Mr. ROBERTSON. I would say that you would find the number that were specifically-I have no recollection of the exact figures, but I would think that you would find that the number disapproved on any list furnished you by any supervisory authority, whether it is by Federal Reserve or the Comptroller of the Currency or FDIC, would be practically nil because those are turned down before they ever reach the application stage.

Senator DOUGLAS. That is, the formal refusal of permission, you think, would be almost nil?

Mr. ROBERTSON. That is right.

Senator DOUGLAS. It would only be the informal disapproval, that is, any disapproval would have been informal?

Mr. ROBERTSON. You can call it disapproval or discouragement, either one you wish, but that is the status.

Senator DOUGLAS. But so far as the cases formally passed on, consent has been virtually always given?

Mr. ROBERTSON. When it reaches the stage of a formal application, everybody knows pretty well whether it is going to be approved or disapproved.

Senator DOUGLAS. Do you follow the theory of Greek tragedy that all action should take place off the stage then?

Mr. ROBERTSON. No; I don't follow any such rule as that.
Senator DOUGLAS. That seems to be what you have done.

Mr. ROBERTSON. Not at all. Not at all. Two institutions are very unlikely to ever attempt to merge unless they have discussed that matter with the supervisory authority beforehand.

Senator DOUGLAS. I don't want to make matters very embarrassing for my very dear friend John McCloy, whom I regard as one of the great citizens of this country, and I mean that most sincerely.

Did you discuss informally the question of the merger of the Chase

National Bank and the Bank of Manhattan?

Mr. ROBERTSON. No, Senator; I would prefer not to do that just for the very simple reason I have not looked at the facts of the case for months and months and months.

Senator DOUGLAS. No. I simply said did you have informal-
Mr. ROBERTSON. Oh, very much so.

Senator DOUGLAS. Then you gave assurances that it was correct to proceed?

Mr. ROBERTSON. Well, let me make this record clear right now, that in that particular case we did not have the power to approve that merger. That was done by the State supervisory authorities. We would decide whether or not they could have branches.

Senator DOUGLAS. I see. If it had become a national bank, you would have had the authority?

Mr. ROBERTSON. If it had become a national bank, it would have been the Comptroller of the Currency.

Senator DOUGLAS. Comptroller of the Currency; yes.

Well then, what function do you play in this at all?

Mr. ROBERTSON. There are very few instances in which we have to approve the merger as such. There are some cases in

Senator DOUGLAS. What cases would you pass on?

Mr. ROBERTSON. Where the capital of the two institutions merging Isn't equal to the combination of the capital and surplus of the two

institutions. If part of the capital is being eliminated through the merger, then we would have to approve it. Otherwise, we would not. Senator DOUGLAS. I am afraid I am very stupid. Would you say that over again because I can't quite follow you?

Mr. ROBERTSON. Well, one of the big gaps in the law today with respect to Federal approval of mergers is that they don't have to be approved by the Federal Government, leaving aside now the national bank cases where you have to have approval in every case, unless there is some diminution of capital. If there is a diminution of capital or surplus, then we would have to approve, but we wouldn't otherwise. In that case, there was no diminution. So only the State authorities would have to approve, but they couldn't get the branch permits without our approval after that. But we could hardly come along after the approval of the merger and say because there happened to be 3 branches out of a hundred or 200, whatever they are, that happen to overlap, we wouldn't

Senator DOUGLAS. So, in effect, you have virtually no control over the question of mergers?

Mr. ROBERTSON. I think that is true in that case you are speaking of. Senator DOUGLAS. And your power over bank holding companies really comes from this last act; isn't that true?

Mr. ROBERTSON. Not at all; not at all. There has been holding company legislation for a long time. It just wasn't adequate. It was not adequate, and that was the reason that the existing legislation was passed.

Senator DOUGLAS. Did you notice the extraordinary activity of Transamerica in buying up banks while the bill was under debate in the Senate?

Mr. ROBERTSON. I could hardly miss it.
Senator DOUGLAS. Pardon?

Mr. ROBERTSON. I could hardly miss it.

Senator DOUGLAS. Would you be willing to make a general statement as to the process of purchasing banks in the Mountain State area by Transamerica during that period?

Mr. ROBERTSON. No. But I would be glad to answer any questions you have on it.

You say a general statement? No, I would not.

Senator DOUGLAS. Would you submit a memorandum on the banks and their capitalization and deposits which were acquired by the Bank of America during the period that it

Mr. ROBERTSON. Oh, very gladly.

Senator DOUGLAS. Went pretty far, didn't it?

Mr. ROBERTSON. They acquired a number of institutions during the last few days, the last weeks, let me say, before the legislation was passed.

I would be very glad to give you that. That, too, has been furnished before.

Senator DOUGLAS. I wish you would submit that for the record. Thank you very much.

(The information referred to follows:)

Acquisition of controlling stock of banks by Transamerica Corp., Jan. 1 to May

Feb. 14
Mar.

Idaho.

.do.

Continental State Bank, Boise.
First National Bank, Caldwell.

New Mexico..

Utah..

2

Idaho.

Montana.

27

Utah.

do.

Apr.

Colorado.

Bank of New Mexico, Albuquerque..
Walker Bank & Trust Co., Salt Lake City.
Bank of Eastern Idaho, Idaho Falls.
Montana Bank, Great Falls
Cache Valley Banking Co., Logan.
Sandy City Bank, Sandy
American National Bank, Denver.
Englewood State Bank, Englewood.
First National Bank, Fort Collins.
Conrad National Bank, Kalispell.
First State Bank, Gallup.
Roswell State Bank, Roswell.
Casper National Bank, Casper..
First National Bank, Laramie.
First National Bank, Riverton
Lea County State Bank, Hobbs.
Bank of Glacier County, Cut Bank.
Santa Fe National Bank, Santa Fe..
Total....

1 Information as to day of the month not available.

Senator ROBERTSON. The Chair recognizes Mr. Cravens. Mr. CRAVENS. I think I should explain for your benefit, Mr. Robertson, that the work of the Advisory Committee has been broken down into subcommittees, one of which deals with the recommendations with respect to changes in legislation affecting the Federal Reserve System and one with the Comptroller of the Currency, and so forth. Mr. McCloy is chairman of the subcommittee dealing with legislation affecting the Federal Reserve System.

I will call on Mr. McCloy first for any questions he has.

Mr. McCLOY. Mr. Cravens, Senator Robertson has asked a good many of the questions that I had in mind asking. There is one general question I would like to ask.

This morning Mr. Gidney and this afternoon you, Mr. Robertson, have pointed out that the scope of your recommendations is somewhat limited, that you haven't gone into fundamental questions, questions of fundamental policy or fundamental operations. That prompts me to ask this question: In your judgment, considering all the developments that have occurred in the United States since the last comprehensive study was made of the banking and monetary system, do you feel at this time it would be wise to look into the fundamental policy of the country in respect to its monetary, credit, and banking situation? Would you feel that such a study might be productive in view of the changes-economic changes-that have occurred in the country over these decades since the last study was made? Would you feel that such a study would be productive?

Mr. ROBERTSON. In response, I would say that I am very much in favor of such a study. I think it would be very productive. I think it would not only be educational on the part of the Congress and the

84444-56-pt. 1—15

public at large but would result in enabling a lot of us to see the way in which the financing industry in this country has grown up like Topsy. We have overlapping on the part of financing institutions and also discriminations as between them, taxwise and otherwise. Some are subject to severe supervision and others almost no supervision. Some have tax benefits that are great, and some have tax benefits that are small. There are distinctions and differences with respect to the extent to which given institutions can finence business, industry, and agriculture, and I doubt seriously that there should be that differential.

It seems to me that we have started out in the right path in each instance, whether on the cooperative side or the mutual side or the commercial enterprise side, but we have permitted these various institutions to grow into something that might be very different from what was contemplated at the outset.

Consequently, I would think there should be such a study as has been suggested and I have advocated it many times in the past. Even within such limited fields as the Federal Reserve System there are areas which are deserving of real careful thought, but it is going to take a long time to do it.

Take the question of reserve requirements alone. That is sufficient for a very broad study. You don't find the answer just overnight. It takes real thought, and I think we ought to have the kind of a study which you have suggested and bring to bear on the problems which exist the best minds we have. Whether it is a congressional committee or whether it is the kind of a committee that you would think of as a commission, monetary commission, with representatives of Congress and representatives of the public, I have no view to express other than to hope that the people who would constitute that committee or commission would be in a position to devote full time to the job for a sufficiently long period of time to do the job well. Mr. McCLOY. This may not quite bear on the point, but I thoroughly agree with that statement. I am a novice, a freshman, as the Senator speaks of it, in the banking profession, but it does seem to me from such knowledge as I have of economics and the history of finance of the country that such a study as that may be appropriate at this time. This present study that we are making preparatory to legislation in the coming Congress scarcely affords time to go into any such a thorough consideration of the problems as you indicate may be advisable.

!

How long would you think such a study should take?

Mr. ROBERTSON. I tried to make a list of the things just within my own limited field which should be studied and then tried to wonder how long it would take to do that sort of a job, and I couldn't come out with anything less than 2 years.

Senator ROBERTSON. Would you mind asking him what it would cost?

Mr. McCLOY. On behalf of the Senator from Virginia, I will ask you how much it would cost.

Mr. ROBERTSON. And I would reply that I haven't the slightest idea.

Mr. McCLOY. It seems to me it would take at least 2 years before a comprehensive study could be completed. I don't know that it would be so terrifically expensive, however. That is another question.