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 reorga nized, 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. 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. 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 Rooters" referred to in the memorandum? sir. Mr. LORD. Other banks, the friends Senator COUZENS. There was no specific organization? Mr. LORD. There is no organization of "Guardian Rooters"; no, Senator COUZENS. That is what I mean. Mr. LORD. No, sir. We had a group, but not a nization. Mr. PECORA [reading]: "Rooters" orga 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 aboveare 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? 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. GORDON RENTSCHLER, President. 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. Mr. Rentschler. Senator COUZENS. You did not hear from Mr. Mitchell! 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. 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 state ments. 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, figures. 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. 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 a 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 state ments. 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 COUZENS. Among that lot of other information you had, did 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. Senator COUZENS. You do not answer that definitely. Are you trusting to your memory? Mr. LORD. Data like that are prepared in some other departments frequently. I do not keep the books. You must rely, or I had to rely, upon information given to me by employees in the organization at all times. No man could cover the whole thing. Senator COUZENS. Do you now believe that that statement was true, in fact? Mr. LORD. I think it was, or it would not have been stated. Senator COUZENS. But subsequent information has not indicated to you that that statement is true or untrue? I ask that question. Mr. LORD. No, sir. Senator COUZENS. You have no subsequent information? Mr. LORD. Not that would indicate that that statement made in there is other than true. Senator COUZENS. All right. Mr. PECORA. I show you what purports to be a printed copy of the Annual Report issued by the Guardian Detroit Union Group, Inc., as of December 31, 1930. Will you look at it and tell me if you identify it as a true and correct copy of the annual report that was so issued by you as president of the Group? Mr. LORD. These statements, as shown in this report, would indicate that there were no bills payable, unless you want to consider that the Highland Park Trust Co. first-mortgage bonds outstanding are bills payable. of Mr. PECORA. No. I merely asked you to look at that printed document and tell us, if you can identify it as a true and correct copy the annual report that was issued by you, as of December 31, Mr. LORD. It is, sir. 1930. Mr. PECORA. I offer it in evidence, but in view of its voluminous character I do not think it need be spread on the minutes. The CHAIRMAN. Let it be admitted in evidence and filed. (The document referred to, Annual Report Guardian Detroit Union Group, Inc., Dec. 31, 1930, was received in evidence, marked "Committee's Exhibit No. 36", Dec. 20, 1933, and the same was ordered filed.) Mr. PECORA. I shall make reference to certain extracts from this report from time to time. This report has been received in evidence as Committee's Exhibit No. 36 of this date, and on page 10 thereof, under the caption "Aggregate Resources and Liabilities of Banks and Trust Companies Affiliated with Guardian Detroit Union Group, Inc. as of December 31, 1930" appears this item, under the caption of "Liabilities: Bills payable, none." You notice that, do you not. Mr. Lord, the next to the last item on that page? Mr. LORD. Yes, sir. Mr. PECORA. Now, Mr. Lord will you tell this committee whether or not there was a settled policy on the part of the group to have its unit banks show no bills payable at any time in their statements or reports? Mr. LORD. I would say it was a settled policy of the banks to show no bills payable, or to keep them at a minimum, at all times. |