Transamerica Unscrambled

For many a month Wall Street has known that "Something has to be done about Transamerica." Last week the big holding company's 217,000 shareholders received a lengthy letter from their bustling chairman, Elisha Walker. It told what will be done about Transamerica.

No More Banks. It was Founder Amadeo Peter Giannini's idea that Transamerica should take the lead in nation-wide branchbanking. Last year the annual report said hopefully: "It is now generally conceded that the trend of public opinion is increasingly favorable to the extension of branchbanking." But Mr. Walker's letter of last week reported: "There is no apparent likelihood that nation-wide branchbanking will be authorized by law in the near future." He then confirmed the recent rumor that Transamerica will sell its controlling interest in banks, chief of which are Bank of America, New York, and Bank of America. California. During the week stockholders were assured that no hurried sale will be made, a buyer will be awaited. Current reports were that Bank of America. New York, would be merged with another Manhattan institution, that some Bank of America, California, stock would be sold, some distributed.

No More Investment Banking. The letter explained that the banks will be divorced from their investment affiliates. The most important of these is Bank-america-Blair Corp., an important investment banking house. It is expected that the securities business carried on by this company will pass to a new corporation known as Blair Securities Corp., and that the former partners of Blair & Co. will acquire it from Transamerica Corp. as an investment trust of the general management type.

No More Goodwill. Last year the total assets of Transamerica Corp. were $1,117,000,000. Last week drastic write-downs were made. All marketable securities were valued at market prices; shares of controlled companies were written down to their net asset value; all goodwill and going concern value were eliminated, also the value of insurance in force in the case of insurance companies. The result was a total asset value of only $302,117,000, a net asset value (assets minus liabilities) of $173,091,000.

No More Dividends, The Transamerica quarterly dividend has been cut from 25-c- to 10-c- this year. But even 40-c- a year requires almost $10,000,000 on Transamerica's 25,000,000 shares. Last week the dividend was passed.

No More Gianninis. Most surprising of all the changes made last week were those in management. Eight new directors were added, 22 old ones dropped. New directors included Frederic Winthrop Allen, Charles Edward Cotting and George Murnane, all partners of Lee, Higginson & Co. They also included presidents of two companies friendly with Lee, Higginson: Frederic C. Dumaine of Amoskeag Manufacturing (cotton mills) Co. and Charles W. Nash of Nash Motors Co. This indicated that the influential house of Lee, Higginson & Co. has a stake in the future of Transamerica, and more than any of the other changes answered the question of "What will be done about Transamerica?"

Best known of the Lee, Higginson partners to join the Board was Director Allen, a silvery-haired man of 54. He was graduated from Yale in 1900, spent the next ten years with Simmons Hardware Co. , of St. Louis. In 1915 he was made a partner of "Lee, Higg." Polite, polished, he fits well into Lee, Higginson's luxurious Manhattan office and is a perfect specimen of Banker, Idealized Type. He is a director of Ivar Kreuger's International Match Corp. for which his house is the U. S. banker. This year he was given the Royal Order of Commander of the North Star by the King of Sweden. His directorates also include Chase National Bank, International Telephone & Telegraph, Nash Motors Co., Otis Elevator Co., Shell Union Oil Corp., Vanadium Corp. One result of the Lee, Higginson-Transamerica affiliation will probably be co-operation between Transamerica's General Telephone & Electric Corp. and the International-Ericsson group.

A second change of management was the dropping of Amadeo Peter Giannini, his brother Dr. Attilio H. Giannini, his not robust son Lawrence Mario Giannini from the directorate, and also their good & stanch friends Prentis Cobb Hale of San Francisco and George Newell Armsby of California Packing. The long suspected LYNN PORTER TALLEY . . . does not let enthusiasm replace collateral. Giannini-Walker feud broke into the open with this news. Founder Giannini announced his resignation had been presented last June "because I could not approve of the plans, policies and procedure of my successor, Chairman Walker." Ironic was this statement since Founder Giannini is supposed to have chosen Mr. Walker carefully to succeed him and carry out his plans.

Founder Giannini likewise denounced the dividend omission, the writedowns, the plans to sell the banks. As usual he spoke of "enemies" who wanted Bank of America for their own purposes. He also charged that when (last June) Transamerica's stock was made of no par value Mr. Walker had made use of proxies not granted to him for this purpose. In San Francisco a stockholders protective committee was formed, and while Founder Giannini denied he had started it he talked of throwing his "full force" behind it. But observers saw little chance of a proxy battle. While the protective committee claimed to have 2,000,000 shares (Mr. Giannini has 56,000) much of the stock is widely scattered and Chairman Walker (who has more than 375,000 shares) is thought to have consulted all the important stockholders before making the move.

The third change in management was a new chairman for Bank of America, California, which, with $1,161,000,000 in resources and 438 branches, looms as the fourth biggest bank in the U. S. The new chairman (who succeeds Edward James Nolan) is Lynn Porter Talley, known to his profession as "a hard-boiled banker," one who has never let enthusiasm replace collateral, Texas-born (in 1881), he became a teller in a Dallas bank in 1901. In 1911 he was cashier of Lumberman's National Bank (now Second National) of Houston. Four years later he was cashier in Federal Reserve Bank of Dallas, of which he was in 1925 made Governor. It is this position which portly, bespectacled, serious-faced Banker Talley resigns to bring "hardboiled banking" to Bank of America, probably the biggest creditor of the citizens of California.

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