Mr. VERHELLE. From what they were listed at in the figures that were on the books of these different units. Mr. PECORA, And didn't that indicate a worse financial condition than existed at the end of the year 1930? Mr. VERHELLE. Not in itself, sir. Mr. PECORA. You said it would have been disastrous to have told the stockholders of the group that the financial condition of the company at the end of 1931 was worse than it had been the year before. That would have been disastrous to whom? Mr. VERHELLE. To the whole country; and furthermore, it would have been a very questionable item, a very questionable statement, because we had the rather very definite feeling that we had there one of the very strongest banks in the country. Senator COUZENS. Why did you write down your assets about 19 million dollars at that time? Mr. VERHELLE. In order to state them at conservative values, in order that the assets might in some measure represent the figures which were covered by the statement. Senator COUZENS. That being the fact, then, that showed the difference between the end of 1930 and the end of 1931, did it not? Mr. VERHELLE. No, sir. Mr. PECORA. Were the figures false at the end of 1930, then? Mr. VERHELLE. No, sir. Senator COUZENS. Why did you write down 19 million dollars in that period of years if both figures were true? Mr. VERHELLE. It is purely a question of judgment as to the value at which an asset should be stated in a report. Senator COUZENS. But your judgment was that the value of the assets at the end of 1931 was some 19 million dollars less than it was in 1930, is that true? Mr. VERHELLE. Than reflected in the figures Senator COUZENS. Is that true, that your judgment was Senator COUZENS. You said these assets were valued as a matter of judgment, and your judgment was that at the end of 1931 the assets were worth some 19 million dollars less than they were at the end of 1930. Is that true? Mr. VERHELLE. Than various examiners might have thought they were worth at the end of 1930. Senator COUZENS. You gave these figures to Mr. Ballantyne. What did you think? Did you agree with the examiners? Mr. VERHELLE. I believe in substance I did, substantially. Senator COUZENS. Then your answer to my question is yes, that you thought the assets were worth some 19 million dollars less at the end of 1931 than they were at the end of 1930. Mr. VERHELLE. No, sir; it is not. Senator COUZENS. You had better read your testimony over, be cause you are falsifying, and subject to contempt of the Senate. Mr. VERHELLE. I do not understand your question, sir, then, if that is the case. Senator COUZENS. You at one time said that you were in substantial agreement with the examiners, and therefore you wrote down the assets at the end of 1931 some 19 million dollars less than they were in 1930, at the end of 1930. I asked you if that was not in substantial agreement with your judgment, and you said yes. Then I asked whether or not, in your judgment, the assets were not worth some 19 million dollars less at the end of 1931 than they were worth in 1930, and you said no. Mr. VERHELLE. Your question, as I understood it, was just a trifle different than it is worded now. Senator COUZENS. Well, take it as I have worded it now, then. Mr. VERHELLE. Than they were in 1930, on the books of those units. Mr. VERHELLE. The answer is yes, they were. Senator COUZENS. They were worth less? Mr. VERHELLE. They were worth substantially less than they were worth according to the figures represented. Senator COUZENS. Yes; and those figures were in accordance with your judgment. Mr. VERHELLE. For 1930? No, sir. I had nothing to do with that. Senattor COUZENS. I am talking about 1931. Mr. VERHELLE. In 1931 I substantially agreed with the figures of the examiners. Senator COUZENS. So that, in effect, you substantially agree that the assets at the end of December 1931 were worth some 19 million dollars less than they were December 30, 1930? Mr. VERHELLE. Not than they were worth in 1930. Senator COUZENS. Than they were valued at. Mr. VERHELLE. Than they had been carried on the books at in 1930. Senator CouZENS. Yes. Mr. VERHELLE. Yes, sir. Mr. PECORA. Mr. Verhelle, was any estimate made by anybody connected with the Detroit Bankers Co. at any time during the year 1931 of the approximate amount of the losses that had been sustained due to various causes, including depreciation of value of securities? Mr. VERHELLE. Including what? Will you read the last part of that question? (The reporter read the pending question.) Mr. VERHELLE. 1932, you said? Mr. PECORA. NO; I said 1931. The stenographer has it right. Mr. PECORA. What was the amount of the estimate of those losses which you made? Mr. VERHELLE. I think it was substantially in accordance with the examiner's estimate. Mr. PECORA. What was the amount? Mr. VERHELLE. I do not recall the amount, sir. Senator COUZENS. Can you estimate it? Can you estimate the amount? Mr. VERHELLE. I would have to base it on the amount which the examiner reported. Mr. PECORA. What examiner are you referring to? Mr. VERHELLE. All the examiners, I should say. Mr. PECORA. What examiners are you referring to now? Mr. VERHELLE. The national banking department examiners andwell, the thing would be very hazy on my part, because it involved a large number of examiners, and these examinations involved a large number of units. Mr. PECORA. You mean by the examiners, the gentlemen who ex amined for the Comptroller of the Currency, the national bank units, and the gentlemen who examined for the State Banking Commis sioner of Michigan, the State bank units? Mr. VERHELLE. Yes, plus, probably, some of our own examiners. Mr. PECORA. See if you can recall approximately the amount of the losses that were estimated in the year 1931 to have been sustained, I whether it be your independent estimate or whether it be your estimate in agreement with the estimates of these examiners that you speak of. Mr. VERHELLE. I am sorry, sir, but I could not do that. Mr. PECORA. You could not do it. Let us see if I cannot refresh your recollection a bit. You know, do you not, that it was legally required of the Detroit Bankers Co., under the laws of the State of Michigan, to file with the Michigan Securities Commission an annual report? Mr. VERHELLE. Yes, sir. Mr. PECORA. And you know that such an annual report was filed for the year 1931? Mr. VERHELLE. Yes, sir. Mr. PECORA. In behalf of the Detroit Bankers Co.? Mr. VERHELLE. Yes, sir. Mr. PECORA. Did you prepare that report? Mr. VERHELLE. I did not personally prepare it, sir, but it was prepared in the Detroit Bankers Co. by one of the men there. Mr. PECORA. Did you have anything to do with the preparation or furnishing of the data embodied in that report? Mr. VERHELLE. Personally? Mr. PECORA. Yes. Mr. VERHELLE. I seriously doubt it, sir. Mr. PECORA. You seriously doubt whether you did or not? Mr. VERHELLE. Whether I personally furnished any data in connection with the preparation of that report. I presume it was made out by just going through the books. Mr. PECORA. By your subordinates? Mr. VERHELLE. I presume so. Mr. PECORA. Without any approval by you? Mr. VERHELLE. I probably looked at it to see if it was substantially correct, although I am not certain of that. It would depend upon what report you are speaking of, which year. Mr. PECORA. I am speaking of the year 1931, and I have so stated. Mr. VERHELLE. I think that the 1931 report was prepared by the treasurer of the company, if it is in writing. I can tellSenator COUZENS. Were those figures taken from the books of the Bankers Co.? Mr. VERHELLE. Yes, sir. Senator COUZENS. You had charge of the books as comptroller, did you not? Mr. VERHELLE. Yes, sir. Mr. PECORA. I show you what purports to be photostatic copy of the annual report for the year 1931 filed with the Michigan Securities Commission by or on behalf of the Detroit Bankers Co. Will you look at it and tell me if you recognize it to be a true and corrected copy of such a report? [Handing paper to the witness.] Mr. VERHELLE. I would say yes, sir. Mr. PECORA. I offer it in evidence. Senator COUZENS (presiding). It may be entered without being spread on the record. (Copy of annual report, 1931, filed with Michigan Securities Commission by Detroit Bankers Co. was received in evidence, marked "Committee Exhibit No. 14, Jan. 25, 1934 ", and the same is not to be printed here for the reason stated above.) Mr. PECORA. In this annual report, a copy of which has just been received in evidence as Committee's Exhibit No. 14 of this date, the following item appears [reading]: Decrease in investments $22,015,428.74. Do you notice it? Have you a copy of this report before you? Mr. PECORA. In the lower left-hand side of the front page, Mr. Verhelle. Mr. VERHELLE. Yes, sir. Mr. PECORA. You have every reason to believe that that was a correct item, have you not? Mr. VERHELLE. I have every reason to believe that this is correct; yes, sir. Mr. PECORA. Does that indicate to you that it was correctly reported to the Michigan Securities Commission by the Detroit Bankers Co., through the medium of this report, that during the year 1931 the company had suffered a decrease in the value of its investments amounting to $22,015,428.74? Mr. VERHELLE. It had taken that decrease. That decrease represents the decrease that we have been discussing, as you know. Mr. PECORA. Won't you please answer my question? Read the question. (The reporter read the pending question.) Mr. VERHELLE. I would not know, sir, without studying this a bit. I am sorry. I did not make up this report, sir. Mr. PECORA. I did not either. You were the comptroller, not I. Senator COUZENS. You are an officer of one of the new banks, are you not? Mr. VERHELLE. I am; yes, sir. Would you please read that question again? (The reporter read as follows:) Mr. PECORA. Does that indicate to you that it was correctly reported to the Michigan Securities Commission by the Detroit Bankers Co., through the medium of this report, that during the year 1931 the company had suffered a decrease in the value of its investments amounting to $22,015,428.74? Mr. VERHELLE. No, sir. Mr. PECORA. What does that item indicate to you? Mr. VERHELLE. That item would, off-hand, indicate to me that the $22,000,000 represents a reduction in invested capital of the units owned by the Detroit Bankers Co., as differentiated from a decrease in the value of those actual securities. Inasmuch as the values of securities are not purely those of book value, these figures representing purely book value, it would not affect the actual value, and certainly did not affect the actual value as indicated by this particular figure here. Mr. PECORA. Do you notice, Mr. Verhelle, that this item of $22,015,428.74 is denominated in this annual report filed with the Michigan Securities Commission as "decrease in investments"? You note that, do you not? Mr. VERHELLE. Yes, sir. Mr. PECORA. Do you note further that it is one of the items appearing in the statement of profit-and-loss account shown in this report? Mr. VERHELLE. Yes, sir. Mr. PECORA. Does not that indicate to you, looking at this report in the form in which it appears, that according to this report the Detroit Bankers Co. sustained a loss of $22,015,428.74 during the year 1931 through decrease in the value of its investments! Mr. VERHELLE. It indicates to me that an unfortunate Mr. VERHELLE. No, sir. Mr. PECORA. Why not? Mr. VERHELLE. Because the figure represents, I presume, the dif ference between the invested capital structure as of the beginning of the year, and as of the end of the year, and that figure would not and should not be considered as a loss. Mr. PECORA. Why is it included in the profit and loss statement if it should not be regarded as a loss? Mr. VERHELLE. That question will have to be put to Mr. Lewright. Mr. PECORA. Why to Mr. Lewright and not to you? Mr. VERHELLE. Because I do not know. Mr. PECORA. You were the comptroller of the company. Mr. PECORA. And had charge of these records and accounts, didn't you? Mr. VERHELLE. This particular report was prepared by the treas urer of the company, who had really charge of the preparation of this report. Mr. PECORA. I thought you said before that the data embodied in this report were furnished by subordinates of yours, and you looked them over. Mr. VERHELLE. I generally did; yes, sir. Mr. PECORA. Did you in this instance? Mr. VERHELLE. I would not be sure, sir. Mr. PECORA. Let us see if I can refresh your recollection further or by other means as to the amount of loss it was estimated the Detroit Bankers Co. sustained during the year 1931, to your knowledge. Do you recall submitting a memorandum to Mr. Ballantyne sometime in March 1932 that contained a reference to the losses estimated sometime during the preceding year? Mr. VERHELLE. No, sir. Mr. PECORA. I show you what purports to be a photostatic reproduction of such memorandum, dated March 7, 1932, and addressed to |