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Upon receipt of that letter did you dictate a letter to Senator Vandenberg, of which this photostatic reproduction is a copy?

Mr. MILLS (after perusing the document). Yes; I believe that is a copy of my reply. It looks like it.

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

(Letter dated Oct. 16, 1931, from Wilson W. Mills to Hon. Arthur H. Vandenberg, was thereupon designated “ Committee Exhibit No. 145, Feb. 6, 1934 ", and appears in the record immediately following where read by Mr. Pecora.)

Mr. PECORA. The letter received in evidence as committee exhibit no. 145 reads as follows, dated October 16, 1931 [reading]: Hon. ARTHUR H. VANDENBERG,

Grand Rapids, Mich. DEAR SENATOR: Thanks for your letter of the 15th. You know my views regarding the imperative necessity of immediate legislation, and I hope you know that anything I can do in any way to assist you I shall be most happy to do. You have stated the situation perfectly-it is desperate.

And those three words are underscored. There must be some way to make the President understand the real situation, I think he probably is taking practically all his financial advice from New York, and they naturally are most concerned about their foreign credits. There is another thing, however, all the bankers in the country are complaining of the public hoarding. I am not certain that the bankers themselves did not start it and I do believe that at the present at least they are equally guilty with the public in hoarding, i.e., by the insistence of the maintenance of a tremendous cash and Government position. I know one large institution in New York has almost 75 percent of its deposits in cash and Governments; and while I haven't tried it, I am willing to wager that I couldn't make a sizable loan in the institution upon any collateral that was not subject to rediscount at the Federal Reserve-why? It impairs the bank's liquidity. Of course, this thing is the old vicious circle again—the banks are afraid of the public and the public are afraid of the banks, so they are in effect each compelled to hoard.

I dictated the foregoing letter this morning before the receipt of your wire. While I think the papers of the National Credit Corporation could have been more definitely drawn, I do not think that the clause you quoted from page 3 will create any liability other than is stated in the succeeding sentence which limits the liability of other members of the association to a several proportionate amount. I talked to Mr. Buckner's office in New York about it after receipt of your telegram and they stated that the actual articles of agreement which will be mailed tomorrow and which will be the agreement itself as listinguished from the plan which has been received will not contain this ambiguity. Mr. Reichart agrees that it is all right to go ahead on that basis. While, of course, every bank that possibly can must and should follow up with the President's plan, I am sure there is going to be quite a reaction when the public understands that it is not going to assist failed banks or failing banks. It is for that reason also that I most heartily concur in your views as to the desirability of a special session.

I am sorry to make this such a long letter, but at noon the president of the Detroit Real Estate Board telephoned me and asked if I wouldn't urge you to accept their invitation to be their guest and speak at their annual meeting in December. Of course, I hope you can; but I know how busy you will be in December and if you find it impossible to come I know they will understand why. Of course, I personally hope you will be able to be here.

I am delighted to know that you will be in Detroit on Friday or Saturday of next week and am holding you to your promise to see me. Will you not save one of the days to have luncheon or dinner with me and if you have no other plans, I would be happy indeed to have you as my house guest. With kindest personal regards. Yours very sincerely,

CHAIRMAN.

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Did you send a letter to Mr. Eugene Meyer, the Governor of the Federal Reserve Board, in Washington, of which this document which purports to be a photostatic reproduction is a copy?

Mr. Mills (after perusing document). I don't recall it, but I have no doubt that it is a copy:

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

(Letter dated Oct. 17, 1931 from Wilson W. Mills to Eugene Mever, Governor Federal Reserve Board, was thereupon designated “ Committee Exhibit No. 146, Feb. 6, 1934,” and appears in the record immediately following, where read by Mr. Pecora.)

Senator Couzens. Did you ever let Mr. Meyer know that you were alarmed about this in 1931 ?

Mr. Mills. Yes; and about the national situation. And so were all of them. Everyone was. The testimony has been that the Guardian Detroit were fighting a war in Detroit. Everybody almost felt the same way I did. I talked to many of them from New York and all parts of the country.

Mr. PECORA. The letter just received in evidence and marked " Exhibit No. 146 ” reads as follows (reading]:

OCTOBER 17, 1931 Mr. EUGENE MEYER,

Governor Federal Reserve Board, Washington, D.C. DEAR MR. MEYER: I am enclosing copy of a letter that I wrote to the President under date of October 14. In this part of the country, at least, I believe the situation is very serious indeed, and I fear for any long delay. The banks all complain of people hoarding-I am wondering as to whether the rererse is not also true that the banks are hoarding. When an institution has 75 percent and upwards of its deposits in cash and Governments and is a very unwilling lender, I would say that it is hoarding just about as much as the public-sime what the case of the pot calling the kettle black. Conditions make hoardingif it may be called so—justifiable, but the cause that may necessitate it should be removed. I am not referring to any individual case, but as illustrative of the general situation. The confidence in our banking institutions is so rapidly waning that I fear the time element as much as anything else and believe delay will very materially lengthen the task of reestablishing that confidence. I trust you will pardon my writing you but I could not resist the temptation Yours very sincerely,

CHAIRMAN Now, Mr. Mills, in your letter to Mr. Meyer, as well as to Senator Vandenberg, you referred to the fact that you had sent a letter to President Hoover under date of October 14, 1931, and it has been reported to me that no copy of the letter was found among the files

, of the bank in custody of the receiver? Have you a copy of that letter?

Mr. Mills. No; I have not. I haven't any copy.
Mr. PECORA. Do you recall the general substance of the letter?

Mr. Mills. While this was being read I have been wondering just what it was. It was either, in my judgment, one of three things—either the Home Loan Bank bill or some provision to establish some type of agency under which mortgage paper might be rediscounted, like a general-mortgage bank, a central-mortgage bank. or else it may have been to broaden the rediscount base of the Federal Reserve bank with the privilege of rediscount, or it may hare been something along the line of what later turned out to be the R.F.C. I do not recall exactly which it was, but I believe it was one of the three.

Mr. PECORA. After you dispatched that letter to the President did you receive an acknowledgment from him in the form of the photostatic reproduction which I now show you?

Mr. Mills Yes; I received this letter from the President. This refreshes my recollection slightly, that I had up to this time thought that a special session was advisable for the purpose of one of those three things.

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

(Photostatic copy of letter dated Oct. 21, 1931, from the President of the United States to Wilson W. Mills was received in evidence and marked “ Committee Exhibit No. 147, Feb. 6, 1934.")

Mr. PECORA. The photostatic copy of letter received in evidence as Committee Exhibit No. 147 reads as follows (reading):

COMMITTEE EXHIBIT No. 147

THE WHITE HOUSE,

Washington, October 21, 1931. Mr, WILSON W. MILLS,

Peoples Wayne County Bank, Detroit, Mich. MY DEAR MR. MILLS: I have your kind letter of October 14th and would be glad if you could come to see me at your convenience to discuss the questions you have in mind.

My own feeling is that confidence is returning throughout the country, of which there are many evidences, and that we should give opportunity for its growth without injecting all the uncertainties that might arise from the action you suggest. Nevertheless, I should like an opportunity for discussion with you personally and when you come east again would value your advice. Yours faithfully,

(Signed) HERBERT HOOVER. Does this letter, Mr. Mills, refresh your recollection more clearly as to the action that you suggested the President might take in your letter to him of October 14, 1931 ?

Mr. Mills. As I stated, Mr. Pecora, I think I was urging a special session of the Congress to enact legislation along one of the three lines that I have mentioned.

Mr. PECORA. Did you urge all three plans upon the President and suggest the adoption of any one of them, or did you confine your letter to one of the three plans?

Mr. Mills. I do not recall.

Senator Couzens. You know, of course, that in 1932, following that correspondence, Congress did enact thé R.F.C. Act and also the Home Loan Act!

Mr. Mills. Yes, sir.

Mr. PECORA. After the receipt of that letter from President Hoover, a copy of which was just offered in evidence, did you write a reply to it, of which this document is a photostatic reproduction [handing a paper to the witness] ?

Mr. Mills. Yes, sir; that is a copy of the letter.
Mr. PECORA, I offer it in evidence.
The CHAIRMAN. Let it be admitted.

(Photostatic copy of letter dated Oct. 27, 1931, to the President of the United States from Wilson W. Mills, was received in evidence and marked " Committee Exhibit No. 148, Feb. 6, 1934.")

Mr. PECORA. The letter just received as Committee Exhibit No. 148 reads as follows [reading]:

COMMITTEE Exhibit No. 148

OCTOBER 27,

1931.

Honorable HERBERT HOOVER,

President of the United States, Washington, D.C. MY DEAR MR. PRESIDENT: Your very generous and kind letter of October 21st has been received. In this matter, or any other I am of course, entirely at your disposal for any conference and should be most happy to go to Wastington at any time which you may indicate will suit your convenience. I should greatly value a short discussion of the matter with you.

I feel sure you will be interested in knowing that Michigan Association of the National Credit Corporation got away to a good start yesterday. All banks in the State were invited to Detroit to organize and I beliere there were between three and four hundred representatives present. There was a great deal of enthusiasm and helpfulness expressed for your plan.

May I state, Mr. President, with what sympathy I have followed your endeavors in these anxious times. No president since Lincoln has had many burdens nor in my opinion met them with such conscientiousness, courage and ability.

Yours very respectfully,

Now, Mr. Mills, when you were on the stand last Friday your attention was called to a letter or a copy of a letter received in evidence as Committee Exhibit 135, which you stated you had addressed to one Henry M. Robertson, then at the Metropolitan Hotel, Washington, D.C. That was a letter in which you gave some espression to a convulsion or shudder sometimes.

Mr. Mills. I recall it.

Mr. Pecora. Will you tell us more definitely what prompted the writing of that letter particularly to Mr. Robinson?

Mr. Mills. Mr. Robinson had telephoned me a day or so previously--he knew I was interested; I had had some correspondence with him-he knew that I was interested and had hopes of the hone loan bank bill. I was urging that it be in the form of a mortgage bank to rediscount mortgage paper, and he telephoned me, and that is what prompted the letter.

Senator COUZENS. Did your bank, after the enactment of the R.F.C. Act or the Home Loan Act, take advantage of those acts?

Mr. MILLS. We tried to at the end, just before the Michigan bank holiday was declared. That was the first time we ever applied. We never applied for a loan from the National Credit Corporation, and on February 12 and 13, 1933, was the first time we ever applied to the R.F.C. for a loan.

Senator COUZENS. But in 1931 you were very much alarmed, and your directors were, and you were urging upon the President to call å special session of Congress for the enactment of the R.F.C. or the War Finance Corporation Act, or something along that line, and you were also urging the enactment of the Home Loan Bank Act, and then shortly after that, within a few months, those acts were pased and they were organized and went on for nearly a year, and you did not avail yourselves of either of those laws after urging their enactment. I am curious to know why.

Mr. Mills. In the first place, the home loan bill, as it passed, did not offer us the help and tħe avenue that we thought, or at least that I thought, it should. It was not in a form we had hoped it would be.

Senator COUZENS. I protested the form in which it went through.

Mr. Mills. I think you protested the entire act, as I recall, Sentor.

Senator CouZENS. I proposed to set up a home-loan division in the R.F.C. for a billion dollars of those mortgages, but the Congress, although the Senate at one time had voted for the setting up of a bureau in the R.F.C. to relieve half a billion, reversed themselves and set up a bank which I understand did not do anybody any particular good out there.

Mr. Mills. But as to your question about the R.F.C., there were several reasons that we did not apply to the R.F.C. board. In the first place, we were running along, with our liquidity going off a trifle, but very little. I think the R.F.C. rate at that time was 5 percent. We did not wish to burden our depositors or our institution with that interest charge until we needed to. We had thought that if we ever needed help from the R.F.C. we could get a reasonable amount from them, and I was more interested in having them as reservoirs if we needed help—just like a fire hydrant in front of the house.

Senator COUZENS. Of course, any time along in 1932 or January 1933, you could have borrowed up to 90 or 100 million dollars of those very mortgages that you had some $153,000,000 of, as I recall?

Mr. Mills. We could have asked for a loan. I do not know whether we could have had it or not. When we asked for it we did not get it.

Senator COUZENS. You asked for it after the crisis began.
Mr. Mills. Yes. We knew nothing of the crisis before.

Senator COUZENS. Yes; I understand that. But with respect to the so-called “ Dawes Bank”, you remember that it was in June 1932 that Dawes got his loan, secured by what everyone at that time thought and many now think was adequate security. You could have gotten the same amount in 1932 or up until January 1933 with adequate security. There was no limitation beyond a hundred millions.

Mr. Mills. But the Dawes trouble had arisen. He had a fire in his house right then and there. We did not. Our fire did not come until the 11th day of February, so far as I knew anything about the fire; and, besides, this burden of interest on a substantial loan would have been terrific to have placed on our depositors for the institution to absorb; and there was also this matter of publicity, which did not help, in my judgment, any institution.

Senator COUZENS. Of course, there was no publicity when Dawes got his loan.

Mr. Mills. Yes; but the Dawes house was on fire at the time.

Senator COUZENS. But there was no publicity when the Union Guardian Trust Co. got their first loan, was there?

Mr. Mills. It was in the report filed by the R.F.C.; the monthly report filed by the R.F.C.

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