19430528_Minutes.pdf

795

25010u

Angeles, Los Angeles,elNlI to the

President of

haq been Prepared in the

6171cithe whole matter waskilld be

better to send thedttly

toward possible844eqe4

Corporation.

It was theW0111,4be " 0 the best procedure

Corporation an opportunity to presentit de

A meeting of the Board of Governors of the Federal ReserveSYstem Was

held in Washington on Friday, May 28, 1943, at 4:00 p.m.

PRESENT: Mr. Eccles, ChairmanMr. Ransom, Vice ChairmanMr. SzymczakMr. McKeeMr. Draper

Mr. Morrill, SecretaryMr. Bethea, Assistant SecretaryMr. Carpenter, Assistant SecretaryMr. Clayton, Assistant to the ChairmanMr. Dreibelbis, General AttorneyMessrs. Cagle and Pollard, Assistant Chiefs

of the Division of Examinations

Before this meeting there had been several informal discussionsbYlalembers Of the Board of the information that had been received regard-

the e--Paign of Transamerica Corporation to acquire 124,000 of the

olatstanding shares of the Citizens National Trust & Savings Bank

California. At this meeting a draft of tele-

the Federal Reserve Bank of San Francisco which

light of these informal discussions was read,

considered from the standpoint of whether it

wire or to institute proceedings looking more

revocation of the holding permit held by Trans-

consensus of the members present that the telegram

as it would establish the facts and afford

such information as

811'ecil following which the Board could determine what further action

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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needed to be taken. There was also agreement that the sending of thetelex„,'841 undoubtedly would be the beginning of a course of action bytheB0_,

'I' d which might result in formal action to revoke the Corporation's

vMane Permit.

Several changes were suggested in thetelegram, and at the conclusion of the dis-cussion, upon motion by Mr. Szymczak, thewire was approved unanimously in the fol-lowing form, with the understanding that acopy of the telegram would be sent to Mr.Crowley, Chairman of the Federal DepositInsurance Corporation, and Mr. Delano,Comptroller of the Currency, for their in-formation:

"The Board has received reports from various sources that thetnageMent of Transamerica Corporation has authorized and isne°ring a campaign to acquire 124,000 of a total of 250,000

Thi:es of Citizens National Trust (Sc Savings Bank of Los Angeles.vi .1; eaulPaign, as reported, bears a marked resemblance to pre-

calliPaigns conducted by the Corporation and particularlyhe

ingcampai n which resulted finally in the Corporation ac-Controlgip

of First Trust & Savings Bank, Pasadena, Cal-.u4orniathrheBoard7-“agement of the Corporation is already aware of the

b e

Yth 8 position with respect to the expansion policy

pursued

as the -Corporation. If the Los Angeles case should turn out

eali Pasadena case did the Board sooner or later would befor:d upon to take some kind of action in that case. There-to 1- :) ,he Board in fairness to all concerned wishes once more1)0841:Lug to the attention of the Corporation the Board's op-"In-L6lon to such expansion policy.

addition, information received by the Board of Governorsby jates that since July 1941, the expansion policy pursued

;'_"e

thathas extended into the industrial field.

I171 e that date it has acquired all of the stock of Premierikannee Company representing a dollar investment of approx-

Tobae,4-„Y $1000,000; the controlling interest in Axton Fisherikate:r 9,0mpany representing a dollar investment of approx-Uqe-P7 92,300,000; substantially all of Adel Precision Prod-

t .rrporation representing a dollar investment of approx-repr:'4'Y $1,350,000; substantially all of Aerco Corporationsala aaj flting a dollar investment of approximately $290,000;a (1017- °f Enterprise Engine and Foundry Company representing

investment of approximately 4379,000. During this


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same period direct and inter-corporate indebtedness of Trans-america, Corporation and its subsidiaries has continued unliq-

in substantial amounts. Permission of the Board forthe changes in the character of Transamerica Corporation'sassets brought about through the above mentioned acquisitions

wr neither sought nor given.e expansion policy pursued by the Corporation and the de-, n

1:1eloPments in connection therewith which have been commented

Boardin this wire have raised the question in the minds of the,Ii0S.rd as to whether the Corporation has violated the agreementwhich it entered into with the Board on April 281 1937, andParticUlarly paragraph 5 thereof reading as follows:

'That the management of the undersigned will be,and the undersigned will take such action withinits power as may be necessary to cause the manage-ment of each of its subsidiaries to be, conductedunder sound policies governing its financial andOther operations, including statements issued re-lating thereto; that the undersigned will maintaina sound financial condition; that its net capitalaad surplus funds shall be adequate in relation tothe character and condition of its assets and to itsliabilities and other corporate responsibilities;and that, except with the permission of the Boardof Governors of the Federal Reserve System, it shallnot cause or permit any change to be made in the

wthergeneral character of its business or investments;co ef°re, the Board, before reaching a conclusion as to thellrglads! c't action to be pursued in these circumstances, would bewists 60 receive any expression of view which the Corporation may

the to offer on the question whether the Corporation has violated

"Ple6erms Of its agreement.tionef.e convey the contents of this wire to Transamerica Corpora-

"repi lth the statement that the Board will appreciate an earlythrough the Federal Reserve Bank of San Francisco."

14 connection with the above matter, it was stated that a numberteie

teetirlggl'aras and letters had been received from independent bankers pro-

the acquisition by Transamerica Corporation of stock of the

ational Trust & Savings Bank of Los Angeles.

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It was unanimously agreed that on Mon-day, May 31, telegraphic replies to thesetelegrams and letters would be sent over Mr.Morrill's signature, stating that the Boardof Governors of the Federal Reserve System was


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798

Opposed to the expansion policy pursuedby Transamerica Corporation and had soadvised the Corporation.

At this point Messrs. Dreibelbis, Cagle, and Pollard withdrew

the meetin_,g and the action stated with respect to each of the mat-

ters e."" lnafter referred to was then taken by the Board:

The minutes of the meeting of the Board of Governors of the Fed-

eserve Syatem held on May 27, 1943, were approved unanimously.

era).

Telegrams to Mr.c)r

Boston, Mr. Treiber,Itx'.

Leach, President

Secreta.ry pro tern of

Aasisterit eounsel of

8"retarY of the Federal

Pl'esident of the Federalldert of the .Vederal ReserVe

Paddock, President of the Federal Reserve Bank

Secretary of the Federal Reserve Bank of New York,

of the Federal Reserve Bank of Richmond, Mr. Frazer,

the Federal Reserve Bank of Atlanta, Mr. Hodge,

the Federal Reserve Bank of Chicago, Mr. Stewart,

Reserve Bank of St. Louis, Mr. Powell First Vice

Reserve Bank of Minneapolis, Mr. Gilbert, Pres-

Bank°t the

Federal Reserve Bank ofProves

the establishment without

St. Lotlis and San Francisco

San

of Dallas, and Mr. Hale, Vice President

Francisco, stating that the Board ap-

change by the Federal Reserve Banks of

on May 25, by the Federal Reserve Bank ofAtlanta on May 26, by the FederalChic g°, Min

neapolis, and Dallas on

/3411k of Boston today, of the rates

eXisting schedules.

serve

their

Reserve Banks of New York, Richmond,

May 27, 1943, and by the Federal Re-

of discount and purchase in

Approved unanimously.

MeMorandwa of this date from Mr. Morrill, recommending thatthe tem

P°r4/7 appointments of Alvin Bissett as a cook and of James Hayden


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a.8 4 Cafeteria helper in the Secretary's Office be extended for additional

Peri°d8 of not to exceed 60 days each, effective as of the expiration oftheir

Present appointments at the close of business on May 31, 1943.


Letter to the board of directors of the "Farmers Bank of Parkes-bur—

Parkesburg, Pennsylvania, stating that, subject to conditions ofkezither

8"4 numbered i to 3 contained in the Board's Regulation HI the

aPPr°Ires the bank's application for membership in the Federal Re-serve 8

130arci

Y8teM and for the appropriate amount of stock in the Federal Re-serve tof Philadelphia.

The letter also contained the follow-ing special comment:

cluinot bare "It appears that the bank possesses certain powers which

eing exercised and which are not necessarily re-eri:ex act

d in the conduct of a banking business, such as the ?ow-in surety in certain circumstances. Attention is

p0:4-bed t as o the fact that if the bank desires to exercise any

be;el's not actually exercised at the time of admission tomem-n 814) it will be necessary under Condition of membershipbeforeered 1 to obtain the permission of the Board of Governors

et' exercis ing them. In this connection, the Board under-

at there has been no change in the scope of the cor-apioue Powers exercised by the bank since the date of its

4-eation for membership."

Approved unanimously, for transmissionthrough the Federal Reserve Bank of Phil-adelphia.

844kers ATelegram to Mr. Walter B. French, Deputy Manager of the American

88°oiati0n, New York, New York, reading as follows:

lioard :7Presentatives of War Department, Navy Department andPosed ;:t Gove rnors have been considering final proofs for pro -bY you :r loans book regarding war financing recently

submitted

'°r comment. It seems unlikely that suggestions can be


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!3labadtted today but it is expected that they will be sub-mitted in time to reach you first part of next week."

reactin

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Letter to the Presidents of all the Federal Reserve Banks,

g as follows:

a+ °You will recall that several months ago Governor Ransom,_4 s Presidents, Conference, called your attention to a pendingrssquest of the Department of Justice for access to registrationtatements of small loan companies under Regulation W and assist-ance4, in connection with a loan shark investigation under way by:i_te Department. The original request contemplated active assist -71ce from the banks in making inspections and in collecting datauTra the registration statements. The Board has now reached anohcieratanaing with the Department which is evidenced by the ex-clange of letters between Assistant Attorney General Tom C.

arkt and Mr. Dreibelbis, copies of which are attached.wil 4You will note that the Department agrees that all data

at 1 be collected by its own staff through examinations of theda.nements by them and that it will treat confidentially anyor so obtained. You will also note that it is the intention

he D epartment to use the information only as a lead to ob-

eli - evidence from other sources; that in the event of anywill!! in the situation it will either subpoena the records orfact "Iprk out the problem with the Board on some other satis-tio or? basis; that the information will be used only in connec-acj with the loan shark investigation; and that the Board's

101;1 establishes no precedent.und Under these circumstances and in conformity with thisre !ratancling, the Board requests that you give duly accreditedist;ssentatives of the Department of Justice access to the reg-

eet'tlon statements of registrants within the classificationGut in Mr. Dreibelbist letter to Mr. Clark."


Memo randum dated May 27, 1943, from Mr. Goldenweiser, Directorthe

1443, 18, ipivisi'n of Research and Statistics, submitting a letter dated

Mit h 1943, from Mr. J. C. Capt, Director of the Bureau of the Census,

e- Pl3roved the Board's request of May 7 to receive, under the termsthe Second War Powers Act, certain department store records of the

41'


801

t t

to

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1939 Cen-sus of Retail Trade and which stated that the cost of preparingthis .—0.usr1al for the Board would not exceed $500. The memorandum stated

atLU.3

material would enable the Division of Research and Statisticstest

the representativeness of its current department store data,

INwhichere based on voluntary reparts by selected stores, and to correct

these data when necessary, on the basis of the comprehensive biennialernuter-,io •

by the Census, and recommended that the Board approve the ex,Perlditur

—7--

Approved unanimously, with the under—standing that the appropriate account inthe 1943 budget for the Division of Researchand Statistics would be increased accordingly.

Thereupon the meeting adjourned.

Secretary. I


Documents

19430528_Minutes.pdf