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To the Shareholders of Shawmut Association:

BOSTON, MASS., May 23, 1947.

A bill entitled "The Bank Holding Company Act of 1947" (S. 829), which has been introduced in the United States Senate, will, if enacted, materially affect you. Enclosed is a copy of certain material provisions. A full copy of the bill may be obtained from your Senator.


The assets of Shawmut Association consist principally of marketable securities and local bank stocks. It should be borne in mind that each purchase of local bank stocks effects a corresponding reduction in marketable securities. chases of local bank stocks for 1945 and 1946 reached the substantial total of $1,284,475, equaling $3.29 per share of Shawmut Association. At December 31, 1946, total investment at cost in local bank stocks was $3,507,101.55, equal to $8.67 per share of Shawmut Association.


At December 31, 1946, "asset value" of Shawmut Association was $24.70 per share, and market price of its shares was approximately $14.50 per share. The bill, if enacted, would, after a period, require the separation by a "bank holding company", such as Shawmut Association, of its bank stocks from its marketable securities. This would mean disposing either of the bank stocks or of the other securities. We think that either alternative would be beneficial to Shawmut Association shareholders and might well result in a selling price for Shawmut Association shares more nearly in line with their “asset value.'

The undersigned, in our individual and fiduciary capacities, own over 20,000 shares of Shawmut Association. We believe that passage of the bill would be in the interest of Shawmut Association shareholders. We plan to be represented in favor of it at a hearing June 2, 1947, before the Senate Committee on Banking and Currency.

We think that it would help to accomplish its passage if you and other shareholders would permit the recording of your names with the Senate committee. If you are willing to be recorded for or against the bill, will you fill out and return very promptly the enclosed questionnaire. Time is short.

Yours very truly,



"A BILL To provide for control and regulation of bank holding companies, and for other purposes" "SEC. 2. DECLARATION OF POLICY.-It is * * * the policy of Congress * * * to control the creation and expansion of bank holding companies; to separate their business of managing and controlling banks from unrelated busito provide for more effective regulation and supervision of bank holding companies, to the end that their * * * control shall be directed toward * * * the continuous maintenance of sound financial conditions by their subsidiary banks."


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"SEC. 5. INTERESTS IN NONBANKING ORGANIZATIONS.- -(a) * * * it shall be unlawful for any bank holding company, after two years after the effective date hereof, to own any voting shares or other securities * * of any company other than a bank or to engage in any business other than that of managing or controlling subsidiary banks. The Board is authorized to extend this period for not more than one year at a time.

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To: Edward S. Stimpson, John Richardson, 50 Federal Street, Boston, Mass.:

For passage of S. 829

Number of shares of Shawmut Association recorded in my name.. Number of shares represented by me in fiduciary capacity (please give record names)

Remarks (optional):

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The CHAIRMAN. We will adjourn now, subject to call.
(At 12:05 p. m., the committee adjourned subject to call.)

1 See annual reports of Shawmut Association.







Washington, D. C.

The committee met, pursuant to adjournment, at 10 a. m., in room. 301, Senate Office Building, Senator Charles W. Tobey, chairman, presiding.

Present: Senators Tobey (chairman), Flanders, Bricker, Fulbright, Robertson of Virginia, and Sparkman.

The CHAIRMAN. The committee will come to order, please.

Before proceeding with any witnesses-and this is a continuation of the hearings on S. 829 the bill to provide for control and regulation of bank holding companies, and for other purposes-I wish to read a letter from Mr. L. M. Giannini, of San Francisco, written to me under date of June 2:

DEAR SENATOR TOBEY: It has been reported to me that at a hearing conducted on May 26, 1947, on S. 829, in response to an inquiry from one of the members of the committee as to the attitude of Transamerica Corp. with respect to the bill, you answered from information acquired from "authoritative sources” and said that Transamerica "will not oppose this bill because they feel down deep in their heart that they would rather have this bill than one that would go much further." I do not know what statements might have been made to you, or by whom they were made, and of course I do not at all question the sincerity of your statement, but speaking merely as one of the directors of Transamerica Corp., I feel I should advise you that so far as my knowledge goes, this is not a correct representation of Transamerica's attitude. I do not believe that Transamerica would hesitate to oppose legislation affecting it which it regarded as being contrary to the public interest, or that it would refrain from expressing its opposition because of any fear that some other legislation would later be enacted. Presumably, it would assume that the Congress of the United States will at all times act with justice and in the public interest.

This is stated by me in the absence of Mr. A. P. Giannini, chairman of the board of directors of Transamerica Corp., who will return from Europe on June 9, in order to avoid any possible misunderstanding which I am sure is as far from your purpose as it is from mine. It will be appreciated if you will convey the contents of this letter to the members of your committee.

Kindest regards.

Sincerely yours,

To which I replied on June 5:


DEAR MR. GIANNINI: I have your letter of the 2d with regard to hearings conducted on S. 829 and referring to a response I made to an inquiry as set forth in your letter. The statement which you attribute to me is practically correct, but I have not looked at the text of the record, and the point of view which you express reflected what I was told, as I said, by a responsible party.

I am glad to have your statement in the premises and shall take pleasure in reading it to the entire committee at the next meeting on this subject.

And then following in sequence, the following telegram was received from Mr. Giannini this morning from San Francisco, from Mr. L. M. Giannini:

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I trust my letter to you of June 2 has not left in your mind the impression that Transamerica Corp. has signified approval of S. 829. I raise this question on account of the following statement in your letter of June 5 "The point of view which you express reflected what I was told, as I said, by a responsible party.' Apparently I expressed myself badly, but I intended to express no point of view which would coincide with what you had been told. I should like to repeat that you have not been given a correct representation of Transamerica's attitude as I understand it, and this is now confirmed by Chairman A. P. Giannini who has just returned from Europe.

It is his view that the Eccles program is not in the public interest and that it is an attempt by a bureaucratic despot to suppress free institutions through the exercise of dictatorial powers masquerading as administrative discretion. Both Transamerica's attitude and facts respecting its operations have been grossly misrepresented to your committee by witnesses. We are not surprised by Mr. Eccles' attitude in view of his having been stopped recently by the courts from exercising despotic powers where Transamerica was concerned. The grossly misleading character of some of his statements is so patent as to make a volunteered reply seem unnecessary. At the proper time the real story will be told. There is one company, the First Security Corp., of Ogden, Utah, with respect to which Mr. Eccles can give full information. In three States in this reserve district it operates the largest intermountain chain of banks. Mr. Eccles can explain the classification of its stock which might show that the voting rights are restricted to less than one-eleventh of the outstanding shares, representing less than 4 percent of the net worth and collecting over 8 percent of the dividends. On the other hand Transamerica shares are owned in small amounts by approximately 150,000 shareholders, each of whom participates proportionately in ownerships, profits, and voting rights. Perhaps he can explain why the bill is silent on this subject; also how and by whom control of this company and its banks is actually exercised. He can probably also explain the interest of a reputedly closely held investment company, said to be dominated by him, in two lumber companies, a construction company, and a sugar company, milk, hotel, and implement companies, and perhaps some others, and how these companies would be affected by S. 829 and former versions of it or if it had followed the Public Utility Holding Company Act in its definitions.

With sentiments of esteem,


I read these into the record because anything that comes to me as chairman of the Committee on Banking and Currency belongs to this committee, and is so read, the committee having them in their possession as a matter of record. This committee holds nothing back, brings everything into the open in fairness to all concerned. That is all I know about the matter.

Coming down to this particular hearing, this is the third hearing which is held on this legislation, and at these hearings we have had the matter presented by Mr. Eccles of the Federal Reserve Board, and other witnesses. We have heard from opposition to the bill, from the Morris Plan bank, its counsel and its president, and at the time we adjourned the last meeting, as I recall, Mr. Morris was on the stand. He did not reach his conclusions, and I suspended the hearings until this time.

We are here again assembled. The bill is a bill which is a very important bill, but one of these bills that the public of necessity does not grasp its import. The job for this committee to do is to decide in its wisdom what, if anything, should be done.

We are an open-minded committee, and so without more ado, in courtesy to Mr. Morris, because he had not finished, I am going to ask Mr. Morris to come up and finish his presentation.


Mr. Eccles, I see, is also here, for which I am very glad, and there may be others. The session will be concluded at a quarter to 12 this morning, because of urgent things on the floor in which I am interested.

Now, that gives us an hour and a half. Unless there are other witnesses to be heard this morning, I will ask Mr. Morris to take the stand and try and conclude his presentation in half an hour. Would that be fair to you, sir?


Mr. MORRIS. Before I left the stand at our last hearing, I promised, at the request of the chairman, Senator Tobey, to present to the chairman and to Senator Flanders a memorandum which you requested.

(The memorandum referred to is as follows:)

When I first appeared before your committee and briefly began my testimony against Senate bill 829, I called attention to the fact that it was obvious this bill was largely a shot against the Giannini interests in California: (1) for the purpose of preventing them from expanding in locations where, under existing Federal and State supervisory laws such branch expansion was denied; and (2) the allegation that Transamerica Corp. (Giannini's holding corporation) was engaged in too many enterprises not concerned with banking.

In reply to these statements I called your attention, first, to the fact that if existing legislation was not sufficient to correct this condition, simple additional legislation by supervisory authorities, both Federal and State, could readily meet the situation; and I further called attention to the fact that no legislation to stop Giannini's expansion was proper under our democratic institutions if it seriously affected an institution like the Morris Plan Corp. of America that was not charged with any of the monopolistic indictments which have been made against the Giannini group and to correct which Senate bill 829 was primarily undertaken. When I made these statements both you, Senator Tobey, and Senator Flanders, requested me to write you this memorandum showing how the two chief allegations against Giannini's group, as above set out, could be corrected independent of this bill, assuming, of course, you concluded that these two criticisms of Giannini's expansion should be corrected.

In the first place, if any Federal or State bank today desires to open a branch, such bank cannot do so without the consent of its supervisory authority. The proponents of this bill argue, however, that when such authority is at the present denied, Giannini proceeds to overcome such denial by purchasing a bank in the location where authority to open a branch has been denied.

This procedure can be readily stopped by Federal and State legislation that whenever any bank or holding company has been denied a branch in any given locality, it shall be unlawful for such bank or holding company to purchase the controlling interest in any bank in such locality without the written approval of such supervisory authority. Of course, the same facts and conditions that justify such supervisory authority for declining a branch, such as public convenience and necessity, etc., should be incorporated in such legislation and it should further be provided that an appeal from such determination shall always be possible to a court of competent jurisdiction.

Of course, I call attention to the fact that when you pass any legislation, whether it be the proposed Senate bill 829 or the remedial legislation herein suggested, affecting the alienability of bank stocks, you strike at the very heart of our property system and you strike at the very heart of our democracy and free American enterprise. And I have never read any legislation that does this with more obvious pronouncement than the proposed Senate bill 829. That, in fact, forces every State bank under the dominating jurisdiction of the Federal Reserve System whether it wants to be a member of such System or not.

Now, with respect to item (2) herein, the proponents of this bill want to prevent Giannini's holding company from engaging in so many enterprises. A simple amendment to our present investment company laws under the Securities and Exchange Commission (if it is concluded such amendment is additionally necessary) could provide that no bank or affiliated bank holding company shall, by

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