City's 72. The change in the lineup of citywide branch systems, after giving effect to the various mergers, would be as follows:

Neither the Chase nor the Manhattan had been active in adding branches during the postwar period. Apart from the acquisition of the Bronx County, the Manhattan added only five offices while the Chase acquires no branches at all during these years. The proposed Chase Manhattan merger was intended to join two relatively old, existing branch systems into a greater network without expending the time, money, and effort in establishing branches de novo.

2. Competition.-Overlapping of branches was minor among the two banks contemplating merger, so that there would be no substantial injury to competition through closing of officers. Chase branches were concentrated in the Borough of Manhattan, while offices of the Bank of Manhattan were mostly located in the other boroughs, as shown below.

1 Including 9 outlets added through the merger with the Bronx County Trust Co.

Duplication existed in only two locations, but here a number of other institutions were in active competition. In Brooklyn, such a location was at Borough Hall, and in the Bronx, at the business juncture of Third Avenue and 149th Street. In midtown and downtown Manhattan, where there was some proximity of offices, the situation was affected by the extremely heavy density of traffic and population, as well as the intense competition from other banks.

3. New loan limits.-Lending limits of the new institution would rise to almost $50 million, compared with $35 million for Chase alone and about $10 million for Manhattan-Bronx County. The combined Chase Manhattan's lending power to one borrower would expand by close to $15 million or 42 percent, about onethird of it due to the Chase's conversion to State charter. This last corporate change would permit the inclusion of $47 million of undivided profits in Chase's capital base for the purpose of computing lending limits.

4. Operating efficiency and earnings.-The Chase appeared to be definitely a low-cost operator, either compared with the Manhattan or the average institution of its size group, as shown in table 17. This fact, shown plainly in lower payroll expenses per dollar assets, could be attributed to (a) economies of scale and (b) the type of business carried on by the Chase.

Instructive here were the lower gross operating earning ratios of the Chase, in spite of a relatively satisfactory return on loans. A significant factory was the low yield on Governments, reflecting a very short average maturity of the Chase's portfolio. This conservatism appeared in striking contrast to the policies pursued by the Manhattan where the average yield on Governments was more than one-half a point higher. Little significance, on the other hand, could be attached to the Manhattan's astonishingly high return on other securities, since these holdings were very small and tax-exempt municipals were relatively unimportant.

After setting off earnings against expenses, the Chase brought a smaller share of its income dollar down to operating net than either the Manhattan or other banks of its size. Since this was due, however, chiefly to Chase's short-term position in Governments, it followed that security profits and losses would be smaller, resulting in a more stable net-profit experience over the years. TABLE 17.-Yields, earnings, and expenses, 1954

Asset base as of Dec. 31, 1954. Bank of Manhattan data are exclusive of Bronx County Trust Co. Computed for the 10 New York State-chartered institutions with deposits of $500 million or more. of the 10 are located in New York City. Average assets during year used as a base. Includes directors' fees.

Source: New York State Banking Department.

Nine

5. Wider service.-The activities of the Chase and the Manhattan would largely complement each other. Chase loans were chiefly to large-scale industry while Manhattan served mainly medium-size and small companies. In the consumer credit field, Chase's operations were limited compared with the Manhattan, whose widespread branch system was very active.

In the foreign banking field, Chase had far-flung contacts in contrast with Manhattan whose operations were limited. In correspondent relationships, the In the large-scale pension

Chase had a far greater system than the Manhattan. and corporate trust business, Chase was very active while Manhattan reached this field in only a minor way. Through its large bond department, Chase had built up its share of underwriting and trading in securities, a business of relatively small importance to the Manhattan.

THE MERGER BETWEEN BANKERS TRUST AND PUBLIC NATIONAL

Summary of findings

The following were the dominant conclusions regarding this merger. 1. The merger would raise Bankers Trust to a competitive level with other city-wide branch banking systems already in the field. The addition of 25 offices operated by Public National would give Bankers Trust a total of 42 outlets.

2. In practice no substantial competition existed between the branch locations of the two banks because there was virtually no overlapping of offices.

3. The increase in concentration would be minor, and the combined institution would maintain its rank as the sixth largest bank in New York City.

4. It was expected that operating efficiencies would result from combining these two institutions. Both banks were relatively high-cost operators.

5. Public National had succeeded in building up an unusually sizable business in time deposits, in spite of the relatively low rates it paid. Although Bankers Trust had a smaller proportion of its deposits in time accounts, it was relatively generous in interest rates on thrift accounts. Savings customers, as a result, were likely to benefit from the merger.

Detailed information

1. Branches.-Before the merger, Bankers Trust listed 17 banking offices; Public National, 25. The merger was expected to move Bankers Trust from sixth to fifth place among branch institutions, regardless of the Chase-Manhattan consolidation. The ranking of the larger Manhattan branch banks was as shown below.

Institution:

Manufacturers Trust..

Chemical-Corn

Chase Manhattan.

First National City.

Public National--

Number of
offices

A

112

98

96

72

25

17

Bankers Trust---.

The new Bankers Trust would be considerably above the more limited branch banks next in line, Hanover Bank and Irving Trust, which operated nine offices each.

2. Competition.--In the absence of overlapping between branches of the two institutions, and the expected continuation of most offices, it was not likely that competition would be materially lessened by the merger. In only 2 cases were branches of the 2 institutions located so close together as to be definitely competitive.

But even if these facilities were consolidated, there remained other banks competing in these two locations, so that no substantial lessening of competition seemed in prospect.

The complementary nature of the 2 branch systems was illustrated by the fact that Public National had 7 branches in Brooklyn as against 1 for Bankers Trust, and 9 branches in the Bronx as against 1 for Bankers Trust. The latter bank, on the other hand, had 7 branches in Queens where Public National had no offices in operation.

The intent of the merger was to increase competition among branch institutions. Bankers Trust had been actively trying to build up a branch system since 1950 so as to compete more effectively against rival institutions that had entered the field earlier. Thirteen of the sixteen operating branches of Bankers Trust had been added in the last 4 years, 12 being acquired through merger or purchase from other banks.

3. Size.-Bankers Trust ranked sixth among New York City banks, having 6.5 percent of total resources. This ranking would not be disturbed through the merger with Public National, even though the resources of the new bank would rise to 8.2 percent of the city total at the end of 1954.

4. Operating efficiency.-Public National, being a smaller bank, was a higher cost operator than Bankers Trust. Both institutions showed somewhat higher expenses relative to assets than banks of similar size and all banks in the New York City average.

1 Computed for 10 New York State chartered institutions with deposits over $500 million. Average assets during year used as base. Includes directors' fees.

While both banks showed relatively high expenses, they also revealed relatively high earnings on assets-the two could well be associated, as for example in the operation of an active consumer loan department.

5. Time deposits.-The Public National had been able to attract a relatively high proportion of time deposits, with over 16 percent of all private deposits in time accounts. Bankers Trust reported a ratio of 8 percent at year-end 1954 while all city banks had about 11 percent on the average.

The success of Public National with time deposits seemed remarkable because its maximum interest rate was only 1 percent, declining with size of account until no interest was paid on any excess above $25,000. Bankers Trust, on the other hand, started with 2 percent on private time deposits, the rate dropping to onehalf percent after $2,500 until $25,000 was reached.

Thus, it could be expected that the time depositors of Public National would see their interest payments doubled after the merger.

Concluding remarks

It should be emphasized that a great many facets of banking operations and balance sheet information were analyzed in making a decision on these two mergers. Particularly investigated were such questions as capital structure, asset composition, and other accounting data bearing on the soundness of the individual institutions before the merger and the combined institution after the merger had been completed. The mergers were studied closely in their effect on management, on the employees, and on stockholders. It would take this statement too far to go into this great volume of detail which nevertheless represented a big part of the work of the Department prior to giving its approval. It should also be stated that a great deal of information was requested from and furnished by the applicant institutions, going into considerable detail about their internal operations.

The Department feels that the present statement is as thorough, and, it hopes, enlightening, as masses of figures and statistics can be made. It is further hoped that the statement will fulfill its purpose of assisting the chairman and the members of the subcommittee in the arduous task on which they have embarked.

The CHAIRMAN. The next witness is Mr. Andrew Biemiller, former distinguished member of the House, who is speaking for the American Federation of Labor.

STATEMENT OF HON. ANDREW J. BIEMILLER, MEMBER, NATIONAL LEGISLATIVE COMMITTEE, ACCOMPANIED BY WILLIAM S. TYSON, OF WOLL & TYSON, GENERAL COUNSEL, AMERICAN FEDERATION OF LABOR

Mr. BIEMILLER. For the record my name is Andrew J. Biemiller. I am a member of the national legislative committee of the American Federation of Labor and appear in behalf of that organization. My office is in the A. F. of L. Building, 901 Massachusetts Avenue, Washington, D. C.

Mr. Chairman, you asked President George Meany to present the views of our organization on the alleged need for extending applica

tion of the antitrust laws, to labor organizations. President Meany wrote you he regretted he would be in Europe attending international labor meetings during the time your committee would be holding hearings and designated me to present the views of the American Federation of Labor. I am accompanied by Mr. William Tyson of the firm of Woll & Tyson, general counsel for the American Federation of Labor.

This subcommittee has been holding hearings on the report of the Attorney General's National Committee To Study Antitrust Laws. This report deals with the application, enforcement, and administration of a number of congressional enactments, starting back with the Sherman Act of 1890. This is a very important current issue which deserves serious attention from the Congress.

This committee's report deals briefly with the extent to which the antitrust laws have been applied to union organizations and to union activities. For the most part, this section of the committee's report confines itself to an analysis of the present situation in this field, with a guide to the ways in which it believes existing antitrust laws can be applied in special cases to union activities.

The committee does make some general comments regarding union activities, and it broadly suggests appropriate legislation, but in no way does it state that antitrust laws should be extended to govern union activities and it does not examine or state whether, in fact, there appears to be an actual need for congressional action.

Nevertheless, the committee report seems to have served as a signal for a number of antiunion employers and employer associations, such as, the United States Chamber of Commerce and the National Association of Manufacturers, to raise once again the battle cry, "Put unions under the antitrust laws."

The argument is a familiar one. It states that antitrust laws now apply only to business while unrestrained union activity is permitted. Unions have grown so big, the argument runs, that they constitute a danger and a threat to the success of our free-enterprise system. This is the type of argument which has now been made for well over half a century. Although it has a very plausible ring, it is as phony as a $3 bill.

This argument relies on a number of basic misconceptions. I would like to take the time to explain to this committee the fundamental facts that make it clear that it would neither be necessary nor desirable for Congress to take particular action to bring unions under the antitrust laws.

1. The call for application of antitrust laws to labor unions ignores the bitter pages in American history reflecting use of antitrust legislation to suppress legitimate union activities.

In 1890, at the time of the passage of the Sherman Antitrust Act, the American Federation of Labor was 9 years old. American trade unions were just beginning to assume a form adequate to represent the laboring people of America.

Congressional debate over this legislation reflected clearly the intent to limit the abuses of big business combinations. There was no reference to unions in the act. House debates did not refer to unions at all. All legislators who supported labor voted for the act.

Yet, in 1893, the second attempt to apply the law involved a group of workers. Blindell v. Hagan (54 F. 40, 1893). During the same

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