Mr. BALLANTYNE. All right.

Mr. PECORA. They had formerly been entities, but they were eliminated by the merger into the Detroit Trust Co.

Mr. BALLANTYNE. I see.

Senator COUZENS. You understand that those in green were eliminated by the merger.

Mr. BALLANTYNE. Let me look over the map, and I will see what I can make out of it.

Mr. PECORA. All right. Please do so.

Mr. BALLANTYNE (after looking at the map and consulting with other witnesses present). That is substantially right, I think.

Mr. PECORA. Now, the chart as you have examined it and conferred about its correctness with quite a number of your associates, is correct, is it?

Mr. BALLANTYNE. It appears to be correct; yes.

Mr. PECORA. Mr. Chairman, I ask that that map be marked in evidence.

Senator COUZENS (presiding). That may be done.

(A large chart entitled "Organization of Detroit Bankers Co.", was marked "Committee Exhibit No. 6, Jan. 24, 1934"; and a copy of it, reduced in size, is made a part of the record.)

Mr. PECORA. Mr. Ballantyne, I show you a little booklet bearing the inscription on the cover page, "Detroit Bankers Co.", and purporting to be the consolidated balance sheet of wholly owned banks of the Detroit Bankers Co. as of December 31, 1929; and also purporting to show the officers and directors of the Detroit Bankers Co., and the officers and directors of the wholly owned banks referred to. Will you look at it and tell me if you recognize it to be a true and correct copy of such pamphlet gotten out by the Detroit Bankers Co.?

Mr. BALLANTYNE (after looking at the booklet). I would say that is a true and correct copy.

Mr. PECORA. Mr. Chairman, I offer that in evidence.

Senator COUZENS (presiding). It may be entered in the record. (A printed pamphlet entitled "Detroit Bankers Co., Consolidated Balance Sheet of Wholly Owned Banks, as of Dec. 31, 1929, etc.", was marked " Committee Exhibit No. 7, Jan. 24, 1934.")

Mr. PECORA. I notice on page 3 of this pamphlet, which has been received in evidence as committee's exhibit no. 7, the following footnote:

These figures do not include the resources of the Detroit Co., nor of the First National Co. of Detroit.

Do you know why in the consolidated balance sheet of these wholly owned banks there was not included the balance sheet of these Detroit Co. nor of the First National Co. of Detroit?

Mr. BALLANTYNE. The First National Co. of Detroit was included

in our statements, so I am told.

Mr. VERHELLE. This is earlier.
Mr. PECORA. What was that?

Mr. VERHELLE. The reason was that the Detroit Co. was owned by the Detroit Trust Co., and

5084

Mr. BA
Mr. PE

inated by Mr. BA Senato nated by Mr. BA I can mal

Mr. PE

Mr. BA other wit

Mr. PE

ferred ab

is correct, Mr. BA

Mr. PE evidence. Senator (A larg was mark of it, redu Mr. PE the inscri porting to of the C purportin Co., and referred t

a true and Bankers (

Mr. BA

is a true Mr. PE Senator (A prin Balance S was mark

Mr. PE

received
footnote:

These fig
First Natio

Do you wholly ov Detroit C

Mr. BA

in our sta

Mr. VE

Mr. PE

Mr. VE

the Detro

Mr. PECORA (interposing). Just wait one minute. I think we will administer the oath to you.

Senator COUZENS (presiding). 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. VERHELLE. I do.

TESTIMONY OF JOSEPH F. VERHELLE, GROSSE POINTE, MICH., SENIOR OFFICER OF THE MANUFACTURERS NATIONAL BANK OF DETROIT

Mr. PECORA. Please state your name, residence, and occupation. Mr. VERHELLE. My name is Joseph F. Verhelle; 1331 Three Mile Drive, Grosse Pointe, Mich.; I am senior officer of the Manufacturers National Bank of Detroit.

Mr. PECORA. Were you connected with the Detroit Bankers Co. in any capacity heretofore?

Mr. VERHELLE. I was connected as comptroller from February 29, 1930, until the beginning of November of 1932. This statement, while it was put out before I had anything to do with the Detroit Bankers Co., yet in answer to your question I will say, the Detroit Co. was owned by the Detroit Trust Co., and that ownership of the First National Bank was very much in doubt.

Mr. PECORA. Well, why were not the balance sheets of these two companies included in the consolidated balance sheet embodied in committee exhibit no. 7?

Mr. VERHELLE. I cannot answer for this one, but it was embodied in future statements, and I can answer for those. I presume the question is the same in both cases, so that my answer to the latter statement will take care of this one. The balance sheet of the Detroit Co., if it had been included in later statements, would have been misleading inasmuch as it was owned and the value of it already included in the assets of the Detroit Trust Co. The theory upon which this statement was published was that the stockholders were being informed on the holdings of the Group Co. There were two ways to publish a balance sheet: One was, to show a balance sheet of the Detroit Bankers Co., merely indicating that they held so many shares of this stock, and so many shares of something else, against which they had outstanding a certain amount of their own stock. That would have been a rather meaningless statement, because after all it was the statements behind that stock that were presumed to amount to anything. And the Detroit Co. was already included, insofar as its value was concerned, and the First National Co. being worthless, were not included in subsequent balance sheets.

Mr. PECORA. All right. Now I will resume my examination of Mr. Ballantyne.

TESTIMONY OF JOHN BALLANTYNE-Resumed

Mr. PECORA. Now, Mr. Ballantyne, before I asked you to identify the chart, which has since been marked in evidence as "Committee Exhibit No. 6", I started to question you on the subject of whether or

not the five original unit banks of the holding company were permitted to carry on as they had been carried on and conducted immediately prior to their acquisition by the Detroit Bankers Co.? Mr. BALLANTYNE. Oh, no.

Mr. PECORA. They were not?

Mr. BALLANTYNE. Not when they were consolidated. Of course not.

Mr. PECORA. What changes or departures were made after they had been acquired by the Detroit Bankers Co.?

Mr. BALLANTYNE. The Peninsular Co. and the Bank of Michigan joined in the consolidation with the People's Wayne County Bank. I, however, was asked to go over to the First National Bank as chairman of the board, which I did. I think those were all the banks that were changed.

Mr. PECORA. I am not asking about changes effected by mergers, acquisitions, or consolidations. My question was directed particularly to the proposition of whether or not the banking units of the holding company were permitted to conduct their respective business affairs in the same manner in which they had been conducted prior to their acquisition by the holding company.

Mr. BALLANTYNE. Of course, when the acquisition took place, when that consoliation took place, those banks were closed. As to the principal banking officers of the Bank of Michigan and the Peninsular State Bank, those banks were closed.

Senator COUZENS. I think there is a misunderstanding here. Mr. BALLANTYNE. It may be that I have misunderstood it. Senator COUZENS. How long after the organization of the Detroit Bankers Co. was it before this consolidation took place? Mr. BALLANTYNE. I would have to look that up.

Mr. VERHELLE. It was 4 months.

Senator COUZENS. Mr. Pecora's question, Mr. Ballantyne, was confined to those 4 months before the consolidation.

Mr. BALLANTYNE. Oh. Yes; there was no pressure there that I know of.

Mr. PECORA. After the acquisition of those banking units, or unit banks, by the holding company, were the officers and directors of each unit bank permitted to conduct and direct the operations, activities, business, and policies of their respective banks?

Mr. BALLANTYNE. In a general way I would say they were.

Mr. PECORA. Was their control and direction interfered with or modified or changed in any way by the officers, trustees, or directors of the Detroit Bankers Co.?

Mr. BALLANTYNE. I cannot think of any way in which they were interfered with.

Mr. PECORA. Well, now, after the acquisition of those unit banks by the holding company, did any representatives of the holding company sit in at meetings of boards of directors of such unit banks? Mr. BALLANTYNE. Not when you talk of the unit banks. Are you referring to the five?

Mr. PECORA. I mean all the unit banks which either at the outset or subsequently or eventually were acquired in whole or in part by the holding company, which was the Detroit Bankers Co.