,000,000.00* The s t o c k h o l d e r s o f t h i s bank have i n w r i t i n g agreed upon the r e t i r a e n e t o f t h e p r e f e r r e d s t o c k , funds t h e r e f o r t c ba r a i s e d by the sale o f 6750 shares o f the |25*00 per v a l u e conaon stock a t $50. X) per share. The said agree-ant *aso contemplates t h e d e c l a r a t i o n o f a stock d i v i d e s d o f 6*50 shares of coa&on s t o c k , s a i d stock t e be issued t c t h e coaaon s t o c k h o l d e r s c o n c u r r e n t l y w i t * r e t i r e m e n t o f t h e p r e f e r r e d stock. These t h r e e s t e p s , aaae'iy, r e t i r e m e n t o f t h e p r e f e r r e d s t o c k , s a l e o f the new eossmon stock, and d e c l a r a t i o n o f a stock d i v i d e n d , w i l l r e s u l t i n s c a p i t a l stock s t r u c t u r e o f 43,000 shares o f ooouon stock having a $25*00 par value, thus leaving t h e t o t a l smount o f c a p i t a l unchanged. I t i s propc»*4 t h a t t h e preferred stock should be r e t i r e d , the new stock s o l d and the stock dividend d i s t r i b u t e d on February 5th, end proper resolutions t o support such a c t i o n t r i l l be adopted by the Board of Directors cn January £0, 194*» i ? * » s d i s t e l y following t h e annual stockholders* meeting. I t i s also proposed t h a t the s t o c k h o l d e r s , a t t v e i r annual meeting, aeend t h e a r t i c l e s o f incorporation t o delete a l l r e f e r e n c e to preferred stock, hut maXe no o t h e r change* therein* The present status of the matter i s t h a t the above plan has been outlined to the Superintendent of Banks and to the Reconstruction Finance Corporation, end i t i s expected t h a t t h e i r asprovsl o f t h i s procedure w i l l be received i n t i m e -~or action on January 20th* For your information, the preferred stock retirement fund now contains $9,125.00} the surplus of t h i s bank i s 1550,000.00, end as of Deoeab«r 31, 1941 t h e undivided p r o f i t s stood a t $312,673.69. As above noted, the sale o f the a d d i t i o n a l 6750 sherec of eoaaon stock w i l l pro<face $337,500.00, and i t i s proposed to carry t h -2d i f f e r e a c e bstveen the aggregate o f t h i s sua and the amount i n the p r e f e r r e d stock r e t i r e m e n t fan-- an the ne hand, inti the redemption p r i c e , i n c l u d i n g o b l i g a t o r y d i v i d e n d s , o f the p r e f e r r e d stock to s u r p l u s . This v i l l a s l a n t t o approximately $16,300.00. Also es above e x p l a i n e d , i t i s planned " h a t t h e - r e f e r r e d stec^ w i l l a c t u a l l y be r e t i r e d and paid f o r February 5 t h , 1942, *nd your a r p r e v a l o f t h i s r e t i r e m e n t , i f re u i r e d , v i l l be d e s i r e d a t t b a i t i m e . Ve have examined the S & t i o n s l l e t and r e g u l a t i o n s o f the f e d e r a l Jteserve Board '-ad t h e r e uiremests l a i d f o r a m i s s i o n of F i r s t Trust Savings Ban <- o f Pasadena t o the FedemX Seserre &yste& «nd de n o t f i n d t h a t there i s any requirement o f a p p r o v l by the Federal ^Issorve Beard o f the r,n©n-?nent o f the a r t i c l e s o f i n c a r c e r a t i o n un4er the circumstances Herein set A > r t h , SECOSfct At t o the raatter o f establishment o f br&nah banks I First T r u s t and -Savings Ban* o f Pas&deaft presentLy one branch l o c a t e d i n the C i t y o f F^gadsma» I t d e s i r e s a t t h i > time t o a c q u i r e the assets o f The Te*~le C i t y S a t l o n a l Baak i n fmsple C i t y , and l i k e w i s e t o e s t a b l i s h a branch i n Alh«»bra. The Superin&tndeat o f Bank's has h e r e t o f o r e issued a p e r m i t "or the e s t a b l i s h m e n t o f a branch on Galley Soulev$£r3 i n A1 hambr® t o snether i n s t i t u t i o n , bat t e n t a t i v e &rraa^en*nte have b'fe^ -m^de f o r the v i t h d r » v a l o f t h i s p e r a i t i n f u r o r o f F i r s t T r u s t and Savings Ban*-- o f Fasadeaa. The terse o f the purchase agreement f o r the assets o f The T r i p l e C i t y S a t i o a a l Bank are now being worked o u t and t h e prapea&l t o r e q u i r e such a s c a t s v i l l be submitted t o oar stockholders a t a s p e c i a l meet in,: v h i e h i s bein, c a l l e d ? or J«nu%ry 3 0 t h , 1942. These saatters have a l s o been • «>ea up v i t h t h e Superintendent o f Banks, whose a : r o v a l o f the c o n t r a c t o f r ureheae w i l l n e c e s s a r i l y he r e q u i r e d , and i t I s hoped t h a t y o u r examination o f t h e assets o f The Temple C i t y S a t i o n e l Bamk, assumiaf t h a t ueb a ? , r o v a l by our s t o c k h o l d e r s i s f e r t h e e m i n f , can be made a j o i n t examination w i t h t h a t o f the St* te b^nlring a u t h o r i t i e s . A c a r e f u l exam'-ttat Ion o f y o u r r e g u l a t i o n s and those o f t h e State Bs:t Act would appear t o d i s e l e s e t h a t the c a p i t a l re* uiremeuts f a r t h e e s t a b l i s h m e n t o f these contemplated branches are new f u l f i l l e d . I t v o u l d be a p p r e c i a t e d I f you w i l l t r a n s i t *.o the u n l e r e i g n e d the r e q u i s i t e forma f o r the e s t a b l i s h m e n t o f s a i d a t Temple ^ i t r and Albambra, i t b e i n the e x p e c t a t i o n t h a t the**e applications v i l l be f i l e d w i t h you v i t h i a the n e x t t h i r t y $ays. Very t n l y y u r s , FIK£? i m aAVXif.t BAIT OF By T . Smith ( s i g n e d ) President. A AOTA COPT F? 8 Trar.ass.,.©r Ice. C o r p o r a t i o n , San Francisco, C a l i f o r n i a . tJantleasam The Board ha® r e c e n t l y received through tha Federal Feeeree Bank of San Francisco & copy of - l e t t - r fr>fc a ^ r b e r ben*. , c o n t r o l or which *es recently acquirer b j your Corpor a t i o n , eta tin* t ! t he asmber bank has under cons ide r a t i o n the »stthliah3sest of aev-rsl oranch ban* a end t h a t the l a t t e r is w r i t t e n for the rurpose of securing rece m r j aj vrovai f r c a the Federal Ke-'erve Board. I h e bank's l e t t e r a c t f o r t h c o r t s i n f a c t a with r e j e c t to proposed branches at tvo i o ^ a t l o n a and st^te<* t h a t tb* t s r voul^ be supplemented by su*h f o m i & p l i c a t i o n s as F e d e r a l Reserve reguXetiew way require. The Ro?rd gave car«fV»l coneideretior. to the informst i o n submit *ed *r.d to o t h e r ; a r t i n e a t i n f o r m a t i o n in I t s f ^ l e a and reached th* c o n c l u s i o n t h a t i t should not ap•••rove the establishment of the proposed branches on the basis of the i n f o r m t i o n no> before i t . The Federal Peserve rank of San Franoieeo wast re uestsd to advise the narsber ban* accordingly. Should your C o r p o r a t i o n h>v^ any plans f o r the f u r t h e r si'saslon i t s i n t e r e s t s m -anits, ? it? * r d i r e c t l y or i n d i r e c t l y , through the onanism of extending locns to others f o r th* purpose o f acquiring bank stock, o r i n any other tit e r , you ar#? requested to advise tha ^oard t i rough the Federal 9e?erv* Fank o f £an Francisco before any such plans are conanaasated. The board's position i n t h i s s e t t e r is i n accord v i t h the f'Olicy, upon which there la una at nous agreement hy the B o e r ' f the Comptroller or' the Currency, and the Federal Tr&neaaerice Cor;*>ra*ioa - Z • f e p o s i t Insurance Cor o r * ! l o t , t h a t tha Federal tank v i s o r y agencies should, under e x i s t i n g circumstances, dec l i n e p e r & i s s i o a f o r . tha a c . u i s i t i - n d i r e c t l y or i n d i r e c t l y o f any a d d i t i o n a l t a n k i n g o f f i c e s or 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 by Transeaerioa C o r p o r a t i o n , Sank o f America T. <5r S. A . , o r any other u n i t o f the Transaaerica ^roup. Please see that, e l l p&raons i n the Transeaerica g r m p vho »ay be concerned w i t h t h i s p o l i c y are advised eecordingly. Very t r u l y yours, (Signed) Chester M o r r i l l Chester M o r r i l l , Secretary. COPT TRAHSAKHICA C0R:'0**?I0» Hoatgoaary S t r e e t at Coluahus Avenue Sen Pre no1sco, ellforale Sen Francisco, uiifornia, *&rcfc 17, 1942. Board of Ooveraore of t h e Federal Reserve System, Veshiastea, C. Oeatleaent Ve hev* e s r e f u l l y eonsidered, and have reviewed the s t a t u t e s i n c o n n e c t i o n w i t h , your l e t t e r o f February M t h forvarCe. t o us by the Federal r'eoerv ' a n * o f San f r a u c i s o o i n l e t t e r dated February 2 i f 1**42. Ve note t h a t i t i s d e s i r e d t h a t the Board o f Governors be adv i s e d of a ay plans o f t h i s cor; o r a t i o n t o expand i t a i n t e r e s t s i n banks l a any aanaer before- such plane are consuasated* Ve have always f u r n i s h e d any t a f o r a o t i o n requested r e s t . t c t l i % our- Invf'*t*i«ato and b» ve p e r m i t t e d the examinations and nave r e g u l a r l y rendered t h t re- o r i s r ^ - a i r e d by l a v , but ve are uuafcle t o f i n d any requirement law or- r e g u l a t i o n t h a t I n f o r m a t i o n r e g a r d i n g our plana t o a c o u i r s a took fee coa aaicf ted t- the '-roard o f Governors b e f o r e ar.y such p i as *r*? consuaaated. I t *>ess sot se* . t o u * t h a t i t v o u l ; be p r a c t i c a l t o do so. Tho a c q u i s i t i o n o f i n t e r e s t s i a batiks, vhetfcar I t La by the p u r g e s of stock o r o t h e r w i s e , a ; p - a r s t o be a s e t t e r w i t h i n i - e r e s p o n s i b i l i t y and d i s c r e t i o n o f the d i r e c t o r s aad aerAgeaeat o f the c o r p o r a t on. It i s b e l i e v e d t h a t the d i r e c t o r s ear aaaageaeat coulc not p r o p e r l y surrender t h a t r e s p o n s i b i l i t y because t o do m would ba t o f a i l i a t h e i r o b l i g a t i o n t o s t o c k h o l d e r s t o condu<*4 ths a f f a i r s of tha c o r p o r a t i o n ac-:-ordiag t o t h e i r best judgsamt. •e note a l s o tht e t a t e a e n t o* t i e Board o f Governors '.-hat * t h e /*o*rd* * f o s i t i o a i n t * \ i s aa< ~ar i s i n accord v i t h i< « - a l l e y upon which •here i - u n a n i s m s agr^e&ent b;< tt-e $oerd, the C o m p t r o l l e r of the Currency and ti-e F e d e r a l Deposit Insurance C o r p o r a t i o n , t h a t t h e f e d e r a l beak superv i s o r y agencies s h o u l d , under e x i s t i n g circumstances, t o o l i n e p u r f l t e s i o s f o r th*> ac u i s i t i o n d i r e c t l y or i n d i r e c t l y o f any a d d i t i o n a l berJcin*. o f f i c e s o r any s u b s t a n t i a l i n t e r e s t t h e r e i a by Traseaaerier f o r / o r a t i o n , T '*«k o f America ?. 4 A. or a-ry otfcar u n i t of t h e ?re$*»ai.sTice ,jrouo.» While t h i s c o r p o r a t i o n i s not- i t s e l f en.vaf.ee Lc, the ankin$ b u s i ness and t h e r e f o r e i a o t i i r e e t i y concerned w i t h trie e s t a b l i o h a e n t o f add i t i o n a l t a n k i n - o f f i c e s , i t cannot, on the basis o f i t s present understanding o4* the tut-as, accent suefe a r u l i n g on v e h a l f o f i t s e l f or any hank Board of Governors of the Federal Feaerv* System. -2- Kerch 17, t c v h i c h i t ova* any i n t e r e s t . Ve are one o f a considerable number of 'baa* h o l d i n g companies doing business s u b j e c t to l a v s enacted by Congress v h i c h vera intended t o have uniform a p p l i c a t i o n . Our present d i s p o s i t i o n would be not t o o b j e c t i f Cor^reas should determine t o impose the esth sentence on ^ n k h o l d i n g companies, seen though i t v o u l i be necessary t o as t o r e a d j u s t our a f f a i r s i n accordance v i t h i h f law. Ve would evan \>e w i l l i n g t o give consideration t o »o*<s gen«r#l plan which vould contemplate t h a t there vould be no e c c i t i o n a l branches f r o n t e d t o any ban* f o r t h e d u r a t i o n o f t h * v a r . I n the snent i m e , however 9 ve b e l i e v e t h a t ve are e n t i t l e d to a i d are assured f a i r snd i m p a r t i a l t r e a t m e n t , and ve eentiot acquiesce i n s p e c i a l t r e a t s * n t v h i c h appears t o be c o n t r a r y t o tha r o l i c y o f the l a v as i t now e x i s t s . Federal s t a t u t e s provide t h - t n a t i o n a l bsnns and s t a t e member baryta are e n t i t l e d to e s t a b l i s h nev branches *hen the l a v of t h e s t a t e grants the r i g h t , s u b j e c t only t o tha spprovr l of t h p e r t i * u i a r supervisory agency t o v h i c h the a p p l i c a t i o n i s r e q u i r e d to be sad* f.nd the s t a t u t e s o r e scribe t h e s e t t e r s t o b* considered u - o n as ih such a p p l i c a t i o n . I t l a d i f f i c u l t t o understand upon what basis the Vo*>.re. o f Governors o r any ,;roup of Federal agencies can s t a t e i n &d?anc« o f any a p p l i c a t i o n t h a t to certain banks i t w i l l r e f u s e tc- e n t e r t a i n aa a p p l i c a t i o n to e s t a b l i s h branches* It seems t o us t h a t the statute.? r e q u i r e t h e r e s p e c t i v e Federal agencies t o consider upon I t s m e r i t s any a p p l i c a t i o n made t h e r e does not t o be any hasis f o r the advance r e j e c t i o n of any a? : l i e t i o n f o r branches by any ben*, f o r the s o l s re«>eou tfcRt t h i s c o r p o r a t i o n has an i f t t e r a ^ t i n i t . ftespectfally yours, (Signed) L . Andrevs V . L. Androvs, Vice President and Treasurer. ccpx f m m i s u b o f aur m J u l y 13, 1942 cisco Tr*m?«aertca Corporation, San Franciseo, C a l i f o r n i a * Soar S i r a j Reference i a to tha foreal application, dated June 10, 1942* of the F i r s t Tryst and .:aviagi? Bank of Pasadena to the Board of Governors of the Federal Be serve System f o r i t s approval of the ^ s t a b l i s h a e n t of hramohes at Tesple City and * l h « a h r a , California. The F i r s t Trust and avians Bank o f Pasadena f i r s t wrote to us i n January, 194-2 concerning I t s plana f o r tha establishjsent o f branches a t these places, vhicb l e t t e r was forwarded t o the 3eard o f Governors f o r I t s information and consideration. After c a r e f u l consideration, the Board ranched the conclusion t? a t i t should n o t approve the establishaent of the proposed branches, cd i n i t s l e t t e r to you, ;»ted February 14, 1942, the Board informed you o f the a c t i o n taken. ¥a are now advised by the Board that i t has f i v e u c a r e f u l c o n s i d e r a t i o n t o the preeent a p p l i c a t i o n of the F i r s t Trust and Savings Bank o f Fesadena f o r the establishment of branches a t Teaple C i t y a ad A l h a a b r a , and t o the data s u b a l t i a d , but i t ioes n o t f e e l t h a t the f a c t & sufeMltted and the circumstances i n the case J u s t i f y *ay ch©n$e i n i t s p o l i c y as o u t l i n e d i n the previous correspondence above r e f e r r e d t o . The Bosrrf f u r t h e r states t h a t t h i s n a t t e r has been f u l l y discussed ^ i t h ttr* Leo ?. Crowley, Chairsaan o f the f e d e r a l Deposit Insurance Corporation, and that he i s i n cosrplste accord v i t h t h i s c o n c l u s i o n . The views expressed above are t r a n s m i t t e d to you a t the r e c u e s t o f the Board o f Ocvernors o f the Federal l a serve System* Tours very t r u l y . (Signed) K. B. VEST Vice P r e s i d e n t . £ £ X I THA m i m t x c A COKPOBATXQ* Montgomery S t r e e t a t Columbus Avenue Sac, F r a n c i s c o , C?iii'"omia August d , 1942. Board o f Governor* o f tha Federal Feserv System, Vn&in^ton, C. Geritleaems *« have r e c e i v e d a l e t t e r dated J u l y 13, 1942, fror. the f e d e r a l Reserve Tank, o f 1 -as Pranciseo, i n which ;.t It, s t a t e d t h a t : ae I'oar:; o f governors o f the F e d e r a l hes^rve System h*s determined t o <!eay t h e a p p l i c a t i o n of the F i r s t T r u s t and Saving* "ank o f Fr.tadon- t o e a t a b l i a h branches a t Temple c i t y **ad Al&aabr* f o r t h e reason t h a t i t haa to the c o n c l u s i o n t a a t circumstances do no* j u e t i f y any change i n the r a l l e y r e f e r r e d t o i n I t s l e t t e r of February l i , 1942, t o Tr*neamerice Cor o r a t i o n . I n t h a t l e t t e r the i o a r d o f Governors s t a t e d t h a t i n c o n j u n c t i o n w i t h the Compt r o l l e r o f f»e Currency arid the F e d e r a l Deposit Insurance Corporat i o n i t had eetersslaed upon <* r o l i c y t o d e c l i n e permission f o r the a c q u i s i t i o n o f aay a d d i t i o n a l benkin t o f f i c e s by r i nsaeiericr Corp o r t i o n o r by aay bank i n v h i c h Tranaameriee C o r t o r a t i o n was i n terested, A a •«•$* s t a t e d i n r e p l y t© the previous l e t t e r from the Board of Coventors, t b e r e does not appear t o as t o be any proper b a s i s i n l a v u? on vhtcfe t h e Board o f Governor* can r e j e c t an apr11« t ; o . i f o r branches by any bank f o r ' h e sole reas a t h a t t h i s c o r p o r a t i o n haa en i n t e r e s t i n i t . This see&s t o be p a r t i c u l a r l y t r u e in the case o f the F i r s t T r u s t and Savings Ban* o f Pasadena, I n which t h i s c o r p o r a t i o n owns but 60 per cent o f tn* o u t s t a n d i n g s t o c k , Ve b e l i e v e tfea* the reason a s i i i [ n e d i s not a l a w f u l one as a b a s i s f o r the r e j e c t i o n o f an a p p l i c a t i o n a - / f o r t h a t reason i s c a p r i c i o u s and a1sorimd.uatory and i s p r e j u d i c i a l not o n l y t o the F i r s t t r u s t a:-- Savings Pan* o f Pasadena but * l » o t o the s h a r e h o l ders o f t h a t t a n * , whether they be Traneaaerica C o r p o r a t i o n or the owners of t h e minority i n t e r e s t i n the bank, T -ars very t f u l y , ( S i ; ned) V. L . Jndrevs V. L . Antfrevs, ? i c e President and Treasurer. c >AXK OP AMERICA SATX08AL XW^l.MD ASSOC IATI Off LOS AHwELKS CALIFOftKU A« 31 ASK IK I August 17, 1842 G M l M i m o r THE 30AJRD OF DI1USCT08S IQS AKGKLES UAItf OFFICE 660 S DOTS SPR1SG 5TRSKT Honorable ^ a r r i n e r ccles, Chairman* Board o f Govern©re* Faderal u eeerve Syetaaa, Saahington, D*C* haar ^ a r r I n e r t I have been t hInking over the communications that we have received fro® the Federal Reeerve System during resent months and X f i n d i t d i f f i c u l t to reconc i l e t h e p o s i t i o n teken by you m& your associates v i t h the assurances given t o us when ve had occasion t o discuss t h e p o s s i b i l i t y of converting the Bank o f America from the national to the s t a t e system* Both you and John Me^ee properly stated t h a t our I n t e r e s t s could count upon receiving the cams f a i r and impartial t r e a t ment from the Federal Reserve #eard as i s accorded to any ether i n s t i t u t i o n s * This c o n f l i c t s sharply w i t h the vievs expressed i n the Board's l e t t e r o f February 14* 1941* addressed to Traneazaerlea Corporation, i n which the <*oard takes the p o s i t i o n t h a t , regardless of i t s merits* an a p p l l e a t i e n from any i n s t i t u t i o n i n the Transaaerlea group, or i n any way connected w i t h i t , would receive an adverse r u l i n g from the ^oard, t h i s decision as t o procedure having boon reached i n c o l l a b o r a t i o n w i t h the Comptroller and the f e d e r a l deposit Insurance Corporation* I n a subsequent l e t t e r to t h e Corporation from t h e Federal Reserve Soak* dated July IS* t h i s a r b i t r a r y position o f the board i a confirmed by the r e j e c t i o n of the applications of the F i r s t Trust and Savings Bank c f ^aaadona without any apparent reason even though the Superintendent of Sank* o f C a l i f o r n i a had granted uncond i t i o n a l permits f o r the branches a f t e r f i n d i n g t h a t public convenience and advantage would be promoted thereby* I t must be obvious t o you t h a t such a position l c not only diecrimiaa* t o r y , but alee injurious t o Trcaeemcriea Cor-oration, and eauees an adverse r e f l e c t i o n en i t * and i t l c also injurioue tc the minority stockholders i n banks i n which Transamerica Corpora t i o a holds an I n t e r e s t * as w e l l as to the banks themselves* We do net know of any l e g a l j u s t i f i c a t i o n f o r such n a t i o n , and you f a l l * od i n your l e t t e r t o i n d i c a t e whet information, i f any* you have i a your f i l e s t h a t would warrant i t * P r a c t i c a l l y a l l the members o f the Board know as w a l l enough, I t h i n k * to r e a l i s e t h a t when I have anything on my mind I do not hesitate to speak i t oat aa f r a n k l y sad d i r e c t l y as 1 can* sod 1 f e e l i t l a only r sac enable to expect t h e Board tc adopt the came a t t i t u d e toward me mad t e l l me f r a n k l y mhat i s the Marriner -ccles - 2 basi0 for i t * discriminatory treatment of the i n t e r e s t * w i t h whioh I am so closel y connected* I doubt i f there i s any bank of comparable sise i n the country that is any more l i q u i d or i n a more sound and healthy condition than 3ank of America* end I think t h a t a c a r e f u l review of the l a s t examination nmde of Transamerica Corporation by the Federal Reserve Sy.tem w i l l indicate that t h i s Corporation also is i n a sound condition, end the sams applies to a l l of the banks i n which i t has en i n t e r e s t . At l e a s t , we did not note any serious o r i t i c i s m i n reviewing the examination of Transamerica Corporation. Frankly, I should l i k e t o know what is the cause, imaginary or otherwise, of t h i s discrimi n a t i o n ! whether i t be the condition of our i n s t i t u t i o n s , t h e i r managements, or any other circumstance* I n the past ten years during which I have been responsible for the d i r e c t i o n of the a f f a i r s o f the Bank of America, on the national bank examiner's b a s i s , exclusive of the preferred stock issue, i t has added more than #57,600,000 to i t s net sound capital structure over and above dividends paid i n t h a t period which aggregated #74,214,042.14, and which were f u l l y j u s t i f i e d . While the growth of the bank has been r a p i d , other banks have grown r a p i d l y too, some, i n f a e t , more r a p i d l y than our bankj and yet there is no apparent attempt to discriminate against those other banks* I t should be obvious t h a t our p o s i t i o n , i f anything, i s stronger than t h a t of most of the other r a p i d l y growing banks, due to the f a c t t h a t t o a l a r g e extent our b u s i ness i s made up of a great number of small accounts, over 2,800,000 an o v e r - a l l average of less then $765*00 per account, and deposits of more than $900,000,000 are i n the time category where they are not subject to withdrawal without notioe i n an easrgeney* I am sure you w i l l recognise t h a t t h i s condition does not e x i s t i n t h e other l a r g e banks which have r e l a t i v e l y few acoounts, but which a r e subject to having p r a c t i c a l l y a l l t h e i r deposits withdrawn over n i g h t . Most of these other large banks have few, i f any, savings or time deposits, and, t h e r e f o r e , ars more vulnerable. The greater portion o f t h i s bank's assets is represented by oash, investments i n s e c u r i t i e s of the United S t a t e s Government, end loans guaranteed by the Government, such as FHA and guaranteed defense loans* I n a l l o f our more than 12,000,000,000 of assets, we have approximately only §250,000,000 i n commercial loans, a substantial portion of which i s supported by government guaranties* Our r e a l estate loans are r e l a t i v e l y small loans averaging less than $5000 each, sad v i r t u a l l y a l l of them are on an Installment basis* The t o t a l of our investments and loans whioh are obl i g a t i o n s of the United " t a t e s Government and p o l i t i c a l sub-divisions, or a r e guaranteed by them, amounts to approximately $1,098,000,000, and we have i n a d d i t i o n , oash and oash items approximating *400,000,000* P r a c t i c a l l y a l l of our assets could be sold a t a premium which i s not true o f the other great banks of the country* all The banking premises ehioh we own and oooupy are A well s i t u a t e d i n the eenter of the business d i s t r i c t s of t h e i r respective communities, and i n the most valuable locations* The American Appraisal Company valued our premises toward the close of 1939, and a r r i v e d at a valuation f i g u r e g r e a t l y i n exaess Marriner £eolee - 5 of the carrying value of the properties on oar books* fce must not loss sidht o f the foots t h a t our promises are not a l l located in one eos*aunity| t h a t thsy are I n ths sost dssirsbls locations spread over the saost r a p i d l y growing end prosperous S t a t s i n ths Union* which Stats has experienced extraordinary population growth since t h s l a s t census i n 1^40* I t i s obvio *s t h a t with such growth as is taking plass i n C a l i f o r n i a * and that w i l l continue t o take plaoe f a d d i t i o n a l banking f a c i l i t i e s srs necess a r y . I cannot understand why there should be t h i s discrimination against us and our atteaipt to extend our services where the need has bsen d e f i n i t e l y established when ether i n s t i t u t i o n s haws no d i f f i c u l t y i n opening new branches when they deeire t o do so* the Bank of * n s r i c a , sines i t s organisation i n 1904* has weathered a l l aorta of economic storms* * imwe seen i t through several depressions and a b i t t e r l y contested proxy f i g h t * Our correspondent banks snd large oooaereial c l i e n t s w i l l t e s t i f y to ths f a c t t h a t their experience i n doing business w i t h us has demonstrated to then t h a t we have the best hanking organisation i n the country* and I defy anyone to point out a uore sound bank or competent management anywhere* k i t h the greateet portion of our assets i n cash* or guaranteed by* or consisting o f * obligations o f the United w t a t e s ^overaaaent and p o l i t i c a l sub-divisions, snd a proven earning power 1 challenge any of ths bank super* visory agencies t o point out a oeseparable s i t u a t i o n * Our other r e a l estats owned anseunts to ths r e l a t i v e l y i n s i ^ n i f leant f i g u r e of #4*800*000* The land contracts o f C a p i t a l Company haws a present balance of #16*670*I»30«?4 and are the unconditional obligations o f the conpany, which has a net c a p i t a l structure o f more than 459*000* through such cont r a c t s * rsal estats of mere than t&6*000,000 has been l i q u i d a t e d * and aest of t h i s was acquired through leans cede by i n s t i t u t i o n s taken over by us* i n aany eases at the request of banking a u t h o r i t i e s end to savs the depositors f r c n lees* Ton a r e f a a i l l a r w i t h the fact that the Bank of America was compelled to take preferred stock when i t d i d net need i t * se we contended at the time* and our arguments I n t h i s respect haws been overwhelmingly substant i a t e d by subsequent events* Our i n s t i t u t i o n took ae advantage of charging o f f i t s assets a t the tims of the aors t o r i urn and o f f s s t t l n g such charts o f f s w i t h p r e f e r r e d stock because we knew t h a t such adtion was not necessary and that i t impoeed an unnecessary burden on the tfover^xmont and an u a j u s t l f i a b l s charge against ths s a m l n p of the bank* On the preferred stock t h a t we were compelled to take* we have paid spprexlmatel? #2*000*000 i n dividends and have derived ne b e n e f i t i n r e t u r n * The bank would c e r t a i n l y have been muoh b e t t e r o f f to have added t h a t #1*000,000 to the more than #40*000*000 added to tfec net sound c a p i t a l structure* on the examiner's basis* i n ths past three yeerc* The only reason t h a t I sen ascribe t o the ^card's continued r e f u s a l * outside the law # to permit the norms1 extension e f our services to placet where banking service i s obviously needed* i s because i t does not l i k e the sanagcetent* I n aqr opinion thsre I s c e r t a i n l y no j u s t i f i c a t i o n f o r t h i s Marriner Ecoles - 4 attitude. This management took ov«r the bank a f t e r the b i t t e r proxy f i g h t I hare mentioned, and a l l of the losses which during the t i n e of the moratorium would hare been charged o f f by other banks through ths medium o f preferred stook were subsequently charged o f f by us out of earnings. We hare had the extraordinary experience of surviving earthquakes, f i r e , panics, depressions, the moratorium, conspiracies, and a b i t t e r proxy b a t t l e , end have stood up under constant harassment on the part of bank supervisory a u t h o r i t i e s , and other Federal Agencies, and yet here we are today w i t h c a p i t a l funds, exclusive of preferred stook, the greatest i n the history of the bank, and our earning capacity unexcelled by any other bank* Only a sound and properly managed i n s t i t u t i o n could have survived* No bank i n the country has cooperated more f u l l y with the Government than the Bcnk o f America, and i n recognition of t h i s f a c t the Treaaury Department, decplte the strenuous controversies of the pest, has seen f i t to award i t the f i r s t o i t a t l o n to be issued to any bank i n the United ^tatec f o r merit i n promoting the war e f f o r t . We have sold more individual defence and war bonds than any other bsnk, a t a continuing cost to t h i s i n s t i t u t i o n of more than #50,000 a month* Enclosed i c the most recent report shoeing d a i l y salee of bonds* We have financed war industries before end a f t e r Regulation V became operative to an extent not exceeded by any other bsnk* I n the FHA program, we l e d the f i e l d and showed the way for other banks t c cooperate} *nd, today, we lead the Nation i n the volume o f a l l types of FHA loans made and i n cooperating w i t h t h i s administration i n i t s other programcj and we are 100% behind the Government's program to win tha war* I do not think that any bank i n the h i s t o r y of t h i s country has been more p e r s i s t e n t l y persecuted than the Bank of America* Can i t be due to the f a c t that we do not represent the vested i n t e r e s t s , end that throughout i t s h i s t o r y i t has been a bank o f the people, owned by many thousands of small stoekholdere? Or cca i t be that there ic a more c l n i s t e r motive? I hope f o r the cake of the future w e l l - b e i n g of our country t h a t t h i s i s not the cace* I must s t a t e to you f r s n k l y , ^Surriner, that I think the position of ths supervisory agencies i s not sound and i n the long run ccnnot be sustained under our American system of f r e e enterprise. Let us not expend our time end energicc i n contending over bh&t fundamental of freedom-loving people of equali t y under the law* I t seems inappropriate that governmental agenciee should a t t h i s time be reaching out t o usurp the l e g i c l a t i v e prerogatives, when t h e r e i c co much need for the exereiee of administrative functions to preserve the very existence of the S a t i o n . I f you do not l i k e the e x i s t i n g laws, l e t uc t r y to change them by c o n s t i t u t i o n a l means. We should not i n these timec r e c o r t t o Hasi«Faseist methodc o f dictatorehip* This i n s t i t u t i o n i s c e r t a i n l y no instrvssent of e v i l , ss ths action of t h e Board toward i t would seem to l a p l y . Through the years, i t has exerciced consistently a beneficent and constructive influence on the Iferriner E m X m - & welfare of the s t a t e and nation and the great number of C a l i f c m i a n s t h a t i t serves* I think t h a t i n j u s t i c e you should exert your influence to nave the Federal Keserve Board subsoribe to the s p i r i t of f a i r and impartial treatment to which you have so frequently subscribed i n the past, iSon't you pleaee l e t me know what you can do about i t ? I f i t i s a matter of some t e c h n i c a l i t y that is involved, can we not resolve that by agreeing t o a f r i e n d l y legal proceeding f o r a declaratory judgment defining the powers and authority of the Board, or f o r c l a r i f i c a t i o n of the s t a t t y * i f they are ambiguous? I should l i k e to hams your cooperation i n seeking freedom from prejudice and discrimination and the attainment o f the l i b e r t i e s whioh we as a nation are s a c r i f i c i n g and f i g h t i n g to preserve f o r ourselves, and to secure f o r others. With kindest personal regards t o you* Tours very s i n c e r e l y , (Signed) k .P.Giannlni or A&f&XCA M n o u L ^ l l ^ mqcutiw WAS SAVI5IG8 30»E SALES FOH FRIDAY AUGUST H , 11*42 - 731.26 SERIES F • 21,843.60 SERIES I SKRISS a TOSAL #618,379.75 TCTAI JkAMn T TO DATE A3 UP tH£ OGSf 0? •CSXttSS AUGUST 14, 1&42 - $151,632,860*78 S o m b e r 13, 1942* Dear This l a l a r e p l y t o your l e t t e r o f August 17, 1942, with reference t o the action of the Scard o f hrttrnor* i a deny l a f the a p p l i c a t i o n f o r the establishment o f branoheo a t fewple C i t y and Alhambra by the F i r s t t r u s t and &aviurs Bank o f I'aaadeaa, uhlofe l a eontrolled by Traneaaerlea Corporation through the ownerahip o f a M a j o r i t y o f the c a p i t a l stook* Tour l e t t e r was acknowledged by i*r, Clayton under date of August Z l , 1 H I , immediately a f t e r I had l e f t Washington for a few weeks * t r i p to the $awt* Since returning to ftaehington, a &rea& many pressing n a t t e r s , including war financing, imve taken up ay e n t i r e time* Consequently, X have only r e c e n t l y had an opportunity to consider w i t h Governor fee£ee, to eboa you r e f e r r e d i n your l e t t e r , and the other jWeatbers of the Board and cove of i t c s t a f f e e r t a i n statements end eharges contained i n your l e t t e r , w i t h which we cannot possibly agree® For come time p r i o r to January, lit42, the Comptroller of the Currency had repeatedly refused to approve expansion i n the author of branches o f important national banks i n the Transamerica Corporation group* Shortly before t h a t date, Traacamcrica Corporation obtained oor.trol of the F l r a t *ruet and **avinrs Beak of Paeadene* Ia January, 1942, t h a t bank wrote a l e t t e r to the Federal Reserve Bank of tan Francisco, s t a t i n g , among other things, that i t had "under consideration the eetabliehaemt o f several branch beaks,** Temple C i t y and Alhanbra being mentioned s p e c i f i c a l l y * I n view of previous dissuasions and undere t e n d i n i s , the Board was surprised to learn o f these plans f o r eapeneion. On February 14, 1942, I t requested of the Federal Reserve Bank t h a t the F l r e t Trust aad Savings Sank o f Pssadens be advieed, before i t took any f u r t h e r steps tc eoaeusasate i t c plans, that the dear* had given caref u l consideration to the information submitted and to other p e r t l n a a t information i a i t c f i l e s and had reached the conclusion that i t should Am iiamiai -2- Sove .ber I S , 1342, n o t approve the ssteblishcseat o f the proposed branches on the bee i s o f t h e i n f o r m t i o n before i t * The Board e l e o considered i t desirable t o i n f o r m Transasaerica C o r p o r a t i o n d i r e e t l y o f t h e a c t i o n on the Pasadena a p p l i c a t i o n and, t o express again to i t s ^anageaaeat the Beard's views i n t h e scatter o f expansion* A c c o r d i n g l y , on the same date i t addressed a l e t t e r t o t h e C o r p o r a t i o n i n which i t was s t a t e d ! "Should your C o r p o r a t i o n have any plans f o r the f u r t h e r expansion o f i t s i n t e r e s t s i n banks, e i t h e r d i r e c t l y o r i n d i r e c t l y , through the seebaniem o f t e n d i n g loans t o o t h e r s f a r t h e purpose o f a c q u i r i n g bank a t o e k , o r i n any other manner, you a r e requested t o advise t h e £oard through t h e Federal Heaerve Bank of &an Francisco b e f o r e any such plans a r e eoaeumaeted* "The Board's p o s i t i o n I n t h i s m a t t e r i s i n accord w i t h the p o l i o y , upon which t h e r e i s unanimous agreement by t h e Board, t h e C o m p t r o l l e r o f t h e Curreany, and t h e Federal Deposit Insurance C o r p o r a t i o n , t h a t the Federal bank s u p e r v i s o r y agencies s h o u l d , under e x i s t i n g e l r e u a c t a n c e e , d e c l i n e p e n a l s a l o n f o r the 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 f any a d d i t i o n a l banking o f f i c e s or 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 by fransamerica Cor* p © r a t i o n , Bank o f America T« A 3* A . , c r say e t h e r u n i t o f t h e Transaaerica group* "Please see t h a t a l l persons i n the Transamsrica group who may be concerned w i t h t h i s p o l i c y are advised accordingly** Nevertheless, the F i r s t Trust and Savings Sank of fasadeaa t h e r e a f t e r continued i t s plsm* and on February 2d, 1942, entered i n t o a contract to assume deposits and take over aaaeta o f the Temple City National Bank, w i t h a view to operating a branch a t t h a t location* urn June 10, 1942, the bank f i l e d n formal a p p l i c a t i o n f o r the establishment o f breaches a t ¥eac>le C i t y and *lhaafora* On July 10, ISMi2t the Board declined t h i s a p p l i c a t i o n and requested that the bank sad Trans* easrlen Corporation be advised accordingly. I t i a our understanding t h a t the position of the Comptroller of the Currency i n t h i s n a t t e r , r e f e r r e d to above, remaina the aama* «e are advised t h a t the Federal deposit Insurance Corporation has « o w j b t r 13, 1942. Mr* A* P* Giaanlni indicated i t s uawilliagnesa under e x i s t i n g circuastancee to insure any newly organised *>tate nonasesber bank i n which Traaaameriea Corpo r e t ion has a substantial i n t e r e s t or any bunk i n the |*rcup v h i e h aay withdraw from the federal ^ s e r v e System* As f o r the Board'a position, u n t i l i t la a a t i a f i a d t h a t the f i n a n c i a l policies pursued by Ifaaasanarlsa Corporation and i t s a f f i l i a t e d i n s t i t u t i o n s are cona la tent w i t h the public i n t e r e s t , i t w i l l conaider aa unsound t h e i r e f f c r t e to continue an espatsaion prcgrns by whatever means, including the organisation of mm $ t a t e banks, the a c q u i s i t i o n o f control of e x i s t i n g State banks, or the con veraion of national banks to State banks, and the eetabliehassnt of tranches thereof* I n a d d i t i o n , where the change or conversion from one j u r i s d i c t i o n to another ia for the purpoaa of avoiding proper rea t r i c t i o . s or requirejas&ts of ether Sovsmmsnfcal ageaeiea, the Board does not propose to be used as n means of avoiding such r e s t r i c t i o n s or requirement*, considered by the Board to be j u s t i f i e d under e x i s t i n g circumstances* The foregoing w i l l i n d i c a t e soma o f the sore important eon* aiderations underlying the board's position i n t h i s matter* I n view o f our previous discussions w i t h repreeentatlvea of your organisations, i t is f e l t unnecessary t o go into f u r t h e r d e t a i l * however, as you w e l l know, whenever yen or any of your aaaooiatea f e e l t h a t you haws a j u s t grievance to take up w i t h the Board, or that you have acme a d d i t i o n a l information to a s s i s t the Board i n i t s d e l i b e r a t i o n s , you are always eeleeiae to e a l l i n person f o r a raore complete and frank discussion than l a practicable through correspondence* Sincerely yours, (Signed) U. S* Ecales M* 8* Eaelea, Chairman* Ifir* A* F* G i a n n i a i , Chairaan of the Board, tranaamariea Corporation, San Freneiaeo, C a l i f o r n i a * CfiTl mmmfOBA cmtmmm S t a t i o n a r y S t r e e t a t Col*jgfe08 Asanas 3aa f r s m d s c o , C a l i f . •an F r a n c i s c o , C a l i f o r n i a ftnw&ar 25§ Bon, K a r r t a e r 8« KooX«s t C h a i r w m , of flmmrs of F s d m l Rcwim- .^Jpetaa^ Waj^iiatgfcon, D. C. Bear * e r r l » e r t I wish to i f l h w A i d f f l r e c e i p t o f l e t t e r of ftsvcsiMP X3, which uoa tarlttan l a reply to f ^ l e t t e r of August X7 t X942. I t r u s t t h a t I n sdi&i I s h a l l ham t o aay n s a w m l n f your r e p l y I sfasil not ass* t o bo oaduly c r i t i c a l f o r I html ao other t h o u ^ t them t h t of i l m w l y a t - tempting to arrir© at a baaia of t»3cr;?tfi»diag# I s so f & r a® your l e t t e r r e * i c t « ecrrcopotidtarKie uhlah has token pl<*o& between tlie ftsaWl of Governors T i a i u n — I n n Corporation, ea*l l a oo f a r as i t r o c i t e a the now h i a t s r l o a l f a c t s u i t h reference to the C c a a p t r o l l s r V j repeated rofaaals t o approve branches of iaportsiat n a t i o n a l banks l a t h e feaanMSrica group, u h l l o g r a n t i n g then t o cocqpetitlvft I n s t i t u t i o n s , I t r e c i t e s f a c t s with u b i e h wo a r e both e n t i r e l y M U i r * But tbeoQ mti.org are seneifcet basics the m l a point of thevhich X arldreseed t o you l a August* I think I f yon «&LX w m i qjr l e t or again «tXX be ispressed ultfc tbs seraestness of agr desire t o knsu ntgr sad apoa what b a s i s , legal or otherwise, action boa been taken which precludes banks i n wblsti Traa»* ansrls& Carper t l o n has sa later® s t ftpea traosctatiag ti-joir business upon the sasae tezns eaaA upon aa e q u a l i t y u l t h othor bcasks. the t o u* i c h you rafter | sorse odf w* ich y r c auota l a y? m l a t t e r , appears t o he t o s*>ov t h a t the Bearrt of Governors o f the Federal Keaeree ^ystca, the Board of S i r ^ c t o r s o f the Federal Deposit Ta,-7tfrszH*> Corporation and the Comptroller o f the ftsrreaoy hern ester d upon a octree o f a r b i t r a r y end discriminatory e c t i n i&erc Trnaasnsrlen i s conaoraed. I u&a hopeful t h a t your r e p l y , Instead o f r e i t e r a t i n g the cireanatcneei? which appear t o show to l a | voeXft sallgbtea ne as t o coy eadsting fonwlatlaa whiah iadU£t be r e l i e d upon t o j w t i i y the ooarso uhich has been pursued f o r acne t i n s . Tou cjuoto flroa the Boards l e t t e r to Traassasrlea of February U, l a nerlth your Boeard «trleeo Trsaemrloa that oa the basia of t t t f o r m t l o a eoNdtted arH other pertinent Infoeaaticn la i t s flXos I t baa reac^ai c^mIubUq that I t ehouM not a^irorB tbe estdblirbneet of proposedferaacfea> of the First trust sad &«fim@t Beak of Fa^wfeaa, ye bate as f t t bo kne*&edge of what the rtotber pertlaeat laftesLtina* toferrod to t y tbe Board eoasistfi^ aart us regard the fasts seocsguogrJiig the appliaattaa to whom boyond cpss&stt a basis for ^prwaX 3U0h as uouli Hon* Marriner 3. £odes * 2m Hevaator 25, 1942 You also quo o th^t portion of tills letter of notification which states that the Hear^1* positive Is In aoeor5 with the policy which has been agreed to by tha RoaM, to i a p t r d X i r aaft the FMaral Deposit Insurance Corporation to deprive Trsmgsaasrica Corpor tioa car nsogr bank in whiofe i t has an interest of the benefit of -to law taa&ar vridoh a bank any 'properly conduct i t s baseness, including the law® previding for the eat&Hisfcaent of t&» ditioual brancb&s for the eace of patrons and the public, 1 aa s t i l l at a loea tofcnowthe basis for tliis policy and I h&vc< bean aaased to find that I t wot&d be agreed, upon, declared aw? put into effaot without any opportunity for the interacted parties to be heeani or even to knee tbe circisestances m l lee upon t o j u s t i f y i t * anX£f$te» <ae u^ec t i s s c o r e . I wich t h a t jm would w r i t e and Instead of aiding is m effort to reeeh caiian ground, your letter would scan to introduce an additional obatrdo to mtual understanding. Xm men "As for the Board1 a position, until i t is satisfied feat the financial p & k A m pursued by tSwonaierfea Gerp«r*t£fl» aftS I t s aff51iittert i n s t i t u t i ns are eoasiatent with the gaft&ie Interest" i t w i l l o o l i t e * aa maaaoA aay e f f o r t to capias*! i t s banking business. Pd&cpe we haw been mistaken in believing that natters? of pul&io policy wan? the primiy eanoew of tha legislative bodice) rather than of tha adtainiatroti^ hoards cor officers* Ue haw alwsyts essrts&stly endeavored to bring aw activities Into accord with the public policy evidenced by the various st testes applicable to the particular business. I t uould sees that i f in orAsr bank* in vhiih TTfl»a?^»rica Corporation is interested as a stockholder to eonrtuet a blinking buetaees on tarns of equality with others engaged m the w business wo sect f i r s t satiafy the Beora of CknrerneriJ of the Federal S e a m * 3yst that the financial policies of tha Corporation aar e^naisfcmt with the Usance view of the public interest, we should at least be advised as to viiat that view is* Xotsr l a t t e r c o n t a i n s a s e n t e n c e , th© i n g l l e & U o n s o f which a r o so u t t e r l y f o r e i g n t o s a y parpoees o f n i n e , t h a t 1 oonnot l o t i t pass u n c h a l l e n g e d . I o n says * I n a d d i t i o n * Where t h e t & m ^ o r c o n v e r s i o n f m n one j u r i s d i c t i o n t o a n o t h e r i s f o r t h e purpose o f a v o i d i n g p r o p e r r e s t r i c t i o n * o r r s q u i r c i s e n t s o f o t h e r fiovnii B M u n t i l a g e n c i e s , t h r Soarr? does a c t propose t o be used as a nesns o f a v o i d i n g stasis r e s t r i c t i o n s oar r ^ u i r e ^ n t a , c o n s i d e r e d b y t h e Board t o b e j u s t i f i e d u n d e r e x i s t i n g aismsststanees.* I an e«e$letely a t a l a s s t o under, s t a n d what y o u a r c d r i v i n g a t * I know X have m m * even refao e l y enggfteted t o y o u o r t o t h e Beard t h a t t h e r e was a n y t h o u g h t o f u s i n g i t as a sedans o f a v o i d i n g a n y p r o p e r r e s t r i c t i o n s o r r e q u i r e n s n t e o f o t h e r goveriaosatal a g a n e l e a * In u y e o q i r i s n e e w i t h g o v e r a s e n t a l a g e n c i e s 2 nonftose I h a t o a t t i n e s f a i t — • y e s , been c e v i n c e d t o t h e p a i n t o f f i r s c o n v i a t i m * * * h e t i a p r o p e r r e s t r i c t i o n s and r e q u i r e a w n U have been a t anptsdi t o b e l a p o s s d and t h a t a t t i n s s i n e t i t u t i a M w i t h uhlsfti X hove been e o m e e t s d have b e e n v i o t f e w o f s a t d t r a r y aa* r i ^ o r i u t o a t o s y aetioii. X r e c a l l ooqpressinc such c o n v i c t i o n s t o you* X have alwnyg a t e a p t e d t o c o r r o e t suoh m f c r t o a a t e s l t u a t l o n a i n eo f a r a s I t was p e a s l b l c t o do a o , b u t X havs n e v e r o b j o c t o d t o t h e f u l l and p r a y e r e n o r d s e o f s u p e r v i s o r y d i s c r e t i o n l e g a l l y vested i n any p u b l i c supervlaory a u t h o r i t y * X w a l l know t h a t X have n w soggestod t o y e n o r t o a n y ana e l s e i n a u t h o r i t y * p r o p o s a l t o use t h e Beard o r s a y e t h e r s n t h s r l t a r f o r t h e iiurpoea o f a v o i d i n g e a r m g Hon, Nearriner S, Scales - 3~ 25, 1942 r e s t r i c t ! one a r rwqpAmmm!** I t h i n k you w i l l r e c a l l , t o o , t h a t a t an* t i n e when wo o o n t t r s p l a t i n g c o n v e r t i n g t o a s t a t e a s a N r hank y o u r a t t c n t l o a m a s p e c i f i c a l l y d i r e c t e d t o th? v a r i o u s p r o v i s i o n s o f t h * l a w w i t h r e s p e c t t o a p p r o v a l o f frronahno sad M s v was aade as t o ^dseth r o r n o t t h e Boar*" u v u l a be l i k e l y t o bo b y t h e standards a t e t e d i s passing upon auah a u a t t o o r A e t h e r f o r e i g n f a m t a a U a a would bo dessasd c o n t r o l l i n g * But I have never a t any t i n s anggestsd t h a t l c f r a l stsadarrls f o r t h e e a a r c l s e o f d i s c r e t i o n a r y a c t i o n V s t ^ e r v i s a r ^ a a t l a r i t i ^ be departed f r o n * U r i l e 3«9ur I c i t o r i s ; i s t i n c t X y H s ^ a t i s i i n t h e r e a p e r ! * ahewsg yesa r e s t secured t h a t I shsXl assert o w u y e f f o r t t o "bring about mash an adjuatnemt i n t h e r e l a t i o n s o f the I n s t i t u t i o n s witli. whiet* t 0 * a s e e ^ l a t e d €$nd a l l i q ^ r w t n f e e s i s p a r r ' s c r y a a t t h o a i t i c a as n a y bo n o n p a t e n t w i t h j u s t i c e gad f a i r n e s s t o a l l . Aa s t a t e d b e f o r e , y r i i n w u i r i a i C o r p o r a t i o n esrmot I R M I t o ( I f p a i i i m l n i i t l f f l i , Aa a b a s i s f o r m f t m 1 u n d e r s t a n d i n g i n w h i s k a l l t h o u g h t o f i H i a f i i f r w d t o would bo psrEasvsstly eliadbaated, i t would aces proper t h a t y o u rfiedM a d v i s e ne o f -say k a f f c a i i k l o t t i M c f c y o u r BoorS has regarded aa p e r t i n e n t i s d e c i d i n g t h e n a t t e r s r e f e r r e d t o i n y o u r c o a r n n l c a t i c n * . Hay I I'ifec-.?* f?**® you aeoaff Sincerely your*, A. P. iaaaiai P . 3 . W i t h r e g a r d t o t h e r c f a m n e a s i n y o u r ecaveapoaSenee t o t h e expansion o f t h e i n t e r e s t ? : o f T~-;naasseriea i n b ^ k s . y u u n l ^ h t be i s t a r e a t a d i n t a k i n g n o t e o f t h e f a c t t h a t on Deeeafcar 3 1 , l m , a l j u r t l y before. I was r e t u r n e d t o i t s nsflngesent, t h e terestaients o f 3runesaerle& C c r i x n ^ t l o n i n n a t i o n a l ban&a, zmaber M s sad s t a t e acrwanfrcr beaks aggregated & L 3 9 , 4 ^ * W » 5 3 exkt t h a t aa of flsyturtii 30, 1942. t h e e i s d l - r i n v r s t m t was I t had decre&ser! 53?'* I t » m i g h t a l e e he i n t e r a c t e d i n n o t i n g t h a t aa o f fteeeateer 31, 1940, the lavestaeat stcod a t and t h a t s i n c e t h a t t i n © i t has decreased s p p r e s i a a t e l y #9,000.000 p e r y e e r t o t h e p r e s e n t eooont o f o r a decrease i n t h e p a s t two y e a r s o f 22$. A. V S . Dscessbor 19 # 1942. Mr. A. F. G i a n n i n i , Chairman o f tha Board, Tr»nsemorlea C o r p o r a t I o n , ,3en F r s n e i a c o , C a l i f o r n i a . tear A, ?.s I h * t s yours of Sfrveaber 25 l a which you askno* Isdge r e c e i p t of ay l e t t e r of ?tove*5b«r 1? respecting the position of the B o o n i n the m - t e r o* expansion o r b^nkir^ i n s t i t u t i o n s i n the Trensaaeric» group. I could not -possibly agree v i t h you t h a t t:»e Foard, the Federal l e p o s i t Insurance C o r p o r a t i o n , the C o m p t r o l l e r o f the Currency have entered upon a course o f a r b i t r a r y and d i g criadne i o r y a c t i o n whsr* Trenaameric* i s concerned nor could 1 p o s s i b l y agree t h a t any p o l i c y ha. a W e n declared a ad *ut i n t o e f f e c t v l t h o u t any o p p o r t u n i t y f o r the I n t e r e s t e d p a r t i e s t o be beard. I b e l i e v e t h a t you are f u l l y informed aa t o the Board's p o s i t i o n an* o f a l l the fa t t s u ; o n which i f i s based, aa£ I «« convinced t h a t continued d i s cussion would o n l y i n v o l v e us i n l e n g t h y ergumenta as t o the c o r r e c t nana of your impressions regarding tit a soundness of the ^oarei's p o s i t i o n nmi the s i n c e r i t y o f i t s a c t i v e s . Hovever, any tiia^ you o r any o f your s e n i o r a s s o c i a t e s are .in V a s h i n ^ t o n , I * i i a l l be .glad t o arrange f u r t h e r conferences on t h i s m a t t e r . ' i t h k i n d personal regards, I a» Oinceraly yours, (Signed) Marriner Keoles, Chairsaen, *cclee
@FedFRASER