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Mr. PECORA. Do you remember any special policy that you ever advocated for the group to follow?

Mr. Ford. I do not recall advocating any policy.

Mr. PECORA. Were you present at any meeting of the board, or the advisory committee of the board, at which there was brought up. the discussion and consideration of any protest by the officers of any of the unit banks with respect to declaring a dividend, at the rate suggested by the group to such banks?

Mr. Ford. A protest by the various members?
Mr. PECORA. By officers.
Mr. FORD. By officers of some of the units?
Mr. PECORA. Yes.
Mr. FORD. No, sir; I don't remember it.

Mr. PECORA. Now, Mr. Ford, Senator Couzens a few minutes ago asked you to tell specifically what, if anything, you did with regard to any relief measures taken by the group on behalf of the group at any time during its life. Will you answer that question now?

Mr. FORD. I loaned them some money.
Mr. PECORA. Do you recall when?
Mr. FORD (looks through some papers).
Mr. PECORA. If you are ready you may go ahead.
Mr. FORD. I loaned them $5,000,000 in municipal bonds and
$1,000,000 in cash. And that receipt is dated December 11, 1930.

Mr. PECORA. That is when you loaned $1,000,000 in cash?
Mr. FORD. Yes, sir.

Mr. PECORA. Now, you loaned that money to the Guardian Detroit Co., didn't you, one of the securities affiliates of the group?

Mr. FORD. Yes, sir.
Mr. PECORA. You did not loan it to the group itself?
Mr. FORD. I beg pardon, but it was to the Guardian Detroit Co.

Mr. PECORA. Do you know the occasion for the company getting that loan?

Mr. FORD. Do you mean the reason for it?
Mr. PECORA. Yes.

Mr. FORD. Well, as I understood it the Guardian Detroit Co. had borrowings in various other banks, outside banks, on which collateral was posted. This was at the time when collateral values had shrunk materially, and as I understood it the collateral was insufficient for the loans that were outstanding at that time. Officers of one of the units of the Group, I think it was, came to me and asked for this loan which I made in order that they could rectify the loans that had been made outside.

Mr. PECORA. That is, the Guardian Detroit Co. was indebted to interests outside of the Group?

Mr. FORD. Indebted on loans to banks outside the Group.

Mr. PECORA. Yes, and in order to enable that company to meet that indebtedness you loaned that company $1,000,000 on December 11, 1930.

Mr. FORD. That is right.
Mr. PECORA. Has that loan been repaid?
Mr. FORD. No, sir.
Mr. PECORA. That was a 6 months' loan originally, wasn't it?
Mr. Ford. It was a 6 months' note.
Mr. PecoRA. Who were the endorsers on that note, do you recall?

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T PECORA. Tell tudi pou yoluntaris et itirit aiony" fr FOR). seg. Vr. PER GRA. Tas that beralise you did not want it repaic, or beCause you did not think it would pay it back?

Vr FORD. Te reason for masing that can was to help the company, thit, particular company, and I am not press them to pay it Dark because I eit when they could pay it they would.

Mr. PECORI. Well, the fact that they did not pay it back it any time would indicate that they could not pay it back, is that s fair 2.mption?

Vr FORD. Could not pay it back at that time it is true.

ME PECORA. At the same time that you made to the Guardian Detroit Co. this loan of $1.000.000 in cash you also loaned them securities of a par value of $5,000,000, didn't you?

Ve FORD. Y ea, ir.
Dr. PELORA. Ind what was that done for?

Mr. FORD. I understad, as I now recall. that it wis for the same Prprise

Mr. PECORA Isn't it a fact that the Guardian Detroit Co. used that á million dollara fare value of securities that you loaned to them as collateral against a loan of 4 million dollars that that bank negotinted or obtained from the Bankers Trst Co. of New York?

Mr. FORD, I believe that is right.
Vir PECORA, Did you get those securities back?
Mr. FORD, I bey your pardon?
Mr PECORA, I say, did you get these securites back?

Mr. FORD), Well, actually I did get them back; ves. The Ford Motor Co. paid off that loan and the securities were returned, and then I satisfied the Ford Motor Co. later on, or, in other words, I repaid the Ford Motor Co.

Mr. P'ECORA. You got then back through the medium of some one other than the borrower?

Mr. Ford. Yes, sir.

Mr. Pecora. That is, the Guardian Detroit Co. not paying the loan for which they put up that collateral as security with the Bankers Trust Co. of New York?

Mr. FORD. Yes, sir. Mr. PECORA. Do you know the purpose for which the Guardian Detroit Co. required that loan of 42 million dollars in December of 1930?

Mr. FORD. Well, I thought it was for the same purpose that they borrowed the 1 million dollars in cash.

Mr. Pecora. Do you recall what the condition was of the Guardian Detroit Co. at that time? I am referring now to December of 1930.

Mr. FORD. That was very shortly after the first market crash. Their portfolio consisted of securities that had depreciated very greatly and they had heavy borrowings.

Mr. PECORA. Do you know

Senator Couzens (interposing). Mr. Pecora, before you go further into that let me ask Mr. Ford: You said they had heavy borrowings. What were those borrowings for?

Mr. FORD. I suppose to buy securities.

Senator COUZENS. That is, for the Guardian Detroit Co. to buy securities?

Mr. Ford. That was a securities company, you know.

Senator COUZENS. Well, you say they borrowed money from you in the first instance to buy securities?

Mr. Ford. No. They borrowed money from me to satisfy some loans outstanding and on which securities they owned had depreciated.

Senator COUZENS. In other words, they borrowed in the first instance money with which to buy securities, which securities afterwards depreciated, is that it?

Mr. FORD. They had loans. I do not know whether they altogether bought securities for which they borrowed money. I really could not say about that.

Senator COUZENS. They would not have any other purpose for borrowing money, except to buy securities, would they?

Mr. FORD. I could not say. I wouldn't think

Mr. PECORA. Mr. Ford, have you the receipt given to you by the Guardian Detroit Co. for this $5,000,000 face value of bonds that you loaned to it in December of 1930?

Mr. FORD. Yes, sir.

Mr. PECORA. I show you what purports to be a photostatic reproduction of such receipt. Will you please look at it and tell me if you recognize it to be a true and correct copy thereof? It is the top document in that file of papers I am handing over to you.

Mr. FORD (after having his attorney, Mr. Columbo, read the phostatic copy, while the witness held his own paper). That is correct.

Mr. PECORA. I offer it in evidence, Mr. Chairman.
Senator COCZENS. Let it be received.

(A receipt dated Dec. 11, 1930, from the Guardian Detroit Co. for 5 million dollars of securities loaned by Mr. Ford, was marked "Committee Exhibit No. 69, Jan. 11, 1934", and will be found immediately following where read by Mr. Pecora.)

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Mr. PECORA. The document received as committee Exhibit No. 69 of this date, reads as follows:

Guardian Detroit Company acknowledges receipt from Edsel B. Ford of municipal bonds of the par value of ($5,000,000) as listed and described in the attached photostatic copies of safe keeping receipts.

These bonds have been loaned to the undersigned GUARDIAN DETROIT COMPANY in order that that company may use the same as collateral to secure loans made or which may be made by the GUARDIAN DETROIT COMPANY and or KEANE, HIGBİE & COMPANY. All or any part of such bonds shall be returned by the undersigned GUARDIAN DETROIT COMPANY to EDSEL B. FORD upon demand. If any of these bonds are used to secure loans of either of these Companies at banks or trust companies not in the Guardian Group, the proceeds of such loans must be used to pay or reduce loans at Guardian banks or trust companies.

It is expressly understood that all principal and interest collected on such bonds by said GUARDIAN DETROIT COMPANY shall be paid immediately upon receipt thereof, to the said EDSEL B. FORD.

GUARDIAN DETROIT COMPANY,
By ROBERT O. LORD,

Its Vice President.
Dated December 11, 1930.

Now, Mr. Ford, do you know whether or not this loan of 41 million dollars that was procured by the Guardian Detroit Co. from the Bankers Trust Co. of New York was used by the Guardian Detroit Co. to pay or reduce loans it had in banks belonging to the group?

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

Mr. PECORA. Now, Mr. Ford, I show you what purports to be a photostatic reproduction of the note for 1 million dollars given to you under date of March 9, 1932, and which I understand was the final renewal note for the 1 million dollar loan that you made on December 11, 1930, to the Guardian Detroit Co. Will you look at it and tell me if you recognize it to be a true and correct copy of such note, together with the endorsements thereon?

Mr. FORD (comparing photostat with his own paper by the aid of his attorney, Mr. Columbo). That is right.

Mr. PECORA. I offer it in evidence.
Senator Couzens (presiding). Let it be received.

(A note dated Mar. 9, 1932 for 1 million dollars at 6 months payable to the order of R. O. Lord, agent, by the Guardian Detroit Co. was marked “Committee Exhibit No. 70, Jan. 11, 1934”, and will be found immediately following where read by Mr. Pecora.)

Mr. PECORA. I will read the note, as follows: $1,000,000.00

DETROIT, MICHIGAN, March 9, 1932. Six months after date we promise to pay to R. O. Lord, agent, or order, one million dollars at GUARDIAN NATIONAL BANK OF COMMERCE. Value received with 5 percent interest per annum payable monthly.

GUARDIAN DETROIT COMPANY

By F. W. PRITCHARD Treasurer.
Countersigned by R. C. Huelsman.
And the endorsements thereon are as follows:

GUARDIAN DETROIT UNION GROUP, INC.
By B. K. PATTERSON, Treasurer.
By C. H. HABERKORN, Secretary.

R. O. LORD, Agent.
Now, for whom was Mr. Lord acting as agent in this transaction?

Mr. FORD (after talking with his counsel, Mr. Columbo). The Guardian Detroit Group Co.

Mr. PECORA. Do you mean the Guardian Detroit Union Group, Inc.?

Mr. FORD. I would think so.

Mr. PECORA. Do you know what was done by the Guardian Detroit Co. with the loan of 44 million dollars that it obtained in December of 1930 from the Bankers Trust Co. of New York, what use was made of the proceeds of that loan?

Mr. FORD. I do not recall.
Mr. PECORA. What was that answer?
Mr. FORD. I do not recall.
Mr. PECORA. Well, do you know, or did you ever know?

Mr. FORD. I may have known, but I don't now recall. That is the loan that was obtained from

Mr. PECORA (interposing). That was a loan obtained on the collateral that you loaned to the Guardian Detroit Co.

Mr. FORD. I am only assuming, or at least I thought they were used for satisfying loans made to the Guardian Detroit Co. by banks, on which the collateral had become reduced.

Mr. PECORA. But you don't know what was actually done with the proceeds of the loan, do you?

Mr. FORD. No; I do not.

Mr. PECORA. Now, Mr. Ford, were there occasions when requests were made of the Ford Motor Co., or of you individually, to make special and temporary deposits in any one of the unit banks of the Group, in order to-well, to make a special or temporary deposit, first?

Mr. FORD. There may have been.
Mr. PECORA. In how many instances was that done?
Mr. FORD. Oh, I have no idea.
Mr. PECORA. In many instances?

Mr. Ford. Those requests would undoubtedly go through Mr. Craig, who was assistant treasurer. I do not recall any request ever having been made directly to me, but there might have been.

Mr. PECORA. Do you know the purpose for the making of those temporary deposits?

Mr. Ford. I suppose to show increased deposits in their statements.

Mr. PECORA. That is, in the annual statements?
Mr. Ford. I am not sure.

Mr. PECORA. Do you know the largest individual special or temporary deposit of that kind made in any one of the unit banks by you or your company?

Mr. FORD. The actual amount?
Mr. PECORA. Yes.
Mr. FORD. No, sir.

Mr. PECORA. As a bank director-and you were a bank director, weren't you?

Mr. FORD. Yes, sir. Mr. PECORA. In how many banks were you a director? Mr. FORD. When? Mr. PECORA. During the years 1930, 1931, and 1932. Mr. Ford. The National Bank of Commerce_until it was consolidated afterwards with the Guardian National Bank of Commerce of Detroit.

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