Mr. PECORA. Have you been advised by your counsel that moneys belonging to the Ford Motor Co. and standing to its credit at the end of the year are not taxable under the personal property tax laws of the State of Michigan? Mr. FORD. Yes. Mr. PECORA. Which counsel is giving you that advice? Mr. FORD. Mr. Columbo. Mr. PECORA. Have you gotten similar advice from Mr. Longley? Mr. FORD. Yes, sir. Mr. PECORA. Well, was it the practice or custom of your company to take funds it had on deposit in any of those banks in Detroit and purchase Government bonds with them and resell those bonds a few days after the first of the ensuing year? That is, to make purchases as of the end of the tax year and resell those securities within 2 or 3 days thereafter? Mr. FORD. That was done. Mr. PECORA. What did you say that it was done for? Mr. FORD. To show diversification in our annual statement which we filed with the Secretary of State of Massachusetts, so that we did not show as much cash on the annual statement. Mr. PECORA. To what extent was that practiced? Mr. FORD. I could not say. Mr. PECORA. That is, how much every year, at the end of the year, was drawn out from bank deposit accounts Mr. FORD (interposing). I could not tell you. Mr. PECORA (continuing). For the purchase of Government securities and a resale of those Government securities within 2 or 3 days thereafter. Mr. FORD. I could not say. It varied from year to year I expect, but I have no idea of the amount. Mr. PECORA. Well, now, you said you wanted to show diversification in some report that you had to file in the State of Massachusetts. Mr. FORD. Yes, sir. Mr. PECORA. Did you consider that cash on hand or in bank was not a good asset? Mr. FORD. No, sir. It was just a question of not showing as much cash on hand, because they usually made a big statement in the papers about it, and we did not care about that. Senator COUZENS. Do you recall what was the largest amount that you purchased with security bonds to effect the purpose? Mr. FORD. I haven't any idea, Senator. Mr. Craig has all that information. Mr. PECORA. Who is Mr. B. J. Craig? Mr. FORD. He is the secretary and assistant treasurer of the company, Ford Motor Co. Mr. PECORA. I show you what purports to be a photostatic reproduction of a letter addressed to Mr. Craig as Secretary of Ford Motor Co., by the Vice President and Cashier of the Guardian National Bank of Commerce of Detroit, bearing date December 22, 1932. Will you look at it and tell me if you know it to be a true and correct copy of such a letter sent to Mr. Craig, secretary of the Ford Motor Co.? Mr. FORD (after perusing document). I don't recall ever having seen that letter, sir. Mr. PECORA. Do you question the authenticity of this copy of the letter? Mr. FORD. No, sir. Mr. PECORA. I may say that we obtained it from files of the Guardian National Bank of Commerce of Detroit. Mr. FORD. Yes. Mr. PECORA. I offer it in evidence. Senator COUZENS. The same will be entered in the record. (Photostat of a letter on letterhead of Guardian National Bank of Commerce of Detroit, dated Dec. 22, 1932, from Vice President and Cashier to B. J. Craig, Secretary Ford Motor Co., Dearborn, Mich., was thereupon designated "Committee Exhibit No. 71, Jan. 11, 1934," and same appears in full immediately following, were read by Mr. Pecora.) Mr. PECORA. The letter received in evidence as committee's exhibit no. 71 of this date reads as follows, on the letterhead of the Guardian National Bank of Commerce of Detroit [reading]: Mr. B. J. CRAIG, Dearborn, Michigan. DECEMBER 22, 1932. DEAR MR. CRAIG: In accordance with arrangements made with you today, we hereby confirm sale to you of $7,500,000 par value U.S. Treasury Certificates 4% of Series TD 1933 dated December 15, 1932, maturing December 15, 1933, at 100.40625 ($7,530,468.75) plus accrued interest ($2,472.53) and enclose confirmation showing the amount which will be due in payment. We understand that this transaction is to be as of December 31, 1932, and further, that you authorize us to charge your Treasurer's demand account, carried on our books, on that date in the amount of $7,532,941.28, with the further understanding that if your Treasurer's demand account does not have sufficient balance to cover this charge we may transfer from your Treasurer's savings account a sufficient amount to cover it. We also understand that you have agreed to resell these certificates to us on January 3, 1933 at 100.40625 ($7,530,468.75) plus accrued interest ($2,936.10) and we enclose confirmation showing the amount ($7,533,404.85) which will be due to you in payment thereof, and, in accordance with your instructions, we will credit to your Treasurer's demand account, on that date, with the further understanding that we will charge your Treasurer's demand account and credit your Treasurer's savings account with the same amount, if any, which we will have been required to transfer on December 31, 1932, as hereabove provided for. As explained to you during our discussion of this matter, in Mr. Judson's office today, the Guaranty Trust Company of New York, through whom we are purchasing these securities, has requested that they be furnished a letter from the Ford Motor Company relative to our agreement to purchase from them and their agreement to sell to us on December 31, 1932, the above-mentioned bonds, said letter also consenting to and authorizing the pledging to the Guaranty Trust Company of the bonds as collateral security for the payment of the Guardian National Bank of Commerce of Detroit Cashier's check, payable to the Guaranty Trust Company, which we purchased with your funds and forwarded to them and which would not clear for payment through the Detroit branch of the Chicago Federal Reserve Bank until Tuesday, January 3rd. A copy of the proposed letter, together with a copy of the proposed agreement, was handed to you today and we would appreciate it, very much, if you will issue such a letter direct to the Guaranty Trust Company, advising us that you have done so or, if you desire, forward the letter together with the exhibit direct to us and we will forward it to New York. With the exception of this letter and exhibit, as requested by the Guaranty Trust Company, the mechanical operations in this transaction are identical with the method used last year in the handling of a similar matter for your company. As we must close this arrangement in New York at the earliest possible time, we would appreciate your acknowledgement and acceptance of this program. Very truly yours, Signed by "E. S. Burns, Vice President and Cashier." Now I show you what purports to be a photostatic copy of a letter addressed by Ford Motor Co., B. J. Craig, Secretary and Assistant Treasurer, to the Guaranty Trust Co. of New York, dated December 28, 1932, and apparently written in pursuance of the suggestion contained in the letter marked "Committee's Exhibit No. 71" as of this date. Will you please look at it and tell me if you recognize it to be a true and correct copy of such a letter written by your company to the Guaranty Trust Co. of New York? Mr. FORD (after perusing letter). What was the question? Mr. PECORA. Do you recognize that as a true and correct copy? Mr. FORD. I have never seen that letter. Mr. PECORA. Do you doubt the authenticity of it? Mr. FORD. No, sir. Mr. PECORA. I offer it in evidence. Senator COUZENS (presiding). The same will be entered in the record. (Photostat of copy of letter on letterhead of Ford Motor Co., dated Dec. 28, 1932, from Ford Motor Co. by B. J. Craig, Secretary and Assistant Treasurer, to Guaranty Trust Co. of New York, was thereupon designated "Committee Exhibit No. 72, January 11, 1934," and same appears immediately following, where read by Mr. Pecora.) Mr. PECORA. Mr. Colombo, with regard to any of these letters the witness may have identified, any advice you can give to impeach the authenticity of any of these documents, we will be glad to get from you and we will amend the record accordingly. Mr. COLOMBO. I reserve the right to object. Mr. COLOMBO. I thought I could make one. Mr. PECORA. The letter is marked "Committee's Exhibit No. 72 of this date," and reads as follows, on the letterhead of the Ford Motor Co., Rouge Plant, Dearborn, Mich. [reading]: GUARANTY TRUST COMPANY OF NEW YORK, 140 Broadway, New Zork, N. Y. DECEMBER 28, 1932. DEAR SIRS: We have examined and approved the proposed form of agreement to be made between yourselves and Guardian National Bank of Commerce of Detroit, a copy of which is annexed hereto as Exhibit A, with respect to the purchase by said Guardian National Bank of Commerce of Detroit from you of $7,500,000 principal amount of U.S. Treasury One year 3/4% notes dated December 15th, 1932. We hereby advise you that we consent to and authorize the pledge with yourselves of said $7,500,000.00 principal amount of U.S. Treasury Notes as collateral security for the payment to you of the Cashier's Check of Guardian National Bank of Commerce of Detroit, all in the manner referred to in said agreement. Yours very truly, FORD MOTOR COMPANY, Secretary and Assistant Treasurer. I show you what purports to be a photostatic reproduction of a letter addressed by the Guaranty Trust Co. of New York to Mr. Elbert S. Burns, vice president and cashier of the Guardian National Bank of Commerce, Detroit, Mich., dated as of December 29, 1932, referring to the letter from the Ford Motor Co. marked "Committee's Exhibit No. 72." Will you look at it, Mr. Ford, and tell us if you know anything about it? Mr. FORD (after perusing document). No, sir. Mr. PECORA. It relates to the transaction referred to in the two previous letters, doesn't it? Mr. FORD. I would assume it did. Mr. PECORA. I offer it in evidence. Senator COUZENS (presiding). The same will be entered on the record. (Photostat of letter on letterhead of Guaranty Trust Co. of New York, dated Dec. 29, 1932, from William L. Kleitz to Elbert S. Burns, was thereupon designated "Committee Exhibit No. 73, Jan. 11, 1934", and same appears in full immediately following, where read by Mr. Pecora.) Mr. PECORA. The document marked "Committee's Exhibit No. 73 of this date", written on the letterhead of the Guaranty Trust Co. of New York, reads as follows [reading]: Mr. ELBERT S. BURNS, DECEMBER 29, 1932. Vice President and Cashier, Guardian National Bank of Commerce, Detroit, Michigan. DEAR MR. BURNS: We have received the letter with enclosures from the Ford Motor Company dated December 28th, enclosed with yours of the same date. We also acknowledge receipt of your accepted copy of our letter to you dated December 22nd. We are returning herewith our accepted copy of your letter to us dated December 24th. On receipt of your treasurer's check for $7,532,941.28 on December 31st, we will sell to you $7,500,000.00 principal amount of U. S. Treasury One Year 3/400 Notes dated December 15, 1932. Very truly yours, W. L. KLEITZ, Vice President. I show you what purports to be a photostatic copy of another letter addressed to the Guaranty Trust Co. of New York, signed by the Guardian National Bank of Commerce of Detroit, dated December 24, 1932, and which appears to be the letter of that date referred to in Committee's Exhibit no. 73 just received in evidence. Will you look at it, Mr. Ford, and tell us if you know anything about that letter? Mr. FORD (after perusing document). I have never seen that letter, sir. Mr. PECORA. But you know that it relates to the same transaction? Mr. FORD. I would think so. Mr. PECORA. I offer it in evidence. Senator COUZENS (presiding). It may be entered on the record. (Photostat of letter on letterhead of Guardian National Bank of Commerce of Detroit, dated Dec. 24, 1932, from Elbert S. Burns, Vice President Guardian National Bank of Commerce of Detroit to Guaranty Trust Co. of New York was designated "Committee Exhibit No. 74, Jan. 11, 1934", and appears in full immediately following where read by Mr. Pecora.) Mr. PECORA. The letter is marked "Exhibit No. 74" of this date on the letterhead of the Guardian National Bank of Commerce of Detroit and reads as follows. [Reading:] GUARANTY TRUST COMPANY OF NEW YORK, 141 Broadway, New York, N.Y. (Attention of Mr. Wm. L. Kleitz, Vice President.) DECEMBER 24, 1932. DEAR SIRS: We beg to confirm as follows the arrangements which we have made with you with respect to your purchase of $7,500,000.00 principal amount of U.S. Treasury One-year %% notes dated December 15, 1932: 1. We hereby agree to purchase from you, and you agree to sell to us, on December 31, 1932, $7,500,000.00 principal amount of U.S. Treasury One-year 4% notes dated December 15, 1932 (hereinafter referred to as U.S. Treasury Notes) at a price of 100.40625, plus accrued interest thereon to December 31, 1932. 2. Payment for said U.S. Treasury Notes shall be made by us to you by our delivering to you, at your office in New York City on the morning of December 31, 1932, our Cashier's Check for said purchase price. 3. You are hereby authorized and directed to hold said U.S. Treasury Notes as collateral security for the payment of our above mentioned Cashier's check until said Cashier's Check has been paid in full. Apparently they were not taking any chances with a Cashier's check. 4. It is our intention to sell the said U.S. Treasury Notes on December 31, 1932, to Ford Motor Company, and we hand you herewith the written consent and authorization of said Ford Motor Company to the pledge of said U.S. Treasury Notes with yourselves as collateral security as aforesaid. If the foregoing is in accordance with your understanding of our agreement, kindly so indicate by signing and returning to us the enclosed carbon copy of this letter, whereupon this letter shall constitute a binding agreement between us. Yours very truly, GUARDIAN NATIONAL BANK OF COMMERCE OF DETROIT, By ELBERT S. BURNS, Vice President. The foregoing is hereby approved and accepted. GUARANTY TRUST COMPANY OF NEW YORK, By W. L. KLEITZ, Vice President. At the same time did the Guardian National Bank of Commerce of Detroit purchase from the Chemical Bank & Trust Co. of New York for the account of the Ford Motor Co. $7,300,000 of Fourth United States Liberty Loan bonds, 4% percent, for the principal amount, with accrued interest, of $7,648,372.21? Mr. FORD. Did they? Mr. PECORA, Yes. Mr. FORD. I do not know. Mr. PECORA. I show you what purports to be a photostatic copy of a letter addressed by Mr. Burns as vice president and cashier of the Guardian National Bank of Commerce of Detroit to Mr. B. J. Craig, secretary of the Ford Motor Co., Dearborn, Mich. Will you look at it and tell me if that is a true copy of such a letter? Mr. FORD (after perusing document). I don't recall having seen that letter, sir. Mr. PECORA. Well, I offer it in evidence subject to any correction of the record you may want to make if you should learn that that is not a true and correct copy. Mr. FORD. I don't question it at all. Mr. PECORA. What is that? Mr. FORD. I don't question it. Senator COUZENS (presiding). The same may be entered in the record. (Photostat of letter on letterhead of Guardian National Bank of Commerce of Detroit, dated Dec. 30, 1932, from Vice President and Cashier to B. J. Craig, was designated "Committee Exhibit No. 75, Jan. 11, 1934", and same appears immediately following where read by Mr. Pecora.) Senator COUZENS (presiding). I think, Mr. Pecora, that the committee should recess until 10:30 tomorrow morning on account of the Senate being in session now. |