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Mr. PECORA. The letter which is received in evidence and marked Committee's Exhibit No. 11 of this date reads as follows [reading]:

MARCH 4, 1930. Mr. HENRY H. SANGER, President National Bank of Commerce,

Detroit, Michigan. DEAR MR. SANGER: provide the dividend requirements of the Guardian Detroit Union Group, Inc., on the basis of an annual disbursement of $3.20 per share, the dividend should be declared at the March meeting of your Board of Directors. I would suggest, therefore, that it would be in order for your board to declare a dividend of 5 percent for this quarter. This dividend should be payable not later than March 27th to stockholders of record March 17th, and à check to cover the dividend on the shares standing in the name of Guardian Detroit Union Group, Inc., as well as the shares standing in the names of your directors, should be in the hands of Mr. B. K. Patterson, Treasurer, Penobscot Bldg., Detroit, on that date or on the day following. Your proportionate share of the expenses of the Group Company, incurred on account of services rendered by that company, will be figured and a memorandum sent you at a later date

Please be good enough to promptly confirm this arrangement and advise me upon the declaration of your dividend. Very truly yours,

President. And that is signed by you as president. Do you know whether Mr. Sanger, upon the receipt of this letter just received in evidence, made any protest or made any suggestions to you with regard to your suggested dividend rate for the quarter of 5 percent?

Mr. LORD. I do not recall what he replied to that.

Mr. PECORA. As possibly serving to refresh your recollection on that, I show you what purports to be a photostatic copy of a letter addressed to you by Mr. Sanger under date of March 11, 1930. Will you be good enough to look at it and tell me if you recognize it to be a true and correct copy of such a letter received by you?

Mr. LORD. I assume so.
Mr. PECORA. I offer it in evidence.
The CHAIRMAN. Let it be admitted.

(The document referred to, letter, March 11, 1930, Sanger to Lord, was received in evidence, marked'" Committee's Exhibit No. 12," December 19, 1933, and the same was subsequently read into the record by Mr. Pecora.)

The CHAIRMAN. Do I understand, Mr. Lord, that the directors themselves did not receive any dividends?

Mr. PECORA. They had assigned them to the Group.

Mr. LORD. They had assigned the dividends of the unit to the Group. They did receive dividends.

The CHAIRMAN. The dividends payable on their stock went to the Group?

Mr. LORD. Yes; and in turn they were to receive the dividend from such Group stock as would have been exchanged if an exchange had been made.

Mr. PECORA. That was part and parcel of the agreement referred to this morning?

Mr. LORD. It is in the record.

Mr. PECORA. The letter just offered and received in evidence, and marked " Committee's Exhibit No. 12" of this date, reads as follows. It is on the letterhead of the National Bank of Commerce of Detroit [reading]:

MARCH 11, 1930. Mr. R. O. LORD, President Guardian Detroit Union Group,

Detroit. DEAR MR. LORD: Your letter of March 14, suggesting that the Board of Directors of the National Bank of Commerce declare a quarterly dividend of 5 percent, at $250,000, was submitted to our Board meeting today.

In view of the fact that our earnings for the present quarter, from present indications, will little more than cover our regular dividend of 4 percent, they felt that only our regular dividend should be declared for this quarter. However, if this will upset your calculation to pay the regular quarterly dividend of 80 cents a share on the Group stock, they will be glad to consider the declaration of an additional 1 percent at the next meeting of our Board, March 18th. Will you please let me have your views in the matter? Very truly yours,

H. H. SANGER, President. When you received this letter from Mr. Sanger, do you recall what you did about it?

Mr. LORD. No; I do not recall, Mr. Pecora.

Mr. PECORA. Perhaps this letter, a photostatic copy of which I now show you, will serve to refresh your recollection. Will you please look at it and tell me if you recognize it to be a true and correct copy of a letter sent by you to Mr. Sanger in reply to his letter of March 11, 1930?

Mr. LORD. I assume so.
Mr. PECORA. I offer it in evidence.
The CHAIRMAN. Let it be admitted.

(The document referred to, letter, March 13, 1920, Lord to Sanger, was received in evidence, marked " Committee Exhibit No. 13 ", Dec. 19, 1933, and the same was subsequently read into the record by Mr. Pecora.)

Mr. PECORA. The letter just received in evidence as committee's exhibit no. 13 of this date is as follows (reading]:

MARCH 13, 1930. Mr. H. H. SANGER, President, the National Bank of Commerce,

Detroit, Mich. DEAR MR. SANGER: I have your letter of the 11th advising me of the action of your board in declaring a regular 4 percent dividend instead of 5 percent as suggested. We are counting on the 5 percent dividend and I hope, therefore, you will have your board declare an additional one percent at the next meeting on March 18. The fact that they are declaring a dividend at this rate for the present quarter does not necessarily mean that the same rate will continue throughout the year. I think each situation will have to be studied to determine what dividend it is advisable to declare for each quarter. Trusting the suggestion is satisfactory, I am, Very truly yours,

President. Signed by yourself as president.

Does not the evidence an instance where you did not abide by the independent judgment of the board of directors of a unit bank with regard to the declaration of a dividend !

Mr. LORD. I gather that Mr. Sanger's letter in regard to the extra dividend of the bank represented the board's decision and judgment on it, don't you?

Mr. PECORA. No; so long as you ask me, I emphatically do not. Mr. LORD. Well, I do.

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Mr. PECORA. Let me have that letter of Mr. Sanger's, and we will analyze it a little. The letter I refer to is a letter of Mr. Sanger to you, under date of March 11, 1930, which specifically tells you this (reading] :

In view of the fact that our earnings for the present quarter, from present indications, will little more than cover our regular dividend of 4 percent, they felt that only our regular dividend should be declared for this quarter.

Now Mr. Lord, do you think that when Mr. Sanger wrote you to that effect, that he was telling you that his board was favorable to a 5 percent rate for the quarter?

Mr. LORD. Would you please read the next sentence?

Mr. PECORA. Will you answer my question based upon that part of the letter?

Mr. LORD. I think you have to consider the letter as a whole. Mr. PECORA, I will read the next sentence. Mr. LORD. I do not recall the exact wording. You may be right. Mr. PECORA (continuing reading): However, if this will upset your calculation to pay the regular quarterly dividend of 80 cents a share on the Group stock, they will be glad to consider the declaration of an additional 1 percent at the next meeting of our board, March 18th.

Will you please let me have your views in the matter?

Do you think that that represents the judgment of Mr. Sanger to you that his board was willing, on their independent judgment, to ideclare a quarterly dividend at the rate 5 percent, as suggested by you?

Mr. LORD. I think it represents their willingness to consider the extra 1 percent at the next meeting, just as Mr. Sanger says.

Mr. PECORA. It represents their willingness after having pointed out to you the unwisdom of declaring a quarterly dividend of 5 percent, to yield to the command from the throne, does it not?

Mr. LORD. I would not think so.

Mr. PECORA. It does to me; so long as you asked me before, that is my view of it.

After you were indulgent enough to respond to Mr. Sanger's suggestion for your views in the matter, did you send him your views Or, rather, you did send him your views under date of March 13, by the letter marked in evidence as Committee's Exhibit No. 13. What did Mr. Sanger's board do?

Mr. LORD. I do not recall, sir.

Mr. Pecora. Will you look at this photos atic copy of what purports to be a letter sent to you by Mr. Sanger and see if that enlightens or refreshes your recollection as to what they did? Is that a true copy of a letter you received from Mr. Sanger?

Mr. Lor). So far as I know, yes.
Mr. PECORA, I offer it in evidence.
The CHAIRMAN. Let it be admitted.

(The document referred to, letter, March 18, 1930, Sanger to Lord, was received in evidence, marked " Committee's Exhibit No. 14", Dec. 19, 1933, and the same was subsequently read into the record by Mr. Pecora.)

Mr. PECORA. The letter received in evidence and marked " Committee's Exhibit No. 14” of this date is on the letterhead of the National Bank of Commerce of Detroit and reads as follows [reading]:

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MARCH 18, 1930. Mr. R. O. LORD, President Guardian Detroit Union Group, Inc.,

Detroit. DEAR BOB: Before that he addressed you as “Dear Mr. Lord.” [Continuing reading :) Dear BOB: Your letter of March 13, in re extra dividend, was submitted to our directors at a meeting held today, and an extra dividend of one percent or $30.000 was declared payable March 27th, out of undivided profits. Very truly yours,

H. H. SANGER, President. Mr. Lord, does this correspondence indicate that Mr. Sanger and his board of directors were exercising their free, independent, and untrammeled judgment about the dividend ?

Mr. LORD. I would think so, knowing that board of directors, Mr. Pecora.

Mr. PECORA. Who were the members of the board, knowing them as you did ?

Mr. LORD. Just a minute. I will get them for you. [After examining papers.] Do you want a list of the board of directors of the National Bank of Commerce at that time?

Mr. PECORA. Yes.

Mr. LORD. Frank W. Blair, Harry C. Bulkley, Harry S. Covington, Harry V. Earhart, George R Fink, Harry S. Finkenstaedt, Burch Foraker, Edsel B. Ford, John H. French, George K. Hebb, Carlton M. Higby, Charles H. Hodges, James Inglis, James B. Jones, Samuel R. Kingston, Charles A. Kinney, George H. Klein, Charles F. Lambert, Dwight B. Lee, myself, Alving Macauly, Francis C. McMath, Charles S. Mott, Edwin H. Nelson,

John R. Russell, Murray W. Sayles, Henry H. Sanger, Allan Shelden, Hal H. Smith, Oscar W. Smith, John N. Stalker, John M. Toolin, Carl V. Tuttle, Charles B. Warren, L. A. Young.

Mr. PECORA. How many of those directors were also directors at that time of the group-quite a few of them, weren't there?

Mr. LORD. Yes; quite a few, sir.

Mr. PECORA. Were all of these directors also stockholders of the group?

Mr. LORD. They had to be.
Mr. PECORA. Were they substantial stockholders?
Mr. LORD. Some of them.
Mr. PECORA. Which of them were substantial stockholders?

Mr. LORD. Mr. Mott was probably the most substantial and Mr. Edsel B. Ford, both of whom were directors.

Mr. PECORA. How about Mr. Blair?

Mr. LORD. Mr. Blair was a fairly substantial stockholder. I do not know what holdings he had at the time.

The CHAIRMAN. The committee will take a recess until 10:30 in the morning.

(Whereupon, at 4:15 p.m., Tuesday, Dec. 19, 1933, an adjournment was taken until tomorrow, Wednesday, Dec. 20, 1933, at 10:30 a.m.)

COMMITTEE EXHIBIT NO. 1, DECEMBER 19, 1933

ARTICLES OF ASSOCIATION OF GUARDIAN DETROIT GROUP, INC. We, the undersigned, desiring to become incorporated under the provisions of Act No. 84 of the Public Acts of 1921, entitled "An Act to provide for the organization, regulation, and classification of domestic corporations; to prescribe their rights, powers, privileges, and immunities, to prescribe the conditions upon which corporations may exercise their franchise”, etc., do hereby make, execute, and adopt the following articles of association, to wit:

ARTICLE I

The name assumed by this association, and by which it shall be known in law is Guardian Detroit Group, Inc.

ARTICLE II

This corporation intends to proceed under Section 1, Chapter 1, Part 1 of the above act.

ARTICLE III

The purpose or purposes of this corporation are as follows: To acquire, own, hold, dispose of, and deal in stocks, bonds, and other evidences of indebtestness and securities including those issued by any corporation, domestic or foreign, and to possess and exercise in respect thereto all the rights. powers, and privileges of individual owners thereof including the right to vote the same and to execute proxies therefor.

ARTICLE IV

Principal place where company will operate is Detroit, in the County of Wayne, State of Michigan.

Address of main office in Michigan is Penobscot Building, Detroit.

ARTICLE V

The total capital stock authorized is Seven Million Five Hundred Thousand Dollars.

The amount subscribed is One Thousand Dollars.
The amount paid in is One Thousand Dollars.

The number of shares of common stock is 150,000 of the par value of Fifts Dollars each.

Amount of common stock, paid for in cash is One Thousand Dollars.

The amount of actual capital, in cash or property or both, which this corporation owned and possessed at the time of executing these articles is One Thousand Dollars.

ARTICLE VI

The term of this corporation is fixed at Thirty years.

ARTICLE VIC Names of stockholders, their residences, and shares subscribed by each are: Henry E. Bodman, 20 McKinley Place, Grosse Pte. Farms, Mich.

1 Edsel B. Ford, 100 Lake Shore Road, Grosse Pte. Shores. Mich.

1 John C. Grier, Jr., 8100 East Jefferson Avenue, Detroit, Mich.

1 Sherwin A. Hill, Northville, Mich_.

1 Ernest Kanzler, 2501 Iroquois Avenue, Detroit, Mich.

1 Robert 0. Lord, 17 McKinley Place, Grosse Pte. Farms, Mich.

12 Fred T. Murphy, 17620 East Jefferson Avenue, Grosse Pointe, Mich..

1 Phelps Newberry, 36 ('loverly Road, Grosse I'te. Farms, Mich.

1 James L. Walsh, 8161 East Jefferson Avenue, Detroit Mich -

1

ARTICLE VIII

The officers and directors for the first year of the corporation's existence are as follows:

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