Mr. PECORA. Were they few or were they many?

Mr. FORD. Probably few.

Mr. PECORA. Were there more than one or two a year that you attended?

Mr. FORD. I could not say.

Mr. PECORA. Well, do you recall the general course of the discussions that were had at those few conferences that you attended, at which the condition of the group and its units was discussed?

Mr. FORD. No, sir; I do not.

Mr. PECORA. Why are you unable to tell us that, Mr. Ford?
Mr. FORD. Because I do not remember.

Mr. PECORA. Do you recall questions arising at meetings of the board of directors of the group attended by you, with respect to the financial condition of the group?

Mr. FORD. There were discussions of the financial condition at the meetings that I attended.

Mr. PECORA. What was the general tenor of those discussions?

Mr. FORD. That the banking situation was very tense and getting worse, and conditions were arising each day that needed careful handling and watching, and conditions of the country at that time were going from bad to worse. The assets and securities that the banks held were naturally depreciating. It was a question of coping with the situation as it changed from day to day.

Mr. PECORA. Do you recall, Mr. Ford, how you coped with the situation as it changed, and gradually got worse from day to day? Mr. FORD. I do not know what you mean by that, Mr. Pecora. Mr. PECORA. You just said that at these conferences in which you participated, in which the condition of the group and its units was discussed, it was remarked that conditions were getting worse, that securities held by the unit banks, either in their portfolios or as collateral against loans, were depreciating in value, and the group was endeavoring to cope with the situation. What steps, if any, do you recall were taken by the group in coping with that situation to which you have alluded?

Mr. FORD. In the first place, the group responsibility was to scrutinize each one of the unit banks, each one of the units in the bank, and counsel with their officers, and try to carry on a course of operations in the most successful manner possible.

Mr. PECORA. What methods, what steps were taken, what policies were adopted to carry on in the face of these conditions that were steadily growing worse?

Senator COUZENS. Let us make that more specific, Mr. Ford. Did you at any time, or any of your associates, go to the relief of any of these units?

Mr. FORD. I did, sir.

Senator COUZENS. That would be a very pertinent answer, I think, to Mr. Pecora's question. Just what did you do in that connection? Mr. PECORA. You see, that relates to a specific time. I wanted to get first from the witness, if he could tell us, the general line of action that the group adopted in order to meet these conditions that were steadily growing worse-not anything that he individually did, but what he, as a director and as a member of the advisory committee of the board of the group, did; and what the other directors did, and what

the group generally did, as a corporation. Can you tell us anything about that, Mr. Ford?

Mr. FORD. Not specifically.

Mr. PECORA. Can you tell us generally?

Mr. FORD. The assets were criticized in the member banks. The Group Co. were assisting the member banks in loans.

Mr. PECORA. The Group Co. had to borrow money for that purpose, did it not? It has been testified to here by Mr. Lord that in the years 1929, 1930, 1931, and 1932 the group received from its various unit banks sums exceeding 9 million dollars in the form of dividends paid by the banks. He also claimed that about $8,400,000 was put back in the unit banks by the group. Are you familiar with those facts? Mr. FORD. Not the figures.

Mr. PECORA. Do you know that of that $8,400,000-odd that was put back into the unit banks, over 71⁄2 million went to one bank alone, namely, the Union Guardian Trust Co.? Do you know that?

Mr. FORD. I do not know it specifically, but I assume it is right. Mr. PECORA. Do you assume it is right because I am telling you that, or do you assume it because of personal knowledge you have of the fact?

Mr. FORD. I know there was money put back into the Union Guardian Trust Co., but I do not know the actual amount that was put there. I do not recall it.

Mr. PECORA. Do you know how the group obtained the money that it put back into any of the unit banks to help them out?

Mr. FORD. By dividends and by borrowing.

Mr. PECORA. That is, the group declared dividends in favor of those banks?

Mr. FORD. Didn't the group receive dividends from those banks? Mr. PECORA. From the banks, yes.

Mr. FORD. From the member banks.

Mr. PECORA. Yes. From what sources did the group derive the money that they put back, as has been claimed here, into some of these unit banks? Do you know?

Mr. FORD. I just stated that they got it from dividends from other member banks and from borrowing.

Mr. PECORA. How much of it did they raise by borrowing?

Mr. FORD. I do not know the total figure. About 16 million dollars

is the figure I have in mind, but I am not positive.

Mr. PECORA. But they put back only 8 million dollars.

Mr. FORD. I do not know about that.

Mr. PECORA. Did you ever read any annual report issued by the group to its stockholders?

Mr. FORD. Undoubtedly.

Mr. PECORA. Did you ever attend meetings of the board of directors of the group at which there were presented to the board statements concerning the conditions of various unit banks in the group?

Mr. FORD. The statements of each unit bank?

Mr. PECORA. Yes.

Mr. FORD. I do not recall. I probably did, but I do not remember. Mr. PECORA. Who determined the dividend policy of the group, Mr. Ford?

Mr. FORD. The officers of the group made suggestions to the directors, I suppose.

Mr. PECORA. Can you not give us something more than supposition? Can you not tell us what the facts were?

Mr. FORD. It is a pretty general question.

Mr. PECORA. Mr. Ford, you were not only a member of the board of directors, but also a member of the advisory committee of the board of directors, the functions of which, you said, were to advise with the officers of the group-I presume with regard to the conduct, management, and operation of the group and its unit banks. Is that correct?

Mr. FORD. Yes, sir.

Mr. PECORA. As such, can you not tell this committee what was done, and by whom it was done, in connection with the adoption of a dividend-paying policy both by the group and its various unit banks?

Mr. FORD. The policy was outlined, of course, by the officers.
Mr. PECORA. What was that policy?

Mr. FORD. When do you mean?

Mr. PECORA. What is that?

Mr. FORD. At what time, sir?

Mr. PECORA. Whenever they adopted it.

Mr. FORD. The dividend policy would change from time to time. Mr. PECORA. Who changed it? What was the original dividend policy adopted? Can you tell us that?

Mr. FORD. No, sir; I cannot.

Mr. PECORA. Can you tell us when any change was made?

Mr. FORD. I know there was a change made when dividends were cut out, but I cannot recall exactly when it was.

Mr. PECORA. Who was responsible for that change?

Mr. FORD. I do not recall. One of the officers undoubtedly, but I do not recall who.

The CHAIRMAN. How was this $32,500,000 distributed to your units, Mr. Ford?

Mr. FORD. How was it distributed by units?

The CHAIRMAN. Yes.

Mr. FORD. There was $13,000,000 in a special account of the Guardian National Bank of Commerce; $571,000 to the Boulevard office; there was $2,000,000 in C. of D.'s in the Guardian National Bank of Commerce; $109,000 in the cashier's account; $1,837,000 in the pay-roll account; $2,500,000 in the treasurer's account of the Union Guardian Trust Co.; $5,000,000 of C. of D.'s in the Union Guardian Trust Co.; $3,500,000-that was a note of the Group; $200,000 in the Grand Rapids National Bank; $1,000,000 in the Highland Park State Bank, treasurer's account; $250,000 in the Highland Park Trust Co.; $25,000 in the Union Peoples National Bank of Jackson, Mich.; and $100,000 in the Capital National of Lansing.

Mr. PECORA. Did you know, Mr. Ford, that the Group, in the years 1930, 1931, and 1932, had a deficit at the end of each of those years?

Mr. FORD. I do not remember.

Mr. PECORA. Did you ever know it?

Mr. FORD. I probably did at the time, but I do not remember it

now.

Mr. PECORA. Would not that be a fact that would linger in your memory?

Mr. FORD. Not necessarily. There are losses in many other corporations.

Mr. PECORA. How large a stockholder were you of the group? Mr. FORD. I had something over 50,000 shares at the closing, or bank holiday.

Senator COUZENS. How much did you have when the group was organized, Mr. Ford, do you remember?

Mr. FORD. Shall I give this in detail?

Senator CouZENS. Please.

Mr. FORD. I started out with 125 shares of the National Bank stock. That was converted into 125 shares of the Union Commerce Investment Corporation. I purchased 45 shares, exercising rights, making a total of 170 shares. I received 850 shares of the Union Commerce Corporation in exchange for the 170 shares. That was converted into 850 shares of the Guardian Detroit Union Group, in exchange for the 850 shares of the Union Commerce Corporation. I started out with 250 shares of Guardian Trust Co. That was converted into 250 units of the Guardian Detroit Bank. I purchased 4,000 units, which made a total of 4,250. I received 21,250 shares of Guardian Detroit Group, Inc., in exchange for the 4,250 shares.

Senator COUZENS. That was all you got for the exchange? There was no cash?

Mr. FORD. No cash; 21,250 shares. I may have. I do not know. Was there cash distributed?

Senator COUZENS. I do not recall.

Mr. FORD. I do not recall either. There were 2,125 shares purchased through the exercising of rights, making a total of 23,375. Then there was a 20 percent stock dividend, 4,675 shares, making a total of 28,050 shares. I had 2,688 shares in the Bank of Detroit, which was converted; 84 shares in the Fordson State Bank; 1,188 shares in the Highland Park State Bank; 850 shares in the National Bank of Commerce; 7,054 shares of the Union Commerce Corporation; 100 shares of the Bank of Commerce of Spring Wells. I do not have that total.

Senator COUZENS. Was that all later converted into the Guardian? Mr. FORD. Those shares were all converted into Guardian Detroit Union Group shares.

Senator COUZENS. After that conversion took place, what were your aggregate holdings in the Guardian Detroit Union Group, Inc.? Mr. FORD. I made some purchases after that.

Senator COUZENS. Before you made the purchases?

Mr. FORD. I do not have them totaled, but it would be approximately 39,000 or 40,000 shares.

Senator COUZENS. After you had made all those conversions you had 39,000 or 40,000 shares, and the difference between that amount and some 50,000 or 55,000 which you owned at the time of the closing was represented by purchases, is that correct?

Mr. FORD. Except for a gift of 1,188 shares from Mr. Henry Ford at one time.

175541-34-PT 10- -6

Mr. PECORA. According to an examination of the minute book of the board of directors of the group for the yaer 1932, which I have caused to be made, your name nowhere is recited as having attended any of the meetings of the board of directors held in that year. Is that in accordance with your recollection of the fact?

Mr. FORD. It must be so. I do not recall.

Mr. PECORA. At the meeting of the board of directors of the group held on March 12, 1931, the following motion appears to have been made, seconded, and unanimously carried. I will read the entry from the minutes of that meeting [reading]:

Advisory committee. On motion duly made, seconded, and unanimously carried, the advisory committee was asked to look into the status, policies, and investments of all security company affiliates of the Guardian Detroit Union Group, Inc., and report back to this board.

Do you recall, as a member of the advisory committee of the board of directors of the group, acting in response to that motion? Mr. FORD. I do not recall.

Mr. PECORA. Do you recall ever making any examination, as a member of the advisory committee of the board, into the status, policies, and investments of the security company affiliates of the group?

Mr. FORD. I do not remember having done so.

Mr. PECORA. Would that indicate that you made no such examination and took no part in any such examination?

Mr. FORD. I may not, or may have. It may indicate that or may

not.

Mr. PECORA. You say you do not recall having made any such examination.

Mr. FORD. No, sir.

Mr. PECORA. Do you recall having participated in the making of any report to the board of directors of the group?

Mr. FORD. No, sir.

Mr. PECORA. On the status, policies, and investments of the investment company affiliates of the group?

Mr. FORD. No, sir; I do not recall.

Mr. PECORA. Would that indicate that you did not participate in the making of any such report?

Mr. FORD. I may have.

Mr. PECORA. If you did, you do not recall it?

Mr. FORD. No, sir.

Mr. PECORA. Do you consider that during the years that you were a director of the group, you were active in the discharge of your duties as such director?

Mr. FORD. I was in close contact with the members of the operating organization, Mr. Longley, Mr. Kanzler, Mr. Lord, and Dr. Murphy.

Mr. PECORA. Were you active in the discharge of your duties as a director, in you own opinion?

Mr. FORD. I thought I was. I was counseling with those men on the policies of the bank.

Mr. PECORA. How much counseling did you do?

Mr. FORD. I do not remember, but there were many times when various matters were discussed.