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I suppose that is real estate. There was a considerable discussion about these employees' loans. When I went into the bank it was not a happy situation, nor did it ever become a happy situation.

Mr. Pecora. In this category of employees' loans did you include the loans to officers and directors, or are they classified as loans to other than employees?

Mr. Mills. The directors' loans were classified separately, but I cannot tell you on this basis or even on the bank's books whether the officers were grouped with employees. I do not know. But there was not a great deal of difference in the situation of either the employers or the officers.

As I stated in my prepared memorandum, some of these old constituent banks had encouraged employee ownership of their stock and an employee of the Peoples State Bank may have taken his stock to the Dime Savings Bank, or the First National Bank, or any othe: bank, and obtained a loan on it. Unfortunately, in those days they were not as strict about capital loans as later events proved they should have been; and as the market went down, then the consolidation came and the loans all ended up in the First National Bank Many of the officers and employees were sunk upon loans which were originally perfectly good. We appointed a committee in the bank consisting of Mr. Webber, Mr. Barbour, and Mr. Sweeney to go into these employees' and officers' loans, and there was not an officer from the top down whose affairs were not gone into by that committee so that he could make such payments as his income permitted to be made upon indebtedness, where he was sunk, if I may use the expres. sion. We did everything that we could. The condition right from the day I went into the bank, on employees' and officers' loans, was not a happy situation. We did everything we could to correct it. As the report introduced here by Judge Murfin the other day, the Verhelle report, so called, indicated one gentleman was paying even more than he was getting in salary. A man would be called in, if he had three children and a wife and possibly owning two automo biles, and he would be told that he was not properly economizing to meet his debts.

Mr. PECORA. You did not tell him to get rid of his automobiles and his wife, too, did you?

Mr. Mills. Not his wife also. But I want to say that the boys took it in great shape, this thing of cutting down to meet their debts. I was proud of it.

Mr. PECORA. There is a memorandum on the third sheet of exhibit no. 138 reading:

See other groups.

What does that refer to? That is the last memorandum on that sheet.

Mr. Mills. I presume it refers to—I wculd be guessing, Mr. Pecora. I will guess if you wish, but I do not know, I have no recol. lection what it means.

Mr. PECORA. Might it have referred to a desire on your part to ascertain the condition of other bank holding interests or groups, so called, for the purpose of enabling you to make a comparison !

Mr. MILLS. I think that is correct. We got a list, my recollection is-now, please understand that this is just recollection.

Mr. Pecora. We understand that you are giving us your best recollection, which may be faulty.

Mr. Mills. Yes, which may be faulty; but it is certainly my best recollection that the examiner said, " If I were you I would see what other institutions are doing with employees' loans." He said, “Some banks have officers and employees who are quite badly sunk.” And we did follow that up. I think we took it up with the Marine Midland and various other banks to see what we could get in the way of enlightenment upon the officers' and employees' situation.

Mr. PECORA. On the fourth sheet of your memoranda the first item seems to read as follows:

Loaning officers weak. Morale weak. Some salary too high.

Mr. Mills. That speaks for itself. That is what the examiner stated in those three instances.

Senator COUZENS. Did you agree?
Mr. Mills. Yes; I do—I did, rather.
Mr. PECORA. The next notation on the fourth sheet-
Mr. Mills. That says “some loaning officers weak”, does it not? ?
Mr. PECORA. No; not as I read it. It says "Loaning officers weak."

Mr. Mills. I would like to change my remark, Senator. I understood it to be “some.” I agree that some loaning officers were weak, but certainly not all of them.

Mr. PECORA. The next item reads as follows:

One hundred and sixty-six real-estate loans, 9 in foreclosure, 8 other real estate.

Do those figures relate to millions?

Mr. Mills. I believe, to the best of my recollection, that those figures are as follows; that the bank had $166,000,000 of real-estate loans—that is, either mortgages or loans predicated upon mortgages would be my belief; that approximately $9,000,000 were in foreclosure; and we had $8,000,000 of other real estate. Other real estate came into this bank not only by foreclosures but also by our policy of eliminating branches. As we cut down branches, and one certain branch was discontinued as a branch, it became other real estate. It had value, of course.

Mr. PECORA. The next notation on this memorandum seems to read as follows—and I am again giving effect to what appear to be abbreviations: American State assessment not properly handled. Have I correctly read that [handing the document to the witness] ? Mr. Mills. You have, sir. I do not recall anything being said about that. It may be that he was criticizing the action of counsel in not pressing the suit. The suit was pressed. I do not know what it could mean. The suit was pressed and got its regular place on the docket. This does not give me any present recollection of it. He was probably criticizing something about the assessment suit.

Mr. PECORA. The next memorandum appears to read as follows:
Officers and employees.
What does that refer to; do you know?
Mr. Mills. Officers and employees—that is all I know.

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Mr. Pecora. For what purpose did you jot down that memorandum?

Mr. Mills. It gives me no further recollection.
Mr. PECORA. The next item seems to read:
“6”—will you read it, please? I cannot decipher it.
Mr. Mills. I will if I can. It says:
Six depreciation bonds.
I don't know what it means.

Mr. PECORA. What does the “6” mean? Does that mean sis million ?

Mr. Mills. I have no idea what it means. I presume so, but I don't know. The item doesn't refresh my recollection at all.

Mr. PECORA. The next item reads:
4. Loan Detroit bankers.
Does that refer to a $4,000,000 loan to the Detroit Bankers Co.!
Mr. Mills. Yes; it refers to that.
Mr. PECORA. That was held by the bank?
Mr. Mills. Yes; substantially that figure.
Mr. PECORA. It was a little under that figure, was it not?
Mr. Mills. I think it was a little under that.
Mr. PECORA. Then there is a notation reading:
Surety bonds too small.
What was the purpose of making that notation?

Mr. Mills. I think the examiner stated that the surety bonds carried by the bank on the employees were too small, and it was a matter that he recommended should be increased and that we would look into it and go into it carefully. We went into it later. That was one of his suggestions, or criticisms, if you prefer to call it that.

Mr. PECORA. On the last sheet of these memoranda appear to be written certain names, such as O'Brien

Mr. Mills. May I translate it for you?
Mr. PECORA. Yes. Suppose you read it.

Mr. Mills. On the last page there are the following names: Buckly, Obindorfer, Jacobs, followed by the word in parentheses “ live. May I explain this as I go along?

Mr. PECORA. Yes.

Mr. Mills. I have a recollection of this. We asked him as to what loaning officers he considered weak and which ones he condered good. We thought that this field examiner, if that is what he is called, who had been in there for several weeks, would state and we would like to check up his judgment with our own. We did not take his judgment as being infallible by a long ways, nor our own.

We wanted his judgment, and my recollection is that he stated he preferred not to name the weak ones, that we would probably know who they were. But after some urging on our part he said Mr. Buckly

, Mr. Obindorfer, Mr. Jacobs, Mr. O'Brien, Mr. Truettner, Mr. Romer, Mr. Gaines, Mr. Robert Locke, Mr. Livingston, Mr. Chittenden, Mr. Bodde-they were good loaning officers.

That is the way my recollection is refreshed from the memorandum before me. Those are the names that I have read, and in mort cases I know very distinctly that he praised them.

I think you

Senator Couzexs. There is nothing on the list about the bad ones?

Mr. Mills. He preferred not to go into any names. know them probably as well as I do. I do not believe he mentioned the name of a loaning officer that he considered bad, although I asked him to. That is the best of

That is the best of my recollection.
Then follows two more lines-
Controller of loans.

He suggested that we establish an officer called the controller of loans, which we did very shortly thereafter. The next one is “ See Utt."

Mr. PECORA. He was the field examiner that made this examination?

Mr. Mills. Yes; I think so. It may be that that was a memorandum that occurred to my mind to have him talk with Utt to see who he thought were the better men in the bank. I don't know whether that was it or not, but it is to the best of my recollection.

Mr. PECORA. Reference has been made in the course of your testimony and Judge Murfin's testimony to a Mr. Joseph M. Dodge?

Mr. Mills. Yes, sir.

Mr. PECORA. He was one of the vice presidents of the bank, was he not?

Mr. Mills. He was, sir.

Mr. PECORA. I show you what purports to be a photostatic reproduction of a memorandum addressed to you, signed with the initials “ J. M. D.", and dated February 3, 1933. Will you look at it and tell me if you recognize it to be a true and correct copy of a memorandum which you received from Mr. Dodge on or about the date which it bears?

Mr. Mills. I do not recall the memorandum, but I do not doubt at all that I had it. I remember there being some talk on that subject matter which I vetoed and put up to the governing committee and it vetoed.

Mr. PECORA. I offer it in evidence.
The CHAIRMAN. Let it be admitted.

(Photostatic copy of memorandum dated Feb. 3, 1933, addressed to Wilson W. Mills and signed “J. M. D.”, was received in evidence and marked " Committee Exhibit No. 139, Feb. 6, 1934.”)

Mr. PECORA. The memorandum just received in evidence as exhibit 139 reads as follows (reading]:

COMMITTEE EXHIBIT No. 139

To: Wilson W. Mills
From: Joseph M. Dodge
Date: February 3, 1933

Mr. Pletsch suggests it would be advisable, and a good political move, if we, as an Institution, would make some kind of a donation to the Democratic State Administration that will be used to help defray the expenses of some of the members of the Legislature who are now residing in the Roosevelt Hotel at Lansing at the expense of various members of the Administration who are trying to hold them in line and keep them out of the hands of lobbyists and others for whom they would be easy prey because of their personal financial difficulties.

He suggests that anything of this kind should be given to Mr. O'Hara, and recites the facts, first–because Mr. O'Hara has contributeil very liberally for the above purpose, and second-he has shown an unquestionable disposition to be cooperative.

Mr. Pletsch calls attention to the fact that the following five matters have been broached to him, on which #1 and #4 have been adjusted to our satisfaction:

1. Ohlander
2. State Banking Commissioner
3. Insurance on County Funds
4. State Highway Department
5. U.S. Government Bonds-State Treasurer.
It is suggested that $500.00 would be a suitable amount.

J. M. D. JMD: IMCH

Mr. Mills. You see, Senator, we invited suggestions and criticisms from every officer of the bank. That was one that undoubtedly Mr. Pletsch made to Mr. Dodge and he passed on to me.

Senator Couzens. Mr. Dodge must have thought well of it when he passed it on to you.

Mr. Mills. He may have passed it on to me with a sense of humor. I do not think Mr. Dodge for a moment thought any such thing as that would be done.

Mr. PECORA. Would he indicate in this formal fashion matters that were dictated by a sense of humor?

Mr. Mills. He might.

Mr. PECORA. Do you think he did that in this instance because he was actuated by a sense of humor?

Mr. Mills. I do not know what was in his mind. Mr. PECORA. Did you discuss this memorandum with Mr. Dodge after you received it?

Mr. Mills. I do not recall receiving it. I know we gave nothing to it.

Senator Couzens. You said you discussed it with the board of directors.

Mr. Mills. Then I must have received it.
Senator Couzens. Then you must have thought pretty well of it!

Mr. Mills. Oh, no, Senator. I recall showing this to the governing committee, that it had been suggested, but of course it could not be done, and the matter brought forth laughter.

Senator COUZENS. Mr. Dodge must have at least impressed you sufficiently to take the matter up with the governing board!

Mr. Mills. Oh, no. He is the secretary of the governing board. He may have read it as a joke. I think it is a joke.

Mr. ÞECORA. Was it a joke when he said !Mr. Pletsch calls attention to the fact that the following five matters hare been broached to him, on which no. 1 and no. 4 have been adjusted to our satisfaction.

No. 1 is Ohlander and no. 4 is State highway department. It apparently relates to something that had taken place.

Mr. Mills. I will say this, that I do not believe Mr. Pletsch was actuated by a sense of humor in this memorandum. I will say that. I do not think he was actuated by a sense of humor at all.

Mr. PECORA. Who is the Mr. O'Hara referred to in this memorandum of Dodge?

Mr. Mills. I presume he is county clerk, but I am not certain. Mr. PECORA. County clerk, where?

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