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1504
Minutes of actions taken by the Board of Governors of the
Pederi
Reserve System on Tuesday, October 22, 1946.
The Board met
tathe Board
Room at 10:35 a.m.
PRE.SENT:
Mr.
Mr.
Mr.
Mr.
Eccles, Chairman
Ransom, Vice Chairman
Draper
Evans
Mr.
Mr.
Mr.
Mr.
Sherman, Assistant Secretary
Morrill, Special Adviser
Vest, General Counsel
Leonard, Director of the Division
of Examinations
Mr. Tomsend, Assistant General Counsel
As stated
in the minutes of October 21, 1946, Mr. Vardaman
was
absent on
official business.
Ur. Evans
referred to the commercial, industrial, and farm
10E-In
the
surveys, the
making of which had been approved in principle by
Board at
earlier meetings with the understanding, however, that
cleterIllination of the
date for the survey of farm loans vould be de—
te red
for
consideration of further information.
Mr. Evans
then read a memorandum from Messrs. Thomas and
Director and Asriistant Director of the Division of Research
Statistics, in which it was recommended that the dating of
the
t4r/11. loan.
survey be authorized for some time during the month of
thltle 1947.
The memorandum stated that this dating would cut
across
t.6-rtri
lending
ilast prior to its seasonal peak in most areas, that it
%lad be
the
earliest possible dating subsequent to December of this
that
could be
fitted into the work schedule of the Federal De—
Posit
Insurance Corporation if that agency should
assist, and that
1505
10/22/46
—2—
the DePartment of
Agriculture had stated it would accommodate its
needs to that
dating even though it preferred an earlier survey.
The
-40randum further stated that postponement of the farm loan
til'Ire."Y would give the
benefit of experience gained in the commercial
a" industrial loan
surveys to be made this November, thus affording
't1 Opp°
rtunity
to v,
ve
to make revisions in the schedules that might prove
desirable.
the discussion that followed, Mr. Evans stated that, while
the American Bankers Association had not officially endorsed the loan
r. Sidney B.
Congdon, President of the Association of Re—
el7'e City
Bankers, had telephoned him to discuss the survey and,
"113114'"r. Evans had not been available to talk with Mr. Congdon
Pets8°nallY, he
(Mr. Congdon) had informed Mr. Young, to whom the call
l'eferred, that the Association was much interested in the program
alldwoUld
cooperate.
It was unanimously agreed that the
farm loan survey be undertaken during
the month of June 1947, and that a
decision not be made at this time with
respect to a follow—up survey of farm
loans at the seasonal low point during
the fall of 1947.
Mr. D
A"ansom asked Counsel to report upon the latest develop—
r4ellta in t
he .,rans
T
america matter, discussed at previous meetings.
4r. T
-ownse
bv,
'shank f
revieed this subject, referring to the letter written
America National Trust and Savings Association on October
1506
10/22/46
-3'
3 1946) to the Chairman of the Board of the Federal Reserve Bank of
Sari Francisco stating that Bank of America was not affiliated with
Trarisanlerica or any other holding company and reuesting that it be
1)1.4°Irided with a
nomination certificate as well as
brlllot for par.
ticipating
in the forthcoming election of a Class A director. ThA
l'e(illest was referred by the Federal Reserve Bank of San Francisco to
the B,,
of Governors for instructions and on October 14, 1946, the
Board
11(3tified the Bank of America through the Federal Reserve Bank
or
Octob
Francisco that the application embodied in their letter of
el* 3 Was
considered to fall within the purvie7.- of Section 4 of
the ft
tiles of Procedure adoptcd by the Board pursuant to the require4.ents
°f the
kuuluistrative Procedure Act, and that it would be
harku.
ed
accordingly. Bank of America replied on October 15 stating
that
the
Board had pparent1 misconstrued the bank's letter of
a
y
October 3.
Mr.
Townsen
had
stated that, in the meantime, Bank of America
provided
16
certain information requested by the Board on October
relating to
the election of directors 7,hich showed that the bulk
shares
voted in recent elections had been voted by proxy, mainly
bY the
b'.11-k
proxyent
committee, which held the proxies for
IT°titig 1-lares 0
ed by Trans
Transamerica and its subsidiaries. He pointed
thet the
or
precise legal question was not that of control of the
a'fra-ils2 er Bank of America, but rather control of the election of a
1507
10/22/46
-4illai°ritY of the directors.
On this point, the bank has provided
information showing, among other things, that the present directorate
is
substantially the same as was the directorate at the time Transezaerica ol\ned
a majority of the stock of the bank. As to control
Of
the
affairs of the bank, he stated that the Federal Reserve Bank
efka F
reacisco had obtained an excerpt from an examination report
c't the b ank
as of August 311
1945, sho;ling that at the time the po*tion of
"Founder Chairman" for Mr. A. P. Giannini was established
ill the b ank)
the by-laws had been emended to provide that the Founder
Chairman
succeeded to all the prerogatives and powers formerly held
bY the
"Cheirman", and that the Founder Chairman was specifically
empo4ered to be
responsible for the formulation of the policies
1113°14 Itioh
the bank's operations and affairs would be conducted.
That
P" on has been end
still is filled by the same person,
4. P. G
iahnini, who heads Transamerica.
11r.
ta ed
Townsend stated that in his opinion the information ob-
stapported the position previously taken by the Berrd; namely,
tilt the e
lection of
majority of the directors of Bank of America
c°11tirilles to be
controlled by Transamerica, and that since Trans'4)ael'iee' holds a
voting permit issued by the Board and still in effect
114der
which the
Corporation has designated another bank to participate
elee
tion S
4.11
—
of Class A and B directors of the Federal Reserve Bank of
the Bank of America is ineligible to participate in the
1508
"h/46
fortht,Ofli
-5election under the terms of Section 4, Paragraph 16 of
the p
He suggested for consideration of the Board
1,th:eh would inform the bank that the Board had considered
lettedererdLLe2
ervc
Act.
the aPrliectior contained in it: letter of October ?), 1946, that the
Boarri
aad
determ;ned that Transamerica does control the election of
e*rlic)ritY of the directors of the Bank of America National Trust and
Sa\lings ;
ssociation, and
that, under the provisions of Section 4 of
the p A
eueral Reserve
Lot, it is ineligible to participate in the fortheoraing
election.
There Was
discussion of the facts submitted by the Bank of
kericE. c
oncerning the election of directors, continuity of the directorte
since the
time when Transrmerics admittedly oncd a majority of
the
12,,:q-ikts stock,
the Board's responsibility for issuing voting permits,
'zd the
general Question of legislation Ahich Congress might consider
the
forthcoming session Ath a vie\; to regulating holding companies
the
birilcinz field.
In the latter connection Chairman Eccles stated
feeling that
unless Congress indicates its desire for restraining
1110Polies in
the banking field by conducting hearings on a holding
c°Illk/AY bill
alad enacting legislation at the forthcoming session, it
aPpear
that the Federal Reserve shold modify its efforts as the
c)11
aeeney o
ppocint; exrmsAon of holding companies in this field under
''tirlg
legislation, since persistence in such efforts could only
N:Ire to
weaken the
Federcl Reserve System if Congress Ad not care to
1_509
10/22/46
-6-
"
'riet bank holding companies.
Chairman Eccles also expressed the
elpillicn that the Board should make clear if called upon by Congress
that 1.,
+'ere was nothing vindictive in its attitude toward any single
11°1clirig company, that it has been acting in accordance with its beI-LEt as
to the intent
of Congress, and that the present legisl-,Alon
is '30
inadec,uato that it should either be r3placed with a more effec-
tive law
or the
present one repealed.
It was unanimously agreed that the
Board should inform the Bank of America
National Trust and Savings Association
of its decision with respect to the request of that bank to participate in
the forthcoming election of a, director
of the Federal Reserve Bank of San Francisco by the following letter:
th
"Under date of October 7, 1946, the Board received from
t,
e Federal Reserve Bank of San Francisco a copy of your letoq' to mr.
Grady, Chairman of the Board of that Bank, dated
Ampler 32 1946, in which it was requested that the Bank of
pe'
,
,
-r ea N. T. & S. A. be supplied with the necessary formal
n4?rs to enable it to participate in the forthcoming nomilon aad election
of a Class A director in San Francisco.
e, "The P
Board has considered your reeuest and has instructthe
Federal Reserve Bank of San Francisco that the Bank
e. & S. A. is ineligible to participate in
0;2.
ZyAinle
rVZN
election. Section 4 of the Federal Reserve
berikProvides in part that 'whenever any two or more member
ateds within the same Federal reserve district are affililivith the same holding company affiliate, participation
ember banks in any such nomination or election
hajj
t
-e
confined to one of such banks, which may be desAs thed
for the purpose by such holding company affiliate.
por,t? laanagement of your bank is aware, Trans-merica Cor1°
-11. holds a voting permit
te ,
t as a holding company affili°
13 the Bank of America N. T. & S. A. issued to it by
the'
rd pursuant to the provisions of Section 5144 of the
Revi
'eu Statutes, which permit has remained outstanding and
rev°ked or unsurrendered since its issuance in 1937.
4
1510
10/22/46
-7"That corporation has designated the National Bank of WashTacoma, Washington, as the affiliated bank to participate in
nominations and elections of Class A and Class
411 directors of the Federal Reserve Bank of San Francisco.
„. "Since your letter to Mr. Grady asserts that the Bank
)
,-L America N.
T. & S. A. is not affiliated with Trmsamerica
Corporation
however, the Board has again reviewed the matr in the light of all pertinent facts and has determined
that, within
the meaning of the definition of a holding
et"anY affiliate contained in Section 2(c) of the Banking
'
of 1933, Transamerica Corrorztion controls the election
,a majority of the directors of the Bank of America N. T.
ra
;
.. A. and has
done so without interruption since it -:ped for and obtained the voting permit issued to it in
1937.11
J
4
At this
point Messrs. Vest, Leonard and Townscnd Athdrew
froz,
the
m('eting and the action stated with respect to each of the
niatQrs hereinafter set forth was then tRen by the Board.
The minutes
of actions t:J-Ren by the Board of Governors of
the
Fecler,q aesc,rve
System on October 21, 1946, were approved unani-
Ilemorr:ndum dated October
l'rlricling
the
appointment
<1,
1914, from :.:r. Sherman, rcco.:1-
of Mrs. Dorothea B. Kelly as a file clerk in
the
Secretary's
Office,
eeeC,,,C1 2ix
to 1D=2
on a temporary basis for a period of not to
months, with basic annual salary at the rate of $2,093.04,
effective
of the date upon IP:nich she enters upon the perform41ce of
her
after having passed the usual physical examination.
dutieh
rrtezor,!],ncluin also
stated that it was contemplated that Mrs. Kelly
1"01.141
become a
merabor of the Federal Reserve retirement system.
Annroved
1511
1O/22/46
-8Letter to Mr. Laning, Vice President and Cashier of the
Federal Reserve Bank
of Cleveland, reading as follows:
11
In accordance with the request contained in your
letter of 0
ctober 18, 1946, the Board of Govcrnors apves the continuation of the assignment of Mr. Elwood
Denton aS an analyst until the completion of your job
ev
aluation program.
"This
the salary approval is given Idth the understanding that
paid Mr. Denton while serving in the temporary
:
.1.3s
signment 1,111 not exceed the salary he would be eligible
wo receive
in the position he occupied at the tine he was
given this assignment."
r
Approved unanimously.
Letter to Mr. Thomas G. Sammons, Jr., Hayes-Sammons Hardware
Comp
,
'V', Mission,
Texas, reading as follobs:
"This Will acknowledge receipt of and thank you for
tour letter of
September 30, 1946, in support of the
oanii consumer credit regulation, which was forwarded
"Dy the Federal Reserve Bank of Dallas.
are pleased to hear that you have found the onecu-'' umm payment requirement helpful in preventing your
efsftomers
from assuming debts they could not repay. The
meli tiveness of the regulation as a part of the GovernPreven atIti-inflation program depends fundamentally on its
ove,
enting such individuals throughout the country from
pol—extending their credit at this time, when purchasing
7erttls so large in relation to the sup?ly of goods.
4, 1°11r suggestion that the maturity rec,uirement might
'Ime be extended to eighteen months rill be given care4
-,attention. 1,,e feel that Regulation W should be adjustexpr meet changes
in conditions, and it is reasonable to
dura
its terms to be relaxed when the sup:)ly of consumers
-e goods more nearly equals the demand.
There naturally has been some organized opposition
to
the
there regulation, as you point out, but on the other hand
term 0,
f
e e many who favor its continuation in simplified
" a Permanent basis. V.e appreciate your support."
j
4
Approved unanimously.
1512
10 22/46
Telegram to Mr. Wiltse, Vice President of the Federal Reserve
of New York,
reading as follows:
"In accordance with request contained in your Are
Octh
o_er 21
Board of Governors authorizes your bank to
f
o)
lufnish to Federal Bureau of Investition information
c uLined in
course of examination of Bank of Manhattan
ErPaRY concerning 1941 loan to International Diesel
4,
ectric Company Inc., to be used for purpose stated
;Jour telegr
and subject to provisions of section
) °f Board's rules of organization.0
ApI:_roved unanimously.
Thereupon the meeting adjourned.
@FedFRASER