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, 1228 Minutes of action taken by the Board of Governors of the Federal Reserve System on Tuesday, July 19, 1949. The Board met in the Board Room at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. McCabe, Chairman Szymczak Evans Vardaman Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Hammond, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board Riefler, Assistant to the Chairman Vest, General Counsel Leonard, Director, Division of Bank Operations Millard, Director, Division of RTeminations Young, Associate Director, Division of Research and Statistics Smith, Special Counsel Hostrup, Assistant Director, Division of Examinations Mr. Carpenter read the following motions addressed to the toavvi ---, and filed with the Board's Hearing Officer on July 8, 1949, by the attorneys for Transamerica Corporation in the Clayton Act pro"ecling against the Corporation: 1. Motion to dismiss for failure of proof. 2. Motion and request for hearing and determination of motions to dismiss by all qualified members of the Board of Governors of the Federal Reserve System. 3. Motion that the Board's Solicitor be required to 7/19/49 -2file statement of facts relied on in advance of oral argument of motion to dismiss. Copies of these motions had been distributed previously to the members of the Board. Mr. Vardaman stated that in a con- ference last week he raised again with Mr. Clayton the question of the Position the latter had taken that for the time being he would refrain from participation in matters coming before the Board in connection with the Transamerica proceeding, that he had understood that Mr. Clayton would prepare and send to the Chairman for presentation at this meeting a statement of the reasons for his position, elld that he (Mr. Vardaman) had consented to come back from his vacation °IllY in order that a quorum could be present for consideration Of the matters that were to come before the Board today with the under standing that Mr. Clayton's statement would be made a part of the record of this meeting. Members of the staff who participated in the conference which Messrs. VardsmAn and Clayton had last week stated that it was their Unde rstanding that Mr. Clayton was to file with the Chairman a stateMent of the reasons for his position for presentation to the Board but that since he was leaving town immediately following the conference and. would not be back before the middle of this week, it was not antithat the statement would be ready for presentation at this Meeting of the Board. 7/19/49 -3Mr. Vardaman said that he was serving notice on the Board that after today he would not participate in matters relating to the Transamerica proceeding until Mr. Clayton had clarified his Position, that he did not object to Mr. Clayton's position, but that the reasons for that position should be stated to the Board and incorporated in the record. A draft of statement and order to be issued by the Board on the three motions referred to above was then read, and Mr. Szymczak moved that the statement and order be approved by the Board as follows: "UNITED STATES OF AMERICA BEFORE THE TUE FEDERAL RESERVE SYSTEM OF BOARD OF GOVERNORS IN THE MATTER OF TRANSAMERICA CORPORATION STATEMENT AND ORDER ON MOTIONS TO DISMISS, FOR BOARD TO HEAR AND DETERMINE MOTION TO DISMISS AND TO REQUIRE SOLICITOR FOR BOARD TO FILE STATEMENT OF FACTS RELIED ON "On July 8, 1949, the Solicitor for the Board concluded his presentation of evidence in support of the Board's complaint (R. 3795). Counsel for respondent thereupon filed With the Hearing Officer three motions addressed to the Board and dated July 8, 1949 (R. 3798-3807), requesting dismissal of this proceeding for failure of proof, asking that such motion be heard and determined by 'all qualified and eligible members of the Board' and requesting the Board to require the Solicitor for the Board to file and serve upon respondent's attorneys a statement of the facts which he deems established and upon which he relies in support of the Board's complaint. Respondent's counsel have indicated that if their motion to dismiss is denied, respondent desires to offer evidence in Opposition to the complaint. "Neither due process of law, nor any statute applicable to this proceeding, requires the Board to hear or determine an 1231 7/19/49 "interlocutory motion to dismiss for failure of proof. As the Securities and Exchange Commission stated with respect to such a motion in Matter of Thornton & Co., Pike & Fischer, Admin. Law, 41q232-7 (1947): 'An informed disposition of the motion on the merits at this time would necessitate the submission of a brief on the merits by the staff, oral argument, and consideration and deliberation by us on the basis of the present record. Should the motion then be denied, hearings would have to be resumed to permit respondent to present its evidence, as it has stated a desire to do in such event, at the conclusion of which there would presumably be additional briefs and arguments on the supplemented record. In that event briefs would be duplicated and we would be compelled to adjudicate the case not once but twice.' "The Board is therefore denying respondent's motion that the 'qualified and eligible members of the Board' hear and determine respondent's motion to dismiss. "The Hearing Officer, however, is thoroughly familiar with the record. It does not appear that consideration by him of respondent's motion to dismiss would unduly delay the proceeding, and it might serve a useful purpose. Hence, in the exercise of its discretion, and in keeping with the policy implicit in Secs. (c), 7(b) and 8(a) of the Administrative Procedure Act (5 U.S.C.A. Secs.1004 (c), 1006 (b), 1007 (a)), the Board is referring respondent's motion to dismiss to the Hearing Officer for consideration, for such hearing, if any, as he may deem appropriate, and for disposition. "Since respondent's motion to require the Board's Solicitor to state the facts which he deems established and upon Which he relies relates to the procedure to be followed in considering and disposing of respondent's motion to dismiss, the former motion is also referred to the Hearing Officer for consideration and disposition. ORDER "For the reasons set forth in the foregoing statement, it is ORDERED that: 1. Respondent's 'Motion and Request for Hearing and Determination of Motions to Dismiss by All Qualified Members Of the Board of Governors of the Federal Reserve System' be, and it hereby is, denied. 2. Respondent's 'Motion that Board's Solicitor Be Required To File Statement of Facts Relied on in Advance of Oral Argument of Motion To Dismiss' and 'Motion To Dismiss for Failure of Proof' be, and they hereby are, referred to e)47:Cli 7/19/49 the Hearing Officer for consideration, for such hearing, if any, as he deems appropriate and for disposition. "This 19thday of July, 1949. "By the Board. (SEAL) (signed) S. R. Carpenter Secretary "Governors Eccles and Clayton took no part in the consideration or decision of the motions referred to in the foregoing statement and order." Mr. Vardaman stated that he would like to hear the views of the Board's Special Counsel on the matter, that as stated before he (Mr. Vardaman) would prefer to have the motion to dismiss heard and determined by the Board rather than by the Hearing Officer, and that he had previously concurred in the contemplated reference of the 14"i0n to the Hearing Officer only because he understood that Counsel strongly recommended that procedure. Mr. Smith stated that he had not been asked for and had not Macle a recommendation as to the action the Board should take in this tatter but rather had been asked what action the Board could take, that he had outlined the available courses of action, that the Board had decided to refer the motion to dismiss to the Hearing Officer, etd that he had drafted the above statement and order accordingly. Mr. Vest stated that at the meeting on Friday, June 24, 1949, he reviewed the courses of action available to the Board and recomInerlded the course of action which the Board decided to follow on the ground that there was no legal objection to it, that it was the most 123.2 7/19/49 -6- Practical thing to do under the circumstances, and that the Hearing Officer who was entirely familiar with the record of the proceeding was in a position to pass on the motion. Mr. Smith made the further statement that the Board had the authority to hear the arguments and consider the motion if it wished to do so, that the question whether the matter should take that course was one for the Board to decide, and that he would be reluctallt to volunteer an opinion as to what the Board should do since he 41 been asked only what the Board could do. Mr. Vardaman stated that while he did not favor the proposed 1/1'cicedure, he would vote with the majority of the Board to approve it but that he thought that the purposes of the proceeding would be better served if the matter could come before the Board rather than the Rearing Officer. tbat The other members present expressed the view on the basis of the discussion at the meetings of the Board on '1141e 13 and 24, 1949, the objectives of the proceeding could best be "Ilred by following the procedure agreed upon at that time. In response to an inquiry, Mr. Smith stated that in the light r Mr. Evans' statement at the meeting on June 24 that if upon conof the motion to dismiss he should feel that it should be glAlated he would refer the matter to the Board for formal action, 188uatoe of the above statement and order would conform to the practice followed by a number of administrative agencies. 7/19/49 -7Thereupon, Mr. Szymczak's motion was put by the Chair and carried unanimously. Reference was then made to the application of the Solici- tor of the Board made through Mr. Evans as Hearing Officer that kragraph four of the complaint issued by the Board in the Clayton Act Proceeding against Transamerica Corporation be amended to cover three banks the stock of which was acquired by Transamerica Corporation subsequent to the date of the issuance of the original cornPla n ., Mr. Morrill stated that the original complaint might be e nded by (1) amending paragraph four as proposed by Mr. Townsend rld- (2) through the issuance of an amended and supplemental complaint e.8 Proposed by Mr. Smith. Mr. Morrill said that Mr. Townsend pre- the shorter form as being a simpler, more direct, and more lY Understood method whereas the longer form might result in -- and undesirable discussions and confusion, but that Mr. 11114ecessaly SInith preferred the issuance of an amended and supplemental com131a1nt, the form of which he had drafted. In response to an inquiry, Mr. Vest stated that he felt that the method of amendment proposed by Mr. Smith was the preferable procedure from the standpoint of a clean-cut record and that counsel for ealsamerica Corporation would undoubtedly question the amendment re' I'l of the manner in which it was made. He also said he felt that 7/19/49 -8- it did not make much difference which form the amendment took so far 8.8 the legal result was concerned except that the statute pro- vided that when a complaint was issued the respondent should be given thirty days in which to appear and show cause, that the sug8ested short form of amendment prepared by Mr. Townsend did not Provide for such a notice, but that he (ft. Vest) felt that such lacitiee Was desirable and should be provided regardless of the form cif the amendment used by the Board. In connection with the latter point, Mr. Smith stated that es he understood it, at least thirty days would be required to disP'°ee of the arguments on the motion to dismiss, and the notice of the amended and supplemental complaint would be running during that Peri°d so that issuance of the amended complaint would not delay the 131'°cleeding. Mr. Morrill stated that Mr. Townsend had agreed that the issuance of an amended and supplemental complaint should not dethe case. Mr. Evans stated that he had no feeling as to which form of elliendinent should be adopted by the Board. In response to a further inquiry as to Mr. Townsend's rea°4111 for preferring the shorter form of amendment, Mr. Morrill stated thet Mr. Townsend's opinion appeared to be that the sole objective of the amendment was to establish the basis for the inclusion of the thre e banks in question in a divestment order in case the Board should Cle8ira to do so at the conclusion of the proceeding and that Mr. 1236 7/19/49 Townsend felt there would be less argument and discussion of the amendment if it were done in the simplest form possible. He also said that Mr. Townsend did not place as much importance as did Mr. Smith on the incidental changes in the complaint that would be necessary to make the amended complaint consistent in all of its Parts and that there would be less likelihood of any issues being raised if the amendment were simple and direct than there would be I f the amended and supplemental complaint were issued. Mr. Smith stated that he thought that the short form of eMehdtent was awkward, illogical, and not in compliance with the statute and that Mr. Townsend had not given any reason for such an EthieMdment other than that he felt the amended and supplemental comillaillt might be subject to attack. Mr. Smith thought the shorter rcIlla of amendment was illogical because if the amendment were made, the complaint which was issued in June 1948 would purport to say that something that occurred in December 1948 and January 1949 had hed certain effects in June 1948. He also said that the shorter al/lel:Lament did not conform to the conventional practice by which there 18 brought into a case facts which occurred after the complaint was iseued and that ordinarily that was done by a supplemental pleading. Made the further statement that the Clayton Act required that ilotice be given and that if the Board should proceed as Mr. Townsend 111*()Posed, no notice would be given, which would not comply with the 7/19/49 statute. -10He added that counsel for Transamerica Corporation had the right to and probably would attack the amendment on any ground that he could find, that such an attack could not be prevented l egardless of what method of amending was used, but that counsel ' vculd have less chance of successfully attacking the amended and suPPlemental complaint than he would the short amendment. At the conclusion of a discussion, during which Mr. Vest outlined the changes that would be made by the amended and supplemental complaint, upon motion by Mr. VardsmAn, the issuance of the amended and supplemental complaint in the form recommended by counsel, as follows, was approved by unanimous vote: "UNIrED STATES OF AMERICA BEFORE THE BOARD OF GOVERNORS OF THE EEDERAL RESERVE SYSTEM IN THE MA1TER OF TRANSAMERICA CORPORATION AMENDED AND SUPPLEMENTAL COMPLAINT "The Board of Governors of the Federal Reserve System charges that Transamerica Corporation, hereinafter called respondent, is violating and has violated the provisions of Section 7 of an Act of Congress approved October 15, 1914 (the Clayton Act), 'An Act to supplement existing laws against unlawful restraints and monopolies, and for other Purposes', and the Board of Governors of the Federal Reserve System hereby issues this, its amended and supplemental complaint against said respondent, and states its charges With respect thereto as follows, to wit: "PARAGRAPH ONE--Respondent is a corporation organized under the laws of the State of Delaware, having its princiPal office in the City of San Francisco, State of California. Respondent has an authorized capital stock of 25,000,000 shares, of the par value of $2.00 per share, approximately 9,900,000 shares of which are now outstanding. Respondent, through various subsidiary and other companies which it controls, is now engaged, in interstate commerce, in the 1238 7/19/49 -11- "commercial benking business in the United States and in foreign countries; in the business of home financing; in the business of acquiring, managing and selling real estate; in the business of catching, buying, processing and selling fish and seafood; in the business of underwriting and selling life, health, accident, fire, automobile and marine insurance; in the business of manufacturing and selling hydraulic controls, line supports for aircraft, agricultural implements, Diesel engines, nonferrous and aluminum castings and forgings, malleable iron and steel castings, oil-well equipment and machinery, and Other products; and in other businesses. "PARAGRAPH TWO--Respondent was founded by A. P. Giannini on or about October 11, 1928, for the purpose, among others, of acquiring and consolidating under one management the control of a number of corporations, including banks, which theretofore had operated under the general direction and control of the said A. P. Giannini. At or about the time of its organization respondent acquired controlling stock Interests in the following corporations, among others: "(a) Bank of Italy National Trust and Savings Association (now Bank of America National Trust and Savings Association). This bank was founded by A. P. Giannini in 1904 as a state bank under the laws of the State of California. At the time of its incorporation and until 1927 it operated as a state bank under the name of Bank of Italy. In 1927 Bank of Italy converted into a national bank under the name Of Bank of Italy National Trust and Savings Association (hereinafter referred to as Bank of Italy N. T. &. S. A.). At or about the time respondent acquired a controlling stock Interest therein Bank of Italy N. T. & S. A. was operating through a head office in San Francisco and approximately 292 branches located thronghout the State of California. Approximately 200 of such branches had been established following the acquisition, by various companies or persons acting under the general direction of A. P. Giannini, of controlling stock interests in or the banking business of various independent banks and branches of such banks located throughout the State Of California. In addition to the banks and branches so acquired and converted into branches of Bank of Italy or its successor, Bank of Italy N. T. & S. A., and during the period between the organization of the Bank of Italy and respondent's incorporation, controlling stock interests or the banking business of approximately 87 other independent banks and branches of such banks had been acquired by companies or 0 ) 41(1 7/19/49 -12- "persons acting under the general direction of the said A. P. Giannini, which bRnking offices were subsequently closed, the banking business of each such closed office being absorbed by an existing branch or branches of said Bank of Italy or its successor, Bank of Italy N. T. & S. A. "(b) National Bankitaly Company. This corporation was affiliated with Bank of Italy N. T. & S. A. and succeeded to the business of Stockholders Auxiliary Corporation (a corporation organized in 1917 by A. P. Giannini for the purpose, among others, of facilitating the bank expansion activities of the Bank of Italy, above-described). (c) Merchants National Trust & Savings Bank, Los Angeles, California. This bank was a national bank having its principal office in Los Angeles, California, and Operating approximately 35 branches located in Los Angeles and vicinity. "(d) United Security Bank & Trust Company, San Francisco, California. This bank was a state bank organized under the laws of the State of California, having its principal Place of business at San Francisco, California, and operating approximately 53 branches located throughout the State of This bank resulted from the merger in 1928 of California. the United Bank & Trust Company and the Security Trust ComPany of Bakersfield, California, both of such banks being state banks organized and operating in the State of California. "(e) French-American Corporation. This corporation was affiliated through common stock ownership with United Security Bank & Trust Company. At or about the time of respondent's organization the French-American Corporation owned controlling stock interests in a number of banks, including San Diego State Bank, San Diego, California; First National Bank, Berkeley, California; First Bank of Jamestown, Jamestown, California; Motherlode National Bank, Sonora, California; Second Avenue State Bank, Los Angeles, California; Bank Of Oxnard, Oxnard, California; Placerville National Bank, Placerville, California; and Vallejo Commercial National Bank, Vallejo, California. "(f) Bank of America National Association. This bank Was a national bank having its principal office and operating approximately 30 branches in the City of New York, New York. "(g) Bankitaly Company of America. This corporation was organized under the laws of the State of Delaware, having its Principal office in San Francisco, California. It owned controlling stock interests in various subsidiary companies, including Americommercial Corporation (a corporation organized In 1924 by Stockholders Auxiliary Corporation and certain 7/19/49 -13- "stockholders of Bank of America of Los Angeles, Los Angeles, California, to further facilitate the bank expansion activities of Bank of Italy, above-described), Banca D'America E D'Italia (a banking company formed under the laws of Italy, having its principal office in Milan, Italy, and operating approximately 37 branches throughout Italy), and Ameritalia Corporation (a banking affiliate of Banca D'America E D'Italia). "(h) California Joint Stock Land Bank. This corporation was organized by the Bank of Italy in 1919 under the provisions of the Federal Farm Loan Act. "(i) Bankitaly Mortgage Company. This corporation was organized by National Bankitaly Company in 1927 and engaged in the business of lending on mortgage loans in urban communities. "(j) Bankitaly Agricultural Credit Corporation. This corporation was organized by National Bankitaly Company in 1928 to make loans on country real estate. "PARAGRAPH THREE-- Since its organization in 1928 respondent has continued, under the general direction of A. P. Giannini, to expand its banking interests by the acquisition, either directly or through one or more of its controlled companies or agents, of controlling stock interests in or the banking business of various independent banks which banks were at the time of such acquisitions in competition with one or more of the banks already controlled by respondent. As a result of such expansion respondent now controls approximately 49 banks, operating approximately 598 branches located Ii the States of California, Oregon, Nevada, Arizona and Washington, having aggregate deposits of approximately $6,652,000,000. Of the banking offices so controlled by respondent approximately 555 are located in California, 6o in Oregon, 15 in Nevada, 7 in Arizona, and 10 in Washington. Of the banking dePosits so controlled by respondent approximately $5,716,000,000 are located in California, $626,000,000 in Oregon, $129,000,000 in Nevada, $85,000,000 in Arizona, and $96,000,000 in Washington. The barking offices and deposits controlled by respondent constitute the following percentages of the total banking offices and deposits in each of the five states abovenamed: In California approximately 50 per cent of all banking offices and 43 per cent of all deposits; in Oregon approximately 36 per cent of all banking offices and 44 per cent of all deposits; In Nevada approximately 6o per cent of all banking offices and 77 per cent of all deposits; in Arizona approximately 13 per cent Of all banking offices and 20 per cent of all deposits; in Washington approximately 4 per cent of all banking offices and 4 per cent of all deposits. 1 24 7/19/49 -14- "PARAGRAPH FOUR--Part of the expansion of respondent's banking interests was accomplished in the following manner: Respondent acquired, either directly or through one or more Of its controlled companies or agents, the controlling stock interest in an independent bank and has continued to operate such bank as a separate institution, although controlled by respondent. Included among the banks so acquired by respondent since its organization in 1928 and now operated and controlled by it are the following: As of date of acquisition Deposits Approx.) Branches 6,944,000 23 9 1936 1937 II 193 Name of Bank Bank of Italy N. T. & S. A., San Francisco, California (Now Bank of America N. T. & S. A.) First National Bank, Portland, Oregon Central Bank, Oakland, California (This bank was originally chartered in 1930 as the Bank of America, a state bank, to take over 58 branches of Bank of America of California, which merged with Bank of Italy N. T. & S. A. in that year to form Bank of America N. T. & S. A.) First National Bank of Nevada, Reno, Nevada National Bank of Tacoma, Tacoma, Washington (Nov National Bank of Washington) First National Bank, Forest Grove, Oregon Farmers Bank of Carson Valley, Minden, Nevada First National Bank of Arizona, Phoenix, Arizona Phoenix Savings Bank & Trust Company, Phoenix, Arizona Coolidge & McClaine, Silverton, Oregon First National Bank, Garden Grove, California Bank of Sellwood, Portland, Oregon (Now Moreland-Sellwood Bank) 46,174,000 6,741,000 1 14,499,000 621,000 1,154,000 1 14,354,000 3,881,000 657,000 694,000 443,000 7/19/49 Year . 17§-gr 194o 1941 1942 It 1943 1944 1945 -15- Name of Bank Clatsop County Bank, Seaside, Oregon First National Bank, Cottage Grove, Oregon Bank of Pinole, Crockett, California Central Bank of Calaveras, San Andreas, California First National Bank, Fairfield, California First National Bank, Prineville, Oregon Bank of Nevada, Las Vegas, Nevada Temple City National Bank, Temple City, California First National Bank, Weed, California First Trust & Savings Bank, Pasadena, California Scio State Bank, Scio, Oregon Bank of Sweet Home, Sweet Home, Oregon First National Bank, Bellflower, California First National Bank, Corcoran, California First National Bank, Los Altos, California Bank of Newman, Newman, California First National Bank, Santa Ana, California First National Trust & Savings Bank, Santa Barbara, California Bank of Tehachapi, Tehachapi, California First National Bank, Crows Landing, California First National Bank, Eugene, Oregon As of date of acquisition Deposits Branches Approx. 3,000 1,137,000 3 2,879,000 1,063,000 722,000 872,000 (Newly organized) 641,000 932,000 16,799,000 379,000 752,000 4,17o,000 1,924,000 712,000 3 14.,267,000 2) 30,000 9,739,000 1,014,000 2,196,000 34,80610m 1243 7/19/49 Year 19 5 Name of Bank First National Bank, San Jacinto, California First Savings Bank, San Jacinto, California Farmers & Merchants Bank of Watts, Los Angeles, California 1946 Benton County State Bank, Corvallis, Oregon II First National Bank, Mountain View, California First National Bank, Oakdale, California Stanislaus County Savings Bank, Oakdale, California First National Bank, Turlock, California 1947 Bank of Beaumont, Beaumont, California Carlton State & Savings Bank, Carlton, Oregon First National Bank, Delano, California H Yamhill State Bank, Yamhill, Oregon 1948 American Commercial & Savings Bank, Moorpark, California II Monroe State Bank, Monroe, Oregon First National Bank of Lebanon Lebanon, Oregon 1949 State Bank of Malheur County, Ontario, Oregon As of date of acquisition Deposits Branches A••rox. 1 On: 000 _ 594,000 3,861,000 1 9,351,000 3,821,000 8,055,000 NIP OM MAO.. 3,409,000 6,605,000 2,205,000 976,000 9,635,000 OOP 1,502,000 1,246,000 1,276,000 ••• 9,663,000 MOON. 1,845,000 "Each of the banks so acquired and now operated and controlled by respondent is engaged in interstate commerce within the purview of Section 7 of the Act of Congress approved October 15, 1914 (Clayton Act). "PARAGRAPH FIVE--A further part of the expansion of respondent's banking interests was accomplished in the following manner: Respondent, either directly or through one or more of its controlled companies or agents, acquired either a controlling stock interest in or the banking business of an independent bank and 7/19/49 -17- "contemporaneously therewith or thereafter caused such independent bank and branches, if any, of such bank to be converted into a branch or branches of a bank already Operated and controlled by respondent, and the banks and branches of such banks so acquired and converted are today Operating as branches of one or more of the banks listed in Paragraph Four above. Included among the banks so acquired and converted since respondent's organization in 1928 are the following: Ittr Name of Bank 19F- Branches of Merchants National Bank, Los Angeles, California United Security Bank & Trust Co., San Francisco, California (Head office and 28 branches) Branches of San Diego State Bank, San Diego, California First National Bank, Eureka, California Motherlode National Bank, Sonora, California If Bank of Oxnard, Oxnard, California Vallejo Commercial National Bank Vallejo, California First National Bank, Grass Valley, California Northern California Bank of Savings, Marysville, California First National Bank, Alturas, California Central Bank of California Auburn, California (Head office and 4 branches) Branches of Berkeley Bank, Berkeley, California 4 First National Bank, Chino, California Cloveragle Commercial & Savings Bank, Cloverdale, California First National Bank, Colton, California Number of banking Deposits offices acquired (Approx.) and converted 23 29 146,883,000 4 1 2,405,000 1 153,000 1 99,000 1 1,707,000 1 420,000 1 3,305,000 1 522,000 5 1,460,000 5 1 427,000 1 176,000 1 795,000 7/19/49 Year -18- Name of Bank 1928 Bank of Dixon, Dixon, California First National Bank, Exeter, California First National Bank, Geyserville, California tt Bank of Pacific Grove, Pacific Grove, California Petaluma Savings Bank, Petaluma, California ft Richmond Commercial & Savings Bank, Richmond, California tt San Carlos Bank, San Carlos, California t, State Bank of Ramona, Ramona, California First National Bank, South Pasadena, California tf Lassen Industrial Bank, Susanville, California (Head office and 1 branch) t, Commercial Bank, Turlock, California (Head office and I branch) tt El Dorado County Bank Placerville, California Dairymen's Coast Bank, Valley Ford, California (Head office and 2 branches) Golden State Bank, Walnut Park, California 19po -.7 The Oakland Bank, Oakland, California (Head office and 8 branches) t, First National Bank, Porterville, California t, Amador County Development Bank, Jackson, California Citizens State Savings Bank, Gardena, California t, National Bank of Hermosa Beach, Hermosa Beach, California Number of banking offices acquired Deposits and converted (Approxj 1 1,102,000 558,000 1 331,000 1 1,274,000 1 3,109,000 1 261,000 1 171,000 1 354,000 1 566,000 2 1,383,000 2 1,727,000 1 1,759,000 3 2,033,000 1 122,000 9 60,324,000 1 3,228,000 1 201,000 1 256,000 1 236,000 2,1J3 7/19/49 Year w -19Number of banking offices acquired and converted Name of Bank Bank of Isleton, 1 Isleton, California t, First National Bank, 1 Long Beach, California 1, 1 Arroyo-Seco State Bank, Los Angeles, California t, 1 Florence National Bank, Los Angeles, California t, 6 Branches of Pacific National Bank, Los Angeles, California 1 Monterey Park Commercial & Savings Bank, California Monterey Park, Bank of Norwalk, 1 California Norwalk, Bank of San Clemente, 1 San Clemente, California 1 First National Trust & Savings Bank, Whittier, California • Commercial & Savings Bank of Sutter County, 1 Yuba City, California 1930 1 Broadway Commercial & Savings Bank, Burlingame, California 1 George W. Bates & Company, Bankers, Portland, Oregon n 1 Bank of East Portland, 1932Portland, Oregon 1 Livestock State Bank, Portland, Oregon • Southeast Portland Bank, 1 t, Portland, Oregon 1 West Side State Bank, t, Los Angeles, California 1 First National Bank, California Alhambra, 193'4 1 The Gresham Bank, t, Oregon Gresham, 1 First National Bank, ,, Sebastopol, California 1 Oregon State Bank, Portland, Oregon 1 American National Bank, Portland, Oregon Deposits Alprox. .01,000 6,524,000 861,000 714,000 312,000 842,000 322,000 4,869,0m 811,0m 294,000 1,430,000 1,018,000 324,000 (newly organized) 613,000 2,2143,000 (newly organized) 269,000 405lom 4,832,000 24'; 7/19/49 -20Number of banking offices acquired and converted 1 Name of Bank 1933 Montavilla Savings Bank, Portland, Oregon First National Bank, Astoria, Oregon First Inland National Bank, Pendleton, Oregon Shute Savings Bank, Hillsboro, Oregon First National Bank, Salem, Oregon Bank of Woodburn, Woodburn, Oregon 1934 First National Bank, Condon, Oregon First National Bank, Cucamonga, California First National Bank, Puente, California 1935 Russ-Williams Banking Company, Ferndale, California McCloud National Bank, McCloud, California Wallowa National Bank, Enterprise, Oregon First National Bank, LaGrande, Oregon Commercial National Bank, Lakeview, Oregon First National Bank, Medford, Oregon First National Bank, Tillamook, Oregon First National Bank, 1936Union, Oregon First National Bank of Southern Oregon Grants Pass, Oregon First National Bank, Coquille, Oregon First National Bank, Ashland, Oregon First National Bank, Merrill, Oregon Deposits (Approx. restricted) 1 1,328,000 1 1,950,000 1 (restricted) 1 1,153,000 1 (restricted) 1 170,000 1 166,000 1 684,000 1 543,00o 1 957,000 1 577,000 1 1,082,000 1 600,000 1 2,667,000 1 1,368,000 1 368,000 1,46o,000 1 617,000 1 1,183,000 1 14.31,000 7/19/49 Year -21- Name of Bank Pirst National Bank, Klamath Falls, Oregon Sierra Valley Bank, Loyalton, California Plumas County Bank, Quincy, California (Head office and 1 branch) Bank of Milpitas, Milpitas, California Citizens Bank, Laguna Beach, California First National Bank, Fallbrook, California California First National Bank, Long Beach, California First National Bank, San Dimas, California Westwood National Bank, Westwood, California Branch of Bank of Inglewood, Los Angeles, California First National Bank, El Monte, California Delta Bank, Rio Vista, California First National Bank, Claremont, California Bank of Point Arena, Point Arena, California First National Bank, Downey, California Crescenta Canada National Bank, Montrose, California First National Bank, Del Rey, California First National Bank, Atascadero, California Calistoga National Bank, Calistoga, California Branches of Seaboard National Bank, Los Angeles, California Lumbermen's National Bank, Bend, Oregon Number of banking offices acquired Deposits and converted (Approx.) 2,959,000 1 1 321,000 2 337,000 1 306,000 1 471,000 1 303,000 1 4,040,000 1 311,000 1 609,000 1 1 907,000 1 51f1,000 1 851,00o 1 18),000 1 154,0.00 1 265,000 1 350,000 1 230,000 1 778,000 4 1 1,458,000 ft d 7/19/49 -22- Name of Bank 93 North. Bend National Bank, North Bend, Oregon United States National Bank, Newburg, Oregon First National Bank, Elko, Nevada 1937 Farmers & Merchants National Bank, Eureka, Nevada Kent National Bank, Kent, Washington Auburn National Bank, Auburn, Washington First State Bank, Bremerton, Washington Castle Rock Bank, Castle Bock, Washington Kalama State Bank, Kalama, Washington Pasadena Savings Bank, Pasadena, California Lindsay Savings Bank, tt Lindsay, California First National Bank, Fontana, California First National Bank, Glendora, California first National Bank, ft Hynes, California First Bank of Highland, t, Highland, California First National Bank, Molalla, Oregon First National Bank of Coos Bay, Marshfield, Oregon First National Bank, Hood River, Oregon Steiwer & Carpenter Bank, ft Fossil, Oregon First National Bank, ft Oregon City, Oregon First State Bank, Las 'Vegas, Nevada Number of banking offices acquired and converted 1 Deposits A rox. 3 ,000 1 1,043,000 1 2,407,000 1 519,000 1 627,000 1 866,000 1 185,000 1 535,000 1 358,000 1 579,000 1 801,000 1 751,000 1 530,000 1 781,00C 1 393,000 376,000 1,690,000 1 1,629,000 241,000 1 1,196,000 1 3,211,000 7/19/49 -23Number of banking offices acquired and converted 1 Year Name of Bank 1937 Mason Valley Bank, Yerington, Nevada 11 1 Yuma Branch of Miners & Merchants Bank, Bisbee, Arizona 2 Branches of Central Bank of Oakland, Oakland, California tt First National Bank of Arizona at Phoenix, 1 Phoenix, Arizona 1938 Coffman-Dobson Bank & Trust Company, It 1943 1944 Chehalis, Washington Toledo State Bank, Toledo, Washington State Bank of Winlock Winlock, Washington Bank of Alameda County, Alvarado, California (Head office and 2 branches) First National Bank of Lamanda Park, Pasadena, California First National Bank, Clovis, California Deposits (Approx. 302,000 1 (Deposits included with First National Bank of Arizona listed in Paragraph Four, herein) 2,640,000 1 84,000 333,000 3 2,652,000 1 1,830,000 1 1,909,000 "PARAGRAPH SIX--A further part of the expansion of respondent's bsnking interests was accomplished in the following manner: Respondent, either directly or through one or more of its controlled companies or agents, acquired either a controlling stock interest in or the banking business of an independent bank and contemporaneously therewith or thereafter aueed the banking business of such independent bank and ranches, if any, of such bank to be transferred into an existbanking office already operated and controlled by respondent and thereupon caused the banking office of the independent bank so acquired to be closed. Included among the banks so acquired and caused to be closed by respondent were the following: 1251 7/19/49 -24- Number of banking offices eliminated Name of Bank 11.2 -8 -13 Merchants National Bank, Los Angeles, California (Head office and 12 branches) Branches of United Security Bank & Trust Company, 25 San Francisco, California Butte County Savings Bank, 1 Chico, California Bank of America, 1 San Pedro (Los Angele4, California San Diego State Bank, 2 San Diego, California (Bead office and 1 branch) 1 Bank of Lake, California Lakeport, ft 1 First National Bank, t, Berkeley, California 1 First Bank of Jamestown, Jamestown, California Placerville National Bank, Placerville, California First National Bank, Marysville, California 1 Second Avenue State Bank, Los Angeles, California First National Bank, Auburn, California 2 Berkeley Bank, Berkeley, California (Head office and 1 branch) ft 1 Chino Savings Bank, Chino, California ft 2 First Savings Bank, California Colton, (Bead office and 1 branch) Security Savings Bank, Exeter, California ft 1 Sonoma County National Bank, Petaluma, California ft First National Bank, Santa Rosa, California 1 Branch of Lassen Industrial Bank, Susanville, California Deposits Ap rox.) 123,31 ,000 2,057,000 599,000 973,000 553,000 2,914,000 151,000 453,000 1,033,000 446,000 459,mo 5,110,000 189,000 302,000 14.19,000 1,525,000 559,000 7/19/49 Year 192 -25- Name of Bank First National Bank, Turlock, California New First National Bank, Visalia, California Security Savings Bank, Visalia, California Vallejo Bank of Savings, Vallejo, California 1929 Branches of The Oakland Bank, Oakland, California First National Bank, Anaheim, California First National Bank, Gardena, California Graham National Bank, Los Angeles, California First National Bank, Healdsburg, California First Savings Bank, Realdsburg, California Pacific National Bank, Los Angeles, California (Head office and 2 branches) Donahue-Kelly Banking Company, San Francisco, California Eagle Rock State Bank, Los Angeles, California 193o First National Bank, Ventura, California It Rome Savings Bank, Ventura, California (Head office and 1 branch) Security Savings & Trust Company, Portland, Oregon 1931 Atlantic Avenue Bank, Bell,California First National Bank, Ducor, California 1932 Branch of First National Bank, Alhambra, California First National Bank, Vacaville, California Vacaville Savings Bank, Vacaville, California Number of banking offices eliminated 1 Deposits A.•rox. 1,7 5,000 1 503,000 1 306,000 1 1,325,000 14. 1 3,602,000 1 456,000 1 386,000 1 1,073,000 1 914.8,000 3 14,095,000 1 2,156,000 1 306,000 1 1,551,000 2 1,649,000 1 238,000 1 504,000 216,000 1 1 213,000 288,000 1253 7/19/9 ear Name of Bank 4..2 First National Bank, Sonora, California Tuolumne County Bank, Sonora, California 1933 First National Bank, Redondo Beach, California First National Bank, Orland, California Bank of Lassen County, Susanville, California Sebastopol Savings Bank, Sebastopol, California Hibernia Bank, Portland, Oregon National Bank of Commerce, Astoria, Oregon State Bank of Echo, Echo, Oregon 193s Fort State Bank, Fortuna, California 1936 State Bank of Ashland, Ashland, Oregon First National Bank, Riverside, California San Dimas Savings Bank, San Dimas, California Bank of Inglewood, Inglewood, California (Head office and 1 branch) Pomona Commercial & Savings Bank Pomona, California First National Bank, Paso Robles, California Ferndale Bank, Ferndale, California Seaboard National Bank, Los Angeles, California office) (Head 193P7 Central Bank of Oakland, Oakland, California (Head office) Los Nietos Valley Bank, Downey, California Number of banking offices eliminated wow 1 Deposits A rox.) 2 2 000 1 948,000 1 821,000 1 399,000 1 1,262,000 1 579,000 1 1,797,000 1 841,000 1 79,000 1 148,000 1 289,000 1 2,216,000 265,000 2 1,787,000 1 789,000 1 614,000 1 857,000 1 13,491,000 1 37,664,000 1,317,000 1 254 7/19/49 -27- Number of banking Deposits _clEnsIT222.iminaox. Name of Bank .125Z—_, 1937 Covina Valley Savings Bank, 1 9 ,000 Covina, California 1,050,000 1 First National Bank, California Covina, ,1 856,000 1 First Central National Bank, Calexico, California T, 6o8,000 1 First Savings Bank, Glendora, California 784,000 1 Bank of Lakeview, 1938Lakeview, Oregon 3,948,000 1 First National Bank, Napa, California 1.93r, 150,000 7 1 Estacada State Bank, Portland, Oregon 1940 1 Branch of Bank of Pinole, Crockett, California 1941zi 1,209,000 1 -.yank of Suisun National Association, Suisun, California t, 328,000 1 Winters National Bank, Winters, California 1942 t, 710,000 1 -camera & Merchants Bank, Gardena, California 1,481,000 1 Citizens National Bank, Ontario, California 1943 b 543,000 1 Dank of Galt, Galt, California 1944 1,752,000 1 Bank of Corning, California Corning, 932,000 1 First National Bank, Laton, California 1 Branch of Bank of Newman, California Newman, 1948 4,o44,000 1 First National Trust & Savings Bank, Fullerton, California and "PARAGRAPH 8EvEN--Commencing on or about May 18, 1943, either attempted, has Ilt various times thereafter respondent directly or through one or more of its controlled companies or agents, to acquire a controlling stock interest in the Citizens National Trust & Savings Bank, Los Angeles, California. In furtherance of such attempts respondent has acquired and now °line, either directly or through one or more of its controlled companies or nominees, approximately 58,937 shares of the said 7/19/49 -28- "Citizens National Trust & Savings Bank, which number of shares represents approximately 23 per cent of the total number of shares of said bank now outstanding. Citizens National Trust & Savings Bank is a national bank operating through a head office and 33 branches, all located in Los Angeles County, California, having deposits of individuals, Partnerships and corporations of approximately $315,000,000. Citizens National Trust & Savings Bank is engaged in interstate commerce within the purview of Section 7 of the Act of Should Congress approved October 15, 1914 (Clayton Act). such respondent acquire a controlling stock interest in bank the number of banking offices which respondent controls in Los Angeles County, California, would be increased from aPProximately 157 to 191, or from approximately 42 per cent Of all banking offices in Los Angeles County to approximately 51 per cent in suchcounty; and the amount of deposits of individuals, partnerships and corporations which respondent controls in such county would be increased from approximately $1/656,000,000 to $1,971,000,000 or from 37 per cent to 45 Per cent of all such deposits in such county. "PARAGRAPH EIGHT--Upon information and belief, that respondent, unless restrained, intends to and will further exPand its banking interests by acquiring the controlling stock interest in the Citizens National Trust & Savings Rank of Los Angeles, California, as well as controlling stock interests in other independent banks now operating or which in the future will be operating in the States of California, Oregon, Nevada, Arizona and Washington in competition with one or more of the banks now controlled by respondent. "PARAGRAPH NINE--The acquisition by respondent of the esPital stocks of the banks listed in Paragraphs Four, Five and Six herein, as well as the acquisition by it of the stock Of Citizens National Trust & Savings Bank, Los Angeles, California, was contrary to law in violation of Section 7 Of the said Clayton Act, and the effect of such acquisition Of such stocks may be, has been and is: (a) To substantially lessen competition in the commercial banking business between some or all of such banks; or "(b) To restrain commerce in the commercial banking business in the sections or communities in which such banks 'were severally engaged at the time of such acquisition or in some of such sections or communities; or "(c) To tend to create a monopoly of commerce in resPondent in the commercial banking business, particularly 1..2,581 7/19/49 -29- "in banking offices, bank deposits and bank credit in the five-state area of California, Oregon, Nevada, Arizona and Washington or in various sections or communities in the said five states. "WHEREFORE, THE PREMISES CONSIDERED the Board of Governors of the Federal Reserve System on this 19th day of July, A. D. 1949, issues its amended and supplemental complaint against said respondent. "NOTICE "Notice is hereby given you, Transamerica Corporation, respondent herein, that the 22nd day of August, A. D. 1949, at 10:30 o'clock in the forenoon, is hereby fixed as the time aM the Federal Reserve Bank of San Francisco, Sacramento and Sansame Streets, City of San Francisco, State of California, as the place, when and where a hearing will be had on the charges set forth in this amended and supplemental complaint, at which time and place you shall have the right, under said Act, to appear and show cause why an order should not be entered by said Board requiring you to cease and desist from the violation of the law charged in this amended and supplemental complaint and to divest yourself of the stock of the Citizens National Trust & Savings Bank, Los Angeles, California, and the stocks of any or all of those banks listed in Paragraph Four herein. "IN WITNESS WHEREOF, the Board of Governors of the Federal Reserve System has caused this, its amended and supplemental complaint, to be signed by its Secretary, and its official seal to be hereto affixed, at Washington, D. C., this 19th day of July,A.D. 1949. -----11-By the Board. (signed) S. R. Carpenter (SEAL) Secretary" Chairman McCabe referred to a memorandum dated July 15, 1949, tIll"r. Vest stating that a number of acknowledgments and a few c°14174ents had been received in response to the Board's letter of July 8, inL - "9, to the various groups interested in the proposed bank holding c°14138AY bill, that there had been no comment of significance regarding the ulendment to subsection 4(e) of the bill, and that the bill was 7/19/49 -30- nov ready to be submitted to the Congress with the inclusion of the amended subsection 4(e) and the insertion of the words "other than bank stock" in the provision requiring a bank holding company to accumulate a reserve of ready marketable assets. Mr. Vardaman moved that the bill in the form referred to in Mr. Vest's memorandum be sent to Congress with a letter to Senator Maybank, Chairman of the Senate Banking and Currency Committee, along the lines discussed at the meeting on July 8, 1949. The motion was put by the Chair and carried unanimously, with the understanding (1) that one sentence of the letter of transmittal about which Chairman McCabe had a question might be changed by him and that the letter would be sent in a form satisfactory to Messrs. McCabe and Szymczak and (2) that Chairman McCabe would talk to Senators Maybank and Robertson about the bill, after which he would deliver or serid the bill and the accompanying letter of transmittal to them. Secretary's note: The letter of transmittal sent to Senator Maybank with a copy to Senator Robertson under date of July 20, 1949, was approved in the following form: "As you know, a bill to provide for the control and regulation of bank holding companies was introduced in the Senate on March 10, 1947. After extensive hearings the bill was favorably reported by unAnimous action of the Senate Banking and Currency Committee on June 19, 1947. Because of the pressure of other matters, however, it was not possible for the Senate to reach the bill on the calendar and the bill was not passed. "Since that time, the bill has undergone further careful consideration by the Board and during the past year informal conferences have been held with representatives of a number of ,L1C5S 7/19/49 -31- 'groups interested in the legislation, including the American Bankers Association, the Reserve City Bankers Association, the National Association of Supervisors of State Banks, the Independent Bankers Associations, Rnd various bank holding companies . These meetings, except in one or two instances, were attended by the Comptroller of the Currency and the Chairman of the Federal Deposit Insurance Corporation or their representatives. As a result of these discussions, various changes have been made in the bill but its principal Objectives remain the same. Early in March of this year a revised draft of the bill (identical except in one particular With the draft now enclosed) was sent to the Secretary of the Treasury, the Comptroller of the Currency, and the Chairman Of the Federal Deposit Insurance Corporation, for their consideration and comment and, more recently, the revised draft l'as sent to the representatives of the various groups who had conferred with us on the subject during the past months. "Several weeks ago this revised draft of the bill was also furnished to the Budget Bureau and I have now been advised by the Director of the Budget Bureau that the President favors legislation designed to provide for more effective control of bank holding companies but that no particular draft Of bill has been approved by him. "I submit herewith a draft of the bill in revised form aM the Board hopes that the bill will be introduced at an early date so that it can have early consideration by your Committee." The letter sending a copy of the bill to Congressman Spence, Chairman of the House Banking and Currency Committee, was approved as follows: "I enclose herewith a copy of a letter which I am today addressing to Senator MaybRnk, Chairman of the Senate Bankand Currency Committee, enclosing a revised draft of the bill which was pending in the last Congress to provide for the control and regulation of bank holding companies. Inastuch as the bill was reported out by the Senate Banking and Currency Committee at the last Congress, it seemed to me to be appropriate that the revised bill should first be considered by the Senate Banking and Currency Committee." At this point Mr. Solomon, Assistant General Counsel, joined the rIlesting, and Messrs. Smith and Hostrup withdrew. 7/19/49 -32Further reference was made to the proposed amendments to Regu- 14tionT, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National curities Exchanges, and Regulation Ur, Loans by 4111E8 for the Purpose of Purchasing or Carrying Stocks Registered on National Securities Exchange, which would exempt from the provision °11 the Regulations credit extended to "specialists", and which had been discussed at recent meetings of the Board. It was stated that in a letter dated July 15, 1949, the New York Stock Exchange reported that it had taken the necessary action to require 4ec1ali8t5 on the ExchAnge to submit reports contemplated by these 4teraments. In this connection, reference was also made to a memorandum cle:ted JulY 18, 1949, from Mr. Solomon recommending that subsection 40(3) of Regulation T, which permits securities being distributed pur8144 "to section 11 of the Public Utility Holding Company Act and which Itet.e l'egistered And approved for "when distributed" trading and exchange, be ex elided to eliminate the requirements that a security be registered 414413Proved for trading and that the distribution be pursuant to the P141.4e Utility Holding Company Act. The reasons for the amendment were outlined in the memorenaum, a copy of which had been sent to the ketabere of the Board before this meeting. Following a brief discussion of the reasons for the amendments, Mr. Vardaman moved that the Board adopt the proposed amendments as follows, to be effective July 20, 1949, and that the New York Stock Exchange be designated as an Exchange requiring reports suitable for 7/19/49 -33- supplying current information regarding specialists' use of credit pursuant to the provisions of the amendments: "AMENDMENT NO. 10 TO REGULATION T the Board of Governors of the Federal Reserve System "Effective JUly 20, 1949, Regulation T is hereby amended in the following respects: 1. The last sentence of section 4(c)(3) of Regulation T is amended to read as follows: If the security when so purchased is a 'when distributed' security which is to be distributed in accordance with a published plan, the period applicable to the transaction under subdivision (2) of this section 4(c) shall be 7 days after the date on which the security is so distributed. 2. Section 4(g) of Regulation T is amended to read as follows: (g) Specialist's Account. -- In a special account designated as a specialist's account, a creditor may effect and finance, for any member of a national securities exchange who is registered and acts as a specialist In securities on the exchange, such member's transactions as a specialist in such securities, or effect and finance, for any joint adventure in which the creditor Participates, any transactions in any securities or an Issue with respect to which all participants, or all Participants other than the creditor, are registered and act on a national securities exchange as specialists. Such specialist's account shall be subject to the same conditions to which it would be subject if it were a general account except that if the specialist's exchange, in addition to the other requirements applicable to specialists, Is designated by the Board of Governors of the Federal Reserve System as requiring reports suitable for supplying current information regarding specialists' use of credit Pursuant to this section 4(g), the requirements of section 6(b) regarding joint adventures shall not apply to such account and the maximum loan value of a registered security Iii such account shall be as determined by the creditor in good faith." 4 "AMENDMENT NO. 11 TO REGULATION U dby the Board of Governors of the Federal Reserve System Effective July 20, l914, section 3(0) of Regulation U is here03r amended to read as follows: (o) In the case of a loan to a member of a national securities exchange who is registered and acts as a specialist in securities on the exchange for the purpose of Te 7/19/49 "financing such member's transactions as a specialist In such securities, the maximum loan value of any stock shall be as determined by the bank in good faith provided that the specialist's exchange, in addition to other requirements applicable to specialists, is designated by the Board of Governors of the Federal Reserve System as requiring reports suitable for supplying current information regarding specialists' use of credit Pursuant to this section." Mr. Vardaman's motion was put by the Chair and carried unanimously. Unanimous approval was also given to the following statement for release in tomorrow morning's newspapers, it being understood that the amendments and the press release would be wired to the Federal Reserve Banks with the request that they print the amendments and make such distribution in their respective districts as appeared to them to be desirable: "The Board of Governors has amended Regulations T and U to remove mArgin requirements applicable to credit for financing the functions of specialists on an exchange designated bY the Board. The New York Stock Exchange has been so designated. "The Board has also amended Regulation T so as to provide that in the special cash account the 7 day period within Idlich payment must be obtained for a so-called 'when distributed' security which is to be distributed in accordance with a Published plan may run from the date when the security is distributed rather than from the day of agreement to purchase it. "Copies of the amendments, which become effective July 20, 1949, are attached." The following statement for the Federal Register with respect to these amendments was also approved unanimously: "The notice, public participation, and deferred effective date described in section 4 of the Administrative Procedure Act are not followed in connection with this amendment for the l'easons and good cause found, as stated in section 2(e) of the Board's Rules of Procedure (12 CFR 262.2 (e)), and especially because in connection with this permissive amendment such procedures are unnecessary as they would not aid the persons 7/19/49 -35- "affected and would serve no other useful purpose." Attention was called to a memorandum dated July 18, 1949, from Mr. Cherry, Assistant Counsel, in which it was stated that hearings commence Wednesday, July 20, 1949, before the House Banking and rencY Committee on four bills relating to the Federal Home Loan eill ' 44k System (H.R. 5596, 5595, 1732, and 4710). The memorandum stated the 1"ion previously taken with respect to various provisions of the bills, 4114"r. Szymczak stated that the question presented by the memorandum 1148 'whether the Board wished to take any action at this time in connec- tion with the hearing which it was expected would not last longer than 3 (IVEL It was pointed out that the Board had not been requested to testify t the hearings so that the question was whether the Board would wish to 4"li a letter to Congressmpr Spence, Chairman of the Committee, setting r°1111 the Board's views on the legislation. After a brief discussion, Mr. Vardaman moved that the question whether the Board should take any action in the matter be left for a decision by Messrs. McCabe and Szymczak. This motion was put by the Chair and carried unanimously. Mr. Szymczak stated that following the meeting of the Board on '114te 30, 1949, he talked by telephone with Mr. Aldrich, Chairman of /Ile Chase Bank, regarding the contemplated purchase by The Chase 844k 0. 4 the stock of American Express Company and that under date or a Ally 7, 1949, Mr. Aldrich sent a letter supplementing his discus131°11 with the Board. Mr. Szymczak stated that there was nothing in Ile letter which changed in any way the essential facts as previously 7/19/49 -36- submitted to the Board. He also said that in a second conversation with Mr. Aldrich he understood the latter to state that the Bank Wouldbe willing to enter into an agreement with the Board that the Bellk would separate the domestic and foreign travelers cheque busii/ess of the American Express Company but that at his (Mr. Szymczak's) l'equast, Mr. Vest discussed this point with counsel for The Chase 15k, and it appeared from that conversation that it was not intended to hav e The Chase National Bank take over the domestic travelers elleque business of the American Express Company and that the most tbat might be considered in this connection was that The Chase Na- ticmaa the Bank might add its name to the travelers cheques issued by American Express Company. Mr. Vardaman expressed the view that the Board did not have "'icient information to enable it to pass on the matter, and he "Ated that it would be his suggestion that the Board say to Mr. 41(41eil that in the light of available information the Board would 4elther. approve nor disapprove the proposed purchase of stock of the 4110e11 Express Company. clecicle With such a reply, he said, the Bank could whether it would proceed with the purchase and take the risk at illegal action. Following a discussion, it was agreed unanimously that Mr. Vest would draft a letter to Mr. Aldrich and submit it to the Board for consideration. 7/19/49 -37Chairman McCabe stated that Messrs. Riefler, Young, and 1°1111013X had prepared memoranda under date of July 15, 1949, relat14 to (1) suggested reduction in reserve requirements and (2) the cUrrent problem of the discount rate and bill market policy, and he Ilugeftted that the memoranda be discussed at this meeting. Problems presented in the memoranda were discussed informally, 44d it was understood that the matter would be placed on the agenda r°11 consideration at a meeting of the Board later in the week. At this point Messrs. Riefler, Vest, Leonard, Millard, Young, €141 Solomon withdrew and the action stated with respect to each of the matters hereinafter referred to was taken by the Board: Minutes of actions taken by the Board of Governors of the Pederal Reserve System on July 14, 1949, were approved unanimously. Minutes of actions taken by the Board of Governors of the "al Reserve System on July 15, 1949, and July 18, 1949, were ape and ''QL the actions recorded therein were ratified unanimously. Memorandum dated July 14, 1949, from Mr. Horbett, Assistant kre cuor of the Division of Bank Operations, recommending that certain Feu ral Reserve reports, memoranda, and other data be made availto Mr. Goldenweiser, formerly a member of the Board's staff, tor uis reference in writing a book, with the understanding that he not quote from the unpublished items referred to in the memo- Approved unanimously. 7/19/49 -38-
@FedFRASER