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Mr. LORD. I would say they were prepared by numerous people. Mr. PECORA. Who were they?

Mr. LORD. The executive committee of the Group Co., the accounting department of the Group Co., principally.

Mr. PECORA. Will you mention the individuals who were especially active in the preparation of the annual reports?

Mr. Lord. I do not think there was any particular individual, Mr. Pecora. Myself, Mr. Kanzler, chairman of the board; Mr. Walsh, while he was there; Mr. Huelsman who came as comptroller; Mr. Patterson, while he was there, sat in on it. There were a number of people, Mr. Pecora.

Mr. PECORA. When those annual reports were finally prepared and issued, they were issued over your signature as president of the Group, were they not?

Mr. LORD. On order of the board of directors or the executive committee, whatever it was.

Mr. PECORA. The last annual report, of course, was issued in the early part of the year and covered the calendar year 1932?

Mr. LORD. There was no annual report issued for that year.
Mr. PECORA. There was not?
Mr. LORD. No, sir.
Mr. PECORA. Was it ever proposed to issue one?

Mr. LORD. I think it was being worked on, and then this loan matter and the holiday came along and it never was published.

Mr. PECORA. Who was working on it?

Mr. LORD. I would say the same general crowd, except Mr. Patterson. Mr. Huelsman and all of us, the executive committee, were working on it.

Mr. PECORA. Did the work on the preparation of that report reach a stage where it was reduced to writing in any form?

Mr. LORD. I believe so; yes.

Mr. PECORA. I show you what purports to be a photostatic reproduction of such proposed report. Will you look at it and tell me if you recognize it as such?

Mr. LORD. This looks somewhat familiar in spots.

Mr. PECORA. Do you recognize the handwriting in the pencil interlineations that appear on the face of the document?

Mr. LORD. I do not, Mr. Pecora.
Mr. PECORA, I offer it in evidence.
The CHAIRMAN. Let it be admitted.

(Copy of proposed Annual Report of Guardian Detroit Union Group, Inc., referred to, was received in evidence and marked " Committee Exhibit No. 34, Dec. 20, 1933", and will be found printed in full at the end of today's transcript.)

Senator COUZENS. When did Mr. Patterson leave your organization?

Mr. LORD. He did not leave the organization until after the holiday and Mr. Huelsman took a more active part in the comptroller's end of the business. Mr. Patterson was doing more out-State work in connection with the bank and their liquidation program.

The CHAIRMAN. How many of these unit banks had closed their doors before the holiday?

Mr. LORD. None of them.

The CHAIRMAN. They were all open in this Group until the holiday?

Mr. LORD. They were all open until the holiday, every one of them. Mr. Pecora. That holiday was declared last February, was it not? Mr. Lord. In Michigan; yes, sir.

Mr. PECORA. I mean the one declared by the Governor of the State.

The CHAIRMAN. I had reference to the holiday beginning March 5.

Mr. LORD. No banks were allowed to reopen in Michigan prior to that holiday, Senator Fletcher. You see, the Governor declared a State holiday that continued up right through March 5 and beyond.

The CHAIRMAN. That State holiday was declared in February?
Mr. LORD. The 13th or 14th.
Senator COUZENS. It became effective on the 14th.
The CHAIRMAN. 1933 ?
Mr. LORD. Yes, sir.
The CHAIRMAN. And no banks were open after that until when?

Mr. LORD. Until after March 10, when the President and the Secretary of the Treasury licensed the banks.

Mr. PECORA. How many of these units were not permitted to reopen after the Federal bank holiday had been declared ? Mr. LORD. I may not be accurate, but I will

give you the best information I can. This, I think, is correct: The First National Bank of Kalamazoo opened 100 percent after the national holiday; the City National Bank & Trust Co., of Battle Creek; Second National Bank & Trust Co., of Saginaw; Highland Park State Bank, of Highland Park; First National Bank, of Port Huron; Grand Rapids Trust Co., Grand Rapids; Bank of Hamtramck; Guardian Bank, of Royal Oak, and Guardian Bank, of Dearborn.

Mr. PECORA. Eleven banks?
Mr. LORD. Yes.
Mr. PECORA. They were permitted to reopen?
Mr. LORD. Yes, sir; that is my recollection.
The CHAIRMAN. Some were State banks!

Mr. LORD. Yes, sir; there were five. No, Mr. Pecora; that was not 11 banks; that is 9 banks. The CHAIRMAN. Five of them were national ?

Mr. LORD. No; wait a minute. Five State institutions and four national institutions in that list.

The CHAIRMAN. And they continued open? Mr. LORD. Yes, sir. Senator COUZENS. All of them? Mr. LORD. The Highland Park State Bank and the Bank of Dearborn have been taken into the Manufacturers' National Bank, of Detroit.

The CHAIRMAN. Those were the only ones opened after the national holiday?

Mr. LORD. Yes, sir. Here are some that have since been reorganized, Senator Fletcher: Grand Rapids National, Union & People's National, and the City National at Niles.

The CHAIRMAN. They have been reorganized since?
Mr. LORD. Yes, sir.

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The CHAIRMAN. And probably doing business or will do business? Mr. LORD. I think they are doing business now.

Mr. PecoRA. Mr. Lord, I will question you tomorrow with regard to that draft of the proposed report for the year 1932 that has been marked in evidence as "Exhibit No. 34.” Meanwhile I will pass on to another subject. I show you what purports to be a photostatic reproduction of a so-called "intra-Group memorandum addressed by you to the directors of the Guardian Detroit Bank under date of January 21, 1931, on the subject of favorable comment from Guardian “Rooters.” Will you look at it and tell me if you recognize it to be a correct copy of such an intra-Group memorandum prepared and submitted by you to the board of directors of the Guardian Detroit Bank!

Mr. LORD. It is.
Mr. PECORA. It is?
Mr. LORD. I think so.
Mr. PECORA. I offer it in evidence.

(Photostatic copy of Intra-Group memorandum addressed by R. O. Lord to the directors of the Guardian Detroit Bank under date of Jan. 21, 1931, was received in evidence, marked " Committee Exhibit No. 35, Dec. 20, 1933.")

Mr. PECORA. The document that has been marked Committee's Exhibit No. 35" in evidence, is on the letterhead of the Guardian Detroit Union Group, Inc., entitled "Intra-Group Memorandum” to the directors of Guardian Detroit Bank, from Mr. Robert O. Lord, president

Senator COUZENS. Before you start reading that; Who were the "Guardian Rootei's" referred to in the memorandum?

Mr. LORD. Other banks, the friends
Senator COUZENS. There was no specific organization?

Mr. LORD. There is no organization of “Guardian Rooters"; no, sir.

Senator COUZENS. That is what I mean. Mr. LORD. No, sir. We had a group, but not a “ Rooters organization.

Mr. PECORA (reading] : On January 2, 1931, there appeared in the Detroit newspapers a brief news item to the effect that the deposits of Guardian Detroit Bank had increased by $9.500.000 during the past three months to a new peak of $124,096,976.65. Clippings of this news item were sent to all bankers with whom Guardian maintains banking relationships—with the additional information that all of the twenty-three banks and trust companies comprising Guardian Detroit Union Group, Inc., showed on December 31, 1930, “Bills payable-NONE".

Extracts from letters written by these bankers-commenting upon the above are reproduced below as being of possible interest to you.

And then follow extracts from letters of executive officers of 59 banks or other corporations, and one from Mr. R. E. Reichert, commissioner of banking of the Michigan State Banking Department.

(Exhibit No. 35 will be found in full at the end of today's record.)

Mr. PECORA. I am not going to read at this time all of these comments that are embodied in this exhibit. Among them, however, is one from the president of the National City Bank of New York, one from a vice president of the Chase National Bank

Senator COUZENS. Does it give the names of the officers of those two famous banks!

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Mr. PECORA. They are both very brief comments. I will read them in full [reading]:

NATIONAL CITY BANK OF NEW YORK, N.Y. I appreciate your letter of January 2d. You have made a good showing.


THE CHASE NATIONAL BANK, NEW YORK CITY. You have every reason to be proud of the Guardian Detroit Bank, as well as the Group.

RICHARD R. HUNTER, Vice-President.
You did not get any from Mr. Wiggin, did you !
Mr. LORD. I did not see it there, Mr. Pecora.
Senator COUZENS. Or Mr. Mitchell ?
Mr. LORD. Mr. Rentschler.
Senator COUZENS. You did not hear from Mr. Mitchell?
Mr. LORD. No, sir.

Mr. Pecora. One of these comments in your Intra-Group memorandum marked " Committee's Exhibit No. 35" is from the Vice President of the Irving Trust Co. of New York, and is as follows [reading]:

We congratulate your institution, and especially so for the liquidity indicated by your statement, that the several banks comprising your group were completely out of debt at the close of 1930. If all the banks of the country pursued a similar policy there would be a far greater stability in banking and less unsettlement during unusual periods.

Senator COUZENS. Was that a fact, Mr. Lord, that all your banks were out of debt?

Mr. LORD. Certainly-except to the depositors.
Senator COUZENS. We will see about that later.
Mr. PECORA. I notice that one of these comments-
The CHAIRMAN. What is the date of that?
Mr. PECORA. This is dated January 21, 1931.

I notice that one of these comments, from a Guardian rooter, is from C. W. Banta, Vice President of the Bank of America, New York, and reads as follows (reading]:

If I may be permitted to use a superlative, the showing of all the 23 banks and trust companies is little short of miraculous, considering all the uncer tainties and disturbances of the day.

The concluding comment that appears in this exhibit is from Mr. R. E. Reichert, commissioner of banking of the State of Michigan, and reading as follows [reading]:

I have your letter enclosing a newspaper clipping, and want to congratulate you upon the condition of the institutions in your group. I am certainly pleased to see you say that not any of the 23 banks and trust companies comprising your group owe the Federal Reserve Bank or any other bank a single penny. It is certainly a very healthy condition, and a very comfortable one to be in at the present time

(Signed) R. E. REICHERT, Commissioner. Now, Mr. Lord, was it true that all the unit banks of the Group had no bills payable?

Mr. LORD. I assume it was if those were their published statements.

Mr. PECORA. Were they their published statements at the time you prepared this Intra-Group memorandum which is dated January 21, 1931 ?

Mr. Lord. I would have to look over the December 31, 1930, fig. ures. Is that what I was referring to!

Mr. Pecora. You did refer, in this Intra-Group memorandum, to that by saying [reading]:

All the 23 banks and trust companies comprising Guardian Detroit Union Group, Inc., showed, on December 31, 1930, “bills payable, none."

Mr. LORD. I assume that is correct. I would have to check it absolutely.

Mr. Pecora. You prepared this memorandum, did you not?
Mr. LORD. Yes.
Mr. PECORA. And had it issued ?

Mr. LORD. I assume it was correct at the time, yes. I have no reason to believe it was not.

Mr. PECORA. Do you know now that not single one of the 23 banks and trust companies that comprised your Group on December 31, 1930, had any bills payable of any kind?

Mr. LORD. I would have to check the published statements of December 31, 1930.

Senator COUZENS. Just a minute. Why do you say "published statements ” ?

Mr. LORD. Because each bank published its own statements. Senator COUZENS. And you had no other information than that which pertained to the published statements; is that correct?

Mr. LORD. What kind of information, Senator?
Senator COUZENS. As to the bills payable ?
Mr. LORD. We had weekly reports.

Senator COUZENS. So, the only information you had when you prepared that memorandum was the published statements ?

Mr. LORD. The memorandum was based upon the published statements.

Senator Couzens. You had no other information, other than was contained in the published statements, is that correct?

Mr. LORD. I do not know what you mean by “other information."

Mr. PECORA. That is a simple term.
Mr. LORD. I had a lot of other information about all the banks.
Senator Corzens. Among that lot of other information you had,

you have any information to sustain your contention that there were no bills payable in any of those 23 constituent units of yours? You remember, now, Mr. Lord, and I want to remind you, that you are under oath. Mr. LORD. I realize that. Senator COUZENS. I want to know whether you had any information outside of the published statements as to whether or not any of these 23 units had bills payable. Mr. PECORA. On December 31, 1930. Senator COUZENS. Yes. Mr. LORD. Senator, if that statement was made, it was made in good faith on the basis of the information I had.

Senator COUZENS. Whether from published statements or intradepartment communications, or otherwise, is that true! Mr. LORD. I think so.


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