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PENNSYLVANIA BANKERS ASSOCIATION
PRESIDENT:

EDMUND

W.

THOMAS

TREASURER:

PRESIDENT, FIRST NATIONAL BANK,

VICE

PRESIDENT: GEORGE PORTER

RUSSELL

J.

HOPKINS

PRESIDENT, TITUSVILLE TRUST COMPANY,
TITUSVILLE, PA.

GETTYSBURG, PA.

SHOTWELL

SECRETARY: CHARLES

PRESIDENT, WILLIAMSPORT NATIONAL BANK

F.

ZIMMERMAN

PRESIDENT. FIRST NATIONAL BANK, HUNTINGDON

WlLLIAMSPORT, PA.

OFFICE OF THE SECRETARY

HUNTINGDON, PA.

June 9, 1947
Hon. Marriner S. Eccles, Chairman
Board of Governors
Federal Reserve System
Washington 25, D. C.
Dear Marriner:
I have read and re-read your May 26 statement on the subject
of full control of bank holding companies before the Senate Banking and
Currency Committee, in the Commercial and Financial Chronicle. This
is a concise and convincing presentation. I had not heretofore grasped
some of the implications which S. 829 would correct.
From the start of holding company purchases of national bank
shares, I have seen the ultimate threat to our American or democratic
system of local bank ownership and management. As holding company
ownership has expanded, the chances of making a practical application
of the basic principle stated in the Lehman Opinion as to corporate ownership of national bank shares, have gradually faded out. Hence, in view of
the difficulty of invoking this principle, the only remaining course is to
make the best of the situation and proceed with S. 829. Unless this is
done, we shall soon witness a similar breakdown in our present controls
of branch banking under state laws, just as failure to uphold the validity
of the Lehman Opinion has resulted in bank holding companies getting
out of hand.
For many years I have looked upon the promotion methods of
A. P. Giannini as our greatest menace, and therefore I trust that the
Federal Reserve Board will continue the fight for the full control of bank
holding companies. We must either win this contest or face the tragedy
of eventual socialization of American banking.
Is there any help we can give ?
Sincerely yours,
CFZ/ebz




June 18, 1947.
Mr. Charles P. Zimmenaan, Secretary,
Pennsylvania Bankers Association,
First National Bank,
Huntingdon, Pennsylvania,
Dear Charlie:
Your letter of June 9 is certainly gratifying. The argument in the
second and third paragraphs is so well stated and convincing that I am sure
it would be effective with members of Congress, especially coming from you.
So taking advantage of your question as to whether there is any help you can
give, my answer is emphatically yes.
The Holding Company B i n , S, 829, was favorably reported to the
Senate today by the Senate Banking and Currency Committee. This will put it
on the Senate calendar in a day or two. However, it can only be taken up thereafter by unanimous consent, or on motion, or by having the Steering Committee
make it the unfinished business. Anything you felt you might appropriately do,
such as writing to your Senators who, in turn, might take up the matter with
Senator Taft, Chairman of the Steering Committee, or other members of that Committee would be most helpful. We do not anticipate any difficulty in its passing the Senate once it is considered.
If it does pass without difficulty, there is a reasonable chance of
getting it through the House provided enough interest is shown, especially from
those like yourself who strongly favor the bill and recognize the need for it.
The House bill, H.R. 3551* has been introduced by Chairman Wblcott of the Banking and Currency Committee, but has not been reported out by the Committee. A
word from you to him recommending its passage, if you felt that was in order,
would help. It would be even better if your Association, possibly through its
executive or legislative committee, would reinforce your stand.
As you no doubt know, three Pennsylvania Congressmen are members of
the House Banking and Currency Committee - John C, Kunkel of Harrisburgj
Hardie Scott of Philadelphia; and Frank Buchanan of McKeesport. Anything you
or the Association could do to interest them in getting the bill acted on by
the Committee and by the House would be very worthwhile.
With kindest personal regards,




Sincerely yours,

M. S. Eccles,
Chairman.

PENNSYLVANIA BANKERS ASSOCIATION
PRESIDENT: GEORGE P. SHOTWELL
PRESIDENT. WILLIAMSPORT
WILLIAMSPORT,

NATIONAL

TREASURER: DONALD P. HORSEY
PRESIDENT.

BANK.

PA.

FIRST NATIONAL

CONSHOHOCKEN.

BANK.

PA.

SECRETARY: CHARLES F. ZIMMERMAN

VICE PRESIDENT: RUSSELL J. HOPKINS

PRESIDENT. FIRST

PRESIDENT. TITU8VILLE TRUST COMPANY

NATIONAL

BANK.

HUNTINGDON

OFFICE OF THE SECRETARY
HUNTINGDON, PA.

June 21, 1947
Hon. Marriner S. Eccles, Chairman
Board of Governors
Federal Reserve System
Washington, D. C.
Dear Marriner:
Many thanks for your favor of June 18 received this morning. It
is a privilege for me to fall in with your welcome suggestion. The enclosed
copy of my letter today to Jesse Wolcott is self explanatory, and I trust you
will approve.
Other copies are going to Senators Martin and Myers, to all members of our Pennsylvania delegation, to Maple Harl and Lee Wiggins. In
addition a copy is going to Sam Needham, who of course is unable to get
on the firing line - and we understand this.
Bankers who know about the developments in recent years and
months are united behind the Federal Reserve Board's position and are
most anxious that this legislation be placed on the statute books.
I am asking Senator Martin, my personal friend, to use his best
influence to have Senator Taft have S. 829 taken up in the Senate as unfinished business at the first opportunity after it has been placed on the
Calendar. I am certain that he will render his best service in this connection. I have the opinion that Senator Myers will also be happy to assist.
Again thanking you, and awaiting further developments, I am
Sincerely ypur s

Y

CFZ/ebz
Secretary.
P.S.:
This morning I learned that the Independent Bankers Association
of Minnesota has sent to all banks in the United States, a letter enclosing
a copy of my letter to you dated June 9, 1947. I gave them this concession
in the hope of aiding your courageous efforts behind S.829.




C. F. Z.

PENNSYLVANIA

BANKERS

ASSOCIATION

OFFICE OF THE SECRETARY
COPY
Huntingdon, Penna.
June 21, 1947
Hon. Jesse P. Wolcott, Chairman
House Banking and Currency Committee
Washington, D. C.
Holding Company Bill,JELR., 3551
Dear Jesse:
I wish to thank you for your kindness in introducing H.R. 3551. This is a
most constructive move for the good of American banking at this crucial time.
Needless to say, if this Nation is to avoid the eventual breakdown of our democratic system of local bank ownership and management, Congress must now recognize
the pressing need for regulating the further expansion and operations of bank holding companies, as proposed.
Bankers everywhere share the earnest hope that the House and Senate will
give these bills their approval, based on the concise and convincing statement of
Chairman Eccles on S. 829, before the Senate Committee on May 26, 1947.
From the start of holding company purchases of national bank shares, I
have seen the ultimate threat to our American system. As holding company own
ership has expanded, the chances of making a practical application of the basic
principle stated in the Lehman Opinion as to corporate ownership of national bank
shares, have gradually faded out. Hence, in view of the difficulty of invoking this
principle, the only remaining course is to make the best of the situation and proceed with S. 829 and H.R, 3551. Unless this is done, we shall soon witness a similar breakdown in our present controls of branch banking under state laws, just as
failure to uphold the validity of the Lehman Opinion has resulted in bank holding
companies getting out of hand.
For many years I have looked upon the promotion methods of Transamerica Corporation as our greatest menace. Should further expansion of bank
holding companies remain uncontrolled, the way is open for the destruction of
states rights governing branch banking within their own borders, because although
there would remain a distinction in terms, there would still be no difference in the
practical use or application of the basic principle involved, as against states rights
in branch banking. We are all aware that domination of banking resources on a
large scale, either through group banking or branch banking, will lead to the
tragedy of eventual socialization of American banking.
I trust that this measure will soon clear the Senate and that the House
Banking and Currency Committee will then proceed with hearings, at which time
I should consider it an honor to testify in line with the above viewpoint.



Sincerely yours,

PENNSYLVANIA BANKERS ASSOCIATION

PICE OF THE SECRETARY
Huntingdon, :: enna.
June 21, 1947
Hon. Jesse P. Wolcott, Chairman
House Banking & Currency Committee
Washington, D. C

Holding Company BUI H,R. 8551

Dear Jesse:
I wish to thank you for your kindness in introducing H.R. 3551. This is
a most constructive move for the good of American banking at this crucial time.
Needless to say, if this Mation is to avoid the eventual breakdown of cur democratic
system of local bank ownership and management, Congress must now recognize
the pressing need for regulating the further expansion and operations of bank holding companies, as proposed.
Bankers everywhere share the earnest hope that the House and Senate
will give these bills their approval, based on the concise and convincing statement
of Chairman Eccles on S. 829, before the Senate Committee on May 26, 194T.
From the start of holding company purchases of national bank shares, I
have seen the ultimate threat to our American system, As holding company ownership has expanded, the chances of making a practical application of the basic
principle stated in the Lehman Opinion as to corporate ownership of national bank
shares, have gradually faded out. Hence, in view of the difficulty of invoking this
principle, the only remaining course is to make the best of the situation and pro
ceed with S. &2£, Unless this is done, we shall soon witness a similar breafidcwn
in our present controls of branch banking under state laws, just as failure to uphold the validity of the Lehman Opinion has resulted in bank holding companies
getting out of hand.
For many years I have looked upon the promotion methods of Transamerica
Corporation as our greatest' menace. Should further expansion of bank holding companies remain uncontrolled, the way is open for the destruction of states rights
governing branch ba.nking within their own borders, because although there would
remain a distinction in terms, there would still be no difference in the practical use
or application of the basic principle involved, as against states rights in branch
banking, W© are all aware that domination of banking resouroes on a large scale,
either through group banking or branch banking, will lead to the tragedy of eventual
socialization of American banking.




*AndH.R.3551.

-2-

I trust that this measure will soon clear the Senate and that the House
Banking and Currency Committee will then proceed with hearings, at which time
I should consider it an honor to testify in line with the above viewpoint.
Sincerely your
(SIGNED) CHARLES F. ZIMMERMAN

CFZ/ebz




Secretary.

PENNSYLVANIA BANKERS ASSOCIATION

-ECRETAEY

m
June 25,

Hon, Richard M, Simpson
e/ House Office Buiio
Washington, D, C.
Dear Dick:
Thank you very much for your favor of June ?4, referring to your
interview with Congressman Woksott, concerning hearings on H.R. 3551. In
my letter to Congressman V olcott some days ago, I told him I would testify
in favor of this bill, should this be found desirable.
May I say that in the fact that the companion bill S. 829 was reported out by unanimous vote of the Senate Committee, there is good ground
for thinking that substantial opposition to the bank holding company bill is
no longer to be reckoned with, and that the holding companies - with one or
two exceptions - have accepted the bill as being a thoroughly justifiable compromise for them, respecting certain promotional phases which are badly in
need of control at this time. Hence it is my thought that the hearings might
well be expedited and kept within bounds, so that the Committee could take
final action in time for enactment of the bill at this session of CongressCongressman olcott probably knows that the Michigan Bankers
Association has adopted a resolution favoring control of bank holding companies. The California Bankers Association likewise adopted a resolution
favoring supervision and control of bank holding companies at their recent
convention. The Independent Bankers Association of California, and the
Independent Bankers Association of Minnesota are a unit behind the bill.
in view of the above I am net certain as to the advisability of having many acceptable witnesses attend the hearings of the House Committee,
erhaps if you were to mention my views to Chairman Woleott, the whole
a could be expedited.
My feeling is that it would be very helpful if the hearings were to
be scheduled at once by the House Committee, "hatever wcrd you can send
me in reply will be appreciated,
Sincerely yours,



*f,

(SIGNED) CHARLES F. ZIMMERMAN

July 3 ,

Dear Charlies
Thank you for sending ae a copy of
your excellent l e t t e r to Representative Simpson«
I t i s right on the beas and especially helpful
going to him. X would, of course, be interested
t o know what his reply say be*
Let ne say again that your effect!TO
efforts in behalf of both the bank holding company
and guarantee b i l l s are greetiy appreciated*
Sincerely yoars.

tfr» Charles F. 2ijaaenmn,
Ponasylvaaia Bankers Association,
Huntingdon, Pennsylvania*

ET:b




c
0
p
Y
CONGRESS OF THE UNITED STATES
HOUSE OF REPRESENTATIVES
WASHINGTON, D. C.

July 7th,

Mr. Charles F. Zimmerman,
Huntingdon, Pennsylvania.
Dear Mr. Zimmerman:
I chanced to talk with Jesse Wolcott several days
ago. He told me that it is his hope the Senate will iron
some of the difficulties in the holding Company Bill and
presently consider it. He is of the opinion that the Bill
which reaches the House will be substantially what is desired and in this connection, was pleased to have your
letter of June the 2bth, pointing out several items with
which you are not in accord.




With best personal regards, I am
Sincerely,
(Signed)

Dick.

Richard M. Simpson

i

z-2063
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM

For immediate release

.

June 10, 19hl

STATEMENT OF CHAIRMAN ECCLES
IN REPLY TO CRITICISM BY MR, MUIR AND MR, CRAVENS ON H.R. 3268
BEFORE THE BANKING AND CURRENCY COMMITTEE OF THE HOUSE

During hearings before this Committee on June I4., 19U7» on H.R, 3268,
which would continue and improve the authority of Federal Reserve Banks to
guarantee in part loans by private banks, particularly to small business,
two witnesses representing committees of the American Bankers Association
presented statements which are so misleading and unfair that I would appreciate having this reply placed in the record.
One witness was Mr. Earl R. Muir of Louisville, Kentucky, a member of
the Small Business Credit Commission of the ABA, whose prepared statement was
strikingly similar to previous attacks made on this legislation by Mr. Walter
B. French, who is employed as Deputy Manager of the ABA. As this Committee
is doubtless aware, though the general public is not, these attacks are not
representative of a very large body of banking opinion in this country. The
Board and, no doubt, members of Congress have received various communications
from individual banks as well as from local banking organizations endorsing
the bill, and I placed in the record the resolution in support of this measure
by the Federal Reserve System's Advisory Council, which is composed of one
leading banker from each of the Federal Reserve districts in the country.
While Mr. Muir speaks for an ABA committee on small business, it is interesting to note that the Small Business Advisory Committee to the Secretary of
Commerce, which is composed of businessmen who have given consideration to
this legislation, strongly endorses it and expects shortly to issue a formal
statement of approval. Likewise, I understand that the research committee of
the Committee for Economic Development, in reporting on the needs of small
business, among other recommendations endorses this type of credit program
administered by the Federal Reserve System.
In an effort to stir up animosities, Mr. Muir echoed a wholly untrue
assertion previously made by Mr. French that the bill would tend to destroy
the dual banking system. This is a familiar red herring. It is repeatedly
dragged out by the opponents of the Federal Reserve System, and it is utterly
false. Congress gave the Reserve System authority in 193U to make industrial
loans directly or to participate in them with private banks. Under this
authority some 3500 applications for commitments and advances, aggregating
566 million dollars, were approved by the Federal Reserve Banks and their
branches. That did not threaten the dual banking system. During the war the
Reserve Banks and branches under the so-called V-loan program made 8771
guarantees of war-production loans, aggregating nearly 10.5 billion dollars.
That did not threaten the dual banking system. Nor will continuation of this
same general authority as proposed in the pending bill.




- 2Mr. Muir stated that the dual banking system had more than once
been under attack by me. That is absolutely untrue. I am and have long been
in favor of wider membership in the Federal Reserve System. I have urged unification in that sense and only in that sense. This does not mean doing away
with State chartering or the State banking authorities, with whom the Federal
Reserve System has long worked very closely. We have in the Federal Reserve
System nearly 2000 State member banks having aggregate deposits of i+0 billion
dollars, or approximately two-thirds of the total deposits of all State commercial banks. It is preposterous to contend that continuance of this guarantee
authority can or would affect in any way the established dual banking system in
this country or that the Reserve Board or the Reserve Banks have any such
purpose in mind in this or any other legislation.
You will recall that when the legislation was passed by Congress
creating the Federal Deposit Insurance Corporation it required that all insured banks were to become members of the Federal Reserve System. Senator
Glass1 support of this legislation was predicated on that requirement.
Opponents of the Reserve System were successful later on in getting this removed from the law as a requirement and this, in my opinion, was a backward
step. The point is, however, that the charge of Reserve System hostility to
the dual banking system is baseless and contradicted by the facts.
Mr. Muir likewise echoed Mr. French's fears that the Reserve Banks
would approve unsound loans. As I stated recently in a letter answering Mr,
French;
"Such assertions impugn the judgment and good faith not only
of the Reserve Board but of the officers and staffs of the Reserve
Banks and branches who have had responsibility for the 11 billions
of similar credit operations in the past and who would have the responsibility for them in the future.
The interest and fees
collected in connection with the 566 million dollars of operations
under l^b exceeded all expenses and losses entailed. Likewise,
interest and fees collected in connection with nearly 10»5 billion
dollars of credit operations under the V-loan program were sufficient
to cover all expenses and losses and to result in a substantial
profit. This is hardly a record of 'loose lending'."
Mr. Muir professes to be very solicitous of the interests of small
"business, but appears to be unaware of the fact that it is the smaller concerns which are greatly handicapped in obtaining needed financing because
they cannot go to the capital markets, as can the big companies, and frequently the local banks do not feel that they can extend long-term credits
up to 10 years, which this bill would enable thorn to do by authorizing the
Reserve Banks, for a fee, to guarantee a percentage of tho risk.
Congress has; recognized the importance of the smaller business
enterprises in this country and has sought to help and encourage them. This
is one practical and tested way of helping. The service would be available
to all banks, State or national, member or nonmember, without discrimination,
just as was the case in the System's thirteen years of experience with
and later with V loans.




-3 The other witness, representing the Credit Policy Commission of the
ABA, who took much the same line as Mr. Muir, was Mr. Kenton R. Cravens, who
reflects the opposition of some of the large banks. He conjured up another
fear, namely, that in case of a severe depression, losses on guaranteed
loans would have to be paid out of public funds collected in taxation of the
people. Such an assertion, as applying to the proposed legislation, is
false. Any losses sustained would first come out of the guarantee foes
collected, and secondly out of earnings of the Reserve Banks, and finally,
if the losses so far exceeded what all our experience indicates, out of the
Reserve Banks' surplus.
Mr, Cravens' statement is ambiguous because he does not make clear
in his criticisms whether he is speaking about the
pending bill or about
Government lending and guaranteeing operations in general. He implies, however, because he was testifying on this measure that it would be inconsistent
with the American system of free enterprise. Such a charge directed at the
proposed legislation is as wide of the mark aa are his equally ambiguous
fears about taxing the American people to take care of the guarantees. This
bill would strengthen our system of private enterprise by encouraging banks
to make loans particularly to the smaller businesses which without the
partial guarantee would look to direct Government lending or guaranteeing
based on appropriated public funds. Under this bill the Reserve Banks would
have no authority to make direct loans and would in no way be placed in competition with commercial banks. In all cases loans guaranteed would originate
with local privately-owned banks. Credit judgment and responsibility would
remain primarily with the local bank. The bill is thus entirely consistent
with our system of private enterprise.
Both Mr. Muir and Mr f Cravens point out that bank facilities today
are adequate to meet the credit demands of business. I do not believe this is
true so far as the long-term crodit needs of small business are concerned.
Experience does not support their conclusion, and this legislation would be
a practical means of affording needed help when necessary without the use of
appropriated money, without competition with private enterprise, and in a way
that will help in preserving our economic system.




BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
For immediate release

June 11, 194-7.

STATEMENT OF CHAIRMAN ECCLES
IN REPLY TO CRITICISM OF S. 829 BY REPRESENTATIVES OF THE MORRIS PLAN
BEFORE THE BANKING AND CURRENCY COMMITTEE OF THE SENATE

Mr. Hill, the Clerk of the Committee, called me the other day to
say that the Committee wanted me to appear here this morning to discusss the
testimony of certain representatives of the Morris Plan who appeared on
June 2nd in opposition to S. 829. Naturally, I am glad to respond to the
Committee's request although I must confess a sense of disappointment that,
after discussions concerning this bill which have covered a period of almost
two years with representatives of other Government agencies, the Federal
Advisory Council, two Independent Bankers Associations, bankers generally,
and representatives of all of the country's major bank holding companies, I
find that we overlooked someone to convince about the merits of this legislation.
I have not had the time to study in detail the extensive oral
testimony and elaborate printed statements which were introduced by the
Morris Plan representatives. Such as I have seen, however, arc so misleading and unfair, and contain so many inaccuracies, as to convince me that
they were delivered merely in the hops that one or more of the random charges
which they contain might result in damaging delay to the progress of this
legislation in this session of Congress. I shall point out two or three of
the major inaccuracies contained in these statements simply to show the
Morris plan opposition for what it really is, namely, an attempt to prevent
the regulation of that group of companies as bank holding companies -- a result which they have so far managed to achieve by taking advantage of one of
the loopholes in the present law and causing the withdrawal from System
membership of any banks which they acquire.
One of the charges which is repeatedly stressed in their statements is that S. 829 does not contain such adequate standards as to enable
those who would be brought under the Act to know in advance what will be
the rules of coverage and administration. This charge is made with respect
to a number of the sections of the bill.
First it is charged that Section 3> which defines bank holding companies and provides the legislative machinery for obtaining exemptions from
the Act, contains what Mr. Huntington, President of Morris Plan, describes as
"meaningless" standards. His statement characterizes that section as providing only one "real" standard, which he states is the "arbitrary determination
of the Board".




-2As pointed out in my previous testimony, the definitions and
exemption provisions of Section 3 are patterned upon identical provisions
in the Public Utility Holding Company Act of 1935. In that Act, as here,
the sole criterion of coverage is that of control. In both there is a
mathematical coverage based upon a percentage of stock ownership, coupled
with the positive right of a company owning the critical number of shares
to obtain a declaration that it is not a holding company if it can demonstrate that it does not enjoy the power of control. Similarly, both Acts
provide that even if a company does not own the critical number of shares,
the Government regency may declare such company to be a holding company upon
a determination that control does in fact exist. The standard provided in
this section is therefore a purely factual one, one which is capable of
concrete proof the same as any other factual issue. Furthermore, this
standard is one which has had judicial construction ind interpretation in
many cases which have gone to the courts from the decisions of the Securities ind Exchange Commission on the definitions contained in that Act. If
the Committee — or Mr. Huntington — desires a list of these cases, I shall
be glad to supply it.
Next it is charged that the Board's power under Section 5(b) to
"determine" that a business is "related" to banking is also without adequate standards.
This section allows an exemption from the positive prohibition
against a holding company owning voting shares in «ny company other than a
bank. Its purpose is to permit a holding company to keep its ownership in
those companies which are "related" to the banking business. The standards
for determining what is a "related" business are clear. First, under the
plain terms of the section, the business must be such as to be a "proper
incident" to the banking business. This in itself is a yardstick capable of
specific application. Secondly, the section lists a number of specific
kinds of businesses which are legislatively declared to be properly incidental to banking and these, under a legal doctrine familiar to most lawyers,
limits the kinds of other businesses which may be declared to be "related"
to banking to those which are of a like nature. Thirdly, these standards
are subject to the further limitation appearing in that part of Section 2
of the Act which reads as follows: "It is hereby declared to be the policy
of Congress, in accordance with which policy all of the provisions of this
Act shall be interpreted, to control the creation and expansion of bank holding companies; to separate their business of managing and controlling banks
from unrelated businesses. * * *"
It is also charged that Section 6 of the Bill lacks adequate
standards for determining to what extent a bank holding company may be permitted to expand. In his oral testimony Mr. Huntington, in effect, urged
the Congress to adopt a dollar figure defining "bigness".




- 5There is no section of S. 829 which provoked a more searching
inquiry for adequate and specific standards than Section 6. Neither the
"death sentence" nor the so-called "freeze" seemed to be either just or in
the public interest. On the other hand, it was recognized that there should
be a positive prohibition against the kind of expansion which operates to
the detriment of the public. I believe that the standards as now stated in
Section 6 are capable of specific application to each problem of expansion
which may hereafter arise. As pointed out in my previous testimony, the banking agencies, when called upon to decide whether to approve the further expansion of a bank holding company, must first consider the financial history
and conditions of the applicant and the banks concerned; their prospects*
character of managementj and the needs of the communities involved. These
are considerations which today constitute the legislative guide for administrative action in such matters as the admission of State banks to membership
in the Federal Reserve System or the granting of federal deposit insurance
coverage. They have been in tho banking statutes for many years, without
challenge or complaint, Presumably, therefore, they are understood and approved by the banking fraternity generally. Next, the banking agencies are
required to take into considerc.tion and to give effect to tho national
policy against restraints of trado and commerce and the undue concentration
of economic power. This standard does not promulgate a new national policy;
it merely gives effect to one which has long been on the statute books of
this country in the Shsrman and Clayton Acts, And judicial interpretation
of those Acts has long sinco fixed the boundaries of this policy in understandable terms of precise application. Finally, there is the requirement
under Section 6 that the proposed expansion shall not bo inconsistent with
adequate and sound banking and the public interest, all of which are familiar
expressions to those whoso activates are subject to supervision at the hands
of banking agencies,

ALLEGED LACK OF ADEQUATE JUDICIAL REVIEW
In addition to the charge of lack of standards it has also been
charged that, with very limited exceptions, no provision has been made in
S. 829 for judicial review of most of the important decisions which the
Board is required to make under the bill.
This charge is so obviously without foundation as scarcely to require a reply. Section ll(d), which is also patterned upon a similar section
in the Utility Act, is intended to, and does in fact, grant a specific right
of judicial review of any and all orders of the Board made pursuant to S. 829
to a person who is aggrieved by suca action, Tho courts have long since determined that the scope of review provided by the judiciEd review section of
the Utility Act, as well as many similar provisions in other regulatory acts,
include the right to review any aation which is of a definitive character
that adversely affects the legal rights of any person. In' £ho Utility Act
the courts have even gone so far as' to hold that a minority stockholder not




-4a party to the proceedings before the Commission is entitled, under certain
circumstances to judicial review of the Commission's action affecting the
corporation, even though the corporation has not sought such review itself.
ALLEGED EFFECT UPON DUAL,BANKING SYSTEM
The third and final charge to which I shall refer is one which
both Mr. Huntington and Mr. Morris made, namely, that S. 829 would tend to
destroy the dual banking system. This is a familiar red herring. It is
repeatedly dragged out by the opponents of the Federal Reserve System, and
it is utterly false. Only yesterday I appeared before the House Banking and
Currency Committee to answer this charge in relation to the Board's bill to
authorize the Federal Reserve Banks to guarantee in part loans by private
banks, particularly to small business. Whenever the Board proposes legislation of any kind, selfish opponents make use of this wholly fallacious
argument because they feel that by doing so they can cause effective alarm
among the senators and representatives in the Congress who have committee
responsibilities for such legislation.
I am and have long been in favor of wider membership#in the Federal
Reserve System. I have urged unification in that sense and only in that sense.
This does not mean doing away with State chartering or the State banking authorities, with whom the Federal Reserve System has long worked very closely.
We have in the Federal Reserve System nearly 2,000 Str.te member banks having
aggregate deposits of 4.0 billion dollars, or approximately two-thirds of the
total deposits of all State commercial banks. It is preposterous to contend
that, by extending holding company legislation to reach all such companies,
which in turn will subject a relatively few nonmember banks to regulation as
a part of a holding company system, this would affect in any way the established dual banking system in this country or that the Board has any such
purpose in mind in this or any other legislation.
You will recall that when the legislation was passed by Congress
creating the Federal Deposit Insurance Corporation it required that all insured banks were to become members of the Federal Reserve System. Senator
Glass' support of this legislation was predicated on that requirement.
Opponents of the Reserve System were successful later on in getting this removed from the law as a requirement and this, in my opinion, was a backward
step. The point is, however, that the charge of Reserve System hostility to
the dual banking system is baseless and contradicted by the facts.







TRUST COMPANY OF GEORGIA
MEMBER FEDERAL RESERVE SYSTEM

ATLANTA 2, G A .

June 16, 1947

Mr. Marriner S. Fccles, Chairman
Federal Reserve Board,
Washington, D. C.
Dear Mr. Eccles:
I would like for you to know how much
I appreciated your inviting me to lunch on last Thursday.
Naturally, we are very glad that an agreement was reached
on the matter we have had under discussion for so long;
yet, it seems rather strange that after the many conferences the final result was achieved so quickly.
Your consideration is very much appreciated,
8nd I hope to see you again before too long.

ordially,

r

. D. Robinson, Jr.,
Vice President.

JDR:AM

CHARLES W. TOBEY, N . H., CHAIRMAN
C. DOUGLASS BUCK, DEL.
ROBERT F . WAGNER, N . Y.
HOMER E. CAPEHART, IND.
BURNET R. MAYBANK, S . C .
RALPH E. FLANDERS, VT.
GLEN H. TAYLOR, IDAHO
HARRV p . CAIN, WASH.
J . W. FULBRIGHT, ARK.
JOI
V. BRICKER, OHIO
A. WILLIS ROBERTSON, VA.
JOS
H R. MCCARTHY, WIS.
JOHN SF ARK MAN, ALA.
ROBERT C. HILL, CLERK




ilICnHeb &laU» JSxmaie
COMMITTEE ON BANKING AND CURRENCY

June 18, 1947

Mr. Marriner S.
Chairman, Board
Federal Reserve
Washington, D.

Eccles
of Governors
System
C,

Dear Mr. Eccles:
Reference is made to your letter
of June 13, 1947 addressed to Senator
Tobey regarding the bill to provide for
regulation and control of bank holding
companies before the Senate Committee on
Banking and Currency.
The Committee is pleased to
inform you that your letter has been
incorporated in the printed record of the
hearings on Senate bill 829.
Very sincerely yours,

RCH:G