Eastward Giannini?

In the 1920s an unhappy man named A. M. Johnson, head of National Life Insurance Co. of the U. S. A., bought for his company 11,050 shares of Continental Illinois Bank & Trust Co. In 1929 Continental sold as high as $1,020 a share. In 1933 a share of Continental could be bought for precisely $1,000 less; Mr. Johnson's National Life Insurance Co. was, not surprisingly, in receivership. General Robert E. Wood of Sears, Roebuck & Co., which sells about everything else, decided that this was the time to go into the life insurance business. He formed Hercules Life Insurance Co. and applied to the court for the contract to reinsure National Life's 112,000 policyholders. Along with the 112,000 policies, he got the 11,050 shares of Continental Illinois.

By last week Continental Illinois was selling at $55 and there had been several dividends paid in stock. Hercules Life was the second largest owner, with some 15,000 shares. This tempting asset has long been eyed hungrily by Amadeo Peter ("A. P.") Giannini of San Francisco, who is to the West's banking what the Rockies are to its topography. Mr. Giannini's Transamerica Corp., once the biggest bank holding company in the world, is now being transformed into an investment trust because A. P. doesn't have to wet his finger more than once to see which way the wind blows. A. P.'s Bank of America has 492 branches in California. His First National Bank of Oregon has 42, First National of Nevada has twelve. There is a Giannini banking chain starting in Washington.

But Transamerica never confined its holdings to banks. It has a portfolio of listed common stocks. And it controls Occidental Life Insurance Co. Indeed, insurance, a business which is not unlike banking in that it is largely concerned with the collection and investment of savings, has long been a prime Giannini interest. The Gianninis bid unsuccessfully for big Pacific Mutual when it got in a rness year and a half ago.

Last week Sears, Roebuck's Wood announced that Hercules Life had been sold to Occidental Life. The price: a secret, at least until approved by authorities. Hercules had been "doing all right," said General Wood, but "you can't sell life insurance through a catalogue."

Hercules has $131,000,000 worth of insurance in force. In Chicago, however, the first financial reaction to the sale was not as an insurance deal but as a banking deal. For La Salle Street was thinking of the 15,000 shares of Continental Bank stock in the Hercules treasury. And Mr. Giannini officially retreated behind the Great Divide when Transamerica sold Manhattan's old Bank of America to National City in 1931. By that deal Transamerica became National City's biggest stockholder, and in 1933 A. P. and his friend John Francis Neylan went on the National City board of directors, where they still sit. Thus the idea that A. P. was marching eastward again, a periodic rumor, was slightly absurd, because A. P. still had a heavy, if minority, stake in the East. His new stake in Chicago banking is even more of a minority stake because 15,000 of Continental represents only a 1% interest.

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