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The CHAIRMAN. Not even after the closing?

Mr. Wilson. After it was closed there was a new bank; it was reorganized into a national bank later on in July, and they ther. borrowed from the R.F.C. for the purpose of making a pay-off to the depositors. I am informed by the receiver that 65 percent of the deposits have been paid off and were paid off before August 1, 1933

Senator CouzENS. You have just spoken very highly of Mr. Ward, who was the executive vice president. What do you think impelle him to make this exchange?

Mr. Wilson. I presume he was under the influence of the First National Bank officers in Detroit. That is my only answer.

Senator Couzens. When you resigned from the Detroit Bankers Co. what was your observation as to the condition of the First National Bank at that time?

Mr. Wilson. The latest available figures I had in regard to the condition of the First National Bank of Detroit at the time I resigned were the figures submitted by the examiner prior to the consolidation. We knew at that time, of course, that there were some loans going into the special loan department; they were increasing. We knew real-estate values were further depreciating; we knew that the bed account was further depreciating.

Senator Couzens. When you left you knew that the First National Bank was getting worse?

Mr. Wilson. There was no question about the First National Bank getting worse. Every other bank in the country was getting worse at that time, through that period.

Mr. SAPERSTEIN. Do you know what the percentage of liquidity was at the time you retired?

Mr. Wilson. I do not know, but it was very low.

Mr. SAPERSTEIN. Will you give us the benefit of your best julg. ment as to what it was at that time?

Mr. Wilson. I would not want to hazard a guess; but the liquidity of the First National was never high.

Mr. SAPERSTEIN. Was it on the increase or on the decrease at the time you retired?

MrWilson. That would be absolutely a guess; I don't know. It was not changing materially. That would be my best judgment ani recollection.

Senator COUZENS. Do you have anything more to say abu-it Pontiac?

Mr. Wilson. No, Senator; I believe not. I think I have covered that situation.

Mr. SAPERSTEIN. Have you any observations to make in regani to

Mr. Wilson. I have two or three other observations that I wou'd like to make.

Senator Couzens. There is one matter that I would like to take up before you conclude your testimony with respect to your recolmendations, and that is that during the grand-jury investigations in Detroit there came to my attention some“ window dressing” which was alleged to have taken place between the Highland Park State Bank and the Union Industrial Bank of Flint, and, as I recall, rou were requested to bring down all of the evidence you had in conne

tion with any of these banking operations in Detroit. I ask you now if you have any evidence of the so-called “ window dressing” by the use of certificates of deposit of the Highland Park State Bank bv the Union Industrial Bank of Flint ?

Mr. Wilson. I will offer all the records I have pertaining to the window dressing that you speak of, in view of the fact that I am receiver of the Union Industrial Trust and Savings Bank of Flint.

Mr. SAPERSTEIN. When were you appointed receiver of that bank? Mr. Wilson. I believe, September 28, 1933.

Mr. SAPERSTEIN. Since then you have been engaged in liquidating the affairs of that institution?

Mr. Wilson. Since then I have been engaged in the reorganization of a bank that would make possible the maximum pay-offs of the Union Industrial Bank and the National Bank of Pontiac, which has been completed.

Mr. SAPERSTEIN. These records which you have produced came into our possession as receiver of that bank, and you found these records among the files of that bank?

Mr. Wilson. That is correct.

Senator Couzens. Do you recall the testimony that was introduced with respect to certain alleged deposits having been made in the Union Industrial Bank by the Guardian Detroit Bank, December 31, 1931 ?

Mr. Wilson. I read sketches, Senator, in the newspapers only. During that period I was quite busy. I have not been able to follow it as closely as I would have liked to.

Senator Couzens. Can you tell us anything from your own knowledge as the receiver of the Union Industrial Bank with respect to these certificates of deposit which have been used to wipe out bills payable?

Mr. Wilson. I have not studied those records, Senator, sufficiently so that I could answer the questions that might be propounded to me. The complete original records are there, but I just simply could not properly answer at this time. I might say that as soon as I found that had occurred, I turned the information over to the prosecuting attorney.

Senator Couzexs. The prosecuting attorney of Genesee County?
Mr. WILSON. Yes; last July.
Senator COUZENS. You turned it over as long ago as last July?
Mr. Wilson. I did, sir, before it came out in the investigation.

Senator COUZENS. What impelled you to turn this evidence over to the prosecuting attorney of Genesee County?

Mr. Wilson. The matter came to my attention in regard to those transactions. As soon as it did I immediately went to Lansing and discussed it with the banking department, and they advised me to immediately turn it over to the prosecuting attorney for whatever action he might deem advisable.

Senator COUZENS. It must have occurred to you then that those transactions were illegal if you did that?

Mr. Wilson. At least they were transactions of a nature that should properly be investigated.

Senator CouZENS. By a prosecuting officer?
Mr. Wilson. That was my conclusion.

Senator Couzens. During previous hearings there were introduced into the record certain testimony and certain certificates of deposit and records with respect to deposits made in the Union Industrial Bank by the Guardian Detroit Bank on December 31, 1931, which had the effect of wiping out bills payable. Then on January 2, 1932, 2 days afterward, those C.D.'s were returned and deposit withdrawn. The effect was to wipe out any bills payable in the Union Industrial Bank; but after the December 31, 1931, statement had been published bills payable again appeared. Among those put into the record at that time and I am trusting somewhat to my memory; I may not be exactly accurate—there was a C.D. for $600.000. The testimony that was heretofore introduced referred to December 31. 1931. These certificates of deposit which I now hold in my hand are for $1,200,000 deposited in the Union Industrial Bank on Decem. ber 31, 1931, and $600,000 deposited in the Union Industrial Bank by the Highland Park State Bank, December 31, 1930, which bad the effect, as the records show, of wiping out $1,800,000 of bills payable as of December 31, 1930; and these were shortly afterward-sometime between then and the 15th of January-withdrawn and the bills pavable were reinstated in the Union Industrial Bank.

I just want to make that a matter of record; and I would like to offer in evidence, Mr. Chairman, these two certificates of deposit.

The CHAIRMAN. Let them be admitted.

(Certificate of deposit dated Dec. 31, 1930, in the amount of $600,000, was received in evidence and marked " Committee Exhibit No. 175, Feb. 8, 1934.")

(Certificate of deposit dated Dec. 31, 1930, in the amount of $1,200,000, was received in evidence and marked " Committee Exhibit No. 176, Feb. 8, 1934.")

Senator Couzens. Mr. Chairman, I would like to offer for the record general journal ledger statement of condition of the Union Industrial Trust & Savings Bank of Flint as of December 30, 1930, showing bills payable of $1,800,000, and as of December 31, 1934), no bills payable, and as of January 2, 1931, the reinstatement of $1,000,000 of bills payable. I would like to have them just marked for identification.

The CHAIRMAN. That may be done.

(Tabulated statement headed “Union Industrial Bank, Flint, Mich.", dated Dec. 30, 1930, was marked for identification “Committee Exhibit No. 177, Feb. 8, 1934.")

(Tabulated statement headed “Union Industrial Bank, Flint, Mich.", dated Dec. 31, 1930, was marked for identification “Committee Exhibit No. 178, Feb. 8, 1934.")

(Tabulated statement headed “Union Industrial Bank, Flint, Mich.", dated Jan. 2, 1931, was marked for identification - Committee Exhibit No. 179, Feb. 8, 1934.")

Mr. WILSON. Mr. Stair indicated in his testimony that I became a vice president of the bank at the time of its consolidation. I wish to state that I was never an officer of any bank in Detroit at any time.

Senator COUZENS. Your official duties were all confined to the holding company?

Mr. WILSON. Yes, sir.
Mr. SAPERSTEIN. Of which you were vice president?

Mr. Wilson. Yes. Mr. Stair also indicated, in regard to the reduction of expenses of the Detroit Bankers Co.-I forget the figure, but it was rather a substantial amount at the time Mr. Ballantyne and myself resigned—I believe the record will show that while there may have been a substantial reduction in the expenses of the Detroit Bankers Co., I believe a checking would indicate that that was only a transfer to the First National Bank and that the expenses of the First National Bank increased more or less.

Senator COUZENS. In the same amount that the Detroit Bankers Co. was reduced ?

Mr. Wilson. Approximately the same amount.
That is all I have on that. I just wanted to make that observation.

Senator COUZENS. Then you do not agree with Mr. Stair that Mr. Ballantyne was not active

Mr. Wilson. That Mr. Ballantyne was not active?

Senator COUZENS. I understood he was not well and was therefore not active and that was the reason his resignation was asked for.

Mr. Wilson. No; I do not agree with that.

There was some reference also made by Mr. Stair that my examiners had examined two Redford banks which were bought by the First National Bank. That is not a statement of fact. We never examined either of those Redford banks.

Mr. SAPERSTEIN. Was there any examination made?

Mr. WILSON. An examination was made by Mr. Jacobs who was vice president of the First National Bank at that time, and upon his findings it was recommended that the First National Bank of Detroit purchase, as I recollect, the assets of those two banks and assume the deposit liabilities and probably other liabilities. I have not all the facts, but I wanted to correct the statement that we ever approved of that. We did not. The only approval I know of was as a member of the executive committee of the First National Bank at the time the statement was brought in regarding the taking over of those banks and it was presented to the committee and recommended that it be done, I believe the records would show that I voted in the affirmative.

Mr. SAPERSTEIN. Was the purchase of those Redford banks a wise one?

Mr. Wilson. It was not. I think members of the executive committee believed that if it was recommended that we take them over they would be taken over with the necessary and proper approval of the Comptroller of the Currency. That was not obtained.

Mr. SAPERSTEIN. You mean that the approval of the Comptroller was never obtained for taking over these Redford banks?

Mr. WILSON. That is my understanding.

I have one other matter. There was quite a good deal of discussion in regard to the twelve trustees of the Detroit Bankers Co. wherein they owned $100 worth of stock apiece. I would like to explain as briefly as possible what I know about those trustees' shares.

Mr. SAPERSTEIN. Will you give us that explanation ?

Mr. WILSON. Mr. Haass realized on the formation of the Detroit Bankers Co. that it was a large job. He wanted to be asolutely in control throughout that period. He did not want any interference from any directors.

Senator Couzens. Did he mean to accomplish that by voting control ?

Mr. Wilson. He did; and you will find in those 12 names a voting control by Mr. Haass if he had wished it in case of an emergency.

Senator COUZENS. You mean the committee to gather from that that Mr. Haass would control the other 11 votes?

Mr. Wilson. That he would control sufficient votes to have a majority; he would have had a majority of the votes. That is the explanation I have, and I believe it is a sound one, because he was embarking upon quite a journey with his bank, with a lot of directors

a who might have different opinions in regard to consolidations, and what not.

Senator COUZENS. How was the change brought about so that the board of directors of the Detroit Bankers Co. was increased by a considerable number later on?

Mr. Wilson. Those 12 trustees were later increased to 20, and within a month or two later to 21. That was brought about by the desire of some later directors to become directors of the Detroit Bankers Co. They wanted to get in.

Senator COUZENS. What became of the 12 trustees who were there at the organization of the Detroit Bankers Co. ?

Mr. Wilson. As I recollect, they continued and became a part of the 20.

Senator COUZENS. And those in addition to the 12 were as much a part of the trustees' agreement as the original 12? Mr. Wilson. Yes; and finally the 21.

Senator COUZENS. And Mr. Haass was able to control a majority of the 21 the same as he was able to control a majority of the 12

Mr. Wilson. At the time they were selected I think they were selected carefully so that the control could be carried through.

In regard to the 17-percent dividend which was declared by the Detroit Bankers Co., and which has been discussed, I would like to offer my explanation in regard to that.

Mr. SAPERSTEIN. Will you do so?

Mr. Wilson. The 17-percent dividend was fixed, as I recall it, in this manner.

The Peninsular State Bank stockholders desired to receive approximately the same returns upon Detroit Bankers Co stock in the way of dividends as they had been receiving upon dividends on stock in the Peninsular State Bank.

Senator COUZENS. And that went through with all of the organizations and became a part of the Detroit Bankers Co.?

Mr. Wilson. It had to go through the other major banking units in order to carry through the requirements as desired by the directors and officers of the Peninsular State Bank.

Mr. SAPERSTEIN. Is it not a fact, Mr. Wilson, that the 17-percent rate which was adopted by the Detroit Bankers Co. at its inception represented a step up over the 5-year average dividend rate of these five constituent banks, and that to maintain that 17-percent dividend rate it would have been necessary for those five constituent banks to step up their earnings as well!

Mr. WILSON. The Peninsular State Bank dividend was not stepped up; it was reduced from $350,000 to $348,500. The Detroit Trust

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