Mr. PECORA. I know the origination of the loan was in the old First National before you became a director.

Mr. MILLS. Yes.

Mr. PECORA. But the charge-off was made after you became a director?

Mr. MILLS. Yes; that is true. I stated that.

Mr. PECORA. The loan was carried in the names of Blessed and Lightner, who were officers connected with the bank.

Mr. MILLS. I don't know how the loan is carried. I know that Mr. Blessed and Mr. Lightner were officers of the bank; yes, sir. Mr. PECORA. And you as a director did not know about the chargeoff?

Mr. MILLS. I didn't say that. I said I didn't recall it. When we charged off some fifteen millions of dollars, some sixty or eighty thousand dollars, I think I could hardly be expected to remember.

Mr. PECORA. Were the fifteen or sixteen million dollars that you referred to charge-offs of loans carried in the names of officers of the bank?

Mr. MILLS. Oh, no.

Mr. PECORA. NO. Weren't there discussions among the members of the board of directors with regard to charge-offs of loans in the name of officers?

Mr. MILLS. There was some discussion as to loans of officers in the board meetings; yes, sir.

Mr. PECORA. Do you recall any discussion about a charge-off of a loan of $212.000?

Mr. MILLS. No.

Mr. PECORA. Carried by Blessed and Lightner?

Mr. MILLS. No; I don't recall any such discussion.

Mr. PECORA. Well, perhaps I can refresh your recollection by suggesting to you that this loan was carried in the name of Blessed and Lightner as trustees.

Mr. MILLS. I have heard that from gossip, but I have had no knowledge of the charge-off. I have no recollection of the charge-off. Mr. PECORA. And that they were acting as trustees for the bank with regard to this loan. Does that further refresh your recollection?

Mr. MILLS. It does not. I have thought of this a great deal. The individuals, Mr. Blessed, Mr. Lightner, I think Mr. Hart knew something about it, and a large number of them, 5 or 6 of them, that knew the whole story of it in the old First National Bank.

Mr. PECORA. At the present time you don't know the story?

Mr. MILLS. NO; I do not. I have heard gossip and nothing

further.

Mr. Pecora, might I take this opportunity to make what I am told is a legal correction in my testimony. I said this morning that the American State Bank, Mr. Chairman, and the Peoples Wayne County Bank were consolidated. Counsel informs me, Mr. Long who handled the matter, that it was not a consolidation. It was an agreement under which the deposits were taken over in consideration of— what was the consideration?

(Mr. Long came forward and conferred with Mr. Mills.) Took over the assets for liquidation and guaranteed the deposits. The CHAIRMAN. Of the Wayne Bank?

Mr. MILLS. The Peoples Wayne, in connection with the American State. It was not a technical consolidation, as I testified this morning.

Mr. PECORA. Mr. F. Howard Russ, Jr., was a vice president of the First Wayne National Bank in January 1932, was he not? Mr. MILLS. He was, sir.

Mr. PECORA. And that was when you were the second in command of the bank?

Mr. MILLS. Yes, sir.

Mr. PECORA. I show you what purports to be a copy of a memor andum addressed to you by F. Howard Russ, Jr., under date of January 6, 1932. I ask if you recall receiving the original of that.

Mr. MILLS (after perusing document). I don't recall having received it. I would be the last to testify that I did not. That is all. A large number of memorandums were made, and I don't recall, I may have had it.

Mr. PECORA. Do you recall the subject matter of the letter or any of the subject matters referred to in that memorandum?

Mr. MILLS. No; I cannot say that I do. I know that in year ends it was not unusual for substantial differences to occur in balances of various deposits.

Mr. PECORA. Due to what circumstances?

Mr. MILLS. As I understand it, by reading the press here, apparently I have been misinformed, but I understood it was for tax purposes; but according to the testimony I have read in newspapers here it was not for that purpose. I have always understood it was for tax purposes.

Mr. PECORA. Would you say that you did not receive the original of this letter?

Mr. MILLS. Oh, no; I said I did not recall. I said I had no recollection. I may have.

Mr. PECORA. Let's see if reference to the subject matter of it might refresh your recollection a little bit more.

I ask that this copy be marked for identification. [After a pause.] I think it could be spread on the record, Mr. Chairman. The CHAIRMAN. Let it be admitted.

(Letter from F. Howard Russ, Jr., to Wilson W. Mills, dated Jan. 6, 1932, was thereupon designated Committee Exhibit No. 142, February 6, 1934," and appears in the record immediately fol lowing, where read by Mr. Pecora.)

Mr. PECORA. The memorandum received in evidence as Committee's Exhibit No. 142 reads as follows; addressed to Mr. Wilson W. Mills from F. Howard Russ, Jr., date, January 6, 1932 [reading]:

The following accounts were responsible for considerable fluctuation in balances over the end of the year:

Booth Newspapers. This was transferred for tax purposes.

Chrysler Corp. This corporation very generously increased their balance by a half million dollars, due to the unusual conditions which they know exist at this particular time.

Detroit Edison Co. This company's account showed a balance of $5,000,000 in excess of its usual balance, due to the fact that they were carrying this amount with us to take care of maturing bonds on January 3. The $5,000,000 was transferred to the Bankers Trust Co. for that purpose on the morning of January 3.

D. & C. Navigation Co. This money was transferred for tax purposes, and up to date has not been returned.

Detroit-Windsor Ferry Co. This was transferred for tax purposes.
Evening News Assn. This was transferred for tax purposes.

Ford Motor Co. Balances as of December 31 is an accumulation of their funds in our various branches and the Detroit Trust Co. and is accumulated for the purchase of Governments over the end of the year. Their balance on January 4 merely reflects a condition of money being transferred back to the same units, but did increase their bank balance on December 31 by approximately $3,000,000 due to the transfer of that amount from the Trust Company. This money is carried in a Special Savings Account and is shown in our savings deposits, and not in our commercial deposits. This balance, however, will be stepped up approximately $2,500,000 by the transferring of this amount from a savings' account to their regular account, and book savings will be decreased by a similar amount.

General Motors Corp. With the knowledge that this corporation has of the fluctuating balances in banks at the end of the year, they very kindly volunteered to increase their account $3,000,000 and it is presumed that this $3,000,000 will be taken out gradually over the next week or two.

Gilchrist & Co. This money was transferred for tax purposes.

S. S. Kresge Co. This account has had considerable fluctuation over the end of the year, due to the payment of $1,800,000 in dividends and several transfers of $2,000,000 and $3,000,000. The balance as of December 31 this year was in excess of about $400,000 over last year."

Now, do you recall the purpose of the transmission of any such memorandum as this to you?

Mr. MILLS. If it was transmitted, it would simply be to tell me the story that you have read.

Mr. PECORA. I notice particularly in that portion of the story set forth in this memorandum relating to Ford Motor Co. and to that mentioned in the item relating to the Ford Motor Co. in this memorandum, which reads as follows:

This balance, however, will be stepped up approximately $2,500.000 by the transferring of this amount from a savings account to their regular account, and book savings will be decreased by a similar amount.

Now, do you know anything about that?

Mr. MILLS. All I can tell you about the Ford transaction is that they were, as my statement probably shows, the largest depositor of the bank. Whatever the Ford Motor Co. wished to do we did so long as it was within the law.

Mr. PECORA. Do you recall that the Ford Motor Co. by arrange ment with the bank stepped up, to use the expression here, its bal ances as of December 31, 1931, by $2,500,000 through the issuance of certificates of deposit?

Mr. MILLS. Didn't it also say that the savings were reduced by a corresponding amount?

Mr. PECORA. Yes.

Mr. MILLS. I don't recall it; no. It may have been so. I don't recall it.

Mr. PECORA. Are you familiar with that portion of the evidence taken before this committee last week in which certificates of deposit were put in evidence?

Mr. MILLS. I am not. I was not here. I did not even see a newspaper account of it. I was on the train coming here. That is why 1 missed a newspaper.

I do know that the Ford Motor Co. accounts at the end of the year, and at all other times, were handled as Mr. Craig, treasurer or comptroller of that company, desired them handled. We had to handle them in accordance with his good wishes. They were good customers, and, after all, it was their money.

Mr. PECORA. What interest would the Ford Motor Co. have which the bank would not have had in stepping up, to use Mr. Russ's expression, its deposits in the First National at the end of the year 1931 by $2,500,000?

Mr. MILLS. They evidently took it out of their savings and put it in their commercial.

Mr. PECORA. Well, the evidence here shows it was taken out of the Detroit Trust Co. account and put in here and then transferred back on January 3 into the Ford Motor Co.

Mr. MILLS. I do not know why the Ford Motor Co. desired to do it. I have never known why the Ford Motor made these year-end transactions.

Mr. PECORA. What was the reason for Mr. Russ calling your at tention, as the second ranking officer in the bank, to the various items set forth in this memorandum?

Mr. MILLS. To give me information about them, because Mr. Russ had been with the old First National Bank. I was with the Peoples. I had not known him intimately. Many of these notes, not all of them, many of them, were in the old First National Bank. Obvi ously, he was giving me information about them.

Mr. PECORA. Let us see about the item referred to in this memorandum under the caption, "General Motors Corporation", which reads as follows:

With the knowledge that this corporation has of the fluctuating balances in banks at the end of the year, they very kindly volunteered to increase their account $3,000,000, and it is presumed that this $3,000,000 will be taken out gradually over the next week or two.

1

What does that indicate to you, Mr. Mills?

Mr. MILLS. Just what it says. General Motors Corporation volunteered to do that and increased their balances.

Mr. PECORA. In order to enable the bank to make a better showing as of the end of the year?

Mr. MILLS. I do not know whether that was General Motors' idea or not.

Mr. PECORA. Was that the bank's idea in having the General Motors Co. increase its balances as of the end of the year?

Mr. MILLS. I want to state right now, as I stated the other day, when I became head of this institution I told everybody that I was not in favor of getting deposits over the year end.

Mr. PECORA, Doesn't this look like getting a deposit over the yearend, a substantial deposit of $3,000,000?

Mr. MILLS. It does not look at all like it from the wording of that document, which says that General Motors offered it.

Mr. PECORA. Doesn't it look like an increasing of deposits in order to enable the bank to make a better showing as of the end of the year, in view of the fact that Mr. Russ specifically says in this memorandum to you that it is presumed that this $3,000,000 will be taken out gradually over the next week or two?

Mr. MILLS. General Motors-I object to any imputation that the First National Bank solicited that increase in deposit in the First National Bank. It appears on its face that the General Motors Co. came in and made that offer. That is all I know about it.

Mr. PECORA. Was that true also of the Chrysler Corporation? Mr. MILLS. All I know is what you have read. Will you read it? Mr. PECORA. With regard to the Chrysler Corporation this is what Mr. Russ reported to you, according to this memorandum: This corporation very generously increased their balance by a half million dollars due to the unusual conditions which they know exist at this particular time.

Does that indicate a generally generous attitude on the part of the Chrysler Corporation?

Mr. MILLS. It would to me, knowing them as I do; yes. There are many decreases, as I recall it, in that memorandum.

Mr. PECORA. I beg pardon?

Mr. MILLS. There are many decreases, I believe, in that memorandum too.

Mr. PECORA. There were. I have put the entire memorandum in evidence. What were, do you suppose, the unusual conditions known to the Chrysler Corporation and to the General Motors Corporation referred to in this memorandum?

Mr. MILLS. I can only think of two things. One was that possible tax matters; second, deposits in the First National Bank that my written statement here has shown had gone off $143,000,000 in 18 months.

Mr. PECORA. Where reference is made in this memorandum to money having been transferred by different depositors named here for tax purposes, what does that refer to? I mean what tax purpose could be derived by such a transfer?