Full text of Mimeograph Letters and Statements of the Board : Letter From Secretary Morrill re Proposed Revision of Federal Reserve Board Forms 94, 94a and 94b, Number X-7431, Volume 38, Page 201

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FEDERAL RESERVE BOARD
WASHINGTON
A D D R E S S OFFICIAL CORRESPONDENCE TO
T H E FEDERAL RESERVE B O A R D

X-7431
May 9, 1953.

SUBJECT:

Proposed Revision of Federal Reserve
Board Forms 94 , 94a and 9413.

Dear S i r :
In the Board's l e t t e r of May 1, 1933 (X-7426), r e l a t i n g
to the a d m i n i s t r a t i o n of the p r o v i s i o n s of the Clayton A n t i t r u s t
Act, a procedure was o u t l i n e d f o r the handling of a p p l i c a t i o n s
which was designed t o b r i n g about a more complete p r e s e n t a t i o n
of the r e l e v a n t f a c t s .

In t h i s connection c o n s i d e r a t i o n i s

being given t o t h e a d v i s a b i l i t y of r e v i s i n g Federal Reserve
Board Forms 94, 94a and 94b so t h a t they w i l l c a l l f o r the
necessary i n f o r m a t i o n more s p e c i f i c a l l y and i n more d e t a i l , and
thus f a c i l i t a t e a proper p r e s e n t a t i o n and prevent unnecessary
correspondence and d e l a y .
There i s i n c l o s e d , f o r your i n f o r m a t i o n , a copy of a
recommendation and the accompanying statement of f a c t s submitted
by t h e Federal Reserve Agent a t D a l l a s i n connection w i t h a
r e c e n t a p p l i c a t i o n , as well a s a copy of a l e t t e r addressed to
the p r e s i d e n t of one of the banks involved i n the a p p l i c a t i o n .




X-7431

-2-

I t i s f e l t t h a t t h e s e contain s e v e r a l f e a t u r e s which might
well be adopted i n a r e v i s i o n of the Board's p r i n t e d forms.
The Board would a p p r e c i a t e your suggestions f o r t h e
improvement of the p r i n t e d forms and any comments which you
may d e s i r e to make r e g a r d i n g the procedure to be followed
i n assembling and p r e s e n t i n g the r e l e v a n t f a c t s .
Very t r u l y y o u r s ,

Chester M o r r i l l ,
Secretary.

Inclosures.

TO ALL T.


R. AGENTS EXCEPT DALLAS.

X-7431-a

RECOMMENDATION ON CLA.YTON ACT APPLICATION
(Name of Applicant)
FOE PERMISSION OF THE FEDERAL EE SERVE BOARD
TO SEEVE AS •
DIRECTOR, (Bank No. 1)
DIRECTOR, (Bank No. 2)
The d i s t a n c e between the two "banks i s approximately s i x m i l e s ,
the (Bank No. 1) "being located i n the southern p a r t of the City of
(_
)i while the (Bank No. 2) i s l o c a t e d i n the center of t h e
down-torm f i n a n c i a l and r e t a i l shopping s e c t i o n . P r i o r to t h e
extension of t h e corporate l i m i t s of the City of (
) , about
s i x years ago, t h e v i l l a g e of (
) , i n which the (Bank No. 1)
)
i s l o c a t e d , was an incorporated town. With t h e growth of (
c e r t a i n suburbs were taken i n t o t h e City of (
) . The p r i n c i p a l
b u s i n e s s of t h e (Bank No. 1) i s t h a t of r e t a i l merchants i n (
),
accounts of employes of the i n d u s t r i a l p l a n t s l o c a t e d a d j a c e n t t o the
(
) ship channel, truck growers, and small f a r m e r s . I t i s
t h e r e f o r e e n t i r e l y d i f f e r e n t from t h a t handled by t h e (Bank No. 2 ) .
The d i s t a n c e between the banks and d i f f e r e n c e i n c l a s s of customers served would eliminate t h e question of t h e i r being n a t u r a l
competitors.
The a t t a c h e d statement of f a c t s shows t h a t Mr. (
) has
been a d i r e c t o r of the (Bank No. 1) f o r eight y e a r s , owning, however,
only a small number of shares of stock i n t h a t bank. He has r e g u l a r l y attended meetings of the Board of D i r e c t o r s of the (Bank No. 1)
and served on the discount and examining committees. This c o n t a c t
enables him to be i n very c l o s e touch with the a f f a i r s of the
institution.
Mr. (
) does not unduly "ride" e i t h e r bank through borrowi n g s , d i r e c t or i n d i r e c t , and he does not own enough stock i n e i t h e r
t o permit any domination or c o n t r o l of t h e management.
I t i s t h e r e f o r e f e l t t h a t h i s s e r v i c e would be e n t i r e l y comp a t i b l e with t h e p u b l i c i n t e r e s t and f a v o r a b l e a c t i o n on the a p p l i c a t i o n i s recommended.




(Signed)

C. C. Walsh
Federal Reserve Agent
Federal Reserve Bank of Dallas

204

X-7431-b
Statement of f a c t s i n r e a p p l i c a t i o n of
(Name of Applicant)
f o r permission of the Federal Reserve Board,
under t h e p r o v i s i o n s of the Clayton Act, to
serve a s
DIRECTOR, (Bank No. 1)
DIRECTOR, (Bank Ho. 2)
Character of management of the "banks involved i n the a p p l i c a t i o n
(a) (Bank No. 1)
(b) (Bank No. 2)
The c h a r a c t e r of management of both "banks i s f i r s t c l a s s ,
and t h e i r a f f a i r s a r e capably handled.

The Managing D i r e c t o r of t h e (
) Branch, F e d e r a l Reserve Bank of D a l l a s , makes the following comment: "We have
a h i g h regard f o r the management of "both of t h e s e "banking
i n s t i t u t i o n s . We t h i n k i t s a f e and e f f i c i e n t . "
Character of the s e r v i c e rendered "by the a p p l i c a n t
(a)

The a p p l i c a n t was e l e c t e d a d i r e c t o r of t h e (Bank No. 2)
on February 14, 1933, and has attended one d i r e c t o r s ' meeting
since his election.
He has been a d i r e c t o r of the (Bank No. 1) s i n c e A p r i l 6,
1925, and has been absent a t only one d i r e c t o r s ' meeting during
the p a s t two y e a r s . He has served on the discount and examining
committees of the (Bank No. 1 ) .

(b)

There i s no evidence t h a t he dominates the banks with which
he i s connected.

(c)

At the p r e s e n t time Mr. (
) i s d i r e c t l y indebted t o
the (Bank No. 1) f o r $3,130. He i s not a f r e q u e n t borrower and
has never been d i r e c t l y or i n d i r e c t l y indebted to t h e (Bank No. 2 ) .

(d)

The a p p l i c a n t nas e l e c t e d a d i r e c t o r of t h e (Bank No. 2) on
February 14, 1933, and has a t t e n d e d one meeting of t h e d i r e c t o r s
of t h a t i n s t i t u t i o n since h i s e l e c t i o n . He has been absent a t
only one meeting of the d i r e c t o r s of the (Bank No. 1) during t h e
p a s t two y e a r s .




X-74S1-T3 L
—2—
3.

Condition of t h e "banks involved
(a)

(Bank Ho. 1)
This hank was l a s t examined on November 10, 1932. The
examiner makes the following comment; "The l i t t l e bank i s
ahout paying expenses, hut e n t i r e l y solvent and i t i s b e l i e v e d the general c h a r a c t e r of i t s a s s e t s a r e sound."
(Bank No. 3)
This bank was l a s t examined on August 30, 1932. The
examiner makes the following comment: "A c o n s e r v a t i v e l y
managed b a n k . "
The c l a s s i f i c a t i o n of i t s a s s e t s does not show excessive
r a t i o s s u b j e c t to c r i t i c i s m . Net d e p r e c i a t i o n i n bonds and
s e c u r i t i e s of $331,622, i s amply provided f o r with t h e b a n k ' s
l a r g e s u r p l u s , undivided p r o f i t s and r e s e r v e a c c o u n t s .

(b)

4.

Since t h e r e i s no common ownership of stock of e i t h e r
bank, i t i s not b e l i e v e d t h e i r condition would be a f f e c t e d by
an i n t e r l o c k i n g d i r e c t o r a t e . Only one other d i r e c t o r of
e i t h e r bank i s a d i r e c t o r of another bank.

general banking s i t u a t i o n
(a)
(b)

The l o c a l banks i n (
) compete f o r a l l c l a s s e s of
b u s i n e s s , but based on the i n f o r m a t i o n developed t h e competit i o n between them i s f r i e n d l y and not d e s t r u c t i v e or u n e t h i c a l .

(c)

The banks a f f e c t e d a r e not under common ownership, or
control.

(d)

There a r e f i v e d i r e c t o r s of t h e (Bank Mo. 1) two of whom
( i n c l u d i n g t h e a p p l i c a n t ) a r e d i r e c t o r s i n o t h e r banks.
There a r e twenty-six d i r e c t o r s of t h e (Bank Mo. 2 ) , two
of whom ( i n c l u d i n g a p p l i c a n t ) a r e d i r e c t o r s i n other banks.

(e)

There a r e f i f t e e n banks i n the City of (

(f)

Mone of them a r e i n a chain or group banking system.

(g)

).

The a p p l i c a t i o n has not r e s u l t e d from a s i t u a t i o n i n
which one bank has a s s i s t e d i n the r e c a p i t a l i z a t i o n or r e o r g a n i z a t i o n of another bank.




#06
X-7431-b
-35.

The management of n e i t h e r bank needs s t r e n g t h e n i n g i n "man-power"
or f i n a n c i a l l y .

6.

Mr. (
) owns 10 s h a r e s , or 2 per cent of t h e c a p i t a l s t o c k of
the (Bank Ho. 1 ) , and 50 s h a r e s , or l / 2 of 1 per c e n t , of the c a p i t a l
s t o c k of the (Bank No. 2 ) .

7.

The reasons why Mr. (
) d e s i r e s to s e r v e a s a d i r e c t o r of t h e
(Bank No. 1) and (Bank Ho. 2) a r e s t a t e d i n h i s l e t t e r t o A s s i s t a n t
Federal Reserve Agent H a l l , dated A p r i l 14, a t t a c h e d .

(Hote: The l e t t e r from the a p p l i c a n t , r e f e r r e d t o i n Ho. 7 above,
i s not i n c l o s e d , "but i t was i n response to t h e a t t a c h e d l e t t e r
addressed t o one of the banks involved by the o f f i c e of the Federal
Reserve Agent.)




2117
X-7431-c
FEDERAL RESERVE BAHK OF DALLAS
February 17, 1933

Mr. (
), President
(Bank No. 1)
(
») Texas,
Dear Mr. (

_):

Your l e t t e r of February 15, addressed t o our (
Branch, has been r e f e r r e d to t h i s o f f i c e by Cashier (
) for
a t t e n t i o n . In compliance with your r e q u e s t I am p l e a s e d t o enclose
form 94, "Application f o r permission of the Federal Reserve Board
to serve under the p r o v i s i o n s of the Clayton A n t i t r u s t A c t , " and
copy of Regulation L, S e r i e s of 1930, to which I d i r e c t your a t t e n t i o n t o Section I I , paragraph ( 3 ) .

)

The Federal Reserve Board has r e c e n t l y announced t h a t
i t does not consider an a p p l i c a t i o n of t h i s kind complete, u n l e s s
i t i s accompanied by a statement of the a p p l i c a n t ' s own reasons
why he b e l i e v e s the g r a n t i n g of t h e a p p l i c a t i o n would not be incomp a t i b l e with the p u b l i c i n t e r e s t . This i s e s p e c i a l l y a p p l i c a b l e t o
cases wherein the a p p l i c a n t wishes to serve as a d i r e c t o r of two or
more banks l o c a t e d i n the same c i t y and competing f o r t h e same
general c l a s s e s of b u s i n e s s . A t t e n t i o n i s i n v i t e d , t h e r e f o r e , to
paragraph 8 of the a p p l i c a t i o n form which reads a s f o l l o w s :
"The a p p l i c a n t i s i n v i t e d t o g i v e , on a s e p a r a t e
sheet or i n a l e t t e r a t t a c h e d h e r e t o , any other i n f o r m a t i o n which w i l l tend to prove t h a t the i s s u a n c e of the
permit a p p l i e d f o r would not be incompatible with t h e
public interest.%
There a r e a l s o enclosed forms 94a which should be f i l l e d
out by each of the banks the a p p l i c a n t d e s i r e s to s e r v e , and accompanied
by a copy of the r e p o r t of c o n d i t i o n of t h e bank a s shown on t h e c a l l
of December 31, 1932. The f o l l o w i n g information from each of t h e banks
should a l s o be f u r n i s h e d :
1.

Length of time t h e a p p l i c a n t has been a d i r e c t o r
of t h e bank

2.

Amount of s t o c k held i n the bank by a p p l i c a n t

3.

Record of h i s attendance a t d i r e c t o r s 1 meetings
f o r t h e p a s t two y e a r s

4.

Reasons why the bank d e s i r e s the a p p l i c a n t to s e r v e
as a member of i t s Board of D i r e c t o r s




X-7431-C
—2**
5.

Whether t h e two banks a r e considered n a t u r a l comp e t i t o r s f o r any c l a s s of b u s i n e s s

6.

I f n a t u r a l competitors f o r any c l a s s of b u s i n e s s ,
would t h e a p p l i c a n t ' s s e r v i c e as a d i r e c t o r of b o t h
i n s t i t u t i o n s tend to l e s s e n such c o m p e t i t i o n

7.

dumber of d i r e c t o r s i n bank who axe a l s o d i r e c t o r s
i n o t h e r banks

8.

Would the a p p l i c a n t ' s s e r v i c e as a d i r e c t o r of b o t h
i n s t i t u t i o n s be i n c o m p a t i b l e w i t h t h e p u b l i c i n t e r e s t ,
a s d e f i n e d i n t h e F e d e r a l Reserve B o a r d ' s R e g u l a t i o n
L, S e r i e s of 1930, S e c t i o n 4, p a r a g r a p h D, page 4

9.

Has t h e a p p l i c a n t ever served a s a member of your
E x e c u t i v e , Discount, or Examining committees

10.

Would t h e g e n e r a l banking s i t u a t i o n i n
be
s t r e n g t h e n e d by t h e a p p l i c a n t c o n t i n u i n g t o s e r v e
a s a d i r e c t o r of t h e i n s t i t u t i o n

11.

Any o t h e r r e l e v a n t f a c t s , or o p i n i o n s , t h e bank
d e s i r e s t o submit.

I

Upon r e c e i p t of t h e a p p l i c a t i o n , p r o p e r l y executed
forms and s u p p o r t i n g d a t a , t h e f i l e w i l l be t r a n s m i t t e d t o t h e
F e d e r a l Reserve Board f o r i t s c o n s i d e r a t i o n .




Yours v e r y t r u l y ,
(Signed) Ohas. C. H a l l
A s s i s t a n t F e d e r a l Reserve Agent