14. Copy of annual report, 1931, filed with Michigan Securities Commis- ́sion by Detroit Bankers Co., 5183--- 15. Memorandum March 7, 1932, Verhelle to Ballantyne, 5185. 16. Papers and documents turned over to committee by the witness: 93. Letter February 16, 1932, Hentschell to Verhelle__ 94. Letter February 23, 1932. Verhelle to Hentschell, 5215_. 95. The document referred to, heretofore marked for identification as Committee's Exhibit No. 16, was received in evidence, 5221_- 96. Memorandum June 16, 1932, Verhelle to Mills, 5264- 97. Memorandum May 27, 1932, Verhelle to Mills, 5269– 98. Memorandum June 1, 1932, Verhelle to operating committee_-- 99. Memorandum from Joseph F. Verhelle to Wilson W. Mills, dated 102. Statement January 9, 1932, signed Felix M. Farrell, 5299. 103. Document signed F. C. Van Every, January 9, 1934, 5300__. 104. Copy of resolution creating trust for investment of trust funds, 105. A number of statements, verified by Mr. Van Every, auditor of the Detroit Trust Co., under date of January 6, 1934, relating to issuance of certificates of participation by the Detroit Trust Co., 5321_ 106. Set of statements signed by A. J. Colvin and by Mr. Van Every, certifying to certain facts with regard to the issuance of partici- 111. A photostat of a certificate of deposit dated August 8, 1931, issued by the Detroit Trust Co., and payable to the Peoples Wayne County 112. A photostatic reproduction of a certificate of deposit issued by the Detroit Trust Co., dated August 8, 1931, payable to the First National Bank in Detroit for $1,700,000, 5351_. 113. A photostatic reproduction of a certificate of deposit issued by the Detroit Trust Co., dated August 8, 1931, payable to the Detroit 115. Photostatic copy of a letter addressed to the Detroit Trust Co., by H. G. Taylor, examiner of the State of Michigan Department of 116. A carbon copy of a letter dated August 2, 1932, addressed to the Department of Banking, Lansing, Mich., by W. J. Thomas, treas- (*) Not printed because of length or for reasons given in text. (**) Some of these latter appear under different exhibit numbers as, for instance, no. 16 appears as regular exhibit no. 91. 119. Photostatic copy of certificate of deposit dated August 2, 1929, pay- able on demand to the Ford Motor Co. in the sum of $1,000,000, 120. Photostatic copy of certificate of deposit dated August 13, 1928, pay- able on demand to the Ford Motor Co. in the sum of $300,000, 121. Photostatic copy of certificate of deposit dated August 13, 1928, pay- able on demand to the Ford Motor Co. in the sum of $200,000, 122. Photostatic copy of certificate of deposit dated September 11, 1929, payable on demand to the Ford Motor Co. in the sum of $1,000,000, 123. Photostatic copy of certificate of deposit dated December 29, 1932, payable on demand to the First National Bank of Detroit in the 124. The copies of four certificates of deposit issued by Detroit Trust Co., payable to Ford Motor Co., dated December 29, 1932, 5366_ 125. Report dated July 9, 1932, signed by Truman H. Newberry, Wilson W. Mills, Lawrence K. Butler, and George J. Pipper___ 126. Report dated May 25, 1932, signed by Wilson W. Mills, J. O. Murfin, 129. Statement of purchases and sales of Detroit Bankers stock by Mr. Stair from January 8, 1930, to February 11, 1933--- 130. Annual report of Detroit Bankers Co., dated December 31, 1932, STOCK-EXCHANGE PRACTICES OF WEDNESDAY, JANUARY 24, 1934 UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D.C. The subcommittee met at 10 a.m., pursuant to adjournment on yesterday, in room no. 301 of the Senate Office Building, Senator Duncan U. Fletcher presiding. Present: Senators Fletcher (chairman), Adams, Townsend, and Couzens. Present also: Ferdinand Pecora, counsel to the committee; Julius Silver and David Saperstein, associate counsel to the committee; and Frank J. Meehan, chief statistician to the committee; Thomas G. Long, attorney for witnesses summoned in connection with Detroit Bankers Co.; Clifford B. Longley, attorney for John Ballantyne. The CHAIRMAN. The subcommittee will please come to order. Mr. Pecora, who will you have first? Mr. PECORA. Mr. Chairman, this is the beginning of the hearings in connection with the Detroit Bankers Co. I will call Mr. Ballantyne as the first witness. The CHAIRMAN. Mr. Ballantyne, will you please come forward to the committee table, stand, hold up your right hand, and be sworn? You solemnly swear that you will tell the truth, the whole truth, and nothing but the truth, regarding the matters now under investigation by the committee. So help you God. Mr. BALLANTYNE. I do. The CHAIRMAN. Just take a seat there opposite that microphone on the committee table. TESTIMONY OF JOHN BALLANTYNE, 1750 BALMORAL DRIVE, DETROIT, MICH., PRESIDENT OF MANUFACTURERS' NATIONAL BANK OF DETROIT AT THE PRESENT TIME Mr. PECORA. Mr. Ballantyne, will you give your full name, address, and business or occupation? Mr. BALLANTYNE. My name is John Ballantyne. I reside at 1750 Balmoral Drive, Detroit, Mich. My occupation at the present time is president of the Manufacturers' National Bank of Detroit. Senator COUZENS. Mr. Longley, are you attorney for Mr. Ballantyne? Mr. LONGLEY. Yes, sir. Mr. BALLANTYNE. How was that, Senator Couzens? Senator COUZENS. I asked Mr. Longley if he was your counsel. I thought he was counsel for the Guardian-Detroit people. Mr. BALLANTYNE. Well, I have new counsel. Mr. PECORA. Mr. Ballantyne, were you connected with a company known as the "Detroit Bankers Co."! Mr. BALLANTYNE. Do you ask, was I? Mr. PECORA. Yes. Mr. BALLANTYNE. Oh, yes. Mr. FECORA. When was that company organized? Mr. BALLANTYNE. It was organized, or rather was formed on January 8, 1930." Mr. PECORA. Under the laws of the State of Michigan? Mr. BALLANTYNE. Yes. Mr. PECORA. Was it organized as a holding company to acquire, hold, and own stock of banking institutions and other corporations? Mr. BALLANTYNE. No. Well, now, I would have to know the law on instruments to be able to answer that, and I do not know the law. Mr. PECORA. Well, you can tell me whether Mr. BALLANTYNE (continuing). As a matter of fact, Mr. Pecora, at that time, let me say, so you may have the genesis of this matter: This operation was discussed for years almost before I knew anything about it. Mr. PECORA. Do you mean that the organization of the company was discussed for a year before its actual incorporation? Mr. BALLANTYNE. Oh, I think so, all of that time. Mr. PECORA. Did you participate in any of those discussions? Mr. BALLANTYNE. No; I didn't know a thing about it until the fall of 1929. Mr. PECORA. The fall of 1929 was prior to the incorporation of the company, wasn't it? Mr. BALLANTYNE. Yes. Mr. PECORA. Did you from that time up to January 8, 1930, participate in any discussions or conferences with regard to the formation of this company? Mr. BALLANTYNE. To some extent; yes. Mr. PECORA. With whom did you have such discussions, Mr. Ballantyne? Mr. BALLANTYNE. Oh, I think there were meetings held of the proposed participants in it. Mr. PECORA. Who were they? Mr. BALLANTYNE. At that time Julius Haass was the chief party in it; and Emory Clark, and Dwight Douglas, and I think Ralph Stone, and Mac Browning, and Palmer Livingstone, and Mr. Chittenden, and I think John Woody. I believe those were the men, principally, who discussed the matter then. Mr. PECORA. Now, Mr. Ballantyne, in the course of those discussions, or as a result of those discussions, what did you learn to be the purpose for which the Detroit Bankers Co. was created? Mr. BALLANTYNE. Primarily to avoid-well, to get rid of unwise competition. To cut down the number of branches in Detroit. Mr. PECORA. To cut down the number of branches of what? Mr. BALLANTYNE. The number of branches of banks. There probable were three-hundred-and-odd branches at that time, or 360-am |