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Mr. MURFIN. I can hear you all right.

Mr. PECORA. Who has not been asked before he was finally eicused, if there was any statement he wanted to make to the cunmittee, or anything further that he wanted to bring to the notie of the committee, without the necessity of being questioned specifically about it?

Mir. MURFIN, All right.

Mr. PECORA. And that wherever a witness has indicated a desire to lay other matters before the committee he has been accommodated in that desire ?

Mr. Murfin. That does not change my opinion a particle, not a particle.

Mr. PECORA. And the committee has been open to anybody, yourself included, to present any evidence that you may want to present Judge Murfin, with regard to the situation that the committee is inquiring into now.

Mr. MURFIN. I shall cheerfully answer any of your questions, and give you any information I have that you want that might be helpful.

Mr. PECORA. Do you think you have more information with regard to the matters I have questioned Mr. Stair about this afternoon than he showed?

Mr. MURFIN. Please do not ask me to answer that question. It is not fair to ask one witness to characterize the testimony of any other witness and, as you know, it is not allowed in court.

Mr. PECORA. Do you think it is fair of you to characterize the conduct of the investigation by this committee with the apparently limited knowledge you have of the record made here!

Mr. MURFIN. I have a pretty fair knowledge of this record.
Mr. PECORA. Are you familiar with the entire record!
Mr. MURFIN. I am pretty familiar.

Mr. PECORA. Do you know anything in the record that has been presented so far that is not in accordance with the facts ?

Mr. MURFIN. I am not going into that. Mr. Pecora. By the way, Judge Murfin, did you, as a member of this special investigating committee that passed upon Mr. Verhelle's private and confidential memorandum, ascertain the facts and circumstances with regard to the transaction referred to therein that related to the discounting of a note by the bank, a note that was dated 3 weeks after the death of the maker of the note?

Mr. MURFIN. I haven't any recollection of that whatever.
Mr. PECORA. You have no recollection of it at all?
Mr. MURFIN. No; I haven't any recollection of it whatever.

Mr. PECORA. Well, it is referred to in some detail in Mr. Verhelle's private and confidential memorandum, which you were supposed to inquire into.

Mr. MURFIN. Which officer did that-Mr. Bodde or Mr. Sweent!

Mr. PECORA. It is included in Mr. Verhelle's private and confidential memorandum.

Mr. MURFIN. Well, I do not know anything about that. I did not get into anything except as to Bodde and Sweeny.

Mr. PECORA. Did you read the entire private and confidential memorandum of Mr. Verhelle?

Mr. MURFIN. I certainly did, and tried to get myself thoroughly prepared to conduct a fair and impartial investigation of the facts.

Mr. PECORA. You do not recall having inquired into that particular item in Mr. Verhelle's private and confidential memorandum, regarding the discounting by the bank of a note about 3 weeks after the death of the maker of the note?

Mr. MURFIN. That could not have been in the Bodde or Sweeny part, was it?

Mr. PECORA. It was in Mr. Verhelle's private and confidential memorandum.

Mr. MURFIN. Well, outside of Bodde and Sweeny, I do not remember about it.

Senator COUZENS. Judge Murfin, you testified a while ago that you were familiar with all of the testimony before this committee.

Mr. MURFIN. Well, I am. I read that in the paper. But I do not remember the details of it. And I do not think I said I was familiar with all of it. I said I had been following it very carefully.

The CHAIRMAN. That is one trouble the committee has to deal with, when they get a witness on the stand he does not know anything.

Mr. MURFIN. Well, you still have that trouble.
The CHAIRMAN. Yes. We are trying to get the facts, is all.

Mr. PECORA. Yudge Murfin, is there any evidence you would like to bring to the notice of the committee pertaining to the subject matter of this inquiry?

Mr. MURFIN. I would rather not, for if I started out I would sit here for a week. And I think the sooner this thing is stopped the happier my friends in Detroit are going to be. I do not want to contribute to their unhappiness by stirring things up by a long statement or a short statement or anything else. I would rather not.

Mr. PECORA. You say you would rather not?
Mr. MURFIN. I would rather not.
Mr. PECORA. You are invited to do it if you wish.

Mr. MURFIN. I appreciate the invitation, and if you do not mind I will not accept it.

Mr. PECORA. By the way, Judge Murfin, you were one of the stock. holders of the Detroit Bankers Co., weren't you?

Mr. MURFIN. I am sorry to say I was, and much larger than I would have liked.

Mr. PECORA. You were a director of it?

Mr. MURFIN. Not of the Detroit Bankers Co.-now, wait a minute. I was a director of the Detroit Bankers Co. for, I should say, less than a month.

Mr. PECORA. When was that?

Mr. MURFIN. At the annual meeting in 1933, in order to reduce the size of the board of the First National Bank and not hurt the feelings of some charming directors who had been bank directors for a great many years, they took all of the directors of the First National Bank and made them directors of the Detroit Bankers Co., and in that way I became a director of the Detroit Bankers Co. We had two meetings—one meeting at which we elected officers and the next meeting we voted for voluntary dissolution. So that my connection with the Detroit Bankers Co. was practically nil.

Mr. PECORA. You are familiar with the fact, as a stockholder of the Detroit Bankers Co., that the certificates of stock issued by the company bore upon them Mr. ÁURFIN (interposing). Yes. I am very familiar with that

. It was article 9.

Mr. PECORA. Article 9 of the articles of association or incorporation of the company regarding the statutory liability —

Mr. MURFIN (interposing). I am very familiar with that.

Mr. PECORA (continuing). Of the stockholders of the Detroit Bankers Co.

Mr. MURFIN. Yes; I am very familiar with that.

Mr. PECORA. You are identified at the present time in a professional capacity, not as a party in interest, with litigation now pending in the courts of Michigan, in which the stockholders of the Detrosi Bankers Co. are seeking to avoid the liability referred to on thox certificates of stock.

Mr. MURFIN. I have been asked by my associates in that litigation to try that case, and that is one reason I am anxious to get back home and complete my preparation of it. I know that case, I think, bt heart now. And we are going to win it.

Mr. PECORA. And you are going to win it!
Mr. MURFIN. We are going to win it.

Mr. PECORA. And by such victory deprive the depositors of thox banks of the protection that the statute—at least it was thought

gave them.

Mr. MURFIN. Ninety odd percent of the depositors are stockholders, and they will be more benefited if I win my case than if I should lose it. Mr. Pecora. Ninety-two percent

of the depositors are stockholders of the Detroit Bankers Co.?

Mr. MURFIN. No, sir; of the First National Bank. This suit is not against the stockholders of the First National Bank. It is against the stockholders of the Detroit Bankers Co.

Mr. PECORA. I know that.

Mr. MURFIN. And you would not ask me to try my lawsuit with you here, would you !

Mr. Pecora. I am neither asking you nor suggesting it, Judge Murfin. I merely wanted to show your interest.

Mr. MURFIN. Í am very much interested. Yes; I am very much interested.

Mr. PECORA. All right. Now, is there anything more you can te!! this committee with regard to the investigation that you and Mr. Mills and Mr. Newberry and Mr. Butler and Mr. Pipper made of the allegations and criticisims contained in Mr. Verhelle's private and confidential memorandum ?

Mr. MURFIN. I have not. We tried to be as thorough as we could. We had the junior officers before us, and the records and a lot of papers, and we made a report that stated our conclusions,

The CHAIRMAN. And you were all personal friends of those people! Mr. Murfin. Yes, sir; personal friends

or business friends is the better way to put it, Senator Fletcher. Here were men, esteemed at home, against whom nothing of any kind before had ever been said. These men had risen from the ranks, from the bottom up,

and you cannot rise from the bottom up unless you are a pretty high-grade man. And these charges on their face, although they sounded very serious, yet on investigation were found to have no foundation in fact.

Mr. PECORA. Judge Murfin, it will be necessary for you to appear again tomorrow, I am sorry to say.

Mr. MURFIN. So am I. And I hope when we are through tomorrow we won't be sorry again.

Mr. Pecora. I am only sorry because you have to appear again tomorrow.

Mr. MURFIN. Very well. I will be here.

Mr. PECORA. Because you wanted to get away today, and I should like to have accommodated you.

Mr. MURFIN. I will be here.

The CHAIRMAN. The subcommittee will now stand adjourned until 10:30 tomorrow morning.

(Thereupon, at 4:50 p.m., Thursday, Feb. 1, 1934, the subcommittee adjourned until 10:30 the following morning.)



DECEMBER 31, 1932

Combined statement of condition of the banking units at close of business,

December 31, 1932

Cash on Hand and in Banks.
United States Government Securities.
Other Bonds and Securities..
Stock in Federal Reserve Bank.
Loans, Discounts and Advances.
Loans Secured by Mortgages.--
Banking Offices and Real Estate-
Accrued Income Receivable.
Customers' Liability on Acceptances and Letters of Credit---

$80, 643, 226. 03
43, 044, 445, 27
40, 012, 561. 41

1, 882, 500.00 178, 851, 033. 13 172, 812, 455, 90 36, 807, 720. 50 4, 758, 284. 68

894, 576. 09

Total Resources

$559, 736, 802.98

Undivided Profits.-
Reserve for Interest, Taxes, etc.--
Bills Payable
Acceptances and Letters of Credit-
Circulation Outstanding--

$192, 820. 109. 15

291, 913, 258. 32

$29, 910,000.00 29, 140, 000.00 3, 329, 267.03 2, 239, 730. 82

901, 065. 16

895, 232.00 8, 588, 140.00

484, 733, 367.97

Total Liabilities.

559, 736, 802.98

JANUARY 9, 1933, To the Stockholders of the Detroit Bankers Company:

The year 1932, just passed, is the third full year after the economic upset of 1929. In it, individuals and businesses generally have felt the accumulated effects of three years of depression. Your Company, as banker for many hun

dred thousands of persons in the Detroit Metropolitan area, and over 85% every type of business represented there, has necessarily been a focus poin í: individual and business problems. It has been organized and conducted so 3 to safely meet these problems from the standpoint of its customers and als itors, and has, as rapidly as possible, adjusted its own affairs and those of in unit organizations to face the requirements of the present general busines situation.

During the year there was only a minor change in the outstanding capita the Detroit Bankers Company, represented by the issuance of $2,679.60 of pe value of Detroit Bankers Company stock in exchange for outstanding and uneIchanged shares of the First National Bank-Detroit. There are at present of standing 1,775,598 shares of $20.00 par value.

In February, 1932, the Detroit Bankers Company established the First Nr tional Bank at Pontiac, contributing $500,000.00 of Capital and $250,000.00 initial Surplus. This was a newly incorporated National Banking Institute for the purpose of taking over the deposits and liquidating the assets of the First National Bank & Trust Company of Pontiac.

The general result of operations for the year 1932 is best shown by a a parison of the total Capital, Surplus and Undivided Profits of all the bankia: units as of December 31, 1931, and December 31, 1932, as follows: Capital, Surplus and Undivided Profits 12/31/31.

$68, 459, 912 16 Add: Capital Stock $500,000.00, Surplus $250,000.00 of new First National Bank at Pontiac..

750, U.


$69, 209, 912.6 Add: Net Earnings after depreciation and all other charges but before Dividends ---

5. 740, 345. *

$74, 950, 210,

Dividends Paid.---
Transfers to Reserves.

$2, 813,500.00
9, 757, 493. 29

12, 570, 993.99

Total Capital, Surplus and Undivided Profits 12/31/32.- $62, 379, 267, 15 Provision was made for reductions in asset values by transfers to Reserves of nearly $10,000,000.00, in addition to nearly $3,000,000.00 of Reserves already provided for during the year out of current earnings and other sources.

The banking units of your Company have, in the past three years of its existence, endeavored to meet the present economic conditions by setting op provisions for losses and contingencies in excess of $37,000,000.00

The combined statement of all banking units shows a decrease in total Income for the year, of $4,776,911.95, over 1931, slightly less than 14 per cent. due mostly to loss of Income as a result of liquidation of earning assets. The close control of operating and other expenses throughout the Group is evidenced by the fact that total Expenses in the same period were reduced $3,061,657 21. leaving a reluction of Net Operating Income of $1,715,254.75. Net earnings. after all charges but before Dividends for 1932, were $5,740,318.29, as compared with $7,475,293.47 for the year 1931 preceding--a decrease of $1,734,945.18.

Dividends have been substantially reduced in greater proportion than the decline in Net Earnings. A total of $2,813,500.00 was paid in 1932 as against $6,051,400.00 in the year 1931. This dividend reduction of $3,237,900.00 excids the reduction in Net Earnings by $1,502,951.82, the capital investment being thereby strengthened by this latter amount.

The First National Bank-Detroit, Board of Directors has bad the large number of seventy-six members. It was determined, in December, 1932. to l'educe the number of the Board of Directors of the Bank to thirty-eight, fire to be Bank Officers and three Trust Company Officers, all of the present Direc tors of the Bank being made Directors of the Detroit Bankers Company at the annual meeting in January.

The general activities of the Detroit Bankers Company, operating as a Holding Company, are rapidly being reduced to the simplest possible form. It will act almost solely as a holder of the stock of its constituent units its

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