64TH CONGRESS, HOUSE OF REPRESENTATIVES. REPORT 1st Session.

INTERLOCKING DIRECTORATES OF NATIONAL BANKS.

APRIL 25, 1916.-Referred to the House Calendar and ordered to be printed.

Mr. GLASS, from the Committee on Banking and Currency, submitted the following

REPORT.

[To accompany S. 4432.]

The Committee on Banking and Currency, to which was referred Senate bill 4432, which passed the Senate April 11, 1916, having carefully considered the same, recommends that the bill be amended as follows:

On page 2, after line 11, insert the following paragraph:

The consent of the Federal Reserve Board may be procured before the person applying therefor has been elected as a class A director of a Federal reserve bank or as a director of any member bank.

With this amendment the committee recommends that the bill do pass, and appends an extract from the report, No. 288, of the Banking and Currency Committee of the Senate, which gives a clear explanation of the purposes of the bill:

The effect of the passage of this bill will be to permit the Federal Reserve Board to authorize a director of a member bank to serve as a member of the board of directors of two other banks, banking associations, or trust companies, if such other bank, banking association, or trust company is not in substantial competition with such member bank.

It was represented to the committee that the rigid enforcement of the so-called Clayton antitrust law with respect to interlocking directorates would work a great hardship in many cases where men of great banking experience were serving on the boards of more than one bank and where there was no substantial competition between the banks for which they were rendering this service.

Realizing that the purpose of the passage of the Clayton antitrust law, in so far as it affects banks, was to prohibit a practical monopoly of credits through the interlocking directorates of competing banks, the committee is of the opinion that that purpose can be as well served by granting this permission to those banks which are not in substantial competition with each other, requiring, however, that the Federal Reserve Board shall first give its permission, and limiting the discretion of the Federal Reserve Board in the matter to specifically two other banks.

It frequently happens that there are several banking institutions under the same roof having practically the same personnel on the several boards of directors, but the banks in no wise competing with each other; as for instance a national bank and a trust company, the trust company being authorized to do business of a nature which a

national bank would be prohibited from doing under the national-bank act, and a State bank with a different line of business under State laws.

The Federal Reserve Board was requested to consider this bill and report thereon to this committee, and the board's report is made a part hereof, as follows:

FEDERAL RESERVE BOARD, Washington, March 8, 1916. MY DEAR SENATOR: As requested in yours of February 26, the bill introduced by Senator Kern to amend section 8 of the Clayton Act, which is now before your committee, has been submitted to and considered by the board.

It appears that under this bill the restrictions contained in the Clayton Act relating to interlocking directorates will not prohibit an officer, director, or employee of a member bank, or a class A director of a Federal reserve bank, who first procures the consent of the Federal Reserve Board, from being an officer, director, or employee of one or more other banks if such other banks are not in substantial competition with the member bank.

This amendment, if adopted, will give some elasticity to the provisions of the Clayton Act which prohibít directors of other banking institutions from serving as directors of member banks under certain conditions. It would seem to be desirable to have this discretionary power vested in the board, since in many instances the enforcement of the provisions of the Clayton Act will result in depriving a member bank of the services of a director because of his connection with other banking institutions, even though his serving on both boards would not be violative of the spirit of the act.

It is the opinion of the board, however, that some limitation should be placed upon this discretionary power, and it is suggested that the bill should be amended so as to provide that "the Federal Reserve Board shall in no case authorize a director of a member bank to serve on the boards of more than two other banking institutions, or on more than one other such institution located in the same city or town.". It is also suggested that the comma appearing after the word "bank, at the beginning of line 12, page 1 of the bill, be eliminated to avoid ambiguity. As the bill now reads it might be contended that the qualifying sentence, who shall first procure the consent of the Federal Reserve Board," relates to class A directors of Federal reserve banks and not to officers, directors, or employees of any member bank.

While the board realizes that it will be difficult in some instances to determine whether or not two or more banks are in substantial competition, it is prepared to assume this responsibility should this bill become a law. In the opinion of the board, the amendment appears to be a desirable one from many standpoints.

Respectfully,

Hon. ROBERT L. OWEN,

United States Senate, Washington, D. O.

C. S. HAMLIN, Governor.

BRIDGE OR BRIDGES NEAR CEDAR POINT AND DAUPHIN ISLAND, ALA.

APRIL 25, 1916.-Referred to the House Calendar and ordered to be printed.

Mr. SIMS, from the Committee on Interstate and Foreign Commerce, submitted the following

REPORT.

[To accompany H. R. 11616.)

The Committee on Interstate and Foreign Commerce, to whom was referred the bill (H. R. 11616) to amend an act to authorize the Dauphin Island Railway & Harbor Co., its successors or assigns, to construct and maintain a bridge or bridges or viaducts across the water between the mainland at or near Cedar Point and Dauphin Island, both Little and Big, also to dredge a channel from the deep waters of Mobile Bay into Dauphin Bay; also to construct and maintain docks and wharves along both Little and Big Dauphin Islands, as amended by an act approved June 18, 1912, having considered the same, report thereon with amendment and as so amended recommend that it pass.

Amend the bill as follows:

Page 2, line 10, after the word "Dauphin' insert the word "Island."

The bill as amended has the approval of the War Department, as will appear by the letter attached and which is made a part of this report.

Hon. W. C. ADAMSON,

WAR DEPARTMENT, Washington, February 28, 1916.

Chairman Committee on Interstate and Foreign Commerce,

House of Representatives.

MY DEAR SIR: I have the honor to acknowledge the reference to this department of House bill No. 11616, current session of Congress:

"To amend an act to authorize the Dauphin Island Railway and Harbor Company, its successors or assigns, to construct and maintain a bridge or bridges or viaducts across the water between the mainland at or near Cedar Point and Dauphin Island, both Little and Big; also to dredge a channel from the deep waters of Mobile Bay into

Dauphin Bay; also to construct and maintain docks and wharves along both Little and Big Dauphin Islands, as amended by an act approved June eighteenth, nineteen hundred and twelve."

By an act approved June 25, 1910, the Dauphin Island Railway & Harbor Co. was authorized, among other things, to construct a bridge across the waterway between Cedar Point and Dauphin Island, the time for commencing and completing the bridge being fixed at one and three years, respectively, from the date of approval of the act. By an act approved June 18, 1912, the time for completion was extended. to September 18, 1916, practically an additional three years. It is now proposed, by the bill under consideration, to further extend the life of the privilege until September 18, 1921, or an additional period of five years.

Except in unusual cases involving exceptional conditions as to work and expense, Congress has uniformly limited the life of bridge franchises to three years. This franchise has now been in existence nearly six years, and so far the grantee has not even submitted plans for the proposed structure for departmental approval. Why so long an extension of time is required is not apparent to the department, and the advisability of granting it, contrary to the established practice of Congress in such cases, is suggested for the consideration of the committee.

Otherwise, I know of no objection to the passage of the bill so far as the interests of navigation are concerned.

Very respectfully,

H. L. SCOTT, Secretary of War ad interim.

O

64TH CONGRESS, HOUSE OF REPRESENTATIVES. 1st Session.

DAUPHIN ISLAND BRIDGE, ETC.

APRIL 25, 1916.-Referred to the House Calendar and ordered to be printed.

Mr. SIMS, from the Committee on Interstate and Foreign Commerce, submitted the following

REPORT.

[To accompany S. 4476.]

The Committee on Interstate and Foreign Commerce, to whom was referred the bill (S. 4476) to amend an act to authorize the Dauphin Island Railway & Harbor Co., its successors or assigns, to construct and maintain a bridge or bridges or viaducts across the water between the mainland at or near Cedar Point and Dauphin Island, both Little and Big; also to dredge a channel from the deep waters of Mobile Bay into Dauphin Bay; also to construct and maintain docks and wharves along both Little and Big Dauphin Islands, as amended by an act approved June 18, 1912, having considered the same, report thereon with a recommendation that pass.

it

The following is the report of the Senate Committee on Commerce on this bill:

The Committee on Commerce, to whom was referred the bill (S. 4476) "to amend an act to authorize the Dauphin Island Railway and Harbor Company, its successors or assigns, to construct and maintain a bridge, or bridges, or viaducts, across the water between the mainland, at or near Cedar Point, and Dauphin Island, both Little and Big; also to dredge a channel from the deep waters of Mobile Bay into Dauphin Bay; also to construct and maintain docks and wharves along both Little and Big Dauphin Islands, as amended by an act approved June eighteenth, nineteen hundred and twelve," having considered the same, report thereon with a recommendation that it pass with amendment.

The bill has the approval of the War Department, as will appear by the following:

[First indorsement.]

WAR DEPARTMENT, March 24, 1916. Respectfully returned to the chairman Committee on Commerce, United States Senate.

Since the foregoing report was submitted the department has been informed that the Dauphin Island Railway & Harbor Co. has graded and built a part of its line on the mainland, and that the work necessary to extend the line and establish temporary communication by boats to operate between Cedar Point and Port Dauphin