Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, March 27, 1952, 9:15 AM, Volume 39, Part 1

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

This set ,of minutes foie March 27, 1952, was
mot tifroultited to the. Itembert of the Board of Governors
t vat raigitOd by all the members present at the meeting.
-It contains an entry to be included in the policy record
the
vianndings as to the Facts, Conclusion and Order in
,lriatter of Trannamttrica Corporation.




Minutes of action taken by the Board of Governors of
he

Federal Reserve System on Thursday, March 27, 1952.

The Board

illet in executive session in the Chairman's office at 9:15 a.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.

Martin, Chairman
Szymczak
Evans
Vardaman
Powell
Mr. Thurston, Assistant to the Board
Mr. Vest, General Counsel

The attention of the Board members had been called to an
"4ele in the New York Times for March 27, 1952, stating that the
8°411'd would issue an order in the Transamerica Clayton Act proceeding
by Et
vote of 3 to 2 requiring the divestment by Transamerica Corpora'4°11 of certain bank stocks.

All of the Board members present ex-

13188601 themselves as being greatly disturbed by the fact that any
kleh .
information had leaked to the press, particularly since there
-°n-1,5r a few persons who had any knowledge of the facts in the
Chairman Martin stated that the incident would be extremely
glng to the Federal Reserve System and its prestige.

He stated

tilet ev
'erY effort should be made to ascertain how such a leak could
h e
°ccurred and did occur, and that no stone should be left unt4111_,
ect to find this out. The Board members were unanimous in agreeWith him in this matter.




In the course of the Board's discussion,

503

Governor Evans stated that he had discussed the proposed order with

MI% Chester Morrill. "Mr. Morrill," Mr. Evans said, "was appointed
the Board as liaison between the Board and our group in San Francisco.
illaddition his judgment and advice were sought and used in drafting my

(III der so I wanted his opinion of the changes made by Mr. Smith.
'
clbtained the opinion of my legal advisor, Mr. Hodge.

I also

Neither was in

4113r1'/aY connected with the leak. I doubt if they knew the exact vote
%111411 was about the only information needed by the author of the article
bee
411se the balance of the material was already available."
There had been distributed to the five Board members present
°IaTtlesday, March 25, drafts of proposed documents in connection with

the Tl'ansamerica Clayton Act proceeding. These documents had been pre151tred

Mr. Smith, Special Counsel, in accordance with the instructions
by the Board on March 3, 1952.

These documents were:

Findings as to the Facts, Conclusion and Order.
Statement and Order Denying "Exceptions Filed on
Behalf of Respondent Transamerica Corporation"
Dated and Filed September 13, 1951.

3. Statement and Order in re Adducing of Additional
Evidence by Respondent.

4. Order Denying Respondent's Motion to Dismiss
Dated and Filed September 13, 1951.

5. Statement and Order Denying Exception of Counsel
for the Board.
The text of these five documents is as follows:




504
—3—
UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

the Matter of
TIUNSAMERICA CORPORATION

)

FLNDINGS AS TO THE FACTS

CONCLUSION AND ORDER

Pursuant to the provisions of an Act of Congress approved
°ctOber 15, 1914, entitled, "An Act to supplement existing laws against
611iful restraints and monopolies, and for other purposes" (the Clayton
1 ,
:3
1 4), the Board of Governors of the Federal Reserve System on June 24,
ti748, issued and thereafter served upon respondent, Transamerica Corpora—
014, a complaint, and on July 19, 1949, issued and thereafter served
11,
respondent an amended and supplemental complaint, charging respondent
violation of section 7 of said Act (38 Stat. 731, 15 U.S.C. § 18).
therder entered herein December 6, 1948, Rudolph M. Evens, a member of
to Board of Governors of the Federal Reserve System, was duly designated
of serve as Hearing Officer in this proceeding, and, upon the completion
?la the taking of evidence, to make and file his recommended decision.
threllant to appropriate authorization, Paul C. Hodge, General Counsel of
"e Federal Reserve Bank of Chicago, served as legal adviser to the
Re
1,,,e.athig Officer. The taking of evidence having been completed, the matter
,_ulY heard by the Hearing Officer upon the amended and supplemental
c078
oivlaint, testimony and other evidence recorded and filed in the office
goathe Board, proposed findings as to the facts filed by counsel for the
re
proposed findings as to the facts filed by respondent's counsel,
by
counsel for the Board to findings proposed by respondent's
co.tY
Bel, reply by respondent's counsel to findings proposed by counsel
support of and in opposition to
the the Board, and briefs of counsel in
cbo amended and supplemental complaint. Subsequently, the Hearing Officer
:r considered the matter, ruled upon the proposed findings submitted
:
141 31msel for the Board and by respondent's counsel, and made and filed
the4 the Board his recommended decision dated June 13, 1951. Thereafter
at:Proceeding regularly came on for final hearing by the Board upon the
reended and supplemental complaint, testimony and other evidence duly
'
clec 'tded, certified and filed in the office of the Board, the recommended
on of the Hearing Officer, respondent's motion to dismiss dated and
til
aricrcl September 13, 1951, exceptions on behalf of the respondent dated
the filed September 13, 1951, and briefs and oral argument of counsel for
eo„ Board and of counsel for respondent; and the Board, having duly
di'sidered the matter, having denied respondent's aforesaid motion to
ci,ies and exceptions, and being now fully advised in the premises,
lactrli
01,078 and enters these its findings as to the facts, conclusion and




505
-4-FINDINGS AS TO THE FACTS
PARAGRAPH ONE: (a) Respondent, Transamerica Corporation
(he
reinefter frequently called "Transamerica"), is a corporation
lallized and existing under the laws of the State of Delaware, and
c_ s its Principal office and place of business at 4 Columbus Avenue,
Francisco, California. It is a holding company, having an authorcapital stock of 25,000,000 shares of a par value of $2 each, and
ring outstanding as of December 31, 1948, a total of 9,930,000 of
shares. Respondent was organized in 1928 by A. P. Giannini for
Purpose, among others, of facilitating control and management
4.cugh a single corporation of the banks and other corporations
wftetofore operated under his general direction.

r!

arid(b) At or about the time of the filing of the Board's amended
supplemental complaint, respondent had acquired and owned, directly
74 through subsidiaries, voting stock in each of the following comOial banks in the States of California, Oregon, Nevada, Arizona,
of"ashington, in the approximate stated percentage of the total stock
each such bank:

;

In California
Bank of America National Trust and Savings
Association, San Francisco
Central Bank, Oakland
The First National Bank of Garden Grove,
Garden Grove
Bank of Pinole, Crockett
Central Bank of Calaveras, San Andreas
The First National Bank of Fairfield, Fairfield
The Temple City National Bank, Temple City
The First National Bank of Weed, Weed
First Trust and Savings Bank of Pasadena,
Pasadena
The First National Bank of Bellflower, Bellflower
First National Bank in Corcoran, Corcoran
The First National Bank of Los Altos, Los Altos
Bank of Newman, Newman
First National Bank in Santa Ana, Santa Ana
First National Trust and Savings Bank of
Santa Barbara, Santa Barbera
Bank of Tehachapi, Tehachapi
The First National Bank of Crow's Landing,
Crow's Landing
The First National Bank of San Jacinto,
San Jacinto




22.88%

99.65
90.00
92.31
92.50
89.60
86.67
90.00
97.78
95.00
92.00
87.20
87.83
98.50
96.18
92.50
89.60

66.90

57;

_5_

California (continued)
Farmers &Merchants Bank of Watts, Los Angeles . ..
The First National Bank of Mountain View,
Mountain View
The First National Bank of Oakdale, Oakdale .• . •
First National Bank in Turlock, Turlock
Bank of Beaumont, Beaumont
First National Bank in Delano, Delano
American Commercial & Savings Bank, Moorpark . . ..
Stanislaus County Bank, Oakdale

97.50%
75.63
93.00
89.87
93.00
90.27
90.00
97.08

In Oregon
The First National Bank of Portland, Portland . . .
The First National Bank of Forest Grove,
Forest Grove
Coolidge & McClaine, Silverton
Moreland-Sellwood Bank, Portland
Cletsop County Bank, Seaside
The First National Bank of Cottage Grove,
Cottage Grove
The First National Bank of Prineville, Prineville .
The Scio State Bank, Scio
Bank of Sweet Home, Sweet Home
The First National Bank of Eugene, Eugene
Benton County State Bank, Corvallis
Carlton State & Savings Bank, Carlton
Yamhill State Bank, Yamhill
Monroe State Bank, Monroe
The First National Bank of Lebanon
State Bank of 'Malheur County, Ontario

68.60
90.00
98.13
97.00
97.00
90.00
90.00

95.00
97.50
98.20

97.33
90.00
90.00
91.67
86.00
94.60

In Nevada
99.10
First National Bank of Nevada, Reno
Farmers' Bank of Carson Valley (Inc.), Minden . .. 88.00
70.00
Bank of Nevada, Las Vegas
In Arizona
First National Bank of Arizona, Phoenix

80.83

In Washington
National Bank of Washington, Tacoma




62.30

v.,

507
-6-

(c) In addition to the stocks owned as stated in the
r ,; 4 ...
Preee
Julg subparagraph, Transamerica also owned, as of 1948, stock
'
in banks, financial institutions, and other corporations as follows:
(1) Banca d'America e d'Italia, 92.59 per cent
of the capital stock.
(2) The National City Bank of New York, approximately 7.2 per cent of the capital stock.
(3) First Savings Bank of San Jacinto, California,
65.40 per cent of the capital stock.
(4) All of the stock of Capital Company, which is
engaged in the purchase, sale, leasing, management, and operation
Of real estate, and in the leasing and operation of agricultural,
oil, gas, and mineral land. This company supervises, maintains,
and constructs properties for its affiliated companies, and
engages especially in the handling of properties owned by or
acquired from affiliated banks.
(5) All of the stock of Allied Building Credits,
Inc., which is engaged in financing new construction, largely
residential, and in reselling mortgages and instalment notes to
banks, insurance companies, and other investors. In 1948, this
company purchased nearly 45,000,000 of notes and mortgages.
(6) All of the stock of Occidental Corporation, which,
in turn, owned all of the stock of Occidental Life Insurance
Company of California. The latter is the largest life insurance
company located on the Pacific Coast, having in 1948 more than
15,000 sales representatives and nearly $2,000,000,000 in life
insurance in force.
(7) All of the stock of Pacific National Fire Insurance
Company, which is engaged in writing fire, automobile, and marine
insurance. This company had, in 1948, some 4,000 sales representatives and received in that year premium payments of nearly
*10,000,000.
(8) Through its subsidiary named in (7) above, all of
the stock of Premier Insurance Company, which is engaged in
writing automobile insurance, principally in connection with
instalment sales of automobiles. This company received premium
Payments in 1948 of nearly $8,000,000.




r

-7(9) More than 99 per cent of the stock of Adel
Precision Products Corporation. This company manufactures
tractors, aircraft parts and equipment, and other metal products.
Its 1948 sales were more than $6,000,000.
(10) Eighty-six per cent of the stock of General
Metals Corporation. This company produces ferrous and nonferrous castings and forgings, and had sales in 1948 of more
than $9,000,000.
(11) All of the stock of Enterprise Engine &
Foundry Company. This company operates foundries and produces
diesel engines, oil burner equipment, and other machinery.
Its sales in 1948 were more than $8,000,000.
(12) Slightly over 60 per cent of the stock of
Columbia River Packers Association, Inc. This company
Operates fisheries and processing plants, and markets canned
salmon, tuna, crabmeat, shad roe, and frozen fish. Its sales
in 1948 were more than $12,000,000.
(13) More than 99 per cent of the stock of Corporation
of America. This company, as of 1948, was engaged only in
acting as trustee under deeds of trust in which respondent and
its affiliated companies were named as beneficiaries.
(14) All or a substantial part of the stocks of
various other companies, including Inter-America Corporation,
American Brokerage, Inc. (inactive); The Axton-Fisher Tobacco
Company (in liquidation); Coast Service Company; and Timeplan,
Incorporated (inactive).
PARAGRAPH TWO: (a) Each of the banks named in subparagraph
(b) of
ace_
Paragraph One hereof is a commercial bank. Each of these banks
Etoc7t8 deposits subject to check issued by the depositor against his
111t. Each of these banks, through the check collection facilities
.
4
(
or tr Federal Reserve Banks, through correspondent banks or directly,
elleAnugh one or more of these means, continuously and regularly sends
48 deposited by its customers, which are drawn upon banks in States
sta r than the State in which such bank is located, to such out-ofte
rem banks for collection. Each of these banks continuously and
it arlY receives from banks in States other than the State in which
ttes:e located, through the check collection facilities of the Federal
04 I've Banks, through correspondent banks or directly, or through
°r more of these means, checks drawn by its own depositors against

0141:




'419
-8their accounts in such bank and sent by such depositors as a means
tr Payment to payees in other States, and deposited for collection
Such payees in banks in States other than the State in which the
,Intlalg bank is located. Both in receiving for collection checks
''-amn upon banks in other States and in honoring the checks of its
°IllI depositors which are deposited for collection in and received
:l'om banks in other States, each of the banks named above in sub41tragraph (b) of Paragraph One hereof must, and does, arrange for
settlement of the resulting debit or credit balances. Such
aactions across State lines are necessary in the operation of
commercial banks and require constant communication and transtion between various States of the United States.
(b) In addition to the matters stated in subparagraph (a)
Paragraph Two, commercial banks, including those named in
Teragraph (b) of Paragraph One hereof, normally and regularly
legage in all or substantially all of the following functions: coltnection or payment of bill-of-lading drafts, notes, and other comej,'cial instruments; acceptance of bills of exchange; purchase or
--T of securities for their own accounts or the accounts of their
,
c;
d onlers; collection of maturing securities or interest coupons
r;? thereon for their own accounts or the accounts of customers;
.Itenance of correspondent relationships with banks in other
acctes; telegraphic transfer of funds for their own accounts or the
perots of their customers; and other commercial transactions. The
of 4 ormance of these functions requires constant use of the channels
illterstate communication and transportation and involves constant
113121ercial intercourse across State lines, including the re6ular
,
0,
aVment and receipt of documents and the transfer of funds between
among various States of the United States.
(3r thi

C

(c) Each of the banks named in subparagraph (b) of
Aar,
ta ':graph One hereof is engaged in commerce, as "commerce" is defined
the aforesaid Clayton Act (38 Stat. 730; 15 U.S.C. § 12).
PARAGRAPH THREE: (a) The banking group control of which
Zlater concentrated in Transamerica had its origin in the organiCa1/71 by A. P. Giannini of the Bank of Italy in San Francisco,
4 a ,ornia, in 1904. Its expansion began with a first branch in 1909,
econd in 1910, a third in 1912, 2 in 1913, 1 in 1915, 5 in 1916,
and 7 2_
tjati, In 1917, making a total of 18 branches at the end of that year.
or „:4 1917, the method followed in buying other banks was for one
barra of the officers of the Bank of Italy to buy the stock of the
fizotbt° be acquired with the proceeds of personal loans to them by
4 er bank, these loans being secured by the stock purchased. The
3e .
:
EtB
-243 of the bank the stock of which had been thus purchased were
th4,
" sold to the Bank of Italy; the loans made to finance the




WI
—9-Stock purchased were then paid from the sale of assets and the acquired
was liquidated. This method was followed because California law
'ulnot permit one bank to buy the stock of another.
(b) As the number of banks being acquired increased, this
Pro
became burdensome and inconvenient. In 1917, A. P. Giannint
trganized the Stockholders Auxiliary Corporation, the beneficial inin its stock being awned by the stockholders of the Bank of
:
1,1 1Y in the same proportion as their stockholdings in that bank.
413 company was organized for the purpose, among others, of acting
'Purchaser of the stock of banks the assets of which were to be
late
er acquired by the Bank of Italy. It also took charge of any
,
j
sets of the acquired bank which had to be written off by the Bank
IpktalY. It acted as an insurance broker in placing insurance for
tl„!-ank of Italy and insurance which came to the Bank of Italy
ii,ugh its customers or in connection with loans made by it. In
cf4) A. P. Giannini organized the Bancitaly Corporation, a New York
lporation, in which about three-fifths of the stockholders were also
Athr
°_,ckholders in the Bank of Italy, and in which the Stockholders
14-.1zarY Corporation owned about 25 per cent of the stock. The
3.14:"alY Corporation acquired control of several banks in New York,
sm ests in some foreign banks, and controlling stock interests in
c e California banks. A. P. Giannini was President of Bancitaly
sZoration from the organization of that company until its dis(In in 1928. In 1924, Stockholders Auxiliary Corporation and
:
4X3
4111
4J
stockholders of the Bank of America of Los Angeles organized
tri nDanY known as Americommercial Corporation, which also engaged
st„-equiring controlling stock interests in California banks.
ofvekholders Auxiliary Corporation later came into the sole ownership
.8ricommercial Corporation. In 1927, after the passage of the
licp.4111
the%,clen Act, permitting national banks to engage in branch banking,
eald fank of Italy absorbed the Liberty Bank of America of San Francisco
zhe,'411e Commercial National Bank of Los Angeles and became Bank of
'7 National Trust and Savings Association under a national charter.

4

X

(c) In 19280 A. P. Giannini organized respondent,
Nrin
as previously found, for the purpose, among others, of
11%
:
/
a
1
1
1
cor14
under the control of a single company all of the various
and other organizations above referred to in this Paragraph Three.
e request of A. P. Giannini, practically all of the stockholders
0.0„ank of Italy National Trust and Savings Association and Bancitaly
111:4nration exchanged their stock in these companies for stock in
or44
88h841ericay thus placing in the hands of Transamerica, at the time of
°T.t17 after its organization, substantially all of the stock of
1 Italy National Trust and Savings Association and Bancitaly
Corp
:
ha(1 „
1 at1on. The Bank of Italy National Trust and Savings Association
-/ that time acquired, by the purchase of other banks through




-10—
the method stated above and by the establishment of de novo branches,
13°Ine 284 branches in California. In addition, Transamerica had acquired
!lad held all or a substantial majority of the stock of California Joint
,tock Land Bank, National Bankitaly Company, Bankitaly Agricultural
)
,
redit Corporation, Bankitaly Mortgage Company, Bank of America
TliAonal Association of New York, Bancamerica Blair Corporation,
;0141171ercial Holding Company, Bankitaly Company of America, Occidental
;0110oration (a holding company owning Occidental Life Insurance
4141D8.ny and Occidental Investment Company), Bank of America (Caliornia)
'
nd its security affiliate, Corporation of America, and Pacific
tional Fire Insurance Company. The "Statement of Condition at the
qc'se of Business December 31, 1928", issued by Transamerica, stated
4.ts resources as $1,093,449,250, and gave the names of its Directors
as follows:
A. P. Giannini, President, Transamerica Corporation;
James A. Bacigalupi, President, Bank of Italy N.T. & S.A.;
A. J. Mount, Senior Vice President, Bank of Italy N.T. de S.A.;
P. C. Hale, Vice President, Bankitaly Company of America;
A. Pedrini, Vice President, Bankitaly Company of America;
L. M. Giannini, President, Pacific National Fire Insurance Comonny;
A. E. Sbarboro, Vice President, Pacific National Fire Insurance Company;
W. E. Blauer, Vice President, Bankitaly Mortgage Company and
Vice President, California Joint Stock Land Bank;
Dr. A. H. Giannini, Chairman, Board of Directors, The Bank of
America, N.A., New York;
Edward C. Delafield, President, The Bank of America, N.A., New York;
L. V. Belden, President, The Bankameric Corporation, New York;
J. E. Rovensky, Vice President, The Bankameric Corporation, New York;
Leon Bocaueraz, Chairman, Board of Directors, Bank of America
of California;
E. J. Nolan, President, Bank of America of California;
C. N. Hawkins, Vice President, Bankitaly Agricultural Credit
Corporation;
W. H. Snyder, Vice President, Commercial Holding Company;
George A. Webster, Vice President, Commercial Holding Company;
W. F. Morrish, Vice President, Corporation of America;
C. R. Bell, Vice President, Corporation of America. 5k 347
14 1
14s, 930, through a consolidation with Bank of America of California,
Leh was itself a consolidation of United Security Bank and Trust
'
64
tb!!ParlY with Merchants National Trust and Savings Bank, Bank of Italy
fr:''ional Trust and Savings Association became Bank of America National
I st and Savings AssociatLon, hereinafter frequently referred to as
T
ank of America."




-11-

PARAGRAPH FOUR: (a) The Transamerica group -- operating
.
1517incipally through Transamerica, but with active assistance and
oPeration from other members of the group and especially from
officials of Bank of America -- continued its aggressive policy of
pec aring other banks and extending and expanding its operations.
its organization in 1928 to the time of this proceeding,
'
!:ensamerica acquired some 240 banks and branches in California,
101Which some 200 have been absorbed into and become branches of
,
Of America.

r

(b) A bank cannot lawfully engage in interstate branch
barT]king; however, Transamerica, not being a bank itself, was able to,
extend its controlled group-banking operations into other
Transamerica first expanded the operations of the group
r41 Oregon in 1930, through the acquisition of The First National
1,2
E 3,c of Portland. Subsequently, Transamerica acquired some 56
244e and branches in that State, about 40 of which have been
Ilusorbed into the branch-bank system of The First National Bank of
x:rtland. The Transamerica group expanded its operations into
da in 1934 through the acquisition by Transamerica of the First
t,,'ional Bank in Reno, the name of which was subsequently changed
tVirst National Bank of Nevada. Since this first acquisition in
ada, Transamerica has acquired six other banks in Nevada, four of
have been converted into branches of the First National Bank of
In furtherance of the policy of expanding and extending the
irrations of the group, Transamerica entered the State of Washington
)741e.936 through the acquisition of the National Bank of Tacoma, the
of which was subsequently changed to National Bank of Washington.
this acquisition, Transamerica has acquired nine other banks in
tilv ullgton, all of which have been converted into branches of the
poi;Lonal Bank of Washington. Continuing its expansion and extension
Tr 4°Y, the group entered Arizona in 1937 through the acquisition by
11:8amer1ca of the First National Bank of Arizona at Phoenix, the
Tliaellix National Bank, and its affiliate, the Phoenix Savings Bank &
?host Company. The First National Bank of Arizona at Phoenix and the
atiZix National Bank were consolidated and became the First National
lkt °f Arizona. This bank acquired a branch from another bank and
b ex' established two additional branches and merged with its companion
Phoenix Savings Bank & Trust Company.

O

(c) The usual method followed in acquiring banks was to
arraz
14u, ge for the purchase by Transamerica of a controlling stock
est in the bank to be acquired, and thereafter if the bank
e:ased was to be converted into a branch, Transamerica would
pror.eY the assets to one of its controlled banks. It has been common
-edure for Transamerica to sell to persons selected to be directors




-12-

n

i bank purchased by it, directors' cualifying shares with an option
A) Transamerica to repurchase. It has also been common for Transamerica
:
'2.complete such arrangements prior to the time it became the owner
record of the capital stock of the bank acquired. By this means,
;nrds of directors selected by Transamerica were provided for in
Zvance of transfer to Transamerica of the stock bought in its behalf,
thus any need for Transamerica to obtain a voting permit from this
Ir°ard in order to vote its stock for the election of a board of directors
,118 avoided. There are a total of 324 directorships in Transamerica
IVority-owned banks which are filled by 266 individuals, and Transamerica
4s options to purchase the Qualifying shares in the case of 249 such
:ectorships. It has also been a frequent practice of Transamerica,
i!'re it appeared necessary in order to secure a controlling interest
1 . a bank it desired to purchase, to pay bonuses to officials of the
7
t Ilk or to grant them special inducements in various forms, as well as
:
1387 unusually high prices for shares that represented control, or
tt'Lch might aid in securing control. It has consistently sought to
e4Nare controlling interests.

P

(d) As of June 30, 1948, the Transamerica group controlled
illealifornia 25 commercial banks having 529 branches, with a total
(1 554 banking offices; in Oregon, 13 commercial banks having 44
b"laches, with a total of 57 banking offices; in Nevada, 3 commercial
:ItEl having 12 branches, with a total of 15 banking offices; in
b°na, 1 commercial bank having 5 branches, with a total of 6
ing offices; and in Washington, 1 commercial bank, having 9
with a total of 10 banking offices. Subsequently, the
44°9
r
of
+:
controlled commercial banks was increased in California
26 and in Oregon to 16.
(e) During the pendency of this proceeding the Transamerica
grou
6_13) having secured permits from the Comptroller of the Currency to
A;7ch such banks, attempted to convert into branches of Bank of
041 1ca 22 banks with 28 banking offices (one dual occupancy) in
v/i41J'fornia which are majority awned by Transamerica. This conversion
or ,Prevented by injunctive orders issued by the United States Court
841a4Ppeals for the Ninth Circuit upon the petition of this Board
itl2Y subsequent action of that court in contempt proceedings
cillultuted against Transamerica, Bank of America, and their respective
4/7 executive officers, Sam H. Husbands and L. M. Giaanini, for
co4lre to obey the injunctive orders. In Oregon, Transamerica presently
lb018 15 banks (with 17 offices) now operated as affiliates of The
sst National Bank of Portland. Applications to convert such banks
irli,
be17branches of The First National Bank of Portland are now pending
°re the Comptroller of the Currency.




-13PARAGRAPH FIVE: (a) A basic position of respondent in this proeeeding is that Bank of America is not controlled by Transamerica, is not a
:!rt of the Transamerica group, and is a wholly separate institution dealing
t'erms length with Transamerica and banks and other corporations majority
(441ed by Transamerica. The support for this position appears to be neces1 111Y based principally upon, though not limited to, reductions in the pro:
:tions of the stock of Bank of America held by Transamerica, upon the
lent wide distribution of the stock of Bank of America, and upon the rela 'relY insignificant stockholdings of L. M. Giannini in the Bank. The facts
ilsa o these particular matters are: (1) From the organization of Transamerica
,s 1-928 until July 1937, it held more than 99 per cent of the stock of Bank
Vmerica; in July 1937, Transamerica distributed about 58 per cent of its
„tdings of stock in Bank of America to the stockholders in Transamerica,
thereafter, by sales, reduced its holdings of stock of Bank of America
'
Percentages of the total stock of that bank as follows:

:

1938
1939
1940
1941
1942
1943

41.17%
30.16
36.53
30.85
25.05
21.36

1944
1945
1946
1947
1948

23.84%
21.25
22.32
22.54
22.88

it..-4g the pendency of this proceeding, Transamerica three times reduced
to holdings of Bank of America stock by sale and by distribution of shares
'
to 11.1 per cent of
th its own stockholders. The first reduction was in 1949
ore total stock of Bank of America; the second was in 1951 to 7.66 per cent
b„. such stock; and the third was in 1952, after final hearing of this matter
the Board, to approximately 5.6 per cent of the Bank of America's total
". (2) As of August 31, 1950, the 24,000,000 shares of stock of Bank
orc
merica were distributed among more than 180,000 holders, exclusive of
14:asa1nerical its subsidiaries, and nominees, and Bank of America employees'
1-5.
4 .11A-sharing and family-estate trustees. (3) The stockholdings of L. M.
4;a4ini, plus other shareholdings directly controlled by him, amounted to
1°ximate1y two-tenths of 1 per cent of the total stock of Bank of America.
'
'

4

(b) From its organization in 1928 to July 1937, Transamerica had
khci
99 exercised control of Bank of America through its ownership of more than
cejsr cent of the stock of that bank. However important other elements of
he:2irol may have been during that period, they are not considered here
el Use of the direct control through stock ownership. The control exer01:!! by Transamerica, not only of Bank of America, but also of its majority4:11 banks and other companies, has always been and is one of policy, leavto 'he details of the management of the individual banks and other companies
'
°fficials selected directly or indirectly by Transamerica. Any radical




-14den.. 4.
--rvure from these policies, or any abnormal commitment, required prior
ultation with and approval by Transamerica. Transamerica's control of
;!ax of America was for many Years publicly acknowledged by Transamerica.
,:7rexample, the published Annual Report of Transamerica for 1932 contains
wle statement:
The policies of the Giannini management of Transamerica Corporation have been restored and are hereby
reaffirmed.

LPX

The

Published Annual Report. of Transamerica for 1934 stated in part:
Your Directors have named a committee of fourteen
to serve as an Advisory Council to assist A. P. Giannini
in directing the activities of all banks controlled by
Transamerica Corporation. . .. This Council, in
addition to its advisory functions, will co-operate with
A. P. Giannini and your Board of Directors in choosing
from timP to time the chief 2perating executives of the
Transamerica group. Lpx

The sam
who was made head of the
;Annual Report refers to L. M. Giannini,
Advisor
Council mentioned in the preceding excerpt, as follows:
The selection of L. M. Giannini to head the Advisory
Council is, in the opinion of your Board, a particularly
happy one for, in addition to his close contact with the
wide range of Transamerica's activities since their inception, he is a man whose seasoned judgment, qualities
of leadership, and outstanding analytical abilities
peculiarly qualify him to head the Council which will
determine management policies for the entire group of
-X
Transamerica's banks.

ZT3

The c
krasri oraposition of the Advisory Council selected by the Directors of Transolk4ea to assist A. P. Giannini and Transamerica in selecting 'the chief
tell+ ting executives of the Transamerica group" and to "determine managequa;Policies for the entire group of Transamerica's banks" was L. M.
Pres141ini as Council Chairman, and the following membership: John M. Grant,
dent of Transamerica; E. B. MacNaughton, President of The First National
'
texat
t V1 Portland, a Transamerica-controlled bank; C. F. Wente, President of
the .
rcla"-rst National Bank in Reno, a Transamerica-controlled bank; and the
14111g, each of whom held the position stated in the Bank of America:
Belgrano, Jr., Vice President; W. E. Blauer, Vice President and Chair,4of 4As General Finance Committee; Hugh L. Clary, Vice President and Vice
ch-"
of its Operating Committee; Louis Ferrari, Vice President and




-15eral Counsel; F. A. Ferroggiaro, Vice President; Dr. A. H. Giannini,
'pearman of the General Executive Committee; A. J. Gock, Vice President;
Panario, Vice President; A. E. Sbarboro, Vice President and Vice
arman of its General Finance Committee, and Will C. Wood, Vice President.
P. Everard, Secretary of Bank of America and of Transamerica Corporation,
,748 designated as Secretary of the Advisory Council. Apparently this Council
uecame inactive after a few years.

r

The Annual Report of Transamerica for 1935 states:
• .. it is fitting
to the stockholders
following preambles
Giannini which were
Of Directors of the
1935:

that there be incorporated in this letter
of Transamerica Corporation a coRy of the
and resolutions in regard to Mr.LA.
adopted at a regular meeting of the Board
Bank of America N. T.& S.A. on August 14,

WHEREAS, at a meeting of this Board of Directors
held on July 9, 1935, there was presented for
consideration a recommendation of the Board of
Directors of Transamerica Corporation that Bank
of America N. T. & S. A. place Mr. A. P. Giannini
on a salary as Chairman of the Board of said Bank;
and
***** *
WHEREAS, this Board of Directors fully recognizes
the fact that the gigantic task of reconstruction
undertaken by Mr. Giannini when he resumed control
of the management of Bank of America N. T. & S. A.
on February 15, 1932, has been accomplished through
the genius and ind2mitab1e leadership of Mr.
Giannini * * *.

LBX

3—E/

(c) (1) When Transamerica, in 1937, became a minority stockhoL;er
in Bank of America through distribution to its own shareholders of
.'er
of
cent of its then stockholdings in that bank, the effective control
at, bank by Transamerica was not interrupted. Many factors, some
e4ible and others of an intangible character, have contributed to and
in
.1. the continuance of this control to the present time, and promise
tinuance in the future.

its!

(2) In 1930, A. P. Giannini retired pursuant to a previously
ealnoun
ced plan, and at his invitation Elisha Walker, an Eastern banker,
be
1
Dic,141"
Chairman of the Board of Directors of Transamerica. The Board of
'ctors was reconstituted, and in 1931 it wrote down the book value of




-16Transamerica's assets by about one billion dollars, mast of which was due
t(1_the reduction to nominal figures of the sums previously carried as goodand going-concern values. Transamerica's Board also announced new
Poli 4
Transamerica from the control
C'eE, which included eventual withdrawal of
Board
stated:
c/f banks, in which connection Transamerica's
.. Your Board believes that it is unsound to link,
through a holding company, the ownership and control of
a deposit bank with other unrelated activities and that
it is essential to the complete success of any bank that
it should be operated and publicly regarded as an independent institution without responsibility for, or connection with, any other business. It was for this reason
that your Board determined upon the policy of confining
the Corporation's investments in the banking field to
minority interests not involving controlling influence.
The eventual separation of its controlled banks from
Transamerica, in accordance with this policy, will give
such banks complete independence in their lending and
investment policies which is the only sound foundation
for a bank. ZTX 3-ii
•

A. p.
of„ Liiannini came out of retirement and, against the strenuous opposition
t, 'Ile new management of Transamerica, secured proxies more than sufficient
cofttrol Transamerica; whereupon the Walker management was ousted. A. P.
withrlrini again became Chairman of the Board of Directors of Transamerica,
Giannini as a Director and Chairman of the Executive Committee,
tin other Directors and officers selected by A. P. Giannini. On
kb
7 24, 1932, soon after these events, the Board of Directors of Trans1
0,14
4ea adopted the following resolution:
'

6i

Resolved, that the Chairman of the Board or the
President of this corporation be, and he hereby is,
authorized to designate, where deemed advisable by
either of them to do so, the particular person or
persons who shall represent the interests of this
corporation on the Board of Directors of any other
corporation of which this corporation owns stock.
ZfR 173il

The p
res,;°regoing action was rescinded on August 23, 1940, and the following
-'ution was adopted by Transamerica's Board:

Resolved, that the Chairman of the Board of Directors
or the President of this corporation be, and each of them
hereby is authorized to execute for and in the name and on
behalf of this corporation, a proxy or power of attorney in
any form satisfactory to him appointing such person or persons




518
-17as he shall determine es attorneys and proxies to vote
the share of stock of other corporations now or hereafter
registered in the name of this corporation, or which this
corporation may now or hereafter be entitled to vote at
any and all meetings of shareholders of said other corporations. LTR 1735j
(3) In addition to the delegations of authority by Transamerica
Chairman of Transamerica's Board of Directors, and to
uue P. Giannini as
President of Transamerica, to designate the person or oersons to repre7Int the interests of Transamerica on boards of directors of corporations
'Illthich Transamerica held stock, and to name proxies to vote the stock held
ransamerica in other corporations, the by-laws of the Bank of America
tInd specific powers in the hands of A. P. Giannini. At all relevant
:
Are, A. P. Giannini, as Chairman of the Board of Directors of Bank of
toelf:Ice, and, later, as Founder-Chairman of the Bank, had direct authority
or Iormulate the policies by which the affairs and operations of the Bank
s,Azerica were controlled. Section 4 of the Bank's by-laws as amended on
1)tember 22, 1931, reads in part:
tO

A

p

Section 4. The Chairman of the Board. The Chairman of the
Board of Directors shall preside at all meetings of the Board
and of the shareholders, and shall perform all other duties
Imposed upon him by the Board of Directors and these By-laye.
The duties of the Chairman, in addition to the usual executive
duties of such officer, shall also include responsibility for
the policies upon. which the bank's operations and affairs will
be conducted. 2)3X 282/
he the
tor
position of "Founder-Chairman" was created by the Bank of America
ke„!* P. Giannini, Section 4 of the Bank's by-laws was, on May 8, 1945,
'
4ed to read in part:
Section 4. The Founder-Chairman. The Founder-Chairman
Shall be responsible for the formulation of the policies
Upon which the bank's operations and affairs will be conducted and shall perform such other duties as may be imposed
l!RPn him by the Board of Directors and these By-laws. . .
CX 282/
(d) (1) When the stock of a company is widely distributed among
t410;le number of small holders, it is common experience that a substantial
pretg" minority interest freouently exercises effective control. In the
Aker4ent instance, after reduction to 7.66 per cent of the stock of Bank of
441):ca, the holdings of Transamerica and its subsidiaries in that bank on
tipp;7'Y 31, 1951, were 10838,850 shares (later reduced in January 1952 to
On August 31, 1950,
(the xinlately 5.6 per cent, or 1,345,883 shares).
°the nearest date for which figures are available) the next largest holder,
11 than Bank of America employee trust funds, which had 450,891 shares,




-18a securities dealer who was the holder of record of 62,000 shares. More
;Ilan half of the 24,0001000 shares of stock of Bank of America was held in
ots of less
than 500 shares by 173,109 owners, and almost a quarter of the
2°.tal issue was held by 6,727 owners in lots of more than 499 but less than
tl.C/00 shares. The record shows that in the years 1938 to 1950, inclusive,
sr shares voted by the management Proxy Committee (as distinguished from
ares voted by other proxies, or in person) averaged approximately 99 per
b nt of all the shares which were voted. For example, the figures for recent
Jears show:

,”
.14

t

4

Year
1947
1948
1949
1950

Total
shares voted
6,158,796
6,214,715
6,183,509
7,108,579

Voted by
management
Proxy Committee
6,097,080
6,143,564
6,115,453
7,031,046

Voted by
all others
61,716
71,151
68,056
77,533

Tr
,Rnsamerica holds a voting permit issued by this Board to vote the stock it
°I-ds in Bank of America.
(2) Since 1939 the stock awned by Transamerica in Bank of America
th t! been voted by the Bank's Proxy Committee. The formal designation of
TVaembers of
this committee is by the Board of Directors of the Bank.
fiva Proxy Committee has consisted of three members (except in one year
iNoe members were named) who have always been persons close to A. P. Giannini.
taal Of the usunl members of the committee have been Margaret Mallory, office
01:ger of the A. P. Giannini Company, who has served on the Proxy Committee
vhorY year since 1937,
and George J. Giannini, brother of A. P. Giannini,
has has served on the committee every year since 1941. The Proxy Committee
biree°nsistently voted for and elected as Directors of Bank of America the
1418 etc)rs already in office if they were available, and when a new member
livt,ded to replace a Director no longer available, the Proxy Committee
°I for whoever was selected by the Bank's Board, usually at the recomtericie.
tati tion of the Chairman of the Board of the Bank, sometimes after consul21 with Directors and officers. This provides the Bank's management with
e41 ":°
trfective
instrument for perpetuating itself in control.
(e) Among the important intangible factors of control of Bank of
4111srij
,
cr .ns'
a RY Transamerica is the history of "Giannini management of T ,
eLtaerl
long-establish
'
ea and its affiliates, the
ed relationships among the
kerab
tatter8 of this group, the long and continuous service of most of the impor..,°fficials in the group, the expectation and acceptance of policy direction,
to ,,,'.1'e momentum of established policies and procedures. All of these tend
hie'eserve and continue unity of policy on the part of the management
l'Etl
'
chY of both Transamerica and Bank of America.




a'

-19-

(f) A result of the tangible and intangible factors enterinto the control of Bank of America by Transamerica appears from
examination of the 1948 Board of Directors of that bank. The Bank's
"J,48 Board consisted of 25 members. Of this membership, 14 were members
the Bank's 1937 Board selected by Transamerica when it owned more
thEi
99 per cent of the stock of Bank of America. These members were:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14

W. E. Blauer,
Leon Bocqueraz,
G. E. Caglieril
J. Cereghino,
John A. Corotto,
A. P. Giannini,
L. M. Giannini,
A. J. Cock,
J. E. Marble,
H. A. Mazzera,
Angelo Petri,
A. E. Sbarboro,
C. J. Sullivan,
Z. Zentner.

Each
serveof these 14 members of the 1948 Board of Directors of Bank of America
1418 d continuously in that capacity from 1937, except A. E. Sbarboro, who
the :
,1e1ieved in 1938 and re-elected in 1946. The remaining 11 members of
'
948 Board of the Bank of America were:
(1) F. S. Baer, who was elected to the Bank's Board in 1943
zrved continuously through 1948. Baer came into the Transamerica
00'241) through Transamerica's acquisition in 1942 of Pacific Finance
'Poration of California, of which he was managing head.
azid

1Q/4

(2) Louis Ferrari, who became a member of the Bank's Board

the r and served through 1948. He had previously been a Director of
etto Etnk for the years 1929 through 1932, inclusive. He became a trust
Pre.„14eY for the Bank of Italy in 1919. From 1926 to 1944 he was Vice
'Ident and General Counsel of Bank of America.
,
4
130E0
(3) F. A. Ferroggiaro, who became a member of the Bank's
been in 1940 and served continuously through 1948. He had previously
of the Bank in 1930 and 1931. He has been an employee
the
B
"e Bank
of Italy and its successor since its organization.




-20-

19(4) Marshal Hale, Jr., who became a member of the Bank's Board in
46 and served continuously through 1948. He took the place of his
ile ther, who had served as a Director of the Bank from 1926 to 1945, in...1151ve, except for the years 1934, 1935, and 1936. Marshal Hale, Jr.,
:1 his family have been closely associated with the Gianninis for
'QV years.
(5) C. N. Hawkins, who became a member of the Bank's Board in
and served continuously through 1948 except for the years 1934,
T5/ 1936, and 1937. In 1916, his father sold two banks to the Bank
ev Italy and thereupon became a Director of that bank, to which position
c 1. Hawkins succeeded. He was a Director of Stockholders Auxiliary
,?xlporation in 1920. During the years 1934 to 1937 he was a member of
Advisory Board of the Bank of America.
(6) Eric A. Johnston, who became a member of the Bank's Board in
1
13946 and served continuously through 1948. He became a Director of the
arik at the invitation of A. P. Giannini.
(7) Alfred J. Lundberg, who became a member of the Bank's Board
served continuously through 1948. He became a Director of
"e Bank at the invitation of L. M. Giannini.

1946 and

W. W. Mein, who became a member of the Bank's Board in 1938
(8)sevd continuously through 1948. He was a director of Occidental Life
'I'ance Company from 1939 through 1947.
(9) Neil Petree, who became a member of the Bank's Board in
1943
B
and served continuously through 1948. He became a Director of the
1,1111,11k at the invitation of A. P. Giannini, and testified that in 1945 "Again
to. A. P. Giannini suggested to me_that he would like to know if I wanted
el g° on the Executive Committee Lof the Bani7, and I did, and so was
--ected." LTR 983il
(10) E. R. Thurber, who became a member of the Bank's Board in
1932,
tiolla at the time the Giannini management resumed control, and served eonously through 1948 except for the years 1934 to 1938, inclusive.
ti:as a Director of California Lands, Inc., in 1939 and 1940, and a
4-uector of Capital Company from 1941 through 1947.
a member of the Bank's Board
, (11) C. F. Wente, who became
et,,744 and served continuously through 1948. He has been continuously
1.117Yed in Transamerica-group banks since 1918; as Vice President
46b9291 and Executive Vice President in 1930, of the Bank of Italy;
P.'llesident and Chairman of the Board of the First National Bank in
-11c) (le ter called the First National Bank of Nevada) from shortly
art_
Transamerica's acquisition of that bank in 1934 until 1937; in 1934 and




522
-21-

t

hereafter, as Director of The First National Bank of Portland; in
as President of the Central Bank, Oakland, California, a Transerica bank; and in 1943, as Senior Vice President of Bank of America.
Wente is now Vice Chairman of the Executive Committee of Bank of
erica, a member of its Trust Committee, and Chairman of the Branch
?
remises Committee.
With very few exceptions, the members of the 1948 Board of
Directors of the Bank of America were either long-time employees of,
re had been closely associated with, the Transamerica group for many
;
e, ars. They were selected by the methods heretofore described and
'0-Nd neither have become nor have continued as Directors of the Bank
1 America except with the approval and support of Transamerica.
(g) Twelve of the Directors of the Bank of America named
ths Preceding
preceding subparagraph have also been Directors and/or officers
.r
9 T
or its subsidiaries (other than commercial banks) in
1°11e years since 1937, as follows:
(1) W. F. Blauer--Director, Bankamerica Agricultural Credit
12?ration, 1939, 1940, and 1941; Director, Inter-America Corporaticn,
Director, Pacific National Fire Insurance Company, 1939 through
(2) Leon Bocqueraz--Director, Capital Company, 1939 through
Director, Pacific National Fire Insurance Company, 1939 through

1930
7

(3) Joseph Cereghino—Director, General Metals Corporation,
through 1947.

(4) A. P. Giannini--Chairman, Boara of Directors, Transamerica
Borration, 1932 until his death in 1949; Director and Chairman of the
14f1 , Corporation of America, 1933 through 1939; Director, Occidental
T1,2 Insurance Company, 1936 through 1947; Chairman, Board of Directors,
samerica General Corporation, 1938 and 1939; Director, Merchants
tY Corporation, 1938.

q

Eltec„. (5) L. M. Giannini--Chairman, Advisory Council and Chairman,
19311"‘ave Committee, 1935 through 1937, and Chairman, Executive Committee,
through 1948, Transamerica Corporation; Chairman, Board of Directors,
ett7araerica Agricultural Credit Corporation, 1928 through 1941; Director,
1 fornia Lands, Inc., 1938 through 1940; Director, Capital Company,
9318
ikt through 1947; Director and Vice President, 1939 and 1940, and
Director and President, 1941 through 1947, Corporation of America;
Preect°r, Inter-America Corporation, 1939 through 1947; Director and
1947 dent, 1933 through 1943, and Chairman of the Board, 1944 through
'Occidental Life Insurance Company; Director, Pacific Fire Insurance




523
-22,k1111Pany, 1933 through 1947; Director, America and Security corporation,
4.9383 Director, Merchants Realty Corporation, 1933 through 1947; and
Director, Transamerica General Corporation, 1938 and 1939.
(6) A. J. Gock—Vice President, Transamerica Corporation,
1932 through 1939.
(7) Marshal Hale, Jr.--Director, Pacific National Fire
eurance Company, 1945 through 1947.
(8) C. N. Hawkins—Director, Bankamerica Agricultural Credit
Corporation, 1939 through 1941.
Life Insurance Company,
(9) U. V. Mein--Director, Occidenta
1939 through 1947.
(10) A. E. Sbarboro--Director and Vice President, Inter-America
Corporation, 1939 through 1947; Director and Vice President, Pacific
oational Fire Insurance Company, 1939 through 1947; Director, Western
.1111m1ture Exchange (later .called Western Merchandise Mart), 1939 through
:
4947.
(11) E. R. Thurber--Director, California Lands, Inc., 1939
44d 1940; Director, Capital Company, 1941 through 1947.
(12) C. F. Wente--Director and Vice President, Bankamerica
icultural Credit Corporation, 1939 through 1941; Director and Vice
coesident, California Lands, Inc., 1939 and 1940; Director, Capital
111Pa4Y, 1939 through 1942; and Vice President, Corporation of America,
,
1,
'-7-59 through 1947.

t

(h) (1) The interrelationships between Transamerica and Bank
0
.
erica are significant in considering the matter of control of Bank
4 america by Transamerica subsequent to 1937.
d—

(2) Since 1937, Bank of America has performed or continued to
a wide variety of services for Transamerica inconsistent with ces1°11 of control of that bank by Transamerica after Transamerica became a
"
-4
kit
btY stockholder of the Bank. One important type of service performed
various officers and employees of the Bank of America has been assist44ce
p,_ to Transamerica in acquiring other banks. G. M. McClerkin, a Vice
oiesident of Bank of America from 1932 until 1946, devoted a major portion
T., his time and efforts during that period to seeking out opportunities for
ri8america to acquire controlling stock interests in banks, and in
Zegotiating or assisting in negotiating such purchases. Since 1946,
tie L._
Alas been a Vice President of Transamerica, where he has continued
m.ts
twe bank-purchasing activities and also serves as a liaison officer bee Transamerica and its controlled banks. During the time in 1941
Peri'orm




524

When Transamerica was in process of acquiring the controlling stock interest in the First Trust and Savings Bank of Pasadena, Edmund Nelson and
8. C. Beise, each a Vice President of Bank of America, and Louis Ferrari,
the General Counsel of that bank, actively participated in the various steps
telcen, and aided in carrying out and in supervising the carrying out of
!uch of the work incident to such acquisition. S. C. Beise also assisted
1Tansamerica in a similar manner in 1944 in connection with the acquisition
b7 Transamerica of the stock of the First National Bank in Santa Ana and
the First Trust and Savings Bank of Santo Barbara. In 1942, F. S. Baer,
then Vice Chairman of the Board of Directors of the Bank of America, apProached the President of the Citizens National Trust and Savings Associ4tion of Los Angeles on behalf of the acquisition by Transamerica of that
K. In 1945, C. F. Wente, then Senior Vice President of Bank of America,
conducted the negotiations through which Transamerica acquired the Bank of
These are merely specific instances of the continual activity
"ach the record shows to have been engaged in by numerous officers and emPloYees of the Bank of America in aid of the purchases of banks by
Transeinerice.
(3) Other types of services performed for Transamerica by Bank
Transamerica-c
r America include the audit and examination ofontrolled
L
America, reports of
of
Bank
the
by
of
Department
the Inspection
ZITc8
to the banks examined.
and
Transamerica
',11
.
;
to
inspections are supplied
and
audits
examines Transamerica
Bank
the
..:Lailarly, the same dePartment of
zasidiaries
services
performed
for TransOther
banking.
not engaged in
aillerica by personnel of the Bank of America include tabulating, addressoPhing, and mailing services; the handling of stock transfers, mechanisal maintenance, stationery supplies, rent collections, burglar alarm insPection, and, until 1950, telephone switchboard service. All of these
_e_rvices are performed by the Bank at actual cost, end substantially all
re Performed
only for Transamerica and its subsidiaries.
(4) Officers and personnel of the Bank of America are freely
tow fa to
other banks controlled by Transamerica, and from such other banks
ank of America. The record leads to the conclusion that Bank of
:nice has served as a reservoir of trained personnel later placed in intit positions in other banks controlled by Transamerica. An example of
.8 appears in the case of C. F. Wente, whose many transfers among TransZ
er rica-controlled banks are stated in subparagraph (f) (11) of this ParaPh Five. In connection with his transfer, at the request of A. P. Giannini,
or the presidency of Central Bank, Oakland, to Senior Vice President of Bank
er America, Mr. Wente testified he "couldn't do anything but salute the genwill be here.'" F. N. Belgrano, Jr.,
bealJ and say 'Yes, Sir, Nr. A. P.,
preeze a Vice President of Bank of America in 1933; in 1939, he was made
sirident of Pacific National Fire Insurance Company, a Transamerica sub!exY; in 1943, he was made President of Central Bank, Oakland, succeeding
F. Wente.
The vacancy as President of Pacific National Fire Insurance




r-

anY caused by this transfer of F. N. Belgrano, Jr., was filled by moving
ire4o it A. E. Connick, a Vice President of the Bank of America. In 1947,
irifl,grazo was made President of The First National Bank of Portland, succeedB. MacNaughton, who was made Chairman of the Board of The First
13i onal Bank of Portland. W. W. Hopper, who had been an employee of the
l'cteof America since 1922, became a Vice President of Bank of America in
he had also been President of California Joint Stock Land Bank and of
araerica Agricultural Credit Corporation, both Transamerica subsidiaries;
of Nevada to the
1 C. F. Wente was moved from the First National Bank
,
441
First
the
National Bank
cq[ ,:ral Bank, Oakland, Hopper was made President of
America
since
1920,
be:evada. A. H. Brouse, an employee of the Bank of
in
1938
was
made
t:me a Vice President of Bank of America in 1928; he
Bank
of Washing Aational
the
of
,
president
tohelltive Vice President, and later
in
service
the Bank of
Transamerica subsidiary. H. C. Gruwell, after
America,
of
where
he reBank
of
President
vice
a
tim _rical was in 1941 made
, an in 1947
President
Vice
Executive
Until 1945, when he was made
Geo
"ident, of the First National Bank of Arizona. Between 1927 and 1940,
and then Vice President of
t e e J. Panario was Assistant Vice President
ely President and
successiv
kal'ank of America; since 1935, he has been
since 1940, he has
Company;
,Illaz of the Board of Directors of Capital
bee,
the
of
Board of Directors
Chairman
olr;: successively Secretary, Director, and
Chairman
of the Board
been
qnneral Metals Corporation; since 19420 he has
he
is
,
and
a Director
lso
Company;
Foundry
or rectors of Enterprise Engine &
hart.
se
Merchandi
Jecidental Corporation and of Western

Z

ive of the large
The foregoing are but a few instances illustrat
and
America
Transamericaer
0
of
1111411
coll+_- of transfers of officials between Bank
the
record.
by
bnnks and companies which are shown
interrelationship appears in unusual
(i) (1) A different type of
COrru,
--4 1--te transactions.
National Fire Insurance Company,
(2) Subsequent to 1937, Pacific
a
July 31, 1941, Premier Insurto
41'47 america subsidiary, and subsequent
insurance on automobiles the
wrote
Puro_°111Pany, a Transamerica subsidiary, America. Inter-America Corporatiorl'se of which was financed by Bank of
broker in these transactions. The
'a Transamerica subsidiary, acted as
Eirr
of the insurance companies has
each
1111„.11gement between Bank of America and
to the premiums paid for the
respect
ilded a formula of adjustment with
incurred by the insurlosses
actual
8-nce. Under this formula, if the
41
:
cost of doing
company's
insurance
the
ecIMPany on such insurance, plus
insurance company, the difthe
by
received
85, exceeded the premiums
reterice
Bank of America. On the
Would be paid to the insurance company by
company exceeded the
insurance
the
by
!
1/ 1 hand, if the premiums received
would be paid to Bank
e
differenc
the
expense,
'ance company's losses and




-25°1rAmerica by the insurance company. The net result of adjustments made
elr?uant to this formula has been payments by the Bank to the Pacific
acnal Fire Insurance Company for the period from June 1, 1939, to July 31,
. 43, totalling $998,158.70, and payments by the Bank to Premier Insurance
for the period from August 1, 19410 to Septelber 30, 1946, totalling
11113aRY
,
t#12.
109,400.17. Both of these insurance companies are stock companies, and
'
93-r earnings, when declared as dividends, accrue to Transamerica.

V

1937, Corporation of Americo, a Transamerica subsidiary,
has acted (3) Since
„_
as trustee (and in recent years that has been its sole function)
;!der deeds of trust in which Transamerica or its affiliated organizations
as beneficiaries. This activity has largely been on behalf of Bank
po„!"laerica, and a number of officers of tnat bank are also officers of Corc 'don of America. They, together with officers of other Transamericapattrolled
banks, were appointed to facilitate the execution and delivery of
ers in connection with deeds of trust. The fees paid to Corporation of
t erica by Bank of America are one-half of the total fees collected from the
1145tora, the other half being retained by Bank of America.

;
re/lamed

(4) Before and after 1937, group insurance policies issued by
lixtel ental Life Insurance Company, a Transamerica subsidiary, to Bank of
41.ca Included not only employees of that bank but also employees of Trans,
and of other of Transamerica's subsidiaries.
Oecia

•
(5) In offering to purchase the stock of the First Trust and
.8a711.1
orjr, ge Bank of Pasadena, in November 1941, Transamerica agreed that if any
r'
o cers or employees of the First Trust and Savings Bank of Pasadena were
at:ased from their employment in line with any management policy, Transt6,
,
34a would endeavor to obtain suitable employment for such persons with
Dank of America.
(6) As previously found, one of the principal functions of Capital
04"pbb—
'
1Y, a Transamerica subsidiary, has been to manage, operate, and sell
re„1estate acquired by Bank of America through foreclosures. This company
rilanages the premises occupied by the branches of Bank of America. It
t2 entered into an arrangement with Bank of America for the purchase and
Q,Jir"ement of real estate. At the request of the Bank, which supplied
‹aisal and credit information, Capital Company made loans at competitive
.Lof interest to finance the acquisition and improvement of properties,
44d 48
ttetire Bank paid to Capital Company the difference between the interest
11;4-1Y received and what the interest would have amounted to if the rate
thei,een 6 per cent. As a part of this arrangement, Capital Company r
the u°rrowers to obtain from Bank of America financing for homes built upon
Property, or in case of sale of lots, that the purchaser offer Bank of




rz_ •

kerica the first opportunity to make any building loans. Another arrange!
lent was that Capital Company would participate in residential loans made
pYBank of America by assuming any amount above the maximum the Bank could
laiffnlly lend.
(j) Having fully considered the evidence respecting the manner
of
4_ operation of Transamerica and its relationships and activities with and
" Dt connection with Bank of America, and with and in connection with Trans8 icals majority-owned banks and other companies, it is concluded, and
therefore found, that Transamerica has had and now has the power to control
!Id direct, and
in fact has controlled and directed, and now does control
rd direct, the major policies and activities, as distinguished from the
'
4
o-day details of operation, of Bank of America and of each of the other
b 8 named above in subparagraph (b) of Paragraph One. As to such other
ens, Transamerica acouired and now holds a controlling stock interest in
f\.ch of them, and has openly and freely exercised that control. It is
her concluded, and therefore found, that Transamerica has not held and
4:!‘s not now hold its stock in any of the banks named in said subparagraph
'') solely for investment.

T

PARAGRAPH SIX: (a) Much evidence was introduced or proffered
respondent assigning reasons for bank acquisitions, explaining the cirtances under which made, and the goal being sought. This evidence is
:
t -"cipally intended to show that the purpose was to accept opportunities
br acquire banks as they were Presented in order to round out State-wide
aranch banking by extending the facilities and services of the system into
eas where it was lacking, and to add to the lines and types of business
40,
already adequately represented in the system; to acquire suitable bankorig Premises not otherwise available; to acquire, at the request of owners
,supervisory authorities, banks in failing or frozen condition; and to
Z!'llcate that there was no purchase of banks merely for the sake of increas'
4g the size of the group or to reduce competition.

t

(b) Elsewhere in these findings there are shown in detail the
lith of the Transamerica group through 1948 (in which year this proceeding
tal;' commenced, Transamerica's further acquisitions during the pendency of
orl Proceeding, and Transamerica's unsuccessful attempt to convey the assets
exte2 banks with 28 banking offices to Bank of America. With respect to
00.414!ding services and facilities, there are at least eight counties in
ort lornia having two or more banking offices in which all the banking
ttril es are Transamerica controlled. There has been no abatement of at-vti s bY Transamerica to purchase other banks during this period. The
tes'
4111°11Y of a large number of independent bankers shows that the general

t




-27-!!putation of Transamerica (and also Bank of America) among bankers in
area involved is one of constantly seeking to acquire more banks.
.
!1 !_4cal examples of this appear in the following extracts from such test.uaony:
... That they LYransamerica and Bank of Americt/ are
very aggressive and very anxious to buy into the small
banks in our neighborhood. Zia 3201/

The reputation among_the bankers of Northern California
unanimously is that they LYransamerica and Bank of Amerisa/
are out to acquire any bank that they can get. LTR 334B/
******
Well, they LYransamerica and Bank of Americi7 have
purchased already five banks in the county, and there are
four left, and they have all been invited to come into the
organization. LTR 3152/

This ,.
b
Jane of testimony shows not only the great persistence of efforts to
T,tbenks by or in behalf of Transamerica, but also makes it clear that
-r: L"samerica is not especially engaged in acquiring banks in bad condition.
'
;
c 111strative of this is
the testimony of the President of The Savings Bank
lendocino County, which operates a commercial banking department, that
,
,L ?1 first efforts to Purchase this bank were about 1923 to 1925 on behalf
;
e4 the Bank
of Italy, and continued at intervals of about 60 days for two
plr.ar8; that in the early 1930's, before 1933, Mr. McClerkin (then Vice
r).,!sident of Bank of America) made two attempts to purchase; that in 1933,
the bank was in difficulties, he approached McClerkin in an effort to
the bank, but was unable to get an offer; that about 1936 McClerkin
1Pached him to reopen negotiations for purchasing the bank; and that in
t4-1- the manager
of the local branch of the Bank of America inquired about
of Ll?ossibility of buying the bank, saying that he did so at the direction
uls superiors.

O

P4st(c) Respondent introduced testimony to the effect that in the
or 30 years some 17 banks with numerous branches were offered for
gala'
to b) c
onsidered, and the offer rejected by respondent. Even assuming this
Nine the fact, it would not affect the conclusion from the whole record
koecting bank purchases by respondent. However, the weight of the testia number of the claimed offers and rejections make it clear
th
Ilegottu some of the instances there was no offer, but, on the contrary,
'ations were had upon solicitation by or in behalf of respondent; in




-28!cme instances negotiations broke down over the question of price; and in
0111s instances no party to the negotiations was in a position to convey a
controlling interest.
(d) Interstate branch banking is unlawful, and Transamerica cannct directly consolidate its controlled banks in the several States into
!single bank. Althoudi Bank of America is by its own statement "the
"ldts largest bank" LIX 352/, Transamerica has evidenced a desire to
"J-ate an even larger bank by interstate branch banking, if and when this
a Possible. The 1937 Annual Report of Transamerica contains the state. . . and should Congress enact legislation permitting
branch banking over State lines, Transamerica Corporation,
with the cooperation and consent of the other stockholders
of member banks in which it is substantially interested,
will be in a position to take advantage of the broader
scope which the new legislation will offer and will be
among the first to launch a branch banking system beyond
State lines. /gX 3-7
'act*
Pl
, lcal steps in the same direction may be inferred from the fact that
th.fl
th. internal operations of Transamerica banks in Oregon and Nevada and
cc 08eOf Central Bank, Oakland, are conducted under a Manual of Operations
11114.ed or adapted from the Manual of Operations of Bank of America, produca uniformity of internal operations adapted not only to central manage1
4
op t and control but also to unification into an interstate branch-banking
'ation should that become lawful.
el

(e) The course followed by Transamerica requires the conclusion
O
long as it is profitable and advantageous to the group to acquire
tore
banks, this will be done to the extent possible.
that

PARAGRAPH SEMI: (a) A principal part of respondent's defense
t: been devoted to offering or tendering evidence directed to showing
Co continued existence of elective competition; that competition from
:
ti044ercia1 banks located outside the five-State area, together with competi:
is from non-banking institutions within and without the five-State area,
tittih that respondent could not, even if it tried, bring about a substanerre tessening of competition; and that no proper conclusion concerning the
of respondent's stock acquisitions can be reached without considering
the
haveellaracter and extent of competition from these sources. These matters
the ,been considered in the light of the fact that this proceeding challenges
bartit-Lalgfulness of respondent's acquisition and use of stock in commercial
:
NI within the five-State area and in the light of the characteristics and
'tans of commercial banks.




Zt"" 11)34: ci

-29(b) The banking structure of the country as it now exists
requires and depends upon two functions which are performed by and
are unique to commercial banks. These are the money-payment and the
Money-creation functions. There is a third function--the extension
of short-term business credit--in which commercial banks are dominant
and for which, in the practical sense, there is no adequate existing
alternative or substitute. In these areas there is no substantial competition with commercial banks from any source.
(c) The money-payment function rests upon the acceptance
of demand deposits subject to being drawn upon by depositors through
the issuance of checks. The conduct of all business depends upon the
smooth operation of the elaborate mechanism by which money payments
fan be made between persons in the same or widely separated parts of
the country through the check collection and clearance procedures of
the commercial banking system, without persons having to make physical
transfers of currency or coin in order to effect payment. More than
°O per cent of all money payments throughout the country are made by
!heck. Some four billion checks a year are issued, representing a
dollar volume of about one and one-half trillion dollars. Only coms!'oial banks perform this money-payment function and there is no
existing adequate alternative or substitute for it.
(d) The money-creation function of commercial banks rests
demand deposit lia(:1 two principal factors. First, commercial bank
and accepted as
used
widely
bilities (deposits subject to check) are
do
not keep a full
banks
commercial
„.sans of payment or money. Second,
deposit
demand
liabilities,
sh reserve behind each dollar of their
basis.
Commercial
banks
nt operate instead on a fractional reserve
re thus in a position to add to their demand deposit liabilities in
:
xchange for note or security assets if they have cash reserves in excess
of what must be held against their deposits or if they can obtain
additional reserves. When a commercial bank lends to a borrower, it
113ically sets up on its books a demand deposit liability (deposit sub;
on to check) to his account. The borrower accepts the deposit as means
'
bt Payment equivalent to cash. As the borrower writes checks against
s new deposit, the funds are transferred and deposited elsewhere,
of the lending bank are
dr/1411Y in other banks. The cash reserves
1.„414n down, but the bank can readily meet such a drain as long as it
8 left the minimum fraction of cash reserves needed against its
receiving the deposits thus
.
l irling deposits. The bank or banks
ohrlia
ei;caain more cash reserves than they need to hold against deposits,
in turn can increase their deposit liabilities by additional lendthis country commercial banks are generally required by law to
. In4
po d reserves equal to specified percentages of their demand and time dewith low percentages typically applying to time deposits. For
e,
e uwer banks of the Federal Reserve System, whose deposits represent
J Per cent of all commercial bank deposits, these reserves must be

Z




3
-30kept as balances with the Federal Reserve Banks. For banks which are
not members of the Federal Reserve System, required reserves are generally kept in the form of vault cash or balances with correspondent
. 11105. Balances in excess of the required amounts are excess reserves
flat may be used to support an expansion of commercial bank lending with
a resultant increase in bank deposit liabilities. If 20 per cent of deand deposits must be held in reserves, then banks as a group may expand
their deposits by five tines the amount of the excess reserves. Member
ks as a group may increase their total reserve balances by borrowing
m the Federal Reserve Banks or by selling Government securities,
which are purchased by the Federal Reserve Banks. Non-member banks as
4 group may increase their total reserve balances by borrowing from
correspondent banks, which in turn may borrow from Federal Reserve Banks
Or also may sell Government securities. An adequate, though perhaps
,!°111evrhat oversimplified, illustration of the process of money creation
bhraugh an increase in bank lending is:

r

Bank A sells $1,000 in Government bonds to a Federal
Reserve Bank, resulting in increasing the reserve balance of
Bank A by that amount. Bank A thereupon lends 0.1000 to Jones
by adding that amount to his demand deposit balance. Jones
draws a check for $1,000 on Bank A, payable to Smith, who
deposits the check in Bank B. Bank B sets aside 8200 as the
required reserve against this increase in its deposits and
then lends the remaining $800 to Brown. Brown draws a check
for $800 to Johnson, who deposits the check in Bank C.
Bank C sets aside $160 as the reserve against this increase
In its deposits, lending the balance, or $6401 to Green. This
Process is repeated by similar transactions within the commercial banking system until the excess reserves of $1,000
originally created by the sale by Bank A of the $1,000 Government bond to the Federal Reserve Bank supports an expansion
of newly created deposits totalling $5,000. It is in this way
that the commercial banking system as a whole is able to use
excess reserves to produce expansion of the demand deposits
Within the banking system as a whole at the ratio oi five to
one when the ratio of required reserve is 20 per cent of demand deposits.

I

hie money-creation function is unique to commercial banks and there
8 no existing alternative or substitute for it.

(e) Short-term business credit is credit required by small,
and even large business concerns for, or to supplement, their
c rking capital. In this area commercial banks occupy a pre-cminent
'
reition. Exclusive of trade credit (which is an arrangement by which
413Pliers of goods and services grant the privilege of deferring pay;
ent for such goods and services for periods of 30, 60, and 90 days),




irY

-31commercial banks supply more than 90 per cent of all short-term business
credit. Because of the commercial banks' intimate knowledge of the
affairs of business concerns in the areas in which commercial banks
operate, including that acquired in the course of extending the other
services for which such banks are commonly relied upon, commercial
banks are able to and do extend and service short-term business credit
t? the almost total exclusion of other lenders. Financial institutions
1•T1thout the same knowledge of local conditions, and without ready access
to such knowledge, afford no practical alternative or substitute for
the short-term business credit function of local commercial banks.
(f) Because of the frequency of need for access to one or
Tore of the services of commercial banks, such banks draw their business
-Largely from areas within which customers may conveniently visit the
'l arlks as occasion may require. Thus, in this aspect of their customer
relations, commercial banks are largely local, and for the usually needed
11stomer services a distant bank cannot adequately serve a customer.
,er3r
large concerns with national credit standing have access to credit
v
trom banks in many parts of the country and may also maintain accounts
ln widely scattered banks. This does not apply, however, to the great
"ltitude of the customers of commercial banks. The smaller concerns,
:'-ocal business enterprises, and ordinary citizens must depend upon
their local commercial bank or banks for the financial services peculiar
t
4,c) such banks; for all these customers there is no alternative or substi411te, because distantly located banks do not serve or supply their needs.
(g) In addition to the three distinctive services previously

scribed, all commercial banks perform some or all of the following
8ervices: acceptance of savings deposits; the making of real estate,
ersonal, agricultural, instalment, term, and other types of loans;
he collection of drafts, bills, and other commercial instruments; the
:,!ceptance of bills of exchange; the issuance of letters of credit;
'ae sale of travelers' checks, cashiers' checks, and drafts on corresldent banks; the purchase or sale of securities for customers; the
le of foreign exchange; the renting of safety deposit boxes; the
tnension of trust services, and others. Within the area of some of
4. ese additional services there is some competition from sources other
:tan commercial banks. Such sources, other than the Government lending
:Tencies, are principally life insurance companies, building and loan
:
!
L eociations, Production credit associations, savings and loan associanons, credit unions, finance companies, personal loan companies, and
individuals. All of these, however, depend upon the commercial
17king system to carry on their own business, and most of them depend
?Yon it for additional credit for their own operations. Such non-bank
nPetition as exists in this limited area of services is immaterial
tjel for it does not compete with or afford an alternative or a substite for the major functions of commercial banks.

t

r

C




-32PARAGRAPH EIGHT: (a) In order to consider the effect of
:the acquisition and use by Transamerica of the stock of banks, as
neretofore found, it is necessary to relate the Transamerica-controlled
banks and their operations to the entire commercial banking structure
of the area involved.
(b) (1) From its inception with the organization of the
Bank of Italy by A. P. Giannini in 1904, the growth of the banking
gr0uP, control of which was concentrated in Transamerica upon its
°rganization in 1928, proceeded steadily from one bank in 1904 to 26
banks and branches in California in 1920, representing 2.90 per cent
of the total number of banking offices in California. The number of
Ibe group's banking offices in California and the group's percentage
°f the total number of banking offices in California increased by
Years as follows: 1921, 31 offices, 3.33 per cent of the total; 1922,
3 offices, 6.20 per cent of the total; 1923, 83 offices, 7.16 per cent
Qf the total; 1924, 106 offices, 8.70 per cent of the total; 1925,
158 offices, 12.43 per cent of the total; 1926, 185 offices, 14.30
1 r cent of the total; 1927, 297 offices, 22.42 per cent of the total;
2
928, 352 offices, 26.27 per cent of the total. At this point control
of the group was placed in Transamerica, and thereafter the expansion
and extension of Transamerica in the commercial banking field has been
as shown in the following table:
igures are not available for 1949 for this table or for the tables
F
7nowing
deposits, which hereafter appear in subparagraphs

loans and
and (d) of this Paragraph Eight. Such data are available for 1950,
pIxt do not differ substantially from the 1948 figures.)




m1
r-N
1

419

352
449
455
421
414
26.67
34.20
35.22
33.98
36.25

506

433
477
497
504
505
509
511

425

1940
1941
508
521
527
538
549

NUMBER OF TRANSAMERICA-C(TJTROLLED BANKING OFFICES AND THE
PERCENTAGE SUCH NUMBER IS CF THE TOTAL t:UMBEF OF
BANKING OFYIaS, BY YEARS AND BY STATES

13.24
18.71
24.65
30.99
32.39
32.62
32.86
33.33
34.75
34.29
34.29
33.79
34.93
36.84
36.07

1.75
4
1.85
4
6
3.77
17 13.49

18
26
35
44
46
46
46
47
49
48
48
49
51
56
57

n
420

352
449

37.98

.43):T,7,

N:g
32.28

26.67
34.20

In total area Shown
- ercent
Trans. P

466

;I18:

39.20

645 40.95

619 49.70
637 40.94

)
(
9 2g::2
V)6

584 39.70
585 40.01

586

577:
582 38.88

34:B

522 35.37
565 37.27

5 33.33
8
12

12
12
12

13
14
14
14
14
14
15
15

.87
2_
44.44
5
63.16
5 13.51N7
11
13.16
63.16
5 13.16
10 4.44
57.14
lo 4.46
5 13.16
57.14
59.0910 4.46
2:g
10 4.57
; 3
60.87
5 12.82
10 4.55
60.87
6 14.63
10
4.48
60.87
6 14.29
lo 4.35
60.87
lo 4.22
6 13.33
58.33
lo 4.08
7 13.73
6o.00
10 4.06
7 13.20
6o.00

7 41.18

Washington
Arizona
Nevada
Oregon
California
Trans.Percent Trans.Percent Trans. Percent Trans.Percent Trans. Percent

(The columns headed "Trans." show the number of Transamerica-controlled banking offices, End the
columns headed "Percent" show the percentage of Ell banking offices controlled by Transamerica)

Year
1928
1929
1930
1931
1932
1933
1934

1942

556

1939

1943
1944
1945
1946
1947

1935
1936
1937
1938

38.94
39.10
40.43
43.96
45.51
46.54
46.80
47.39
47.76
48.19
48.85
50.05
50.10
50.33
5:.69
50.86
1948




-34There was a dispute as to many of the above figures, arising primarily
from problems relating to dual occupancies (two banking offices in
one location). A recalculation which gave effect to the alternate
contentions has been made of all the above figures, and no material
Changes resulted, though the general tendency was to increase slightly
the Transamerica percentage of the total. For example, the number of
Transamerica-controlled banking offices in the five-State area in 1948
is shown as 645, and the corresponding Transamerica percentage of the
t;otal as 40.95 per cent. The recalculation shows these figures as
041 and 41.90 per cent, respectively. A dispute also arose over the
'
1gures as to deposits and loans shown in succeeding subparagraphs
kc) and (d) of this Paragraph Eight. Similar recalculations were made
as to all these figures, with results similar to those stated above
as to number of banking offices. In the case of deposits, shown in
subparagraph (c) of this Paragraph Eight, the Transamerica percentage
of all bank deposits for the five-State area for 1948 is shown as 38.85
Per cent, and the recalculation shows this percentage as 40.45 per cent.
In the case of loans, shown in subparagraph (d) of this Paragraph Eight,
the Transamerica percentage of the total of all bank loans in the fiveState area for 1948 appears as 49.97 per cent, and the recalculation
shows this percentage as 51.80 per cent. Because the recalculations
take no change in trend and little in details, because other figures
have been determined upon a basis comparable to that used in the tables
referred to above and it is desirable to use the same basis in all such
figures, and because respondent is put to no disadvantage by failure
0 use the recalculations, the original figures are used throughout
these findings. The foregoing table relating to banking offices presents
°,111Y a statistical record of the persistent and continuing expansion of
ransamerica, showing the rate at which it increased its percentage of
'
°ccupancy of the banking field to 1948, at which time it had under its
control about 41 per cent of all the banking offices in the five-State
84ea. Since 1948 Transamerica has increased its number of banking
?9'ices by 13 in California, 5 in Oregon, 1 in Nevada, 3 in Arizona, and
t 111 Washington, making a total addition of 23 banking offices.
'

5

(2) Transamerica expanded in California from 352 offices
in 1928
to 556 offices in 1948. During the same period the total
rtiUmber of banking offices in California decreased from 1320 in 1928
° 1093 in 1948. Thus, banking offices in California other than those
)
!?!Itrolled by Transamerica decreased from 968 in 1928 to 537 in 1948.
ing the same comparison for the five-State area, but beginning with
4f37, the first year in which Transamerica expanded into the last of
five States, the increase in number of Transamerica-controlled
411M-ng offices in operation was from 565 to 645. During the same
'
riod the total number of banking offices in the area increased from
4.516 in 1937 to 1575 in 1948. The number of banking offices not conby Transamerica decreased from 951 to 930. These changes

7

r




Ps-en'

-35occurred during a period when the population of the five-State area
waS increasing by 70 to 80 per cent, and the income of the population,
retail sales, and business generally increased by much larger percentages.
(3) While the foregoing table shows the number of Transamerica?ontrolled banks and branches which were in operation during the years
flclicated, it does not reflect the many instances in which a bank or
loranch in the Transamerica group was merged or consolidated with another
in the group, where a bank or branch acquired or established was discontinued, or where banks within the group in the first instance
absorbed the business of various banks or branches acquired by Transamerica or its predecessors. Although the table shows the number of
Transamerica-controlled banking offices in operation in 1948 in the
rive-State area as 645, the number of banks and branches acquired by
Transamerica to June 30, 1948, was 679, and the number of branches established de novo was 233, or a total acquired or established of 912. The
1111Portance of the mergers, consolidations, and discontinuances more
clearly appears from an examination of the facts respecting these
matters in relation to smaller communities in the five-State area. The
I0)-lowing table shows by States the number of communities having, as of
uecember 31, 1947, but one banking office and in which the Transamerica
gl'auP, since 1904--

Stat

Acquired
Acquired
two banking
and was
operating offices and
was operating
the only
banking, the only
ing offic
officel/

California
Oregon
11A!vada
rizona
washington

131
26
10
1
5

Acquired
three banking
offices and
was operating
the only
mg offic

18
2
0
0
0

Acquired
four banking
offices and
was operating
the only bailking office4/

9
0
0
0
0

2
0
0
0
0

column includes 52 banking offices established de novo,
39 in California, 6 in Oregon and 7 in Nevada.
a/ This column includes 4 dual occupancies in California.
•V This column includes 6 dual occupancies.
4/ This column includes 3 dual occupancies, 2 of which were in
one community.




-36-

The following table shows by States the number of communities having,
B of December 31, 1947, two banking offices and in which the
!
Transamerica group, since
1904—

Acquired
and was
operating
one ba4ing
offic
California

54

Oregon
!evada
-rizona
Iltshington

15
1
0
3

Acquired
two banking offices
and was
operating
one banlicing
officeW

23

Acquired
Acquired
bankfour
bankthree
ing
offices
offices
ing
and was
and was
operating
operating
one banlçing one banl5ing
offic
office3

5

Acquired
five banking offices
and was
Operating
one baniing
offica2/

3

1

3:_b/

This column includes 10 banking offices established de novo,
9 in California and 1 in Oregon.
This column includes 10 dual occupancies in California.
This column includes 2 dual occupancies.
This column includes 4 dual occupancies, 2 of which were in one
community.
This columan includes 1 dual occupancy.
In these communities the Transamerica group acquired two banking
operating the two existing
offices and on December 31, 1947, was
banking offices.
In this community the Transamerica group acquired three banking
the two existing
Offices and on December 31, 1947, was operating
banking offices.




-37-

The following table shows by States the number of communities having,
as of December 311 1947, three banking offices and in which the
Transamerica group, since 1904--

Stat

Acquired two
Acquired
banking offices
and was
and was operatoperating
one bank- ,ing one b
ing office/ ing offic 2

California

12

°regon
Nevada
Arizona
Washington

1

Acquired three
Acquired four
banking offices banking offices
and was operat- and was operating one banking one ba
ing office
ing offic

3

4

1

lsy

a/

0

This column includes 3 banking offices established de novo,
2 in California and 1 in Oregon.

V This column includes 2 dual occupancies.
V This column includes 5 dual occupancies.
$.41 / In these communities the Transamerica group acquired two banking
Offices and on December 31, 1947, was operating two offices.
12/ In these communities the Transamerica group acquired three banking
Offices and on December 311 19471 was operating two offices.
In this community the Transamerica group acquired three banking
Offices and on December 31, 1947, was operating the three existing
Offices.




77;1141

-38-

The following table shows by States the number of communities having,
as of December 31, 1947, four banking offices and in which the
Transamerica group, since 1904--

Acquired
and was
operating
one banking
office

Acquired five
Acquired
Acquired
banking
banking
three
two banking
and
offices
offices
and
offices and
operating
was
operating
was operating was
three barjking
one banlçing
one banking
office 2
offic 1
office

California

2

1

Oregon
Nevada

3.

0

0

0

Washi _s.

guon

a/

1

0

This column includes 1 dual occupancy.

'?./ This column includes 2 dual occupancies in one community.
It/ In this community- the Transamerica group acquired two banking
offices and on December 31, 1947, was operating two offices.
In these communities the Transamerica group acquired three banking
Offices and on December 31, 1947, was operating two offices.
In this community the Transamerica group acquired one banking office
and on December 31, 1947, was operating two offices.
(c) Individual banks and branches vary greatly in size and
relate the total of
,!Te of business. It is, therefore, desirable to
1
e
le.,
banks and branches
-controlled
tjr..44. and time deposits in Transamerica
in the five-State
banks
all
kr the total of demand and time deposits in
occupancy.
The followmarket
This is another important factor of
bank
such
deposits
all
of
table shows the percentage of the total
by the Transamerica group banks, by years, in each of the five
'itttes separately and also as a whole.

he!




-39PERCENTAGE OF ALL BANK DEPOSITS, BOTH DEMAND AND TIME,
HELD BY TRANSAMERICA GROUP BANKS, BY STATES AND BY YEARS

XtE4L California

Oregon

Nevada

Arizona Washington

1920
6.37
1921
7.56
1922
9.48
1923
10.51
1924
11.85
1925
12.71
1926
15.08
1927
20.18
1928
23.97
1929
31.08
1930
17.08
32.10
1931
17.17
27.91
1932
24.84
15.99
1933
25.07
27.77
1934
27.37
30.47
51.35
1935
58.41
30.59
25.34
1936
29.96 60.01
33.33
3.77
1937
34.85 70.64 22.52
34.49
4.08
1938
24.44
36.54 85.35
35.33
1939
4.00
24.05
35.66 81.23
35.24
3.89
1940
36.53 81.36 24.21
35.09
4.39
1941
37.61 79.76 23.93
35.99
4.80
1942
39.02 82.06 22.45
38.38
19435.04
23.01
40.60 80.75
39.93
4.39
1944
23.30
41.43 79.77
41.73
5.31
1945
40.70 79.67 22.53
41.58
.946
4.84
43.68 80.02 20.99
42.74
'490
4.58
44.11 76.90 20.44
43.14
1948
4.81
44.12 78.46 20.10
43.75

For whole of
area shown
6.37
7.56
17
1)
.8
45'1
5
12.71
15.08
20.18
23.97
31.08
31.03
27.15
24.28
27.61
30.39
30.43
33.30
31.27
32.41
32.09
31.95
32.61
34.27
35.40
36.51
36.54
37.77
38.15
38.85

1
I
nA 428, the total of all demand and time deposits in all banks in
IE
,
tlifornia was $3,454,284,000, and this increased to $12,930,427,000 in
c7;f8- The demand and time deposits in Transamerica-controlled banks in
1 fornia increased by growth and acquisitions from $827,992,000 in
,.:928 to $5,657,897,000 in 1948. Thus, the increase in deposits in
.1?'Etnsamerica-control1cd banks amounted to $4,829,9051000 as compared
ewlth an increase as to all other banks of $4,646,238,000. Making the
Zile comparison for the five-State area, but beginning with 1937, the
Far in which Transamerica extended its operations into the last of the
0107e States, the total demand and time deposits of all banks in those
ires in 1937 amounted to $4,800,809,000, which increased to
837:446,000 in 1948. The increase in
'




Se?
-40Transamerica-controlled banks and branches during this period, through
growth and acquisitions, was $5,040,292,000 as compared with $6,996,345,000
ift all other banks.
(d) Another important factor in relating the market occupancy
of Transamerica-controlled banks to all banks is the volume of bark
loans. The following table shows this in percentage proportions:
PERCENTAGE OF ALL BANK LOANS HELD BY
TRANSAMERICA GROUP BANKS, BY STATES AND BY YEARS
Itar.

California

1920
5.82
1921
7.57
1922
9.37
1923
10.71
1924
11.65
1925
11.54
1926
13.32
..927
19.37
1928
22.59
192929.30
1930
31.64
1931
29.73
1932
28.03
1933
31.09
1934
31.49
1935
30.72
1936
31.03
1937
35.26
3.938
37.32
39
40.21
1940
40.37
1941
41.36
1942
43.88
1943
44.90
1944
47.33
1945
48.54
1946
50.38
1947
57.35
1948
56.79

Oregon

NevadaA
....La
j ojak

Washington

For whole
of area .p110W11
5.82
7.57
10.41
'
..2
11.65
ltt
19.37
22.59
29.30

15.35
12.19
12.57
20.70
27.76
26.50
29.95
37.38
41.99
42.70
44.03
46.11
45.87
42.84
46.36
41.64
42.65
43.16
46.78

26.04
40.22
53.20
65.69
83.56
81.21
79.31
80.15
81.17
81.49
83.08
81.25
79.70
77.94
79.05

n
30.75
31.35
30.59
18.23
21.52
20.52
19.89
18.17
17.23
14.35
11.29
10.94
9.34
9.28
14.93

3.82
4.33
4.30
5.11
6.66
6.07
6.12
6.82
7.04
6.46
6.78

ig
37.70
36.925
39.89
40.39
42.23
42.76
43.51
49.65
49.97

:11 California the total loans of all banks increased t2,348,281,000
.!1°° 1928 to 1948. In this State the loan total of Transamerica`'untrolled banks increased $2,128,083,000 in this period as
compared




I2
-41with an increase in loan total by all other banks of 2201198,000.
Using the five-State summary for the available years, the total of
loans of all banks increased $3,826,3131000 from 1937 to 1948;
the total of loans of Transamerica-controlled banks increased
t2,271,9710000 in the same period, as compared with $1,554,3421000
for all other banks.
(e) Another aspect of the bank deposit percentages set out
in subparagraph (c) of this Paragraph Eight, appears through segregating demand deposits from all other deposits. The following table shows
the proportion of the total of all demand deposits of all banks held by
Transamerica group banks:
PERCENTAGE OF TOTAL DEMAND DEPOSITS OF ALL BANKS HELD BY
TRANSAMERICA GROUP BANKS, BY STATES AND BY SPECIFIED YEARS

XP.4.
:
1
1920
1925

1930
1935
1940

1945
1948

California

Oregon

Nevada

Arizona

Washington

For whole of
area shown

4.6
8.5
26.9
24.6

4.6
8.5
28.1
24.0
32.3

15.3
38.1

80.0

24.1

4.0

29.3

39.6
42.3

40.6
44.5

79.8
79.1

21.8
18.9

5.3
4.5

34.6
37.1

26.5

60.6

The total demand deposits in all California banks in 1930 was
-4,4421135,000,and in 1948 the total was $71270163110001 an increase
21 $5,828,546,000. In the same period, the increase in this State for
`Lenland deposits in Transamerica-controlled banks was $21670,8051000 as
eclaPared with $3,15727411000 in all other banks. From 1940, the first
ear for which the figures are available for the five-State area, to
!
ti 481 the increase in such deposits for all banks was $71 217,121,000;
6,e correspondirg increase for Transamerica-controlled banks was
w4,890,677,000 as compared with $4,326,444,000 for all other banks.

l

(f) A further index is available through a comparison of
the
.imber of personnel employed in all insured commercial banks in
the ni
five-State area and the number of personnel employed in Transrica-controlled banks. Approximately 99 per cent of the commercial
oriks in the area are insured. The following table shows the number
4‘
.
4 officers and employees of all insured commercial banks and branches
441 the
area as of December 311 1949, and the Transamerica group proPar+
,don of the total, by States and in total.

r




,,4 41

-42-

..§14t
e
___---

Total officers
and employees
of all insured
commercial banks
and branches

California
Oregon
Nevada
Arizona
Washington
Total, 5 States

Officers and employees
of Transamerica banks
and branches
Per cent
Number
of total

33,553

15,509

46.2

4,226
510
1,753
5.798

2,154
399
354
372

51.0
78.2
20.2
6.4

45,840

18,788

41.0

(g) The proportion of deposits held by Transamericacontrolled banks has been shown. It is desirable, therefore, to show
the proportions in terms of number of accounts. As of September 30,
1949, the total number of demAnd and time deposit accounts of individuals,
Partnerships, and corporations in insured commercial banks was 8,284,719 in
California;
902,731 in Oregon; 102,585 in Nevada; 293,700 in Arizona;
and 1,297,864 in Washington, with a total in the five States of
10,881,599. The following table shows the percentage of the total
Ilumber of such accounts, divided into groups according to the ie
size
of the accounts and in total, held in Transamerica-controlled
Per cent of demand and time
deposit accounts of individuals, _partnerships and corporations
$5,000 $5,001 $10,001 More
than
to
or
to
less. tipj000 i,000_ ..tt25.2.9.9P
4

38.8
45.4

52.8
47.9

21.2

82.3
21.3

6.1

___42

_ 4.6

77.6
20.5
6.2

40.5

40.1

35.3

46.2

(Iregon
!!vada

53.3
48.0
77.8

44.5
44.5
74.4

44.3
43.5
75.6

izona
"48hiAgton

20.5

21.5

6.3

Total, 5 States 46.6

California

Per cent
of all
such
accounts

Transamerica percentage of dollar volume of the deposit accounts
-"u by numbers above, divided into the same grouping by size of
gccount, as of September 30, 1949, was:




544
-43-

Percentage of dollar volume of demand
and time deposits in accounts of individnAls, _partnerships and corporations
Per cent of
$5,000 $5,001 $10,001 More
all such
than
to
or
to
$25,000
deposits
less $10,000 $25,000
California
Oregon
Nevada
Arizona
Washington
Total,
5 States

48.3
46.6
76.6

44.9
44.7
74.4

43.8
43.4
75.8

20.7
7.0

21.1
6.0

42.7

40.8

35.2
43.0

21.8
4.2

83.3
21.8
2.1

43.3
45.0
77.5
21.2
5.2

39.5

32.3

39.0

(h) Segregating the demand deposit accounts from the totals of
all deposit accounts shown in subparagraph (g) of this Paragraph Eight,
the total number of demand deposit accounts of individuals, partnerships,
alld corporations in insured commercial banks as of September 30, 1949,
3,119,046 in California; 449,478 in Oregon; 51,082 in Nevada; 163,040
tla Arizona; and 674,495 in Washington; with a total in the five States of
4)457,141. The following table shows the percentage of the total number
saf such accounts, divided according to size of accounts, held in Transamericacontrolled banks:
Per cent of number of demand
deposit accounts of individuals,
artnerstions _an
$5,000 $5,001 $10,001 More
than
to
or
to
$25,000
less $1Q,290 $25,000

,
C.alifornia
regon
nada
44.1zona
144611i1)gton
Total,
5 States

37.8

Per cent of
number of
all such
accounts
48.5
44.8

48.9
44.9
74.8
21.0
5.4

44.0
43.3
75.6
19.7
....4.22.

41.5
43.9
74.7
20.5
3.5

45.4
83.1
21.4

74.9
20.9

41.2

37.4

35.8

33.8

41.0

The TransnmArica percentage of the dollar volume of the demand deposit
ZeoUnts in all insured commercial banks shown by numbers above,
rided into the same grouping by size of account, as of September 30,
949, was:




-44-

ZJII.9.

Percentage of dollar volume of demand
deposits in accounts of individuals,
partnerships and corporations
More
$5,000 $50001 $10,001
than
to
to
or
$25,000
less $10,000 $25.000

California
Oregon
Nevada
Arizona
Washington

47.6
46.9
76.5
19.5
_LI

43.8
44.0
75.7
19.5
4.1

41.1
43.7
75.1
21.0
3.4

33.9
42.8
84.8
22.1
1.8

Per Cent
of all
such
deposits
39.9
78.8
20.5
_422..

31.0
35.4
37.3
40.8
35.4
Total,
5 States
PARAGRAPH NINE: (a) The amended and supplemental complaint
"Parately charges the acquisition by respondent of stock in the
Citizens National Trust and Savings Bank of Los Angeles, California,
in violation of section 7 of the Clayton Act. This bank is engaged
ill commercial banking, having in 1947 a total of 35 banking offices,
in Los Angeles, with aggregate deposits of $349,147,000, and loans
461)431,000. It is engaged in commerce, as "commerce" is defined
111 the Clayton Act (38 Stat. 730; 15 U.S.C. g12), in the manner set out
b Paragraph Two hereof, and said paragraph is hereby adopted as to this
:ank as fully as if such bank had been named in subparagraph (b) of Para6raPh One of these findings as to the facts.

T
1

(b) For a long period of years Transamerica sought to
se
,2111 e control of Citizens National Trust and Savings Bank of Los
24ge1es and its branches. The first direct approach to this end was
Tade in 1942, although apparently Transamerica had been interested
211 several years before that date. In October 1942, F. S. Baer, a
ee President of Bank of America, inquired of the President of
ltizens Bank if a sale of all or part of the stock of that bank to
.eansamerica could be worked out. This inquiry was reported to the
cecutive Committee of the Citizens Bank, which immediately rejected
t4Y consideration of such a proposal. Later in the same month, Mr.
lQ”r renewed his inquiry, the matter was taken up with the Board of
rectors of Citizens Bank, and Baer was informed that the Directors
5t1111:"!.wish to dispose of their stock holdings or to pursue the matter
In May 1943, a representative of Nelson Douglass & Company,
Trsecurities dealer, informed the President of Citizens Bank that
„ansamerica intended to present an offer to the Board of Directors
4- Citizens Bank to exchange stock of National City Bank of New York
Citizens Bank stock. Later in that month an offer was addressed
81! the Directors of Citizens Bank by Transamerica to acquire 124,000
'
rialles of Citizens Bank stock. There were then outstanding 250,000

i

i




-45shares of such stock, 2,000 shares of which were already owned by
a Transamerica subsidiary. The Board of Directors of Citizens Bank
having declined the Transamerica offer, Nelson Douglass & Company
began advertising the offer in Los Angeles newspapers, soliciting
in that manner, and also by direct contact with stockholders, acceptance of the Transamerica offer. There was active resistance on
the part of Directors and officers of Citizens Bank, and many of its
substantial stockholders, to the Transamerica effort to secure control.
Against this opposition Transamerica failed to secure control, but
did increase its stockholdings to 54,583 shares at the end of 1943.
Although this attempt failed, Transamerica has continued its efforts
to buy stock in Citizens Bank, and through purchases made from time
to time increased its holdings to 58,142 shares in April 1949. Of
these shares, Transamerica itself on that date held 38,142; its subsidiary, Occidental Life Insurance Company, held 15,000 shares; and
Occidentalls subsidiary, Premier Insurance Company, held 5,000 shares.
In each year since 1943 Transamerica, through cumulative voting of
these shareholdings, has elected 5 of the 21 Directors of the Citizens
Bank.
(c) The actions of Transamerica in seeking to purchase and
Purchasing controlling interests in other banks, the nature of the
hegotiations and offer made in this instance, and the additional purchases of stock since 1943, indicate the purpose of Transamerica to
4cquire control of the Citizens National Trust and Savings Bank. It
18, therefore, concluded that the acquisitions by Transamerica of
stock of this bank are not solely for investment, but for the purpose
5 securing control of the bank in order that it may be added to
'fransamericals interstate group-banking structure. The banking offices,
°cDosits, loans, and other data concerning Citizens National Trust
and Savings Bank have not been included in findings showing the proPortions of market occupancy by Transamerica. The facts found in this
Paragraph are, however, considered in the light of all other findings
made.
PARAGRAPH TEN: (a) As previously stated, commercial banks
ellioY a monopoly of the money-payment and money-creation functions,
and dominate the market in short-term business credit. These facts,
t:oegether with the fact that substantially all those who require the
!.rvices afforded by commercial banks must rely upon such banks in
141e local area to which they have ready access, place in the hands of
:Uch banks much power over the business affairs of the area which they
eelnie. The local bank or banks in a community have the power to overcredit by lending too freely and too much, and, on the other
'
allds have the power to so restrict credit as to hamper growth and




SI

v4
,
1

development. To the extent that banking offices are controlled by
one group, these powers--which include the power to discriminate among
business enterprises and individmis—are in the hands of that group.
(b) There is not the same freedom of entry into banking
as into other types of business. Authori7Ation must first be secured
from regulatory agencies before new banks or branches may be established. Regulation concerning entry into banking is directed primarily
to the protection and safety of depositors, and its exercise includes
consideration of the effect of such establishment upon existing banks
..nd the availability of business to support the new bank and permit
its successful operation. An over-banked condition, which may result
in bank failures, is sought to be avoided. A bank may not lawfully
buy the stock of another bank, but entry presents no problem to a
holding company, such as Transamerica, other than its ability to buy a
controlling stock interest in an established bank. The size and
resources of a large banking group also enable it to enter a community
before it is clearly apparent that a bank is warranted, and thus
anticipate and block the organization of a local bank, which must
depend upon the business available at such location for its continuance.
In this way, bank locations in promising areas may be pre-empted by
a large group through a branch which does not have to be immediately
Profitable in order to continue. As the size and resources of a
banking group increase, its power to suppress potential competition
Increases. Its size alone may discourage and prevent the establishment of independent banks in direct competition with it, or serve
ae an inducement to existing small banks, likely to be, or already,
in direct competition with it, to sell to the group at its solicitation.
(c) There is testimony that Transamerica did not attempt
to acquire any bank against the wishes of its owners; and there is
testimony showing specific instances where this was not true. There
18 testimony by numerous individuals stating their satisfaction with
the services afforded by Transamerica-controlled banks and their conclusions respecting the continuance of competition; and there is also
evidence showing that as a result of acquisitions by the Transameric,-...
group, in a large number of communities that had two or more banks,
lthe only banking services now existing are Transamerica controlled.
There is opinion testimony by economists as to what constitutes cornPetition and monopoly; and much testimony was introduced and proffered
bY respondent to show that its expansion and methods of expansion and
oPeration have been benign in character and dominated by a wish to
make superior services and facilities available to more people. All
Of these matters have been considered. They are largely immaterial.
The controlling facts are that it is clear from the record that by
the significant standards--number of commercial banking offices,




548
-47volume of deposit liabilities, volume of loans, and number of deposit
accounts--Transamerica-controlled banks have, in the five-State area,
aPProximately 41 per cent of all banking offices, 39 per cent of all
bank deposits, 50 per cent of all bank loans, and 46 per cent of all
deposit accounts of individuals, partnerships and corporations; that
despite the tremendous growth of population and wealth in this area,
the expansion of Transamerica has been accompanied by a decrease in
the number of banking offices independent of Transamerica, a substantially higher relative increase in deposits in Transamericacontrolled banks than in all other banks, and the absorption by
Transamerica of practically all of the total increase in bank loans;
that Transamerica has the purpose and the power to continue to expand
its occupancy of the market in the five-State area; that its present
Position is held with a proportion of approximately 8.13 per cent of
the capital funds of all banks in the area; that its acquisition and
holding of the stocks of the banks named in subparagraph (b) of Paragraph One and of Citizens National Trust and Savings Bank of Los Angeles
were not and are not solely for investment; and that the effect of its
holding and use of such stocks may be to substantially lessen competition and restrain commerce in commercial banking in the States of
California, Oregon, Nevada, Arizona, and Washington, and tend to create
a monopoly in such line of commerce in said area.
CONCLUSION
The acquisition, holding, and use by Transamerica, as
aforesaid, of the stock of the banks named in subparagraph (b) of
Paragraph One of the foregoing findings as to the facts, and of the
stock of Citizens National Trust and Savings Bank of Los Angeles,
'lamed in paragraph Nine of such findings, constitutes and is a continuing
violation of section 7 of "An Act to supplement existing laws
against unlawful restraints and monopolies, and for other purposes,"
aPProved October 15, 1914 (38 Stat. 731, 15 U.S.C. Ol8).
In considering the relief necessary and appropriate to put
all end to the aforesaid violations of law in a manner which will have
a Practical result consistent with the intent and purpose of said
section 7, account has been taken of the factual situation presented
b7 the record. The stock of Bank of America was the first acquisition
bY Transamerica of importance in this proceeding; Bunk of America was
the hard core around which the Transamerica-controlled banking group
l'as built, and it still is the center and princioal support for the
grouP. The long and close association of Bank of America in aiding in
constructing the Transamerica group, the unity establishec=
ilm
eofars, the personal associations and relationships among
in Transamerica and Bank of America, and similar intangible
actors, provide sound reason to believe that even if Transamerica were
'sclaired to divest itself of the stock it now holds in Bank of America,




-48the existing relationship between Transamerica and Bank of America
would continue. In these circumstances, to require Transamerica to
divest itself of the stock it now holds in Bank of America, but allow
it to hold the stock of other banks, would accomplish nothing. Divestiture by Transamerica of the stock of other banks will place maJority holdings of the stock of those banks into new and different
hands so that prompt and full disassociation from Transamerica can be
expected. These considerations have guided the framing of the Board's
order.
ORDER
IT IS ORDERED that respondent, Transamerica Corporation, a
corporation, cease and desist from violating the provisions of section 7
of "An Act to supplement existing laws against unlawful restraints and
monopolies, and for other purposes" (38 Stat. 731, 15 U.S.C. § 18), in
the manner set out in the findings as to the facts herein; and it is
specifically ordered that said respondent divest itself fully and comPletely of all capital stock, whether directly or indirectly owned or
controlled by it, of each of the following named banks:
In California
Central Bank, Oakland,
The First National Bank of Garden Grove, Garden Grove,
Bank of Pinole, Crockett,
Central Bank of Calaveras, San Andreas,
The First National Bank of Fairfield, Fairfield,
The Temple City National Bank, Temple City,
The First National Bank of Weed, Weed,
First Trust and Savings Bank of Pasadena, Pasadena,
The First National Bank of Bellflower, Bellflower,
First National Bank in Corcoran, Corcoran,
The First National Bank of Los Altos, Los Altos,
Bank of Newman, Newman,
First National Bank in Santa Ana, Santa Ana,
First National Trust and Savings Bank of Santa Barbara,
Santa Barbara,
Bank of Tehachapi, Tehachapi,
The First National Bank of Crow's Landing, Crow's Landing,
The First National Bank of San Jacinto, San Jacinto,
Farmers & Merchants Bank of Watts, Los Angeles,
Citizens National Trust and Savings Bank of Los Angeles,
Los Angeles,
The First National Bank of Mountain View, Mountain View,
The First Nationa3 Bank of Oakdale, Oakdale,
First National Bank in Turlock, Turlock,
Bank of Beaumont, Beaumont,
First National Bank in Delano, Delano,
American Commercial & Savings Bank, Moorpark,
Stanislaus County Bank, Oakdale,



5,,Y)
-49In Oregon
The First National Bank of Portland, Portland,
The First National Bank of Forest Grove, Forest Grove,
Coolidge 8cMcClaine, Silverton,
Moreland-Sellwood Bank, Portland,
Clatsop County Bank, Seaside,
The First National Bank of Cottage Grove, Cottage Grove,
The First National Bark of Prineville, Prineville,
The Scio State Bank, Scio,
Bank of Sweet Home, Sweet Home,
The First National Bank of Eugene, Eugene,
Benton County State Bank, Corvallis,
Carlton State & Savings Bank, Carlton,
Yamhill State Bank, Yamhill,
Monroe State Bank, Monroe,
The First National Bank of Lebanon, Lebanon,
State Bank of Malheur County, Ontario,
In _Nevada
First National Bank of Nevada, Reno,
Farmers' Bank of Carson Valley (Inc.), Minden,
Bank of Nevada, Las Vegas,
In Arizona
First National bank of Arizona, Phoenix,
In Washington
National Bank of Washington, Tacoma;
that said divestment be made in good faith, and that none of the
eaPital stock of any of said banks be sold or transferred directly
°r indirectly to any presently existing or later organized or acquired
81°38J-diary or affiliate of respondent, or to any director, officer,
1310yee, agent, or nominee thereof, or to any person acting for or
:LL behalf, or subject directly or indirectly to the control, of
8Pondent or of any of its subsidiary or affiliated companies or
a4Y director, officer, employee, agent, or nominee thereof; that
7,14 divestment be made without using or attempting to use any of
:alid capital stock in any manner in directly or indirectly acquiring
!
4 conveying to others any of the assets of any of said banks; and
1Z9I, said divestment be made in such mAnner that each of said banks
1-7q continue to operate as a going concern wholly independent of
!
Ii sPondent; that action to bring about said divestment be initiated
l'espondent within 90 days after service of this order upon it, and
.741t said divestment be completed within two years and 90 days after
'atd service of this order.

4




-50-IT IS FURTHER ORDERED that within 90 days after the service
of this order upon it, respondent file with this Board a report in
writing shoving in detail the action which it has then taken, and which
it intends to take, in compliance with this order; that within one year
after the expiration of said 90 days respondent file with this Board a
report in writing showing in detail the action which it has then taken,
and which it intends to take, in compliance with this order; and that
vithin two years and 90 days after said service of this order respondent
file with this Board a report in writing showing in detail the manner
and form in which it has completed compliance with this order.
This 27th day of

March

, 1952.

By the Board.

1.ggneci1_g. R. Carpenter,.
S. R. Carpenter,
Secretary.

(SEAL)
Governor Vardaman dissents. He would dismiss the complaint
for the reason that, in his opinion, the record fails to warrant or
sustain the Board's finding that Transamerica's acquisition, holding
aad use of the stock of the banks named in the Board's divestment
order "may be to substantially lessen competition and restrain cornroe in comnercial barking in the States of California, Oregon,
Nevada, Arizona, and Washington, and tend to create a monopoly in
811ah line of commerce in said area." Governor Vardaman is also of
the opinion that the Hearing Officer arbitrarily and unfairly discriminated against Transamerica in his conduct of the proceeding and erroz.lesausly excluded a substantial quantity of relevant and material
!vIdence offered by Transamerica in defense of the Board's charges.
1.4 the circumstances, it is Governor Vardaman's opinion that, in the
nsence of a dismissal of the complaint, the matter should be remanded
T'D the Hearing Officer for the taking of further testimony on behalf
:f Transamerica in line with Transamerica's several exceptions, dated
filed September 13, 1951, to the Hearing Officer's rulings on
ev
idence.
Governor Powell dissents for reasons to be set forth in a
statement hereafter to be filed and made a part of the record.
Governors Mills and Robertson took no part in the Board's
C n
sideration or decision of this matter.




-51-

UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
In the Hatter of
TRANSAMERICA CORPORATION )
STATEMENT AND ORDER DENYING
"EXCEPTIONS FILED ON BEHALF
OF RESPONDENT TRANSAMYRICA CORPORATION"
DATED AND FILED SEPTEMBER 13, 1951
This matter duly came on for hearing upon "Exceptions Filed
on Behalf of Respondent Transamerica Corporation" dated and filed
September 13, 1951.
Respondent's Exceptions One to Nine, inclusive, relate to
the Hearing Officer's alleged erroneous exclusion of certain evidence
Offered by respondents

The Board is of the opinion that the Hearing

Officer's exclusion of the evidence in question was not erroneous,
and that the Hearing Officer properly excluded such evidence for reasons
Which he stated or indicated on the record.

It is therefore ORDERED

that respondent's Exceptions One to Nine, inclusive, be, and they hereby
are, denied.
Respondent's Exception Ten relates to the Hearing Officer's
alleged "generally arbitrary and discriminatory conduct of the hearings
and rulings admitting evidence offered by theffoard'i7 Solicitor and
excluding evidence offered by the respondent." The Board is of the
°Pinion that the record affords no basis for this Exception. The




-52Hearing Officer's conduct of the proceeding and his rulings on evidence
were fair, impartial and free from prejudicial error.
tion and application of the law were sound.

His interpreta-

He was under no duty to

assist respondent in its efforts to obtain the appearance of witnesses,
and he gave full and due consideration to respondent's offers of proof
before ruling thereon. He neither failed nor refused to consider
respondent's proposed rebuttal findings and conclusions (see the
Hearing Officer's "Rulings upon Proposed Findings as to the Facts"
dated and filed June 13, 1951, and Tr. 12,955-12,959). It is therefore ORDERED that respondent's Exception Ten be, and it hereby is,
denied.
Respondent submitted to the Hearing Officer 278 proposed
findings and conclusions and 148 proposed rebuttal findings and conclusions. Many of these were adopted in substance by the Hearing
Officer; most were rejected. In its Exceptions Eleven to Nineteen,
inclusive, respondent excepts, in effect, to the Hearing Officer's
failure to adopt its proposed findings and conclusions and proposed
rebuttal findings and conclusions as proposed and in their entirety,
as well as to virtnAlly every recital, statement and finding, and to
the conclusion and order, contained in the Hearing Officer's recommended
decision.
For the reasons indicated in the Hearing Officer's "Rulings
uPon Proposed Findings as to Facts" dated and filed June 13, 1951, the
Board is of the opinion that respondent's Exceptions Eleven to Nineteen,
inclusive, cannot be sustained.
Insofar as the Hearing Officer adopted



-53the substance of findings proposed by respondent, his failure to
express such findings in precisely the language proposed by respondent
furnishes respondent no ground for complaint. Insofar as the Hearing
Officer rejected respondent's proposed findings, the findings rejected
were immaterial or irrelevant, not supported by evidence or contrary
to the weight of the evidence. There was no error in the introductory
statement of the recommended decision. The Hearing Officer's findings
are supported by the weight of the evidence. His conclusion and order
were fully warranted by the record and by N 7 of the Clayton Act (38
Stat. 731, 15 U. S. C. N 18). Subject to certain minor clarifying
changes, the Hearing Officer's recommended decision is approved and
his findings, conclusion and order will be adopted and entered as the
findings, conclusion and order of the Board.

Accordingly, it is

ORDERED that respondent's Exceptions Eleven to Nineteen, inclusive,
be, and they hereby are, denied.
This 27th day of

March

, 1952.

By the Board.

R. Carpenter
S. R. Carpenter
Secretary

(SEAL)

Governors Vardaman and Powell dissent.
Governors Mills and Robertson took no part in the Board's
consideration or decision of respondent's Exceptions.




,

-54UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

In the Matter of
TRANSAMERICA CORPORATION

STATEMENT AND ORDER IN BE ADDUCING OF
ADDITIONAL EVIDENCE BY RESPONDENT

At page 3 of its brief herein dated and filed September 13, 1951,
respondent Transamerica Corporation stated that, "In the event the Board
Should determine that an order La divestmere need be issued, Transamerica
would ask leave to adduce evidence and be heard as to the provisions to be
included in such an order."
It is not clear to the Board whether this statement was intended
as a motion or request for leave to adduce additional evidence, or merely as
a statement of an intention hereafter to make such a motion or request if
the Board should decide to issue a divestment order.

In either case, the

Board is of the opinion that there is no necessity or occasion for the
taking of additional evidence.
It was certainly contemplated that if the Hearing Officer concluded that a divestment order should be entered, his recommended decision
Should contain, and it did contain, a recommended form of order.

Re-

sPondent specifically excepted to "each and every part of the statements"
appearing in such order, and respondent was allowed ample opportunity to
brief and orally to argue its objections to the order.




Respondent's

-55failure to avail itself of this opportunity was conscious and voluntary,
and affords no basis for a motion or request for leave to adduce additional evidence. The order recommended by the Hearing Officer has,
moreover, received the Board's most thorough and careful consideration,
and, in the opinion of the Board, was fully warranted by the record.
It is therefore ORDERED that if respondent intended the statenent above quoted as a motion or request for leave to adduce addional
evidence, said motion or request be, and it hereby is, denied.

This 27th day of March

1952.

By the Board.

(Signed) S. R. Carpenter
S. R. Carpenter
Secretary

(SEAL)

Governors Vardaman and Powell dissent.
Goveraor3Mills and Robertson took no part in the Board's conelderation or entry of the foregoing statement and order.




-56UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
In the Matter of
TRANSAMERICA CORPORATION

)

ORDER DENYING RESPONDENT'S MOTION TO DISMISS
DATED AND FILED SEPTEmBER 13, 1951
This matter duly came on for hearing upon respondent's
"Motion to Dismiss the Complaint" herein, said motion having been
dated and filed September 13, 1951, and the Board having now
fully considered the matter, it is ORDERED that said motion be,
and it hereby is, denied for the reasons stated in the Board's
statement and order of January 17, 1949, denying respondent's
"Motion That Complaint Be Dismissed for Lack of Jurisdiction"
dated and filed December 7, 1948.
This 27th day of

March

1952.

By the Board.

(Signed) S. R. Carpenter
S. R. Carpenter
Secretary

(sEAL)

Governors Mills and Robertson took no part in the consideration or decision of the motion denied by the foregoing order.




-57UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

In the Matter of
TRANSAMERICA CORPORATION

)

STATEMENT AND ORDER DENYING
EXCEPTION OF COUNSEL FOR THE BOARD
At page 70 of their brief filed September 13, 1951, and not
Otherwise, counsel for the Board except to the Hearing Officer's
failure to recommend that respondent Transamerica Corporation be
Ibequired to divest itself of its stock in Bmnk of America National
Trust and Savings Association.

This exception was not taken in

accordance with Rule VII of the Board's Rules of Procedure.

The

Board has nevertheless considered the exception, and, for the reasons
stated by the Hearing Officer in his recommended decision, is of the
)
(
Pinion that respondent should not be required to divest itself of
its

stock in Bank of America National Trust and Savings Association.

It is therefore ORDERED that the exception of counsel for the Board
to the Hearing Officer's recommended decision be, and it hereby is,
denied.
This 27th

day of

March

1952.

By the Board.

.igiEr3RaLitit_c_a_s_anter
S. R. Carpenter
Secretary

a
(sEn)

Governors Mills and Robertson took no part in the consideration or entry of the foregoing statement and order.




r;sq

After discussion of the five documents set forth
above, they were, upon motion, approved and adopted by the
Board.

Governor Vardaman and Governor Powell voted "No"

'with respect to the Findings as to the Facts, Conclusion and
Order, the Statement and Order Denying "Exceptions Filed on
and Filed
Behalf of Respondent Transamerica Corporation" Dated
Order in re Adducing
September 13, 1951, and the Statement and
of Additional Evidence by Respondent.

With respect to these

reasons set forth
actions, Governor Vardaman dissented for the
above at the end of the "Findings as to the Facts, Conclusion
reasons to be
and Order", and Governor Powell dissented for
set forth in a statement hereafter to be filed and made a part
of the record.