The CHAIRMAN. Mr. Mills, what was your salary as an officer of the bank, I mean the first officer of the bank?

Mr. MILLS. In 1931 it was $50,000 a year. In 1932 it was $40,000 year until March 1, 1933, and it was restored to $50,000 a year. I had a contract when I came to the bank. And on March 1, 1933, I reduced it to $25,000 a year.

Mr. PECORA. Mr. Chairman, the hour for recess has arrived, and I suggest that we take a recess until 2 o'clock. In the meantime I can look over this statement.

The CHAIRMAN. All right.

Mr. PECORA. Mr. Mills, will you give me a copy of that prepared statement that you have just read into the record, so that it may be marked in evidence?

Mr. MILLS. I have handed a copy to the committee reporter. Mr. PECORA. Well, that may be marked as an exhibit. Of cours it has already gone into the record, as you read it.

(Thereupon the statement prepared and read by the witness was marked "Committee Exhibit No. 132, February 2, 1934", and is shown immediately above where read by the witness, and, in addition, the matter the witness interpolated while reading the prepared statement.)

The CHAIRMAN. The subcommittee will now stand in recess until 2 p.m.

(Thereupon, at 12:55 p.m., Feb. 2, 1934, the committee recesse to meet again at 2 p.m. the same day at the same place.)

AFTERNOON SESSION

The hearing was resumed at the expiration of the recess.
The CHAIRMAN. The committee will come to order.

TESTIMONY OF WILSON W. MILLS, DETROIT, MICH.-Resumed

Mr. PECORA, Mr. Mills, in the prepared statement which was read into the record this morning by you, a copy of which was marked in evidence, you state that you had been a bank officer 2 years from March 1, 1931, at which time you became chairman of the Peoples Wayne County Bank of Detroit. Prior to March 1, 1931, had you been a member of the board of directors of any banking institution in Detroit or elsewhere?

Mr. MILLS. I became a director, was elected a director of the Dime Savings Bank, I think it was in 1926. That is the best of my recol lection. That bank later became the Bank of Michigan by a merger and I continued as a director of that bank; and in 1930, I believe it was, that bank was merged with the Peoples Wayne County Bank. and I continued as a director for 6 or 7 months with the Peoples Wayne County Bank.

Mr. PECORA. Your first banking experience, then, as a director of any banking institution commenced in 1926?

Mr. MILLS. I think it was 1926; yes, sir; approximately.

Mr. PECORA. Did you become a stockholder of the Detroit Bankers Co. at the time of the organization of that company?

Mr. MILLS. I exchanged my stock in the Bank of Michigan for Detroit Bankers Co. stock.

tored to

And

Mr. PECORA. And at the time you became chairman of the Peoples Wayne County Bank of Detroit on March 1, 1931, did you receive a salary as such chairman ?

Mr. MILLS. I did, sir.

Mr. PECORA. That was the bank that was consolidated with the First National Bank in Detroit at the end of 1931?

Mr. MILLS. Yes. As a matter of fact, so there will be no misunderstanding, I was elected chairman in January 1931 with the understanding that I would not assume duties or take any compensation until March.

Mr. PECORA. And you became chairman of the board of the consolidated bank immediately upon that consolidation becoming effective?

Mr. MILLS. I did. I was the second officer of the bank.

Mr. PECORA. By the second officer of the bank, do you mean that you were the senior executive next to the president?

Mr. MILLS. No; the chairman of the governing committee was the senior executive of the First Wayne National Bank, under the bylaws.

Mr. PECORA, Who was that officer?

Mr. MILLS. Mr. Ballantyne.

Mr. PECORA. When did you become chairman of the governing board?

Mr. MILLS. I was elected to that position in July or August-I think it was July of 1932.

Mr. PECORA. And continued to serve in that capacity until a receiver for the bank was appointed?

Mr. MILLS. Not quite. The office was later abolished in an effort to cut down bylaws, and so forth. The office was abolished and I was given the office of chairman of the board, and that became the highest ranking office.

Mr. PECORA. The highest executive officer?

Mr. MILLS. With the same powers as the chairman of the governing committee had had before.

Mr. PECORA. Are you familiar with the testimony which Mr. Ballantyne gave here during the past week in which, in substance, he stated that as chairman of the board of the First National Bank he felt that he did not have the power under the bylaws, and had been so advised, that he thought should attach to the position which he held?

Mr. MILLS. I read that statement, substantially as you have made it, in the press; yes, sir.

Mr. PECORA. Was that the condition of affairs?

Mr. MILLS. Might I introduce the bylaws in evidence?

Mr. PECORA. It is unnecessary. You are an attorney, and perhaps you can simplify it.

Mr. MILLS. I think they would be the better evidence. I would state that in my judgment under the bylaws there was ample power given to the chief executive officer of the bank. Like all matters, certain things are subject to veto power by the board, or, in this case, by the governing committee.

Mr. PECORA. When were the bylaws you have in your hand now adopted in the form in which they appear in that copy?

Mr. MILLS. This is the final amended form. There was a change in an effort

Mr. PECORA. What year?

Mr. MILLS. 1932. It is substantially the same as to the power of the governing board.

Mr. PECORA. You say "substantially the same ", from which I am inferring that there was some change made in that provision.

Mr. MILLS. The only change that I recall that was made in that provision was to give to the chairman of the board the power that had previously been enjoyed by the chairman of the governing committee.

Mr. PECORA. Can you produce here a copy of the bylaws of the bank that were in effect just prior to the resignation of Mr. Ballantyne.

Mr. MILLS. I have not them. It may be that Mr. Long, who is present, has them in his files.

(Addressing Mr. Long:) Have you the original bylaws? Mr. LONG. I have my copy.

Mr. MILLS. Will you give it to me, please?

Mr. Long has handed me what he states is a copy of the bylaws as they existed at the time of the organization of the bank and which were in force during Mr. Ballantyne's administration.

Mr. PECORA. Do I understand that those were the bylaws, to which you now refer, which were in force just prior to Mr. Ballantyne's resignation in 1932?

Mr. MILLS. So I am informed by Mr. Long, and they would seem so to me.

Mr. PECORA. I ask that they be marked for identification; not in evidence, but just marked for identification.

Mr. LONG. That is my private file, Mr. Pecora. Will I have to leave it here?

The CHAIRMAN. You will not have to leave it.

(Bylaws produced by Mr. Long, entitled "Bylaws of First Wayne National Bank, of Detroit, as recommended Dec. 18, 1931, and adopted Dec. 31, 1931 ", were marked for identification "Committee Exhibit No. 133, Feb. 2, 1934.")

Mr. PECORA. The bylaws that have been marked for identification as the Committee's Exhibit No. 133 for identification are entitled 'Bylaws of First Wayne National Bank, of Detroit, as recommended December 18, 1931; and adopted December 31, 1931." Let me ask you this, Mr. Mills: Do you know that the form in which the bylaws here in this copy thereof which has been marked for identification was retained up to the time of Mr. Ballantyne's resignation, or had there been any changes or amendments prior to that time!

Mr. MILLS. I am almost certain that there were no changes or amendments until after Mr. Ballantyne's resignation. I am almost certain of that.

Mr. PECORA. Have you a copy of the bylaws as then changed or amended?

Mr. MILLS. I have a copy of the bylaws as they were on February 11.

Mr. PECORA. Of what year?

Mr. MILLS. 1933.

Mr. PECORA. Do they contain the amendments which have been referred to?

Mr. MILLS. They are a complete copy of the bylaws as they then

were.

Mr. PECORA. How many times had they been amended between the time of the resignation of Mr. Ballantyne and the date in February 1933?

Mr. MILLS. To the best of my recollection, only once. There were several amendments to simplify matters. There may have been two, but to the best of my recollection there was one.

Mr. PECORA. Will you produce the bylaws that you now have, Mr. Mills?

Mr. MILLS. Yes, sir [producing a document and handing it to Mr. Pecora].

Mr. PECORA. I ask that this be marked for identification.

Mr. MILLS. They were amended and adopted December 6, 1932. There may have been a minor change in the meantime, but if so I do not recall it.

(Document produced by the witness containing bylaws in effect on February 11, 1933, was marked for identification "Committee Exhibit No. 134, Feb. 2, 1934.")

Mr. PECORA. Will you point out by reference to the section of the bylaws the change that was made with respect to the powers, duties, and authority of the executive head of the bank, the chairman of the governing body?

Mr. MILLS. All I recall, Mr. Pecora, was this: You would have to compare the two, but the sum and substance of it, according to my recollection, was that the title of chairman of the governing committee was abolished and his functions were assumed by the chairman of the board; and in the redraft where the former had said that the chairman of the governing committee shall do so and so, it now said that the chairman of the board shall do so and so, Have I made that clear?

Mr. PECORA. I think so.

Mr. MILLS. Article IV seems to be the section in question. I have marked part of it. Section VI seems to be the section-I think it is the same in the original. They can readily be compared.

Mr. PECORA. Section 6, subdivision A, article IV of the bylaws marked for indentification as "Exhibit No. 134 ", reads as follows [reading]:

The chairman of the board of directors shall be the chief executive officer of the bank and subject to the actual affirmative exercise of the powers by law pertaining to and vested in the board of directors, whether so exercised by the board itself or by the governing committee or the executive committee within the scope of the jurisdiction and function of these bylaws vested in each of said committees, respectively. The chairman of the board of directors shall have general executive control over the conduct of all the business and affairs of the bank and over the functions and activities of all officers and agencies of the bank.

Mr. PECORA. Who was the chairman of the governing committee just prior to Mr. Ballantyne's resignation from the bank?

Mr. MILLS. He was the chairman of the governing committee, and there was none before. As far as I know, the old First National Bank before the consolidation had none. I was not a director of the old First National Bank.

Mr. PECORA. Who was the chairman of the board of directors while Mr. Ballantyne was chairman of the governing committee of the board?

Mr. MILLS. I was. In general, Mr. Pecora, the ranking of the officers under the bylaws could be summarized, until they were amended by the exhibit which you hold in your hand, as follows: The principal officer was the chairman of the governing committee. The second officer was chairman of the board. The third officer was the vice chairman of the board. The fourth officer was chairman of the executive committee. The next one was vice chairman of the executive committee. And then came the president. There was an awful raft of titles which we tried to simplify. That was one purpose for the amendments in the copy which you have.

Mr. PECORA. The president of the bank was really the fifth or sixth ranking officer?

Mr. MILLS. Yes. Under the bylaws he had certain duties assigned him.

Mr. PECORA, I wonder if that was the situation that called forth the suggestion, comment, or criticism of Mr. Verhelle in his confidential memorandum to you of May 18, 1932, which is in evidence here, and in which, as I recall it, he alluded to the fact that many of the senior officers of the bank had no special duty or functions or responsibilities.

Mr. MILLS. Up to a certain point that was true; but in June or July specific, definite duties and responsibilities attaching were assigned to every officer in the bank.

Mr. PECORA. June or July of 1932?

Mr. MILLS. Yes.

Mr. PECORA. That was a month or two following the making of that criticism by Mr. Verhelle?

Mr. MILLS. Yes, sir. We were working on it at the time.

Mr. PECORA. In your prepared statement you said, among other things, as follows [reading]:

The bank had made many loans predicated upon a tremendous number of shares of stock of the Detroit Bankers Co. (this coming into the bank by virtue of the exchange of stock of unit banks for stock of the Detroit Bankers Co.).

Do you know how many loans, Mr. Mills, had been made by the bank of that category?

Mr. MILLS. I can only answer in this way: That when I went into the bank there were loans in there which were predicated on Bankers Co. stock, which in turn had been predicated on individual bank stocks. If I might illustrate this way: Someone in the Dime Savings Banks bought stock of the Dime Savings Bank, and to pay for it he went, we will say, to the Peoples Bank or the Merchants Bank or the Peninsular bank and borrowed on it and put up his stock as collateral. When the Detroit Bankers Co. was formed that stock was exchanged into Detroit Bankers Co. stock, and eventually these banks that I have named were merged in the Peoples Wayne County Bank or the First National Bank, so they ended up with both the collateral and the loan.

Mr. PECORA. When you became the senior officer of the bank, how many such loans were in the bank?

Mr. MILLS. There were a large number of loans.