# Appendix — United States v. Marine Bancorporation, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0339%3A02 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1974 - **Citation:** 418 U.S. 602 ## Text Supreme Gost of the Batted State OCTOBER TERM, 1973 No. 73-38 UNITED STATES OF AMERICA, Appellant, —.— _ MARINE BAN CORPORATION, THE NATIONAL BANK OF COMMERCE OF SEATTLE, WASHINGTON TRUST BANK, AND JAMES E. SMITH, COMPTROLLER OF THE CURRENCY ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON * INDEX Docket Entries Complaint by the United States filed October 22, 1971 9 Defendants’ Answer to the Complaint filed November 22, 1971 Intervenor’s Answer to the Complaint filed December 8, 1971.. Defendants’ Answers to Plaintiff’s Interrogatories: No. 5(A)(2), (3) 7 AA A No. 23 No. 80 No. 38 No. 34 No. 40 No. 48 No. 53 832888888 * 2 ii INDEX Page Plaintiff's Answers to Intervenor’s Interrogatories (Set. No. 1): BING SIN seascape essence 91 No. 15 91 No. 16 92 —B—AT AAA 92 Deposition of Robert F. Buck taken August 16, 1972 93 Buck Deposition Exhibit 1... 1514 Buck Deposition Exhibit ½· 1516 Buck Deposition Exhibit 3“ 1576 Buck Deposition Exhibit 4* 1407 Buck Deposition Exhibit 5 132 Buck Deposition Exhibit 6* 1358 Buck Deposition Exhibit 7 136 ' Deposition of Maxwell Carlson taken August 16, 1972 137 | Carlson Deposition Exhibit 1 152 Carlson Deposition Exhibit 2* 1273 Carlson Deposition Exhibit 3 154 Deposition of Ralph J. Stowell taken August 16, 1972 157 Stowell Deposition Exhibit 1“ 1432 Stowell Deposition Exhibit 2“ 1433 Stowell Deposition Exhibit 3“ 1393 Stowell Deposition Exhibit 4“ 1284 Deposition of Frank A. Abersfeller taken August 17, 1972... 195 | Abersfeller Deposition Exhibit 1 236 Abersfeller Deposition Exhibit 2* 1391 Abersfeller Deposition Exhibit 3 239 Abersfeller Deposition Exhibit 4 240 Abersfeller Deposition Exhibit 5 1279 Deposition of Andrew Price, Jr. taken August 17, 1972 242 Price Deposition Exhibit 1-1* 1430 Price Deposition Exhibit 1-2* 1429 Price Deposition Exhibit 1-3* 1428 Price Deposition Exhibit 144·l . 1427 Price Deposition Exhibit 1-5* 1426 Price Deposition Exhibit 1-6* 1425 Price Deposition Exhibit 1-7* 1424 Price Deposition Exhibit 1-8* ... 1423 Price Deposition Exhibit 1-ůůᷣ᷑ꝛ⸗:m 1422 Price Deposition Exhibit 1-10* 1421 Price Deposition Exhibit 1-111 1420 * Deposition Exhibits which correspond to Government Exhibits are reproduced in the category of Government Exhibits. INDEX iii Page Deposition of Andrew Price, Jr. taken August 17, 1972—Con- tinued Price Deposition Exhibit 1-12* 1419 Price Deposition Exhibit 1-13* 1418 Price Deposition Exhibit 1-14* 1417 Price Deposition Exhibit 1-15* 1416 Price Deposition Exhibit 1-16* 1415 Price Deposition Exhibit 1-17* ; 1414 Price Deposition Exhibit 1-18 327 Price Deposition Exhibit 1-19“ 14¹3 Price Deposition Exhibit 1-20“ 1412 Price Deposition Exhibit 1-21“ 1411 Price Deposition Exhibit 1-22“ 1410 Price Deposition Exhibit 1-23* 1409 Price Deposition Exhibit 1-24* ; 1406 Price Deposition Exhibit 1-25* 1404 Price Deposition Exhibit 1-26* ........... 1403 Price Deposition Exhibit 1-27“ 1402 Price Deposition Exhibit 1-28 * 1401 Price Deposition Exhibit 1-29 * 1400 Price Deposition Exhibit 1-30 ˙ 1399 Price Deposition Exhibit 1-31“ 1398 Price Deposition Exhibit 1-32* 1397 Price Deposition Exhibit 1-33 ˙* 1396 Price Deposition Exhibit 1-34 1395 Price Deposition Exhibit 1-35“ 1393 Price Deposition Exhibit 1-36* 1394 Price Deposition Exhibit 1-37“ 1392 Price Deposition Exhibit 1-38* 1391 Price Deposition Exhibit 1-39“ 1389 Price Deposition Exhibit 1-40“ 1390 Price Deposition Exhibit 2“ 1433 Price Deposition Exhibit 3“ 1432 Price Deposition Exhibit 4“ 1593 Price Deposition Exhibit 5“ 1650 Price Deposition Exhibit 6“ 1514 Price Deposition Exhibit 77“ 1573 z „ OB ssid oti rte 329 Price Deposition Exhibit 9* . 1856 Price Deposition Exhibit 10“ 1358 Price Deposition Exhibit 11* 1357 Deposition of Dean W. Loney taken August 18, 1972 331 Loney Deposition Exhibit 1* 5 1514 Loney Deposition Exhibit 2“ 1573 Pretrial Order and attached Exhibits A through H, filed January 8, 1973 * Deposition Exhibits which correspond to Government Exhibits are reproduced in the category of Government Exhibits. iv INDEX Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 8, 1978: Appearances a Transcript of the proceedings Testimony of Robert E. Smith —direct—[50] —voir dire—[57] further direct—[61] Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 9, 1973: Appearan ces Testimony of Robert E. Smith (resumed) —direct—[117] — — Testimony of Warren P. Cooley direct [1931 —CTOSS— [209 )J Testimony of Michael Marston direct [2151 —cross—[264] Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 10, 1973: Appearances r Testimony of Charles F. Haywood direct [3291727 Testimony of Maxwell Carlson direct [459 — Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 11, 1973: Appearances Testimony of Joseph C. ee —direct—[485] —cross—[555] —redirect—[574] .. Page 596 INDEX v Page Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 11, 1973: Continued Testimony of Richard G. Bennett —direct—[622] 804 —cross—[633] 810 redirect [645] 818 Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 12, 1973: Appearances 820 Testimony of Betty Bruckner —direct—[654] 822 —cross—[656] 824 —redirect—[662] 828 Testimony of William F. Barrett —direct—[663] 828 —cross—[672] 834 I Testimony of Leroy Johnson —direct—[684] 841 —cross—[687] 843 _ Testimony of Maxwell Carlson (resumed) —direct—[692] 846 —eross—[718——f———.———.——g̈k.—————————— 860 redirect [749] 881 Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 15, 1973: Appearances . 883 Testimony of Raymond A. Hanson —direct—[756] 884 —cross—([761] 887 —redirect—[773] 893 Testimony of Neil Degerstrom —direct—[774] 894 —cross—[779] — 897 Testimony of E.D. McCarthy —direct—[780] 897 —cross—[785] 900 —redirect—[788] ‘ 902 Testimony of Arden Jacklin —direct—[789] 903 —cross—[793] 905 redirect [7977 U en 908 Testimony of R. Neil Williams — direct [798] — 908 —cross—[802] 911 * vi INDEX Page Transcript of proceedings held before the Hon.) William N. Goodwin, United States District Judge for the Western District of Washington, on January 15, 1973:—Continued Testimony of Leonard Maxey C —— ——ůůů 912 —cross—[805] 913 —redirect—[807] = 914 Testimony of Merton L. Howard direct [808] 915 —cross—[811] 917 Testimony of Philip H. Stanton —direct—[814] 918 —cross—[846] 937 —redirect—[861] 945 Testimony of T. Robert Faragher —direct—[867] 948 —cross—[911] 974 Transcript of proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 16, 1973: Appearances — 1007 Testimony of H. Joe Selby rn . 1008 —cross—[979] 1013 —redirect—[1018] 1036 Testimony of Nevins D. Baxter —direct—[1031] 1043 --cross—[1066] — 1063 Testimony of Robert K. Hurni direct [1132] 1102 Transcript of procedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 17, 1973: Appearances 1115 Transcript of the proceedings 1116 Government Exhibits: GX A-1 1148 GX A-2 1149 GX A-3 1150 GX A-4 ; — 1152 GX A-5 1153 GX A- 1154 GX A- 7 1155 c “—Q—Q—Q—Q—U—U—U—U—A ———— — —'— 1156 INDEX ix Page GX H-13 1388 GX H-14 1886 GX H-15 1341 GX I-1-a 1346 GX 1-1-5 | 1347 GX I-l< 1848 GX I-2 1349 GX 1 1350 GX 14. | 1353 GX I-4-b 1854 GX I 4c &. 1855 GX I-44 1856 GX 14. 1857 GX 1-6 1858 GX 1-8-4 1862 GX 1-65 | 1363 GX I-7 1864 GX I-8-a 1365 GX I-8-b 1366 GX I-9-a 1367 GX I-9-b 1368 GX I-10-0 1870 G 1-10 1871 GX I-ll-a 1872 GX I-11-b 1878 GX I-ll< 1374 GX 1-11-4 1875 GX 1-11. 1876 GX I-11-f 1877 GX-J-1 1378 GX J-2 1879 GX J-8 1380 GX J-4 1381 GX J+ 1882 GX J-7 1383 GX J-8 1884 6X J-9 1885 GX J io i 1386 GX 4-11 1387 GX J-12 1388 GX 4.18 1889 GX J-14 1390 GX J. is 1891 GX 4.16 1892 GX 717 1398 GX J-18 1894 GX J-19 1895 CCCP ² A 1396 GX J-21 1897 GX J-22 1898 GX J-23 . GX J-24 GX J-25 GX J-26 GX J-27 GX J-28 GX J-29 GX J-30 GX J-31 GX J-32 GX J-33 GX J-34 GX J-35 GX J-36 GX J-37 GX J-38 GX J-39 GX J-40 GX J-41 GX J-42 GX J-43 GX J-44 GX J-45 GX J-46 GX J-47 GX J-48 Gx J-49 GX J-50 GX J-51 GX J-52 GX J-53 GX J-54 GX K-1 GX K-2 GX K-3 GX K-4 GX K-5 GX K- GX K-7-a GX K-7-b GX K-7-< GX K- GX K-9 GX K-10 GX K-ll-a GX R- 11 GX K-12 GX K-13 GX K-14 xii GX K-48-b GX K-49-a GX K-49-b GX K-50 INDEX GX K-5l-a GX K-61-b GX K-5l< GX K-51-d GX K-52 GX K-53-a GX K-53-b GX K-54-a GX K-54-b GX K-55-a GX K-55-b GX K-55-c GX K-56 GX K-57-a GX K-57-b GX K-58 GX K-59 GX K-60 GX K-61 GX K-62 GX K-63 GX K-64 GX K-65 GX K-66 GX K-67 GX K-68 GX K-69 GX K-70 GX K-71 ... GX K-72-a GX K-72-b GX K-72-b-1 GX K-73 GX K-74-a GX K-74-b GX K-74-c GX K-75 GX K-76 GX K-77 GX K-78 GX K-79-a GX K-79-b GX K-79-c GX K-80 1541 1547 1551 1570 15783 1576 1579 1591 1592 1593 1607 1608 1612 1613 1615 1616 1617 1618 1634 1650 1666 GX K-81 GX K-82 1668 GX K-83 1669 GX K-84-a 1678 GX K-84-b 1679 GX K-85-a 1680 GX K-85-b 1681 GX K-85-c 1682 GX K-86 1683 GX K-87-a 1684 GX K-87-b 1685 GX K-88 1686 GX K-89 1688 GX K-90 1690 GX K-91 1691 GX K-92 1692 GX K-93 1694 GX K-94 1695 GX LI 1697 c 1747 GX M-1 1753 GX M- 2 1758 Gx N 1769 GX O-1 1820 Gx 0-2 1821 Gx 0-3 1822 Gx 0-4 1823 GX 0-5 . 1824 Gx 0-6 1825 GX 0-7 1826 Gx 0-8 1827 Gx 0-9 1828 GX O-11 1829 GX 0-19 1830 GX 0-20 1831 Defense Exhibits : Dx 1 1832 DX 2 1833 Dx 3 1834 DX 4 1835 DX 5 1836 DX 6 1837 DR 7 9 1838 DX 9 1839 DX 10* 1840 DX 11 1841 „Colors are not shown on this map in the Appendix. They are shown on the map in the record certified to this Court. xiv INDEX DX 12 DX 18 DX 14 DX 15 DX 16 DX 17 DX 18 DX 19 aE a RENE I eNO UE DX 21 DX 22 DX 23 DX 24 DX 25 DX 26 8 DX 27 ae JJ... ͤ v eee Dx 29 eee eee J...... —„T DX 31 : DX 32 ...... 00000000 J...... cece ets DX 35 DX 36 DX. 37 DX 38 DX 39 ta eee 8 DX 40 DX 41 ET aE een DX 43 DX 44 DX 45 DX 46 7 UN a eae ee ...... M Dx 49 — DX 50 DX 51 DX 52 Intervenor’s Exhibits: Exhibit L to Intervenor’s Exhibit 5000 Exhibit (1) to Intervenor’s Exhibit 500 Transcript of Proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on January 31, 1973 at Tacoma, Washington 1847 1849 1851 1857 1859 1861 1862 1863 1864 1865 1866 1867 1868 1870 1871 1873 1875 1877 1879 1881 1883 1891 1899 1900 1901 1902 1904 1905 1908 1911 1912 1913 1914 1915 1916 1918 1920 INDEX Findings of Fact and Conclusions of Law filed January 31, 1973 Transcript of Proceedings held before the Hon. William N. Goodwin, United States District Judge for the Western District of Washington, on February 22, 1973 at Las Vegas, Nevada Notice of Appeal to the Supreme Court by the United States dated March 30, 1978 Order of the Supreme Court noting probable jurisdiction, dated October 15, 1973 1932 1953 1970 — 555 [193] AFTERNOON SESSION 1:30 o’clock p.m. THE COURT: All right, you may proceed. MR. VERVEER: Your Honor, at this time we would like to call Mr. Warren P. Cooley as our next witness. WARREN P. COOLEY, called as a witness on behalf of Plaintiff, being first duly sworn, was examined and testified as follows: DIRECT EXAMINATION BY MR. VERVEER: Q Would you please state your name? | A Warren P. Cooley. I live at 714 West Sandaval Place, Thousand Oaks, California. MR. VERVEER: Your Honor, we have a resume of Mr. Cooley’s professional qualifications. THE COURT: I am reading them. MR. VERVEER: We would like to have the resume inserted into the record at this time, your Honor. (Resumé here) THE COURT: All right. Q (By Mr. Verveer) For whom do you work? A Economic Research Associates, 1100 Glenden Ave- nue, Los Angeles, California. [194] Q What is Economies Research Associates? A Economic Research Associates is a for-profit man- agement consulting organization which conducts market and economic feasibility studies in such areas as recrea- tion, tourism, land use and real estate economics, eco- nomic analysis for communities, and corporate planning. Q What are your responsibilities with ERA? A My staff title is senior associate, and I work in two basic areas, in the area of recreation, tourism, and economics, for which I am directly responsible for winter resort studies that we get involved in, and also public recreation areas and facility studies in which we are 556 involved. In addition, I do a bulk of the work in world fairs and international expositions, and I am also the manager of comprehensive health planning, for Eco- nomics Research Associates. Q What is recreation and tourism economics? A Well, recreation and tourism economics in our firm deals with market and economie feasibility studies for basically leisure-oriented attractions and industries, and it is broken down into sub categories, world affairs and expositions would be included in that general heading, winter resort areas, public parks and recreation fa- cilities, public sporting stadiums and [195] arenas, those are basically the areas that are involved. Does your firm have any background in preparing studies and making projections for international exposi- tions and world fairs? A Yes, since 1960 we have prepared studies for all or major parts of each of the world’s fairs that have been held in North America. For the Century 21 Fair in Seattle we were the market and economic consultant. Then for both the New York World’s Fair in 1964 and 1965 and Expo ’67 in Montreal in 1967, we conducted studies for the monorail transportation system. We were the market and economic consultants for HemisFair in San Antonio in 1968, and we were one of the market and economic consultants for the proposed Philadelphia bicentennial celebration which was to take place in 1976, and we have also been the market and economic consult- ant for the Expo 74 in Spokane. [196] Q Have you ever worked in any of these studies? A Yes, I was involved as part of the team that did the work, some of the work for the bicentennial exposition which was to be held in Philadelphia, responsible for the work done on the 1974 Spokane Exposition. Q Are you the author of the report on the Spokane Exposition in 1974? A Les, I was. Q Is Government Exhibit N for identification that report? A Yes, it is. 557 Q What is the title of the report and when was it formally presented? : A Well, it was Plan and—Plan and Feasibility of Spokane Ecology Exposition. It was formally presented on September 16, 1970. Q Your Honor, I think that this would be an ap- propriate time for any voir dire. THE COURT: Do you have any voir dire, Mr. Moen? MR. MOEN: No voir dire at this time. THE COURT: All right, we will wait until cross- examination, is that right, Mr. Moen? MR. MOEN: All right. THE COURT: Was this report presented to Mr. Lindsay? THE WITNESS: Yes, sir. [197] THE COURT: Do you know who Mr. Lindsay is, counsel? MR. VERVEER: No, sir, I don’t. THE COURT: Well, he’s in the banking business at Spokane, a competitor of the banks over there now. He is I think in the Lincoln Building, isn’t it, Lincoln Savings & Loan. MR. VERVEER: Is he a mutual savings banker? THE COURT: Right next to the courthouse. MR. VERVEER: Well, in that case we would con- tend he is not a competitor, your Honor. THE COURT: All right. MR. VERVEER: What is EXPO 74? THE WITNESS: EXPO 74 is a world exposition to be held in Spokane in 1974 from May 1st through October the 81st and it is a concept which incorporates educa- tion and recreation into one attraction which has a pro- jected entertainment appeal to 4.6 million persons. ni 3 Mr. Verveer) Where will EXPO 74 be lo- ea A The site is in the area which includes Havermale and Crystal Island and downtown Spokane and the Spo- kane River as well as the north and south banks of the river. It extends from approximately Trent to Division * and the site itself, excluding parking, roughly is acres. 558 [198]. Q What would be the major attractions of the exposition? A e major attractions will be exhibits which will tell a story around an environmental theme and there will be rides and amusements and on-site entertainment as well as planned entertainment to take place in the area or in areas throughout the community, and visitors’ services and facilities such as beverage outlets, merchan- dise spots and so forth. Q Who are the major exhibitors at the Fair? A At this point, the international exhibitors who plan to participate are the Soviet Union, Japan, Iran, Korea, Mexico and Canada. As for domestice industrial parties, I understand that over the weekend, it was announced that Ford will participate in Expo 74, and I understand that negotiations are under way are other domestic ex- hibitors. THE COURT: Well, would General Motors, do you think, come in now that Ford has come in? THE WITNESS: I would hope so. THE COURT: Very well. Q (By Mr. Verveer) Describe how EXPO 74 has come about. A Well, in the spring of 1970 there was to be a regional fair and the group that we had did study for it was the Spokane Centennial and they had a number of goals and some of the goals—one of them was to sponsor [199] and to hold events which would have to do with the redevelopment of the site which was previously described, which would be a reason for the removing of the railroads and redeveloping that site. So we were retained to conduct a study as to this regional fair idea with this goal that they had and I was assigned the task to study this. And early in this one of our con- clusions was that the regional fair concept really wasn’t sufficient in scope that would attract the total facilities to be developed to support or to achieve a greater de- velopment of that island area. So our recommendation was that a World Fair be held in Spokane to achieve what we thought would be the redevelopment of that island area there. 559 THE COURT: The island area that you’re speaking of, that is where the old Great Northern depot was? THE WITNESS: That was the depot and the tracks. THE COURT: And then since AMTRAC came in and eliminated competition they left Spokane with that unsightly group of railroad tracks there, is that right? THE WITNESS: That’s right. {200} THE COURT: Go ahead, you were talking about a concept that you first decided that it wouldn’t —the overall plan wouldn’t attract enough people because it wasn’t broad enough in scope. Isn’t that what you were saying? THE WITNESS: Our recommendation was to expand _ the scope from a regional fair to a world’s fair. That was adopted by the Board of Directors of the Spokane Centennial Commission and that specific concept is the thrust of the Government Exhibit N, which was previ- ously referred to. Q (By Mr. Verveer) What did your study, Govern- ment Exhibit N for identification, consist of? A Well, it consists of six basic parts, the first is a description in loose terms of the concept which was— this is to be—was proposed and to be an environmental oriented exposition. Based on this concept, the market analysis was undertaken and attendance projected. The basis of this analysis and attendance projection, utilized in defining the market was the vast amount of previous experience we have of the operating experience of other expositions and similar events. We relied on census population figures for current population, state projections for population projections, tourism studies, which were done by Battelle Northwest [201] and the State of Washington. Then derived from these attend- ance projections were what we call project planning para- meters, which are basically sizing criteria telling you how many people will be there on design day—again a term we have devised, which is the day that you design all the facilities in the exposition for, the number of people that will do different types of things so that you . can begin to form a development plan. From that we did — prepare a development program and prepare preliminary cost projections for the exposition. Another portion of the study was to project revenues and expenses during the construction and operation of the exposition. A further item was an evaluation of the economic impact and residual benefits of the Exposition on the Spokane area, and then we did zero in on one residual benefit and looked at it in some detail, which was what impact would a convention center have on the economy of the Spokane area. What are the anticipated major direct economic benefits to Spokane of Expo 74? A The direct benefits measured were basically three in nature. The first one would be new jobs and payroll, and we defined payroll because we are interested in pre- cisely what this is likely to do in the local [202] econ- omy. So we further refined new payroll to payroll ex- pended in the area, new payroll expended in the Spokane area. So we eliminated those people who would live there during the week and then drive home during the week- ends. We didn’t count on them spending money on the weekends when they weren’t there, for example. Our projection is that the total expenditures during construction and operation will generate 1300 new jobs and new income expended in the local economy of about 13.5 million dollars. In addition, there will be materials, supplies, and serv- ices that will be required or purchased during the con- struction and operation of the Exposition projected to amount to another 14.3 million dollars. And a third item would be off-site visitor expenditures and these are expenditures which would be made in the local economy by visitors to the Exposition that wouldn’t have been made had the Exposition not been there. These are the off-site expenditures in nature dealing with off-site ac- commodations, food and beverage off-site, miscellaneous retail purchases off site, and we projected this at 10 million dollars. So the total direct economic benefit that we project for being derived from the Exposition is [203] about 37.8 million dollars. There are a lot of areas in off-site 560 — — 561 visitor expenditures, for example, that we didn’t attempt to project—the amount of money that would be expended for gasoline by those people who would be in the area. So it is conservative to the extent that we didn’t evaluate those factors. Q Would these expenditures have any further effect on the local economy? A Yes, it is our projection, and I think conservatively so, that that money is going to turn over three times in the economy before it finally exits and goes to outlying areas and it doesn’t have any effect. There is the origi- nal expenditure by the visitor for the services that he buys, that’s a turnover of one, then that person he buys services from has to pay his help and buy services and supplies and that money turns over, so we feel that a turnover rate of three is conservative, but that is the rate that was applied to the direct economic impact to —applying that to the direct economic impact, and we come up with a total economic impact of approximately 112 million dollars in the local economy. Are any residual benefits anticipated? A The residual benefits again are three in nature. There is the first benefit, that is the redevelopment of [204] the island areas. The Exposition site is in direct conformance with the Spokane River front plan, which is a plan to redevelop the river for a ten or twelve mile stretch, the heart of which exists in downtown Spokane. So that would be accomplished through the Exposition. The State of Washington is building a seven and a half million dollar performing arts convention center complex, which is their contribution to the Exposition, and that will remain and have a long-term lasting impact on the community. Thirdly, the US government has approved in concept and appropriated funds for the development of an eleven and a half million dollar pavilion of their own, and after the Exposition, this pavilion will be converted to a tour- ism center, ecology education center, outdoor recreation center and these types of uses. So those are the three basic residual benefits that would be derived, quantitative benefits that would be derived. Q Do any of these residual benefits have any impor- tant economic applications? A They all do, I am sure. The only one we measured in our report was the convention center, and we projected that the existence of the convention center [205] will enable Spokane to attract an additional 40 conventions a year from what they are currently attracting, and the effect—the direct economic impact of this will be new money into the community of about 1.8 million dollars a year, and when you apply the multiplier of three again, you come up with a total economic impact of 5.4 million dollars. Q Has there been any work on a supplemental or an amended study since it was initially presented? A We have continued since our original study in 1970 to work for the Exposition. Subsequent to the original feasibility study, we did an in-depth financial analysis updated financial analysis, and we incorporated some new developments, cost figures which had been prepared through a master plan that they had done subsequent to our original study. And then in January of 1972, it would have heen a year ago now, we were placed on a monthly retainer by the Exposition to function as a day- to-day market and economic consultant. So we have had a continuing relationship with them since the original study and I have continued to be that person involved and responsible for this work, and we did—an interest- ing note, we did recently undertake an attendance update. We had to look at the Exposition in rather loose terms initially because it wasn’t well [206] defined in terms of what it would be. Well now, now it is very well defined and it will take place, so we undertook an attendance update in which we increased our potential attendance projections from 4.6 to 5.1 million. However, because of the physical capacity in Spokane of hotel and motel rooms and projecting the number of rooms that are likely to be built by 1974, it appears that the capacity of the area won’t enable the Exposition to attract any more than about 4.6 million. So we are still holding to that origi- nal projection. [207] Q How do present expenditures coincide with the expenditures which you have projected in your study? A In our original study we projected that there would be roughly forty million dollars expended for the Expo- sition. To this point in time our definite commitments of approximately thirty-five million dollars which have been made, which are composed of seven and a half mil- lion dollars from the State of Washington, eleven and a half million dollars from the Federal Government, 5.5 million dollars from the City of Spokane. The EXPO 74 Corporation will spend at least seven and a half million dollars in the Exposition. There is a current request in the Washington legislature for four million more dollars, and I won’t project how that will come out. THE COURT: You are a diplomat. A (Continuing) Add all of those, without the new request from the Washington legislature, there is 32 million dollars definitely committed, and that doesn’t ac- count for independent exhibit complexes which would be constructed, the ride and amusement complexes are not included in there, so it appears that our 40 million dollar projection will be achieved in terms of expenditure for the Exposition, physical expenditure. Where in your study can your conclusions be found, the [208] conclusion on the direct economic benefits? A All of Section 7 deals with the economic benefits that we have talked about, that I have talked about with you today, and they are summarized on page 17. Now the convention center— THE COURT: When you say Section 7 do you mean that numeral 2, Section 7? THE WITNESS: Turn to Roman Numeral VII. THE COURT: All right, I see. THE WITNESS: And then -17. And then in the back of the report there is an appendix Section A which deals with the convention center, and Table A-8 sum- marizes the projected economic impact of the convention center. 7 564 THE COURT: On that Section VII-17 which is titled New Money Brought Into the Economy? THE WITNESS: Yes. THE COURT: All right, go ahead. Q (By Mr, Verveer) What has been your firm’s experience in/preparing its projections in events similar to EXPO 74 as to the actual attendance and gross reve- nue figures? A Fortunately, a high percentage of the time we have been conservative. We attempt to be, whenever we have a choice to make we attempt to be on the conservative side, and I think that the fact that we have stayed in business [209] as long as we have and have continued to be retained for these events and attractions is a good track record that we have done that. For example, Century 21, we were only two or three per cent off on our attendance projections, and we were 30% low in our gross revenue projections. In EXPO 67, we were about 30% low on attendance projections and only 9% off on revenue projections, and HemisFair, we were 1% high on the revenue projections. So I guess if you look at what is a good figure to use, if you look at all of the recreation attractions that we have done studies for, as to attendance and gross revenues, there is a range of 10 to 15 per cent that we are typically on the con- servative side. MR. VERVEER: I have no further questions. THE COURT: Do you have any questions of this witness, Mr. Moen? MR. MOEN: Yes, I think I might ask him a few questions. CROSS-EXAMINATION BY MR. MOEN: Q Mr. Cooley, over what period of time will this money be spent? A Well, it was projected in the original study that it [210] would be expended over basically a three-year time period, four-year time period, 71, 72, 73, and ’74. Under 565 no circumstance will it be expended after, will the eco- nomic impact that I indicated previously be expended beyond 1974, that is when the Exposition ends, with the exception of the convention center, which has a long term residual benefit of 5.5 million dollars. Q In your study did you make any projection with respect to population growth? A Yes. THE COURT: I was going to ask that. Go ahead. Q (By Mr. Moen) And what did you discover? A Well, we divide our market areas in terms of zero to 50-mile radius, 51 to 100 mile radius, and categorized it into those kind of market areas, and I would have to refer,—we projected a growth in all instances, and the Spokane area itself, projected growth was for a conserva- tive study growth rate. Q Did you make any studies with respect to unem- ployment existing in Spokane? ö A That was really not a major part of our study, however we did look at unemployment when we were evaluating the new job potential in the area. Q What is the economic base of Spokane? A What is the economic base of Spokane? [211] Q Yes. A It would be conjecture on my part. Q Will EXPO 74 add anything to the economic base of Spokane? A Well, it certainly adds new money into the econ- omy, which filters down into the tourism and services industry. Isn't that a very temporary sort of thing? A That is true, except I go back to the long term impact, those activities, those facilities which create a long term impact. Q What type of an impact is going to be created over the long term growth? A Expenditures, speaking directly for the convention center, the expenditures for overnight accommodations— Q_ Isn’t it mostly a matter of developing the motels? A No, there would not need to be new motels. 566 Q Wouldn’t that be a natural outgrowth of EXPO 74? A I will say that that is directly dependent upon a long term load that could be supported in the area. Q Isn’t the whole purpose of the thing mainly a tour- ist attraction? A Define what you mean by tourist attraction. Q Well, I mean drawing power, a drawing card for people to come in and visit Spokane? [2121 A Well, the basis of support for the Exposition itself, more than 50% of the vistors will be residents who reside within roughly a 200-mile radius of the Expo- sition. About 60% of the total vistor days will be gen- erated by those who reside there. It does exist, one 6f the benefits will be an attraction to the area for a six- month time period of vistors who would not normally come to that particular area. But the benefit in terms of the Exposition itself, I did not quantify that as a long term benefit, I don’t envision that as a long term benefit, as I envision the redevelopment activities which have taken place and the residual benefits added to the com- munity as being the long term benefits of the Exposition. Q Isn’t the long term benefit the beautification of oe Isn’t it to make it a more pleasant place to ve A Well, I would guess that that would be one of the things, yes. Q Have you made a study as to what the effect would be on the banking industry? [2131 A No. Q Are you familiar with the report filed by the Fed- eral Deposit Insurance Corporation for 1966, 1968 and 1970 showing the growth and total commercial bank de- posits in the San Antonio, Texas area? A No. I have no further questions. a 3 COURT: Mr. Hartman, do you have any ques- ons MR. HARTMAN: I have a couple of questions, your Honor. 567 THE COURT: All right, I don’t want you to under- rate him. I think you know what my feelings are. I think that he has been a fine witness, giving good an- swers as to what would happen to Spokane. I would like to see Spokane do real well as a result of this. I don’t want you to tear him down. MR. HARTMAN: Very well, your Honor. Well, what did you receive your Bachelor of Science degree in? THE WITNESS: Bachelor of Science degree was one specializing in recreation and education and— Q How about economics, did you have any courses in economics? 1214 A I had courses in ecomonics but no specializa- tion in economics. Q Statistical work, have you had any statistical work? A Graduate work in statistics. Q What was that in statistics? A Well, in park administration programs. Q What kind of work would be involved in park ad- ministration or recreational administration programs? A Very typical standard statistical courses and analy- sis from the standpoint of administration and all of those other theoretical things that we don’t use in our business anyway. These processes of business judgment or ori- ented type of business we don’t use. These and other theories about economics and those types of things, per- centiles and theories. THE COURT: Well, I think you’ve accomplished a great deal of things. You’d better quit. MR. HARTMAN: Yes. The only thing is, your Honor, I would have objection to this document going into evidence, Plaintiff’s Exhibit No. N. THE COURT: Well, it really may not be pertinent, but I'd like to read it so I am going to admit it. You understand that I am assigned both to the Western and the Eastern Districts of Washington? MR. HARTMAN: Right, your Honor. 12151 THE COURT: I like the Eastern District and I like to read good things about the Eastern District. MR. HARTMAN: Yes, your Honor. 568 MR. VERVEER: Your Honor, at this time the gov- ernment would move for acceptance into evidence of Gov- ernment’s Exhibit No. N. THE COURT: Well, I’ve already admitted it before you moved, I guess—all right- Have you any more ques- tions of this witness? MR. VERVEER: No, your Honor. MR. MOEN: No further questions. MR. HARTMAN: No more questions, your Honor. THE COURT: Well, this wouldn’t be pertinent I guess, in the case so I won't ask it, so you can be excused. (Witness excused) MICHAEL MARSTON, called on behalf of the plaintiff, having been first duly sworn, testified as follows: DIRECT EXAMINATION BY MR. HOFFMAN: Q I have a copy of Mr. Marston’s resume that I would like to have distributed and inserted into the rec- ord at this time. (Insert resume.) THE COURT: Do you have any other witnesses [216] after this one? And the reason I ask is that Mr. Silverman is not going to get a turn. MR. HOFFMAN: Before I begin with Mr. Marston’s interrogation I would like to inform the Court first that plaintiff withdraws its exhibits No. 0-12, through 0-18 inclusive. THE COURT: Well, what do those relate to, counsel. I'd just like to know. MR. HOFFMAN: Those are exhibits comparing Spo- kane County with certain other areas of the State of Washington in various ways. THF COURT: Is there any objection to his with- drawing them, Mr. Moen? 569 MR. MOEN: No objection, your Honor. MR. HARTMAN: No objection, your Honor. THE COURT: All right, your motion that they will be withdrawn is granted but they are just for identifi- cation as of now? MR. HOFFMAN: Yes. THE COURT: You never offered them so you don’t have to withdraw them— MR. HOFFMAN: Just to inform the parties I’d like to withdraw Plaintiff’s Exhibits Nos. 0-20, 21, 22, 23. THE COURT: You're not offering those? [217] MR. HOFFMAN: Right, and I think, your Honor, before I begin with Mr. Marston’s interrogation or examination I’d like to inquire of defendants’ counsel whether they have found any mathematical mistakes in the statistical exhibits, Exhibit No. O. MR. JOHNSTON: We would have to have our peo- ple who examined these to be able to tell. MR. MOEN: There are a number of mistakes, your Honor. I don’t know if I could identify them by exhibit number but I can assure counsel that we will find out what they are and tell him. THE COURT: Well, I’ll tell you what you do, coun- sel, if it comes up and there is a claim that you made a mistake why I’ll give you an opportunity to rehabilitate by calling another witness if you wish. MR. HOFFMAN: Well, we’d like the opportunity and would appreciate an opportunity to cure any mistakes if there are any. THE COURT: [I'll grant that if there's any question about that. All right— MR. HOFFMAN: Now, would you restate your name? THE WITNESS: Michael Marston. Q Where do you live? A I live at 1730 Laverd, Berkeley, California. Q Mr. Marston, what is your occupation? 12181 A I’m a partner in an economic consulting firm known as Keyser-Marston and Associates. Q When was this firm organized? A This firm opened business on Tuesday of last week, the 2nd of January, 1973 and prior to that time I had 570 been executive vice-president of the Urban Economics Division, Larry Smith and Company Incorporated and vice-president of Larry Smith and Company Incorporated for nine years. That firm, which is a nationwide economic and real estate consulting firm which has offices in, five offices in this country and two in Canada and three affili- ated offices in Europe. Q. How long were you with Larry Smith and Com- any? A It would have been nine years on the 20th of this month. Q Would you give us some examples of the kind of work that you did when you were with Larry Smith? A Well, when I was with Larry Smith as shown on the resume I’ve had major analytical and supervisory ex- perience in community development type of economic base studies and we had very large projects that I secured for the company; for example, in a city in the southwest and it was on a nationwide bid competition where our budget was three-quarters of a million dollars and our work program was specifically to identify the [219] eco- nomic base for this immediate area and the region, and how this regionally related to the idea of strengths and weaknesses within the economy and opportunities for capitalizing on the strengths and so forth. Q Is that—well, do you call that a base study? A Yes, that’s a term, base study is a very loose term that covers a multitude of sins. Simply, it is our main thrust to create a process which helps communities or regions solve economic problems or at least minimizes their negative impact. Well, for example, we made an economic base study of the Genessee Lake region which was a 12-county region in New York State to identify strengths and weaknesses. We did analytical research but we do not do pure analytical research for research sake. Q Did you participate in a project for the State of Idaho? A Yes, I have. Q Would you describe what that involved? A Well, we were selected and I was the principal in charge on a competitive basis to identify the impact of the 571 relocation of the Lewiston Hill portion of US Highway 95 and the impact that that would have on the City of Lewiston, Idaho and adjacent areas. We started [220] this study in 1970 and had to look at a full range of land uses from retail to industrial to port development to grain shipments. I think at this point is when I first became aware of the term—inland empire. State of Idaho officials were concerned about the impact of expenditures from within the state that were lost to Washintgon State and particularly Pullman and Spokane. THE COURT: That hill you speak of, that comes from Uniontown to Lewiston, is that what you are talk- ing about? THE WITNESS: Yes, your Honor, that’s right. Q Did you do work for the Seattle-First National Bank? A Yes, our firm was retained to estimate the financial feasibility of building a new headquarters office build- ing. The basic thrust of the assignment was how much market there would be to justify or as large a building as could be supported by the market from the point of view of good planning. I was personally responsible for all analytical efforts on that project. That building has since been built following, as I understand it, quite specifically our recommendation and has been successfully occupied. THE COURT: I didn’t quite get that last part [221] of your answer. Do you mean the percentage of occu- pancy is in accordance with your predictions, is that what you mean? THE WITNESS: Right. It is a little hazy. I did that work in 1966. THE COURT: It's a new Sea-First Building in Seat- tle that you’re talking about? THE WITNESS: Right. MR. HOFFMAN: Will you speak a little louder. We're having a little trouble over here hearing you. THE WITNESS: Well, I am having a little trouble. I have a minor cold. THE COURT: Do you want to turn on the micro- phone, Mr. Hanson? 572 MR. HOFFMAN: Now, Mr. Marston, will you de- scribe your educational background? THE WITNESS: I did my undergraduate work at the University of California at Berkeley with a liberal arts background with strong emphasis in economics at the undergraduate level and I did my graduate work at the University of London in the London School of Eco- nomics where I was a graduate research scholar from 1961 to 1963. I received a degree, an MA, a Master's degree and I graduated from the University of California in 1959. [222] Q Well, I think this would be a good time for voir dire, your Honor. THE COURT: Well, do you have any voir dire, Mr. Moen? MR. MOEN: No, I do not. I would save that for cross-examination. THE COURT: All right. Q (By Mr. Hoffman) Have you made any analysis of the growth potential of the Spokane metropolitan area? A Yes, I have. Q What factors did you include in your analysis? A I think we considered all the factors and by that I mean we intended to get as much data as was available specifically to cross check information, and to get this in- formation we'd try and get four and five different data sources and cross check one against the other so that we had as solid a data basis as possible in this case which —In other words, we studied the factors and evaluated labor force and employment characteristics, past popula- tion growth trends, Spokane construction activities and compared them with Idaho, the general vicinity and other cities that I have personally been involved in, and am familiar with the terms of others who have unique prob- lems or opportunities. [223] We also, I think, it would be fair to say have eval- uated the Spokane’s influence as related to the geographic area that it might have domination in and different types of degrees within— Q Now how did you prepare your analysis? A As I summarized briefly before we separated the available statistical data and studied the available statisti- 578 cal reports and I personally visited Spokane and I inter- viewed knowledgeable persons based on their—and based on this broad section of data we made projections as to the future employment and population levels. I think a key element that we did was evaluating the past trends to understand this and what would be the factors and what the problems and probabilities of the forces that would be dominating the future of the economy. Q Would you explain why you chose these factors to make this analysis? A I think a straightforward answer would be that growth is generated by people and jobs. Except in specific situations. People follow the jobs and specifically the jobs have to be available for the people to move into the area to have the area grow in population or maintain its vital- ity. There are some exceptions to this such as retirement communities, places such as [224] Palm Springs would be an example. In certain areas in Florida where the people themselves move, bringing outside people into the area and this then creates jobs and services. In other areas, I think that the primary emphasis on population relates to jobs. Then the other factor I mentioned was construction activity. We picked construction activity be- cause we feel that construction is a sign of vitality and people are vitally interested in the future and make com- mitments for 20 to 30 years’ duration. [225] Q Turning now to Spokane’s employment char- acteristics, would you tell us about past trends in employ- ment and the economy of Spokane? A Yes. As shown in our exhibit, I think that just an overview, the past trends in employment are shown really over—we picked 1950 to 1972, that time frame for the majority of our analysis. The data base was good, it was comparable, and I think forms on an annual basis by major employment categories the backbone of our analysis related to labor force and employment by major categories in Spokane. MR. JOHNSTON: He is referring to an exhibit now? Q (By Mr. Hoffman) You are referring to a table entitled Labor Force and Employment by Major Cate- gories, which the plaintiff has denominated as Exhibit 0-3. 574 A That's the one I thought we were going to discuss. I’m just giving you a general background, yes, and that’s a table which we have specifically compiled to give us an insight into employment. Q Well, let’s go back a minute, and if you would, would you give us a little historical background on the economy in Spokane? A Well, I think that it flows from the analysis that if you synthesize an analysis and focus it, you could say [226] that Spokane has really gone through four cycles of—I wouldn’t use the word “growth”, change, let me say. Since 1950, we picked 1950 because before that we had World War II in the 40s and the depression of the 30s, and we think that’s a solid representative data base, a 22-year period. We would categorize, I think, just to give an overview which would be useful, and we could probably get into the specifics later, a period of expansion over the time from 1950 to 1956 period, we call this a period of growth and expansion, then we would call from 56 to 63 a period of recession, then we would say that over the 63 to 67 period we had a period of recovery. Then from 1967 to present we have a new period of expansion. So we are looking probably at four periods that have occurred over the last twenty-two years, and we are currently in a period of expansion. Q Now I will direct your attention to Plaintiff’s Ex- hibit marked for identification O-3 and O-4, Government’s exhibits, did you prepare these exhibits? A Yes, I did. Py SO aan you explain the significance of the contents 0 ? A I think that Exhibit O-3 assembles the data in a form [227] that can be evaluated to show some of the dominant trends that occurred within the Spokane metro- politan area. For example, I won't cover all the cate- gories. I think I have a couple of them which point out agricu’ture, which has declined since 1950 from 4.7 thou- sand to 2.4, 2,400 people, it’s almost half of what it was in the 22-year period before. That’s fairly standard, that is occurring nationwide, on a nationwide basis. Agricul- ture is becoming less labor intensive and more intensively 575 mechanized, and the smaller farms are going out of business. Probably one of the most—more significant categories here is manufacturing of primary metals. That has had a great swing in employment. This is primarily related to the aluminum industry and has been one of the pri- mary reasons for the four cycles. I sumnfarized this in overview form previously. So basically we go through this data based on a category by year basis to provide us with conclusions as to the major forces that work within the economy, and we tabulate this with other data and reports that we have and experience in other areas. The unemployment rate I think is another significant variable here that has fluctuated over the time frame fairly dramatically. 228] THE COURT: One of the most significant in- creases is in an area where the taxpayers are unhappy and that’s in government, isn’t that right? THE WITNESS: Yes, your Honor, that is typical na- tionwide. THE COURT: I understand that, but that has even reached Spokane, is that true? THE WITNESS: Yes. THE COURT: When you come to court nowadays with four lawyers, you used to come to court with one lawyer. All right, go ahead. THE WITNESS: It might be helpful at this point to note that typically the growth categories nationwide are the services, government, trade, and in some cases manu- facturing. But basically we are service-oriented. Some people say it is a mature society. The government surprisingly in California, some of the major growth is at the state level rather than the federal level. THE COURT: There is another area there too that relates to services, does that mean tourists, doesn’t it? THE WITNESS: Yes, your Honor, everything, hotels, restaurants. THE COURTS: Hotels, and much more tourism than [229] there was in the 50s? . 576 THE WITNESS: Les, and that’s what many commu- nities have not recognized as being a major growth area. People tend to think of the service industry as being some- thing peripheral, and they keep trying to develop their economy in many communities by going after basic manu- facturing plants. THE COURT: Frankly, those are the only two areas where there has been any dramatic change in Spokane, isn’t that right? THE WITNESS: Yes. THE COURT: Tourism and the government? THE WITNESS: Yes, your Honor. Q (By Mr. Hoffman) Would you explain why you used figures covering Spokane, would you define the Spokane SMSA for us? A This is a standard metropolitan statistical area, this one was used by the Bureau of Census, and most economists want to define an area where data is collected on a nationwide basis in detail. The SMSA is the basic unit of measurement of the changes in the ten-year census for most large metropolitan areas. Some metropolitan areas will have as many as three SMSAs. For example, the Bay Area has a five-county SMSA, that includes San Francisco, and that’s [230] really the heart of San Francisco and the related suburbs, and then there is one om the south, San Jose, which oper- ates somewhat more independently than the other one, the five-county area, and there is one to the north, that’s a two-county area. I use this because I think it is important to understand that the SMSA is the basic unit of measurement, and in bigger areas that can be subdivided. But here we have used the SMSA which is coextensive with the county and it provides a very good base for evaluation trends on a comparable basis for many years, particularly using a ten-year census for forty or fifty years. There are other areas that we referred to in the re- port that I think are probably worth touching on, so there won't be confusion. There's the city limits of Spo- kane, typically these are not at all valid for doing any in- d »pth evaluation of past trends or projections in the 577 future, city limits change their policies of annexation or de-annexation and the growth occurs typically outside of the city limits. So that is really just sort of an historically interesting situation, the city limits, but they are not valid analytically. Then there is an urbanized area in Spokane, that there are some analytical problems with. The urbanized area hasn’t changed and [231] there has been growth outside it into what has been referred to as the rural area. Q Are you referring to a table and graphs covering the population growth in Spokane, in metropolitan Spo- kane from 1950 to 1970? A Yes, I was using that for the nomenclature. MR. HOFFMAN: I just wanted to make sure that those were government exhibits— THE COURT: Actually he has been testifying using that first Exhibit O-1 and O-3, also, as I understand it, is that true? I had to read O-1 and O-3 while he was testifying and I was trying to listen at the same time. THE WITNESS: I apologize for the confusion. THE COURT: No, that is fine. THE WITNESS: I was using the terms as they came up, and if you don’t spell them out they are confusing. THE COURT: That is fine, I have followed your testimony, I am sure. Q (By Mr. Hoffman) Does the mix, shall we say, of the employment. category of Spokane have any signifi- cance? A It is not exactly clear to me what you mean by the question. THE COURT: You are talking about— [2832] MR. HOFFMAN: The various proportion of em- ploment in different categories, THE COURT: Are you talking about the employ- ment in the variety of areas of endeavor over there, agri- culture, manufacturing, mining, that type of thing, is that the idea? MR. HOFFMAN: That is right, your Honor. THE COURT: All right, go ahead. 578 A Yes, you are referring to the different categories of employment, the major ones on the table which is Exhibit 0-3, and the different categories I mentioned. Agriculture is declining and I think that overall it can be said, looking over the 22-year period, that in 1972 the economy is more diversified than it was in 1950, it is less dependent upon the declining industries such as agriculture. I noted that while agricultural employment dropped by half, it in- creased from 84,000 in the total civilian force to 118,000, and at the same time the primary metals, the category that created problems in the economy previously, is al- most constant with the 1950 level of 3,700, it is now 3,800. THE COURT: Are you talking about the Trentwood plant? The aluminum company at Trentwood? THE WITNESS: Yes, the Kaiser plant. A (Continuing) So the pie has gotten bigger, and some of [233] more volatile elements become smaller pieces of the pie, so therefore the economy is less susceptible to disruption currently than it was during the decade of the 1950s. THE COURT: Let me ask you about that agriculture situation. When you talk about employm̃ent in agriculture, are you referring to farm labor or things such as labora- tories that handle the examination of thing? THE WITNESS: No, your Honor, the people whose primary occupation was on the farm. THE COURT: And that is partially as a result of larger areas under one ownership and that type of thing? THE WITNESS: Yes, your Honor, and mechanization. Particularly in this area there is very heavy investment in farming equipment. THE COURT: Yow are talking about the cost of combines? THE WITNESS: Yes. Q (By Mr. Hoffman) I notice on Exhibit O-3 that you used actual raw numbers and not percentages. Did you have any reason for that? A Yes, it has been our experience that the actual num- bers of people employed in jobs is the most valid indicator [234] to compare what has happened on a numerical basis, eat, that sort of — 579 the number of people who have gotten jobs or lost jobs by category. The old expression that numbers don’t lie, that people lie with the numbers applies to percentages. You can make the percentages prove anything you want. It is something you have to be very, very careful with. I have seen distortions where you take a percentage of a very small base, you have a community growing by 1,000 per cent, but it really amounts to 15 people. So we are very careful of percentages, we use those as a cross check, but we use the numerical growth as the basic analytical units. Re | Would you describe the Government Exhibit marked A Yes, in essence I prepared that graphic illustration to show the employment change over the 1950 to 1972 time frame based on that Exhibit O-3. Here we start to get a feel for the periods of growth and decline. The top line shows the total labor force with the dots, as you can see there, and the bottom line total employment, so the width of the line measures in a generalized way the unemploy- ment. The top of the line shows the growth in the labor force, and the bottom of the line the growth in jobs. It shows, as you can see, starting out with about 80,000 in terms employed people in 1950, 84,000 in terms of labor force, increasing to [235] 118,000 in terms of labor force currently, and 108,600 in terms of jobs. It is an S-shaped curve which indicates a volatility in the economy. If you see one of those you have to try to understand what created the problem. THE COURT: That bears out what you previously told - relative to the period of growth and recession, does it not THE WITNESS: Yes, your Honor. THE COURT: All right, go ahead. Q (By Mr. Hoffman) I would now like to direct your attention to Government’s Exhibit marked for identifica- tion O-5. Did you prepare this exhibit? A Yes, I did. Q Would you explain what this exhibit shows? A I think this exhibit really summarizes the period that we discussed, and the underlying causes of the growth and decline by periods. For example, in summary, the — 580 period of expansion, 1950 to 1956, as you look at the bot- tom of the table, there was an average annual increase of 2,430 people in the civilian labor force, the total employ- ment increased 2,470. In other words, there were more jobs than people coming into the area, so some of the un- employment dropped. The major reason for that was growth in primary metals, 470 jobs per [236] year; trade, 630; services, 280; government 550; and miscellaneous 270. Contract construction played an important part. So that was the period of expansion and probably one would expect the population to grow with that magnitude of jobs being created. Then Spokane went into a period of recession over the 1956 to 1962 time span. The highlights of this are quite dramatic, total employment went from increasing 2,470 per year in the previous period to decreasing by 800 per year, very dramatic. In the drop, you can see looking under the manufacturing category, lumber declined, that was the main cause, one of the main causes, and that has been hap- pening all over the West, I think, and then the primary metals trade. Then we go into a period of recovery as shown under the category 1963 to 1967. In this period of recovery, agri- culture is declining but the rate of decline in the other categories such as primary metals has actually stopped declining and is now growing by a hundred jobs a year. Trade has stopped declining and has grown dramatically by 580 jobs a year. Services have grown very damati- cally, 720 jobs per year. It is the fastest growing category in all categories. So we go from a net loss of 800 jobs per year to an increase on an average annual basis of 2100 jobs per vear. 237] THE COURT: This is annual average increase? THE WITNESS: Yes, your Honor. A (Continuing) So that is a period of strong re covery. It would vary by year, but it just illustrates the changes most accurately by putting the years together on this basis. Then we get a period of expansion. Starting in 1967, the growth rate is accelerating, we see that the agricultural loss in jobs has dropped to 20 from 180 pre- viously, we are still losing in primary metals, there is a 581 little turnaround there, but it is significant to note that that does not impede,—we went from an increase of 100 jobs a year to a loss of 120 jobs a year, but the total econ- omy still kept growing at a faster rate, significantly faster rate over the 1967 to 72 time frame, than the 1963 to 1967. What that is showing is that the economy is bounc- ing back. So then we average it over 22 years, both the ups and the downs, and even with the dramatic period of recession we still have an average annual growth rate in terms of number of jobs, as 1330 jobs per year for the 22-year period, and a total civilian labor force per year of 1540. This tells us that Spokane did not dry up and blow away over this hard time period, but continued to expand over the total time frame despite a [238] period of severe decline, one of the most severe I have seen in the West. Q I would now like to direct your attention to Gov- ernment’s Exhibit marked for identification O-6 and O-7. Did you prepare these exhibits? A Yes, I did. Q Would you explain the methodology used in making the projections that these exhibits show? A Yes, in essence the methodology was the technical term referred to as a linear regression, which means look- ing at the past trends, understanding what they were doing, and projecting on an alternative basis appropriate past trends. Q Why did you select the linear regression method? A I think that given the data base, and the purpose of the analysis, this is the most appropriate analytical technique. Q And your projections go from 1972 to 1985. Would you explain why you used that time period to confine your projections to? A Yes, that time frame is, the long and the short of it is that it is not too long and it is not too short. We think it is a meaningful projection that will be appropriate for Spokane, that if you carry any projection too far it really gets very, very “iffy”, like the [239] year 2000. Typically, we recommend that our projections have to be reviewed every five years. We would like an alternative 582 basis of projection, because then combining that with an understanding of the forces at work, one can evaluate on a yearly basis what has occurred and how that would in- fluence the projection. We feel that this is a good valid pro- jection time frame in that the forces at work over the past twenty-two years, 1950 to 1972, we think will apply in varying degrees related to the assumptions given for each projection over the 1972 to 1985 period. We feel quite confident that there won’t be any major changes that would invalidate projections over this time frame that are not in evidence now in the economy. [240] Q Would you explain the sets of conditions and underlying assumptions in the exhibit that you referred to just a moment ago? A Yes. As shown in Exhibit O-7, the low projection takes the one thousand three hundred thirty jobs that we discussed previously, that is, the average annual growth over the total 22-year period from 1950 to 1972, which in- cluded a period of expansion, a period of recession, a period of recovery and expansion and said if all of these factors occur, in essence that allows for another recession, we are not saying there will be one, but if it did happen, then the economy would still grow to a total of 125,900 jobs by the year 1985. This is the most conservative basis for projec- tion, and then the medium range projection takes two time frames that we evaluated in the past, two trends, a period of recovery and a period of expansion and it says this is the valid ten-year basis that the—a lot of the factors that caused the recession do not exist to the extent that they did previously in the 50’s and, therefore, the basis for a med- ium range projection is using the last ten years, and that would give us a growth of 1940 jobs a year or a total labor force of 134,000 by 1985. The high range projection, which is the last alternative future is based on a set of [241] conditions which in essence says Spokane is in a period of expansion. A lot of factors that really have not been quantifiable such as the momen- tum developed from Expo, the benefits of that, the boost that it gives to the community, the new development in the downtown, the whole range of factors will make this period of expansion continue and perhaps accelerate. 583 When I was talking with different people in the com- munity, such as King Cole last week, every one had a tremendous feeling of confidence and that really they felt that things were much better now than they were two years ago, and this hasn’t shown up statistically yet in any sig- nificant way. The high projection would say the good times will continue and by 1985 there will be 139,000 jobs. So that is the basic alternative future that could occur over the 1972 to 1985 time frame. Q And the graph, which is Exhibit O-7, is just a— THE COURT: That is the graph form—that’s just what he said. THE WITNESS: Yes, your Honor. THE COURT: I have looked at the graph, and just because I closed it doesn’t mean I didn’t look at it. I read the figures there too before he téstified, [242] counsel. All right. Q (By Mr. Hoffman) Would you tell us which pro- jection you considered the most reliable? A I think given the occurrence of a recession in the past and the factors that have occurred over the 1950 to 72 time frame, that we would recommend a conserva- tive approach and, therefore, we have used in our analysis the low projection, which would indicate the rate of growth that could occur even if another recession occurred over the 72 to ’85 time frame, and we recommend this because it could happen. We think that we don’t have really signifi- cant data since the 70 census, and this is one trouble with just having a census every ten years to thoroughly docu- ment the extent of the expansion that has occurred since 70. So given that situation, it is our recommendation that to avoid the surprises, let’s plug them in and use the low projection as a basis for planning for the future, and by surprises I mean negative things that could occur that we might omit at this time because there is still a fair amount of employment in the aluminum industry, which has its problems and so forth. THE COURT: Aren’t they right now trying to put another pot line in, and they are having some problems with the ecology people? 584 12431 THE WITNESS: Yes, your Honor, I have heard that secondhand, and that is an example of the fact that there are a lot of movements that might try and restrict basic industry, ecology and environmental movements. Perhaps the jobs won’t grow as fast as they are cur- rently, in the future. Q (By Mr. Hoffman) Your low projection takes the possibility of such factors into account? A Totally, I think. Looking at the numbers, we are projecting a growth of 1330 jobs as opposed to a cur- rent rate of 2320, so we are projecting 1000 less just for the reasons I outlined and which we have discussed. Q We have made some slight reference to this be- fore, but I would like you to explain, if you would, why you use the employment figures for the Spokane SMSA, that is, Spokane county? A The employment is, we feel, the most valid means of projecting population growth because the people have to eat to live and to eat to live they have to work, and typically, you have something like thirty—36 percent of the population base employed. So if you create the jobs, in general the people will come. If the jobs dry up or decrease, the people move elsewhere. One example of that might be—there is some evidence to indicate that people are moving or have [244] moved in the last few years from Seattle to Spokane just be- cause things are a little better despite a relatively high unemployment rate in Spokane compared with the rest of the country. You just may be able to get jobs more readily in Spokane than Seattle. I can’t quantify that, but it is this level of expectation which is a human factor. Q I think that we may have gotten off on a tangent here. My question was, why you used employment figures for the SMSA. A As opposed to some other geographic area, is that what you are referring to? That's right. Well, maybe I'd better ask you first whether or not the projections that you made as to the Spokane SMSA are generally applicable to the future increase in employment in the metropolitan Spokane area? 585 A The answer to that is yes, for the reasons we have discussed previously. The SMSA figures are the most reliable and comprehensive, the area is big enough to absorb future growth within its geographic boundaries. We think the SMSA accurately refleets the future growth potentials and opportunities, the SMSA regional figures in Spokane. Q Is the percentage of population and employment and growth in the metropolitan Spokane area as com- pared to [245] the SMSA relevant to that? A I am not sure I understand your question. MR. HOFFMAN: Did the reporter get that? THE REPORTER: Yes. (Last question read by the reporter.) THE COURT: That is hardly a question, that’s a statement. Can you turn it into a question and answer it? THE WITNESS: I think so. You are saying that the SMSA is the valid area, is that your question that you’re asking me? Q (By Mr. Hoffman) I previously asked you whether or not you could generalize from the SMSA figures as to future employment levels in the metropolitan Spokane and I believe you answered affirmatively? A Yes, I can. Q I then asked whether or not the proportion of people in employment in the county, that’s in the metro- politian Spokane area, helped you make that draw that conclusion? A I think— Q The proportion of the people in metropolitan Spo- kane. A I think that I understand what the question is now. Really the question is are there a significant num- ber of people who do not live in the metropolitan area who live in the county, [246] subject to different eco- nomic forces which could create a problem, and the an- swer is no, that the majority of the people who live in the county, which is the SMSA, live within the urbanized area of Spokane. That is a valid—very valid unit be- 586 cause the city and the SMSA really work together as most of them do, and there is nothing unusual or unique to this SMSA or the employment population characteris- ties of it. Q I would like to turn to the subject of population, and I direct your attention to Government’s Exhibit marked for identification O-1 and O-2. THE COURT: Haven't we gone over that, counsel? MR. HOFFMAN: Only definitionally, your Honor. I don’t think that we discussed the substance of it. THE COURT: I thought we had, but perhaps I am in error. Of course, I am way down to 0-23, and that’s an analysis of the population and growth in the Inland Empire, Yakima, Walla Walla which, of course— MR. HOFFMAN: If your Honor will recall, that is one of the exhibits we have withdrawn. THE COURT: That’s right, but I did read it any- way. It is 3:00 o’clock, maybe we can take a brief break now, or a seventh inning stretch, and come back in in about 10 minutes. [247] (Court reconvened at 3:20 o’clock p.m.) MR. HOFFMAN: All right, I believe that we were on the subject of population and I would like again to direct your attention to Plaintiff’s Exhibit No.—excuse me, Government’s Exhibit for identification Nos. O-1 and 0-2, did you prepare these exhibits? THE WITNESS: Yes, I did. Q Would you explain what they show? A Exhibit O-1 shows the growth of population over the 1950 and 1970 time frame for the four areas we dis- cussed previously in the Spokane SMSA, the basis used in evaluation, the metropolitan area, the rural area out- side the city limits and— Q You mean the urbanized area? A The urbanized area, yes, excuse me. We see an annual change on a numerical basis on the bottom of the page. We put in percentage change as a secondary means of identifying change— Q Would you look at that again. On that point, I thought the percentages meant something else. 587 A Well, the percentages are relating the numbers to the numbers above and they go into another area. That is what is meant to say here. They’re not percentage increases, they are percentage changes. That is probably the word that is right. For example, it is [248] not valid to use the Spokane urbanized area as opposed to the SMSA because in 1950 to 1960, that time frame, the urbanized area’s percentage of the SMSA was 90 percent. But in 1960 to 1970, in that time frame, it was only 30 percent and the reason for that is that much of the change, which in this case was growth, occurred in other areas outside of the urbanized area, but within the SMSA, the urbanized area defined in 1950. Q By the census? A Right. So the SMSA is the only really valid unit of measurement in looking for growth levels and the numbers shown on Exhibit No. O-1 are translated into the graph shown as Exhibit No. O-2 which illustrate I think the rate of growth for each of the areas, the general magnitude of growth. Q How do the trends noted in the exhibit compare with the trends in employment that you testified to earlier? A They generally corroborate them and here is the growth in jobs and here is the rate of growth in em- ployment and you can see— Q Do you mean in population? A Excuse me, in 1950 to 1955 the high rate of growth in the county and that’s of course the period of expansion in jobs. And then things slowed down in [249] em- ploment in the later part of the 1950’s and then in the early 1960’s slowed down in population. Q Now would you turn to Plaintiff's Exhibit No., excuse me, again, Government’s Exhibit marked for identification as O-8 and 0-9. Did you prepare these exhibits? A Yes, I did. Q Would you explain what Exhibit O-8 shows? A Exhibit O-8 shows five alternative sets of popula- tion projections keyed to five sets of conditions that we found in existence over the 1950 and 1972 time frame and we projected on the basis of each of these sets of conditions to take a look at the projections as a basis for selecting the projection that we will use for plan- ning purposes. Our recommended projections one through three are based on employment which is, as I said earlier, in our judgment most meaningful indicator of the in- crease in population and job opportunities and in es- sence, we have projected, one based on a high projec- tion of employment, that is, the rate of employment that is occurring over the 1967 to 1972 time frame. Projection number two is based on the rate of em- ployment projection that was the rate of employment that occurred from 1962 to 1972, within that time frame, and projection number three is based on the rate of . [250] employment growth that is occurring over 1950 to 1972 time frame and to each of these we apply the population relationship to job relationship, using the 1970 census as our base, in other words, in 1970 there are 104,600 jobs, 287,487 people which gives us 36.4 per- cent employment to population ratio, which is in line with other areas we worked on and we use that to project the population based on employment. The projections number four and number five are projections of population based upon past trends and we use the actual—well, we checked our employment and our employment growth as it related to the past trends and how would that compare with it if we did that; how would you compare that with employment or the employment trend. We don’t think this is as valid and we feel that projection. Number three—we would recom- mend it as a planning projection to be used subsequently in projection number three is based on low employment, a low employment projection which is employment growth over the 1950 to 1972 growth period. e ls your projection number three as shown in Plain- tiff's Exhibit, excuse me, Government’s Exhibit marked for identification O-10, is that there? [2511 A Yes. — Q Very briefly, and I don't want to keep repeating this, but I would like to have you mention it for the Yes, as you can. have population shown fr 960 through 1972, that is using the census and then tinue the trend over 1972 to 1985 time-range, combine it. on one time table so you can look at the rates of growth, and see the consistency over a 85-year time frame. The population levels grow at approximately 3600 people per year, so that by 1985 there about 385,900 people. The rate of growth at our projection level is lower than the past trends which have occurred over the 1950 to 1972 time frame, and although the line is straight over the 1972 to 1985 time frame, we anticipate that by 1985, if you look at the graph: you will probably see slight curves, this is an average annual basis, but that is our projection that we in our judgment feel is a valid and conservative means of estimating future population growth for Spo- kane and the metropolitan statistical area. Q I now would like to direct your attention to Gov- ernment’s Exhibit for identification marked O-11 en- titled [252] Construction Activity, Housing Units Au- — . Spokane SMSA. Did you prepare this exhibit? es. Q Would you explain the significance of its contents? A Well, the Construction Activity is a secondary in- dicator, as are most other economic activities of vitality. We think it is fairly significant to look at the number of housing units authorized within the Spokane SMSA over the 1962 to 1972 time frame, and although we have data only through August, we see the rate of growth, both of what’s good and what is bad, what is strong and what is weak, and as you can see, the rate of development has increased dramatically in recent years, and in 1971 there are 4,000 units, and in 1972 only through August there were over 3,000 units. There are many reasons for this, the availability of money, mortgage lending, and so forth, that I think one of the primary reasons for the develop- ment of residential units is demand, that the units . couldn’t be built unless people were there to either rent 590 them or purchase them, so this indicates I think a vitality, a confidence in the future, people are making commit- ments on a long term basis, new residential units typi- cally last at a 30-year or more life, so I think this is an expression of confidence in the future. 12533 Q Would you state your conclusion as to the growth prospects of the Spokane metropolitan area? A I think in conclusion the economy has experienced ups and downs, it went through a very difficult time in the period of the 1950s, during the recession, that was also I think accompanied in the early 1960s by somewhat of a philosophical attitude of concern. There are two elements of growth, one is the hard data, the projections we make, and the second is the vitality and the mental attitude of the people. Taking the first level, in terms of economic data, the trends are positive. It is going to be a steady growth even if another major recession occurs, which we don’t see or have any indication that it will, that there will still be steady growth over the projection time frame of 1972 to 1985. I think as im- portant, but non-quantifiable, is an attitude, a positive attitude of growth and dynamics as evidenced by the Spokane World’s Fair, the amount of construction that is going on downtown; one individual quoted to me when I was in Spokane last week that on a per capita basis Spokane has the highest per cent of investment of any downtown in the country, in terms of the number of people. So things look very, very good. On a psycho- logical basis, and again that is not quantifiable, [254] but I think our overall conclusion is that there is vitality and there will be growth in the future. Are you familiar with the various urban areas in the State of Washington? A In general, yes. Based on your knowledge of these urban areas, how would you compare Spokane and characterize its importance in relation to these other urban areas? A Well, I would say that clearly Seattle is the domi- nant area, definitely on the Coast, we have a region that includes Seattle, Everett, and Tacoma, an economic reason that is a dominant region in the Northwest, and 591 Seattle is No. 1, and interestingly Spokane is No. 2, like Avis, you might say, but it is a strong No. 2. The® distance from Seattle is such that it is independent;; it doesn’t have the vitality of the Seattle economic region,, but it is a healthy region and an important region. Which region are you referring to? A I am referring to Spokane. I think it is healthy and important, and having a geographic distance so thatt it has a large base of support, as I recall it is a short’ 300 miles from Seattle, and I would say it is the No. 22 city, the statistics as far as population show that, and! if you combine into one region Seattle, Tacoma and! Everett, [255] which I think is valid to do, just ass we do in the Bay area, where we combine nine counties in the San Francisco Bay area, this is the No. 2 economic: region in the state. Q Would you describe Spokane’s relationship with) any other areas, geographic areas? THE COURT: Are you talking about Western Mon-- tana, and Coeur d’Alene, Southern British Columbia, that sort of thing? Is that what you are going to talk“ about? THE WITNESS: Yes. THE COURT: All right, go ahead. A As I say, I first became aware of Spokane’s eco-- nomic influence in what is called the Inland Empire® when I was working for the State of Idaho on this im-- pact study which we discussed earlier, U. S. Highway’ 95. Basically, there is a combination of population levels’ of different cities, so that Spokane is clearly so much) bigger than any other city in the vicinity that it hass dominated in the past, and in my judgment will continue® to dominate the large region known as the Inland Em-- pire, which basically includes Western Washington— THE COURT: You/mean Eastern Washington? A (Continuing) I’m sorry, I mean Eastern Wash- ington, Western Montana, and Northern Idaho, and you! can put in [256] or leave out parts of Oregon, but II think there is no question that given the size of Spokane® compared with Lewiston, Clarkston and Coeur d’Alene® — 592 and other eities within the Inland Empire, Spokane is the dominant force in terms of trade and commerce. [2571 Q Have you had an opportunity to read Gov- ernment's Exhibit offered for identification L-1, which is the economic brief submitted by the National Bank of Commerce and Washington Trust Bank in support of their application for permission to merge? A Yes. Q Would you care to comment on the contents of that brief? A I think in general I am in agreement with many of the statements of economics contained therein. For example, on page two is a statement that there is a natu- ral division of the state into two principal and distinct regions, the high Cascade Mountains form a substantial barrier between the western third of the state and the remaining area to the east. THE COURT: I wouldn’t agree with that entirely, I just don’t think that Yakima is closer to Spokane so far as commercial enterprises is concerned than it is to Seattle. Do you think that Spokane draws from Yakima like Seattle? THE WITNESS: I was one of the economists, my partner and I, in the downtown revitalization of Yakima, and we did that, that was in 65, 66, that’s seven or eight years ago, I would have to refresh my memory, but as I recall, there was a fair amount of [258] the retail sector at least commuting from Yakima to Seattle, people would drive into Seattle to purchase items. THE COURT: It’s much more difficult to get to Spo- kane, it’s further too, miles-wise, and it’s east of the Cascades. So when you talk about the Inland Empire, aren’t you talking about from, say Ritzville east rather than from Ellensburg, for example, and Ellensburg is east of the Cascades but you wouldn’t include Ellensburg in the Spokane area. THE WITNESS: I think probably the commercial ties are closer to Seattle. The Inland Empire typically, when we do a trade area study, we get percentages of penetration, and it would decrease—that would be a peripheral area of some influence, but it is perhaps pe- 593 ripheral in that area. There is a newspaper survey or an audit, I think that you’re looking at something like five percent or less penetration in terms of newspaper circulation, that was one indicator. Q (By Mr. Hoffman) I would like to get to that in one moment. But very briefly, is there anything else that you would just like to highlight from that brief that is of particular interest? A I think that the reference in general to the Inland [259] Empire, I think there are different definitions of it, and I would tend to use a more conservative one. The brief refers to “the economic influence of the City of Spokane reaches far beyond the borders of Spokane County. The city has developed as the center of a re- gional trade territory popularly known as the Inland Empire, which encompasses portions of four states and bounded by major mountain ranges. “The Inland Empire extends from the Canadian border down to the Blue Mountains in northern Oregon and from the eastern slopes of the Cascades in Washington to the western slopes of the Rockies in Montana. Thirty- six counties are included in this area containing 1,156,- 000 people.” The brief does go on to say that for the purpose of this brief, the Spokane trade area is more narrowly defined to include a region of only 27 counties in three states with a total population of 819,955. 5 I think probably in terms of significance, your Honor, I agree with the narrower definition but recognize there is some influence in the larger areas in other words, some influence in 36 counties, more influence in 27, and I think that the last point that I feel is important is that Spo- kane will continue to dominate this vast area, and as the brief says, the [260] importance of the City of Spo- kane, a vast area can be made clear from many types of evidence, metropolitan newspaper circulation is domi- nated by the Spokane dailies and then other points are made about the dominance of Spokane that I think I am in agreement with and confer with it. Q I would like now to turn to Government’s Exhibit 594 marked for identification 19 and 20, 0-19 and 0-20. Were these exhibits prepared by you? A These exhibits are—I want to make sure they are the same exhibits. Q The table entitled “Actual Growth, Sunday distri- bution, Spokesman Review Newspaper, 1972,” that’s 0-19, and 0-20 is a map of the Inland Empire showing per- centage of households which receive a Sunday newspaper. A Les, these exhibits were prepared by us from data prepared, as illustrated and as noted in the source, from the ABC audit report to the audit bureau of circulation, Chicago, Illinois, the Spokesman Review. THE COURT: What we are talking about just a minute ago is pretty dramatically illustrated, two per- cent in Kittitas, that’s Ellensburg, and one percent in Yakima. THE WITNESS: I think that peripherally is maybe being a little optimistic. There is, I think— [261] you are right, that really Yakima is not meaningfully related to Spokane on the basis of newspaper circulation. THE COURT: All right. Q (By Mr. Hoffman) Would you very briefly ex- plain—you touched on it lightly before—but would you explain very briefly the significance of the exhibit. A I think the exhibit is a good indicator of the pene- tration of the Spokane newspaper in the Inland Empire, which is also a reflection of the penetration of Spokane in many other lines, such as retail trade, commerce, wholesale trade, distribution, and as you see from our map, that this area had been classified into three cate- gories of primary area, which includes the counties ad- jacent to Spokane, and that is based on percent distribu- tion. You will note in this area the percentages all exceed 50 percent, in other words, the newspaper is distributed to over 50 percent of the households located in those counties, and then we have a secondary area, and in the secondary area, the percentages of penetration range from 23 percent to 46 percent. I think that is very mean- ingful penetration. And then in the tertiary areas, the percentages range from a low of one percent, which is Yakima, which is really [262] not meaningful, to a high 595 of 15 percent in Douglas County, which is a substantial, and I think this exhibit illustrates the Inland Empire phically and the penetration varies by county. MR. HOFFMAN: Your Honor, at this time the gov- ernment moves that its exhibits marked for identification 0-1 through O-9 inclusive, O-11, O-19 and O-20 be ad- mitted into evidence as well as Exhibit L-1 and L-2. THE COURT: Any objection to that? MR. JOHNSTON: Well, L-1 and L-2, I don’t believe we have heard anything about that. MR. HOFFMAN: Well, Mr. Marston just testified to L-1, that’s the economic brief, and L-2 is the appendex to LI. MR. JOHNSTON: That is in the record, that was put in by Mr. Hartman at the beginning of the case. THE COURT: You don’t have to introduce it, that is here is what he says. Is that right, Mr. Hartman? MR. HARTMAN: That is in the application. THE COURT: All right. In other words, it is a part of the record, so— MR. HOFFMAN: In any case, we would like to use it as evidence in the case. 12631 THE COURT: All right, we will admit it in evidence as well, being part of the record. MR. TORRE: Just for clarification, I understood Mr. Hartman introduced only the transcript. Did he intro- duce the entire record? MR. HARTMAN: That is the transcript and the ex- hibits to the hearing. MR. HOFFMAN: But not the application, it’s not the application? MR. MOEN: ‘Tile application is going to be offered tomorrow. THE COURT: It is in now, we won’t have to—we will admit it. Go ahead. (Government’s Exhibits O-1 through 0-9, 0-11, 0-19, 0-20, L-1 and L-2 for identification be admitted into evidence. ) [264] MR. JOHNSTON: If the Court please, I might say that in this group of exhibits that this witness has gone through we didn’t have a chance to segregate these 596 due to the numbering system which has just been devised, and the comments we had as to the relative accuracy do not relate to these basic statistics in this old group. THE COURT: Okay. All right, is there anything fur- there from Mr. Marston? MR. MOEN: With the Court’s permission I would like to defer any cross-examination until Mr. Hartman has a chance for cross-examination. MR. HARTMAN: I just have a couple of questions, your Honor. CROSS-EXAMINATION BY MR. HARTMAN: THE COURT: As I understand it, Mr. Hartman, all of his testimony goes to the projected growth of Spokane County and the areas that are included in this SMSA, I guess you called it, and that is all I get from it, just the projected growth? MR. HARTMAN: Yes, your Honor. THE COURT: And the reasons why he thinks it will grow as far as jobs and housing and the normal [265] growth that he ascertained from previous census, et cetera, and how he draws his conclusions and that’s about all it is, isn’t that it? MR. HARTMAN: Ves, that’s about it. THE COURT: I don’t mean to say that’s about all it is, I should say that’s what he testified to. MR. HARTMAN: That’s it. THE COURT: I don’t want to depreciate his testi- mony, which I am not. All right, go ahead. 22 (By Mr. Hartman) Now, Mr. Marston, do you * 2 expertise in the field of banking? 0 : Q In making these studies and projections did you = = banking factors into consideration? o. Q When you were hired by the plaintiff here, did they indicate that this matter involved banking? A Yes. Q You were aware when you made these studies you were aware of that? 597 A Yes. Q Did you look at any of the factors which would enable someone to reach a conclusion as regards to bank- ing or banking economics? [266] A No. Q Did you testify as a witness for the plaintiff in the United States vs. Idaho? A Les, I did. Q In the Idaho case? A Yes. Q Would you tell us what kind of testimony you gave in that case and what it related to? A I think the testimony related basically about to the same factors, was the area— THE COURT: How fast Twin Falls was growing, is that it? THE WITNESS: Was it growing, your Honor, I think was it. THE COURT: I just got through reading that case just during the recess. MR. HARTMAN: Very good, your Honor. Q Now, would you say it is a fair statement, Mr. Marston, that in spite of your conclusions and testimony in this case the Court found that there were no economic or financial or business conditions in Twin Falls to justify the state or federal regulators to authorize another bank in Twin Falls? THE COURT: Well, just a minute, Counsel, that’s a tough question because I don’t know if he [267] read the opinion or not. I did, I read it, and the Court found that the rate of growth of Twin Falls was slow and that is the way I recall the opinion and that’s the way I understood he testified. Is that about it? THE WITNESS: Yes, your Honor, that was it. THE COURT: That’s what the Court found. MR. HARTMAN: Well, I guess that’s all I have then. THE COURT: Well, I mean insofar as his testimony is concerned. MR. HARTMAN: That’s correct, your Honor. THE COURT: And the Court found that the rate of growth was slow, there was nothing dramatic about it. 598 MR. HARTMAN: I think that makes my point, your Honor. THE COURT: You testified that the rate was slow? THE WITNESS: Yes. THE COURT: And the Court found that there wasn’t any reason to allow a fifth bank to come into the area because of the slow rate of growth and in the foreseeable future there never would be a fifth bank. [268] MR. HARTMAN: Well, that probably supports Mr. Marston’s testimony and— THE COURT: Oh, 1 don't know if I would put it quite that way, I don't think that he was responsible for the Court finding that a fifth bank would have come, maybe he was responsible for that, maybe his testimony was that the rate of growth was so slow that the Court said, Well, under those circumstances you could never have or wouldn't have another bank.“ Do you see what I am getting at? MR. HARTMAN: Yes, I do, your Honor. THE COURT: I don’t want to put the blame on him for the Court finding anything in that because I don’t think that that would be appropriate, from the way I read it I don’t know what his testimony was. The Court in there did in that opinion remark about that it didn’t credit certain of the experts and Mr. Marston wasn’t one of them. True? MR. HARTMAN: That's correct, your Honor. THE COURT: He didn’t mention Marston, he did mention a certain expert that he called but not Marston. MR. HARTMAN: What did you say as to the rate of Twin Falls growth in that case? THE WITNESS: Well, I would have to review [269] and refer to my notes in terms of specifics or something that I haven’t with me. Q (By Mr. Hartman) You don’t remember? MR. HOFFMAN: I would have to object to that, your Honor, as to the resolution of another fact case to the growth of Twin Falls. THE COURT: Well, I would conclude that the Court found that the rate of growth was slow unless he is will- ing to say he testified it was going to be fast, I don’t 599 think it would be material and I am sure he didn’t testify to that. Did you? THE WITNESS: Not to my knowledge. THE COURT: Okay. Anything further? MR. MOEN: No cross-examination. THE COURT: Now, this witness can be excused then, is that correct? MR. HARTMAN: Tes, your Honor. THE COURT: All right, he will be excused. And now as far as other witnesses are concerned, is Mr. MacMur- ray coming Thursday? MR. TORRE: Tomorrow we will read the deposition of the late W. Witherspoon in the record. THE COURT: How are you fixed for witnesses, Mr. Moen? MR. MOEN: Well, I would hate to start off with one [270] this afternoon, your Honor. THE COURT: No, no, I mean tomorrow. MR. MOEN: I think I could have a witness in the morning, your Honor, we can get started in the morning. THE COURT: All right. Do you think Mr. Mac- Murray will take a full day? MR. TORRE: It’s hard to say right at this moment, but not a full day. THE COURT: I would think so. He’s in Alaska and he is the former head of the— MR. TORRE: (Interposing) Supervisor of Banking in the State of Washington and now is in the same posi- tion in the State of Alaska. THE COURT: I know him personally and I just didn’t think that he would take a full day, and the reason I don’t think he would take a full day is he is a lawyer, so he could take two days, but you mean his testimony won’t take all day long? MR. TORRE: Well, there is a transportation problem between here and Alaska, two problems, in fact, and also his position up there requires him to be there. THE COURT: Lou can have him here Thursday. Now, Mr. Moen? [2711 Mr. Moen, in view of the fact that this is a court trial you have no objection, do you, to going ahead and putting on some testimony? 600 MR. MOEN: Not at all, your Honor. THE COURT: And you can make whatever motions when you rest, in any event take it, as you probably will, but you don’t have any objection? MR. MOEN: No, not at all, your Honor. THE COURT: So I think—well, how long will Mr. Witherspoon’s deposition take? It’s not too thick, is it? MR. TORRE: No, your Honor, it’s quite thin. THE COURT: All right. You will have some wit- nesses so we can just go all day tomorrow, Mr. Moen, and that will expedite the ultimate disposition of the case. And do you want me to read Mr. Witherspoon’s deposition before tomorrow? MR. TORRE: Whatever you prefer, your Honor. THE COURT: Lou can put it in the record by ques- tion and answer but if I read it, then I’ll remember it better than if I hear it the first time. MR. TORRE: Well, if the defendant and the inter- venor have no objection, we have no objection to that. THE COURT: Then I will read it in the [272] in- terim and of course every time a deposition is filed, why they, that, under the Court rules, that permits me to read it. All right, now, there is nothing further then tonight? MR. MOEN: Nothing as far as the defendants are concerned, or the intervenors are concerned, your Honor. THE COURT: All right. MR. TORRE: Nothing further as far as we are concerned, your Honor. THE COURT: While we are all here, were you in that case, that Idaho case? MR. TORRE: Yes, I was, your Honor. THE COURT: I haven’t heard, of course, the testi- mony of the defendants’ side, but this case seems to me to be remarkably similar to the Idaho case save and except for the fact that Spokane, the City of Spokane, is more of a metropolitan area, is that the distinction? MR. TORRE: Well, it is larger, and in the Idaho case there was another kicker in it, in that, was that the government alleged there was an elimination of existing competition in an eight-county area. This was narrowed down in trial to the Jonston area. 601 THE COURT: I read that, yes, but other than [273] that factor the distinction I see is the Spokane metro- politan area as contrasted to the City of Twin Falls, a 25,000 population city, is that it? MR. TORRE: There is quite a difference of magni- tude in the market areas and in importance in the state. THE COURT: All right, then. If there is nothing fur- there we will recess until tomorrow morning at 9:30. Is that satisfactory or do you want to start earlier? MR. MOEN: No, 9:30 sounds good to me, your Honor. 9:30 is just fine. . MR. TORRE: That is just fine, your Honor. THE COURT: Very well, we'll recess until 9:30 in the morning. (Court recessed until 9:30 A. M., January 10, 1972.) [274] REPORTERS’ CERTIFICATE WE, W. L. Mayrand, Gerald J. Popelka, and Paul C. Tveten, official court reporters for the United States Dis- trict Court, for the Western District of Washington, do hereby certify that the annexed and foregoing is a full, true and correct transcript of proceedings had in the above-entitled and numbered cause, on the date herein be- fore set forth, and we do further certify that the same has been prepared by us, or under our direction. — [275] UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA Filed in the United States District Court, Western District of Washington, June 22, 1973, Edgar Scofield, Clerk, by M., Deputy] No. 237—71C2 UNITED STATES OF AMERICA, PLAINTIFF vs. s MARINE BANCORPORATION; THE NATIONAL BANK OF COMMERCE OF SEATTLE, ET AL, DEFENDANTS TRANSCRIPT OF PROCEEDINGS held in the above- entitled and numbered cause in the above-entitled Court before the Honorable WILLIAM N. GOODWIN, United States District Judge, on Wednesday, January 10, 1973, at the United States Courthouse, Tacoma, Washington. VOLUME III 276] APPEARANCES RICHARD J. TORRE, ALLAN S. HOFFMAN, PHILIP L. VERVEER, and RONALD SILVERMAN, Attorneys, Antitrust Divi- sion, Department of Justice, appearing for and on behalf of Plaintiff; JAMES WILLIAM JOHNSTON and R. A. MOEN (of Graham, McCord, Dunn, Moen, John- ston & Rosenquist), and DANIEL M. GRIBBON, and CHARLES LISTER, (of Covington & Burling), ap- pearing for and on behalf of Defendants; JON HARTMAN and THOMAS McLACHLEN, appearing for and on behalf of Intervenor. 608 277 PROCEEDINGS (The Court convened at 9:50; everybody is present.) MR. VERVEER: Your Honor, the government at this time would like to read into the record the deposition of the late W. W. With THE COURT: All right. MR. VERVEER: The deposition was taken Septem- ber 8, 1972, in Spokane. THE COURT: Is there any objection to this? MR. MOEN: Not at this time. I intend to object to certain questions when we get into it. THE COURT: All right. I was going to say if there wasn’t any objection, we could shortcut this. I have read the deposition, and I gather that the purpose of the gov- ernment introducing it into evidence is to show that banks can acquire other banks under sponsorship, and in the last part of the deposition, that Mr. Witherspoon said he wouldn't try to move into Seattle and Tacoma under the same circumstances as he would if he were going to go into Othello or something of that sort. Is that the idea? MR. MOEN: Our position is to the extent that the procedure used and described by Mr. Witherspoon 278] in his depsition is concerned, as to the extent that it is illegal, ft is not binding on the National Bank of Com- . merce in any way, and if there is a violation of the statute, why, it doesn’t provide a means of entry for Commerce. THE COURT: Go ahead, put it in then. MR. VERVEER: Your Honor, we don’t have any great desire to read this into the record. We would like 4 have it in the record at this point if that is accept- e. THE COURT: I am going to let it go in for whatever it is worth. MR. MOEN: If our objection can be noted in the rec- ord at this time, I see no reason to read the whole deposition. THE COURT: I don’t think so either because I have read it, and as you can see, I didn’t detail it paragraph 604 by paragraph, but that is the import of it. Isn’t that it, what I have just said? MR. MOEN: That’s right, as long as we preserve our position, there is no reason to read it. THE COURT: All right, go ahead. You offer it and I will admit it into evidence. MR. VERVEER: At this time we would like to offer Mr. Witherspoon’s deposition. 2791 THE COURT: I noticed, of course, you cross- examined him at the time. MR. MOEN: That’s correct, your Honor. We just didn’t note our objections at that time, but they were to be preserved until trial, but as long as it is understood that we have the objections— THE COURT: You have your objections. The point of your objection is that if the Old National engaged in a practice that was in violation of the law, that doesn’t mean necessarily that N B of C would engage in a similar activity, is that the point? MR. MOEN: That’s correct, your Honor, and to the extent that whatever way they od construe the statute, it has no— THE COURT: - No binding effect on you. MR. MOEN: No binding effect on the National Bank of Commerce. THE COURT: All right. (The deposition of W. W. Witherspoon was read as follows:) [280] “W. W. WITHERSPOON, called as a witness on behalf of Plaintiff, being first duly sworn, was examined and testified as follows: EXAMINATION “BY MR. VERVEER: Would you please state your name and address for the record? a es Ws Witherspoon, 1821 Upper Terrace Road, Spokane, Washington. —— 605 Q What is your profession, Mr. Witherspoon? A Iam an attorney and also a banker. Q With whom are you a banker? A I am chairman of the board of Washington Banc- shares, Inc. and chairman of the board of the Old Na- tional Bank of Washington. Q And what is Washington Bancshares, Incorporated? A It is a registered bank holding company. What banks does it control? A The Old National Bank of Washington and First National Bank in Spokane. Q Mr. Witherspoon, how has your health been re- cently? A It has been poor. Q Are you under a doctor’s care? A I am. Would it be difficult for you to travel to Tacoma, [281] “Washington for a trial in October? A It could be difficult for me to do so. Q Do you expect to be hospitalized in the near future? A I will be entering the hospital this coming Sunday. Has a physician advised you to attempt to get away — = Pacific Northwest area for a vacation? 0. Q Has the Old National Bank ever sponsored or as- sisted in the creation of new banks? A It has assisted in the creation of new banks. Q What banks were they? A Walla Walla National Bank, Bank of Richland, Tri-Cities National Bank, Pasco, a national bank at Othello, I can’t give you the correct name at the moment, and National Bank of Kennewick, Washington. Q To the best of your recollection would the bank in Othello have been named the Othello National Bank? A Yes, I believe that is correct. And the bank in Kennewick named the Kennewick National Bank? A I think that is correct. Q Could you describe what type of assistance was given to the new banks? A Well, it varied from bank to bank. — 606 Q Could I ask you with respect to the Walla Walla [282] “National Bank what type of assistance was ren- dered? A In the case of the Walla Walla National Bank the people who were forming it were not able to raise suffi- cient capital funds, and I assisted in that manner by obtaining a couple of Spokane people who did make substantial investments. Q Was there any further assistance beyond that in the case of the Walla Walla National Bank? A Very little other than what any bank would render to a correspondent bank. I might say that we would like to have assisted in cases where we were not permitted to. Q In the case of the Walla Walla National Bank? A That is correct. Q What assistance was rendered to the Tri-Cities Na- tional Bank in Pasco, Washington? A We assisted in their obtaining a manager. We as- sisted in the formation of that bank in that we encour- aged people to start a bank in that case. Q And representatives of the Old National Bank ac- tually actively sought out individuals and encouraged them to do it? A That is correct. Did any officers of the Old National Bank own stock in the Tri-Cities National Bank in Pasco? A Mr. DeWitt Wallace owned stock in the Tri-Cities [283] “National Bank. He was president of the Old Na- tional Bank at that time. Do you recall the approximate percentage of stock in the Tri-Cities National Bank which Mr. Wallace owned? A I do not. Q What assistance was rendered to the Othello Na- tional Bank? A In. the case of the Othello National Bank, there were people in the community who desired to form a bank, came to a manager of our Tri-Cities’ branch, and asked for assistance. What assistance was then rendered to them? A Rendered? Mr. Wallace discussed the matter with Mr. Saxon who was then comptroller of the currency, an 607 application having previously been filed by this group. Mr. Saxon took the position that a charter would be granted provided that they could demonstrate a need for another bank in the community and that adequate financing and good management would be provided. With this the Old National continued to help them in the formation of their bank. I believe again that Mr. Wallace made a stock investment. We did assist some of these stockholders by loaning them money with which to buy stock and taking stock as security, perhaps with other security than stock. ’ [284] “Q What assistance was rendered in the case of the Kennewick National Bank? A In the case of the Kennewick National Bank again the people who were interested in forming the bank came to Mr. Wallace, and as for assistance, the matter of whether or not a charter would be available was discussed with Mr. Saxon on the very same trip that the Othello one was discussed. In that particular case there was a difficulty in obtaining proper management. We had at- tempted to line up management for them from outside sources, had not been successful when it came time to move ahead. So we gave a leave of absence to a man who had been a manager of our Pomeroy, Washington branch, and he managed the Kennewick bank. Could I ask you to repeat? You said you gave a leave of absence to the man at the Pomeroy branch? A That is correct. Q What assistance was rendered in the case of the bank of Richland? A At the start there were two groups that were out to form banks in Richland, and we heard about it. We were able to get the two groups together. One of the groups had already filed an application for a state charter. We were able to get the two groups together and pro- ceeded with the formation of a bank. And again [285] “I believe Mr. Wallace made a stock investment in that one. I am not entirely sure of that. Again I do know that we did loan money to some of the original share holders. Q Would it be a correct summary to state that in the case of the Tri-Cities National Bank the Old National Bank approached individuals to serve as organizers and in the other four cases, the prospective organizers approached the Old National Bank? MR. HARTMAN: I will object to the form of that question. Q (By Mr. Verveer) Mr. Witherspoon, could I ask you to recapitulate who approached whom in the case of the five banks that we have discussed? A The Walla Walla bank, we were approached by an attorney from Walla Walla who wanted to get a bank started. In the Tri-Cities National Bank at Pasco we went to individuals in that area to interest them in forming a bank. In the case of Richland, we obtained information that two groups were each trying to get bank charters. A member of one of the groups was a director of the Tri-Cities National Bank, and we got the informa- tion from that source. We made the move then to try to get the groups together and to form a bank which would be a correspondent of the Old National. In the case of [286] “Othello, the group who were attempting to form a bank and who had made an application for a national charter approached our manager—manager of our Tri- Cities’ branch. In the case of Kennewick, the group who were forming a bank approached us. Q Mr. Witherspoon, why did the Old National Bank assist in the formation of these five banks? A We assisted in the formation of these banks, first of all, to have a correspondent and with the hope and belief that we would be able to acquire them in the fu- ture and make branches of the Old National there. Q Has the Old National Bank in fact been able to ac- quire these five banks? A It has. Q Are the branch ~~ which these banking offices now have become profitable branches? A That is a rather difficult question in that it is most difficult to determine the net profit of individual offices in our branch system. I would say that in some cases we have recovered the premium that was paid and are in the black in that respect, and that in other cases we have not as yet fully recovered the premium paid. Q Was there an understanding between Old National 609 Bank and the organizers of these new banks that Old National [287] “Bank would eventually acquire them at the time that the charters were granted? A There was an understanding between the Old Na- tional Bank and some of the original shareholders of those banks that the Old National would acquire them. Q Im the cases where there was such an understand- ing did these shareholders control the requisite percentage of stock to assure control to Old National? A Yes, they did. Q Was the understanding between Old National Bank and these shareholders formal or informal in nature? A To the best of my recollection there was no written understanding with respect to the Walla Walla National Bank, but there was a formal understanding with each of the others. Q Mr. Witherspoon, what did the formal understand- ing in the case of the other four banks entail? A It was an agreement in each case which provided that within five years from the formation of the bank the Old National Bank would make application to the comp- troller for permission to acquire that bank and establish a branch at its location, that the shareholders who joined in that agreement would vote in favor of such a transac- tion, that the price which would be paid would be either a net—the fair value of the assets [288] “less liabilities at the time of takeover plus a premium equal to four per- cent on deposits, or the shareholders’ original investment plus interest at eight percent per annum compounded an- nually, whichever was the greater. Was the comptroller of the currency informed by the Old National Bank of its activities with respect to the assistance to the new banks? A Not in the case of the Walla Walla National Bank. The comptroller was informed in every other case, how- ever. Q Was he informed of the intention of the Old Na- tional Bank eventually to acquire the assisted banks? A Yes, he was. I might state, just to clarify this, in the case of the bank of Richland, which was a state bank, the comptroller was not informed of it until after that 610 bank had been formed, but he then was informed of it. In all other cases he was informed of it before the or- ganization of the bank. Q Did the comptroller of the currency raise any ob- jection to the Old National Bank’s efforts to establish branches by this means? A Hedid not. As a matter of fact, in the case of the Tri-Cities National Bank, the suggestion that we form the bank was made by the Chief Deputy Comptroller in [289] “the presence of—who was Lew Jennings at the time in the presence of Ray Gidney, which was the comp- troller of the currency, and Mr. Gidney approved that we should do it. Q In connection with these activities involving assist- ance and eventual acquisition by the Old National Bank, did the law firm of which you are a senior partner pro- vide legal advice to Washington Bancshares and the Old National Bank? A It did. Did your firm advise Washington Bancshares or the Old National Bank that there was anything illegal or improper about this method of establishing branches under either state or federal law? A It did not. Q Did you, as the chairman of the board of Washing- ton Bancshares, ever have any fear that the holding company would be in danger of forfeiting its charter under the state holding company law as a result of the agreements which you have told us about involving the controlling shareholders of the various banks? A No, I did not. Q Mr. Witherspoon, what is the percentage, approxi- mate percentage, of stock ownership that Washington Bancshares has in its two banking subsidiaries? [290] “A Oh, 98 percent of the stock of the Old Na- tional Bank and 99 percent of the stock of the First Na- tional Bank at this time. Q And at the time that these activities which you have described were taking place, what was the owner- ship, approximately? A Well, at that time I believe it was approximately 611 two-thirds of the Old National Bank and 74 percent of the First National Bank. Q Is the Washington— A It was less than two-thirds of the Old National Bank at that time, 60, 62 percent, something like that. Q Is Washington Bancshares, Incorporated a Wash- ington corporation? A It is. Q Where did the manager of the Tri-Cities National Bank come from? A He was Mr. Wallace’s son-in-law. He had been running a small bank at Endicott, Washington. Q Mr. Witherspoon, to your knowledge was the Old National Bank the first bank in the State of Washington to assist other banks in the manner you have described? A I have to answer that it is just general knowledge and it’s done by other banks in the past, with my not having any proof at all. [291] “Q Based on your beliefs and without any evi- dence of it, what other banks were engaged in activities similar to those which you have described? MR. MOEN: I am going to object to it as repetitious. He’s already answered the question. He said he didn’t know, didn’t have any particular knowledge of it. MR. VERVEER: We will note the objection and ask Mr. Witherspoon to answer the question. MR. MOEN: He’s already answered the question. (By Mr. Verveer) Mr. Witherspoon, I will attempt to te the question. Based on simple belief and not on firsthand knowledge, what other banking organiza- tions in the State of Washintgon have been involved in activities similar to those which you have described? MR. MOEN: Same objection. A Want me to answer? Q Please. A Seattle-First National Bank, National Bank of Commerce, Peoples National Bank. Q Again based on your belief, could I ask what as- sisted banks were involved in the case of Seattle-First National Bank? A A bank at Kennewick which subsequently was 612 branched, a north Spokane bank which subsequently was acquired [292] “and branched. I know no others. Q Based on your belief, what assisted banks were in- volved with the National Bank of Commerce? A The bank at Pomeroy, Washington. Q And again based on your belief, what banks were assisted by Peoples National Bank? A The bank of Vancouver. MR. VERVEER: We have no further questions. (A short recess was taken) EXAMINATION BY MR. JOHNSTON: Q Mr. Witherspoon, as I recall it, counsel asked you a question that was worded roughly as follows: In your opinion was this method of establishing branches legal or was it proper. Now, I am not quite clear as to what counsel meant by this method. What did you understand him to mean? A I understood him to ask me whether I had had any concern as an officer of Washington Bancshares as to the possibility of our charter being put in danger by using this method of getting banks started, and future acquisi- tion. Q In other words then, you didn’t understand him to mean that what you did was a method of establishing a branch from the inception? . [2938] “A No. Q And is that what you did? A No. We assisted in the formation of a bank which we hoped to be able to take over. Q And circumstances later developed so that you did take them over? A That is correct. Q Now, counsel also asked you, Mr. Witherspoon, if you had informed the comptroller, and there again I wasn’t quite clear as to what information he—you said that you had informed the comptroller, and I wasn’t quite clear as to what you had informed the comptroller in that connection. Can you elaborate on that? 613 A Merely the fact that [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0339%3A02. Public record. Not legal advice.