On to Wilmington

John William Pole, Comptroller of the Currency, was recently in San Francisco. Up and down Montgomery Street brokers and bankers guessed that his visit was to bring a halt to the running fight which Amadeo Peter ("A. P."; Giannini was waging on Elisha Walker. Financial re- porters sensed a big scoop when Mr. Pole summoned them to his office in the Federal Reserve Building. But when they arrived he gravely told newshawks he was sorry but he had nothing to say after all.

With this incident there came .an end to all stories that hostilities would cease. It was to be war to the end. That end was to be Feb. 15, when in person and by proxy the owners of a gigantic holding company, Transamerica, will gather in Wilmington, Del. to vote. Last week Mr. Giannini, still campaigning, continued to claim that his white proxies represented a majority. Silently confident that their blue proxies would win were the Walker group.

In California, where the majority of stockholders reside, the Giannini faction has been holding tumultuous meetings up and down the State, has thrown accusations at "the Walker gang,'' has demanded that the opposition speak out in answer. Mr. Giannini has let his men do most of the speechmaking. But his presence on the platform has brought the cheers. While the story has been sensational, newspapers have played it down, knowing that the Giannini attacks did no good to California's Bank of America, which Transamerica owns.

The fight began as a conflict of personalities. There was less reason for Amadeo Peter Giannini and Elisha Wralker to get along than there was for them to differ. If you like and respect Elisha Walker, who is always neatly dressed and who was born to society and Wall Street, who gives an impression of careful, methodical methods, you may distrust the attitudes of Mr. Giannini. If you like "A. P.," a big blustery fellow who does not give a hang how his clothes hang, who has known manual labor, who gives a jovial shout when he sees you coming down the hall, you may distrust the more rigid banking technique of Chairman Walker. It is easy to see why a large group of stockholders who know little about finance and who have lost money, regard the conflict as "The People v. Wall Street."

These two men, with such different personalities, first began to work together in 1929 when Mr. Giannini, anticipating his retirement, looked for a leader to replace him. Mr. Walker, he thought, possessed prestige as well as brilliance and was a man of broad enough vision to carry on the dreams of the branch banking and in vestment empire which Transamerica rep resented. Soon after Mr. Giannini retired friction became apparent. Friends of Mr. Walker think that when, in the early part of 1930, he became fully familiar with the task ahead of him, he was aghast at the true situation, and has since labored tirelessly to turn Transamerica fiction into the greatest possible amount of auditable fact. But Mr. Giannini did not expect his retirement to be as complete as it was any more than King Lear expected to be neglected after he had given his kingdom to his two elder daughters. In Mr. Giannini's attempted comeback there is with out doubt a great deal of personal pride. He has, however, been shrewd enough to cover this. The fight began when a group of stockholders united to oust Mr. Walker. The Founder said he would join them if he were sure they wanted him. His entire attitude has been that he was accepting a "mandate" to "rededicate" himself.

The most recent Giannini attack contained twelve charges, among them:

1) "The steady decline of Transamerica, and the stopping of the dividend." For this the Walker management has already offered three reasons: general market conditions; the unorthodox, if not utterly improper, methods which Giannini used to put the stock up in the bull market; attempts at artificial support in October 1929, when the Giannini management spent $68,000,000 of the company's cash to keep its stock up. The annual report explained the dividend stoppage by the necessity of conserving cash resources to meet bank loans recklessly incurred by Giannini management and because of asset shrinkage. The report showed 25.94-c- earned on each of the 24,000.000 shares last year but this was before setting up certain reserves and did not include large "write-offs."

2) "The abandonment of the branch banking program. ..." The Walker management has asserted that because of changed economic conditions and because there is little likelihood of revised laws concerning branch banking, it was forced to change its policy.

3) "The unwarranted disposal of Bank of America of New York. . . ." If the management wished to, it could answer that conditions made it urgent to sell Bank of America to a strong institution (National City) without delay.

4) "... Sacrifice of productive assets at bargain prices at private sales." The Walker management could reply that "bargain prices" are a matter of opinion, that private sales are essential for unlisted securities or big blocks of listed securities. Transamerica under Giannini had acquired a vast miscellany of assets such as fire insurance companies, a land bank, common stocks, trading companies, shares in an Italian bank.

5) "The raising of salaries, and extravagant expense accounts . . . employment of many unnecessary high salaried officials." The management's answer to this was: "The only record of payment of extraordinary compensation relates to Mr. A. P. Giannini, although he allowed the impression to be created that he worked for little or no compensation." The reply pointed out that between 1927 and 1930 Mr. Giannini was credited with $3,712,000, not including $1,500.000 that Bancitaly gave to University of California for the creation of the Giannini Foundation and the erection of Giannini Hall. It explained how Mr. Giannini used the company's money for club dues, hotel expenses, automobile expenses, income taxes, insurance. But the inquiring stockholder last week realized the point was merely whether or not Mr. Giannini was entitled to the money, that, if he was. he could have spent it on baubles and trinkets without violating any ethical rule.

Thus, last week Transamerica's stockholders, who are numerous enough to fill a city the size of Memphis, were pondering the big decision which lay before them. Those who were financially mature did not let the 1931 report, showing further drastic writedowns, unduly influence them, since bookkeeping entries do not mean a disturbance of tangible values. And it is an open question whether or not the greater part of this adjustment in assets (from $1,176,000.000 in 1929 to $224,684.000 in 1931) was not largely caused by the bookkeeping methods of the former management.

As a whole, it was a jury-like problem, to overlook personalities and to decide whether Mr. Giannini's accusations of mismanagement were true.

Meanwhile "A. P.," weary of campaigning, could be happy in the knowledge that he still has power to evoke great personal loyalty. He booked a reservation for Manhattan, abandoned his dramatic plan of hiring a special train, rallying stockholders to him as he roared eastward, to Wilmington.

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