Mr. PECORA. The clouds began to obscure that sun in the latter part of October 1929, did they not?

Mr. BALLANTYNE. Yes.

Mr. PECORA. Nevertheless, when the company was organized on January 8, 1930, and for the year 1930, with the clouds of the depression in the skies and clearly visible to everybody, this dividend policy or rate of 17 percent, fixed in good times, was adhered to, was it not, by this group?

Mr. BALLANTYNE. Yes.

Mr. PECORA. Was that wise, in your opinion?

Mr. BALLANTYNE. I would not hold any brief for that. I have never been in favor of paying dividends that were not wise, and I cut the dividend of that operation.

Mr. PECORA. Not in 1930.

Mr. BALLANTYNE. I did it in 1930.

Mr. PECORA. Did you? Well, now, let us see.

Mr. BALLANTYNE. 1931. (After conferring with an associate.) 1932, rather. I beg your pardon. I was thinking of the gap. The first year I was in I did it. Julius was in for a year. One can only speak for himself.

In answer to the Senator here, in respect to these 12 men, each of those men, I think the record will show, was a very large stockholder in the banking group.

Mr. PECORA. Did they remain stockholders up to the time that the company went into receivership, do you know?

Mr. BALLANTYNE. I did not.

Mr. PECORA. How about some of these others?

Mr. BALLANTYNE. I do not think anyone else left but me.

Mr. PECORA. Do you know whether any of the other 12 trustees or founders held on to their substantial stockholdings of this company up to the time when the company went into receivership in March 1933?

Mr. BALLANTYNE. From all I know, I would say yes; but that would be a mere guess.

Senator COUZENS. I still raise the same issue, because these gentlemen you refer to were stockholders of the units and not stockholders of the Detroit Bankers Co.

Mr. BALLANTYNE. I see what your point is.

Senator COUZENS. So, for the mere putting up of $1,200-which the facts show they did not put up, as a matter of fact-they got control of nearly 1 billion dollars, and that is what is generally referred to as the handling of other people's money. By the mere acquisition of $1,200 worth of trustee shares these men got control of nearly 1 billion dollars to do as they pleased with for a period of 5 years. I would just like to know if you, as an old-time banker in Detroit, endorse that as a principle.

Mr. BALLANTYNE. Not just the way you put it, Senator.
Senator COUZENS. I am putting it as a fact.

Mr. BALLANTYNE. Maybe it means that in substance. I do not know. I am not very well versed in legal phraseology.

Senator COUZENS. I am not either, but it does not require a lawyer-even some of the crooked ones can understand that.

Mr. PECORA. Are you talking about bankers now, Senator?

Senator COUZENS. No; lawyers.

Mr. PECORA. Now, Mr. Ballantyne, let me read to you the following excerpt from the circular marked "Committee's Exhibit No. 3" in evidence [reading]:

In order that each customer of these allied institutions—

That is, referring to the five original banking units [continuing reading]:

may continue to enjoy all existing connections and facilities, it is planned to carry on each institution as at present organized.

Was that principle carried out?

Mr. BALLANTYNE. No.

Mr. PECORA. It was not?

Mr. BALLANTYNE. No.

Mr. PECORA. To what extent was it departed from?

Mr. BALLANTYNE. To this extent: It is like everything else. You start off with one idea, and circumstances force others on you. That very matter of branches came up for discussion frequently, and it was found that the old loyalties persisted, and everyone wanted the other fellow's branch closed rather than his own. I suppose that was human nature. That was what determined them on those later mergers, later consolidations of the Bank of Michigan with the Peoples Wayne Bank, so that they could make a clean sweep of it. As far as my knowledge goes, that is why it was done.

Mr. PECORA. Were those unit banks that came into this Detroit holding company through the acquisition of their capital stock permitted to continue in operation under the policies formulated by the officers of those unit banks, the officers and directors of those unit banks, or were those unit banks directed, as to their policies, and so forth, by the officers and directors of the Detroit Bankers Co. ?

Mr. BALLANTYNE. I think not. There was no coercion that I know anything about; no.

Mr. PECORA. Will you be good enough to look at this chart [indicating a large chart mounted at the head of the committee table]? Mr. BALLANTYNE. Yes.

Mr. PECORA. It purports to be an outline of the various units that were acquired from time to time by the Detroit Bankers Co. Mr. BALLANTYNE. Yes.

Mr. PECORA. That includes banking units and nonbanking units? Mr. BALLANTYNE. Yes.

Mr. PECORA. Will you look at it and tell us if you can say that it is a correct representation of the various units, both banking and nonbanking, which ultimately were acquired, in whole or in part, through the acquisition of capital stock by the Detroit Bankers Co.? Look at it closely. You may also seek the advice on that of any of your associates. This is as of the time when it went into receivership; in other words, at the end.

Mr. BALLANTYNE (standing before map on easel). It does not seem to be correct to me. For instance, there was a Detroit Trust Co. and a former Detroit Securities Co. I don't think this one [pointing on map], for instance, was put into it.

Mr. PECORA. Well, those colored green on the map were eliminated by the merger, you understand.

175541-34-PT 11-3

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