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Mr. PECORA. It relates to the transaction referred to in the two previous letters, doesn't it?

Mr. FORD. I would assume it did.
Mr. PECORA. I offer it in evidence.

Senator Couzens (presiding). The same will be entered on the record.

(Photostat of letter on letterhead of Guaranty Trust Co. of New York, dated Dec. 29, 1932, from William L. Kleitz to Elbert S. Burns, was thereupon designated "Committee Exhibit No. 73, Jan. 11, 1934", and same appears in full immediately following, where read by Mr. Pecora.)

Mr. PECORA. The document marked “Committee's Exhibit No. 73 of this date”, written on the letterhead of the Guaranty Trust Co. of New York, reads as follows (reading]:

DECEMBER 29, 1932. Mr. ELBERT S. BURNS, Vice President and Cashier, Guardian National Bank of Commerce,

Detroit, Michigan. DEAR MR. BURNS: We have received the letter with enclosures from the Ford Motor Company dated December 28th, enclosed with yours of the same date. We also acknowledge receipt of your accepted copy of our letter to you dated December 22nd. We are returning herewith our accepted copy of your letter to us dated December 24th.

On receipt of your treasurer's check for $7,532,941:28 on December 31st, we
will sell to you $7,500,000.00 principal amount of Ú. S. Treasury One Year 3/400
Notes dated December 15, 1932.
Very truly yours,

W. L. Kleitz, Vice President. I show you what purports to be a photostatic copy of another letter addressed to the Guaranty Trust Co. of New York, signed by the Guardian National Bank of Commerce of Detroit, dated December 24, 1932, and which appears to be the letter of that date referred to in Committee's Exhibit no. 73 just received in evidence. Will you look at it, Mr. Ford, and tell us if you know anything about that letter?

Mr. FORD (after perusing document). I have never seen that letter, sir.

Mr. PECORA. But you know that it relates to the same transaction?
Mr. FORD. I would think so.
Mr. PECORA. I offer it in evidence.
Senator COUPENS (presiding). It may be entered on the record.

(Photostat of letter on letterhead of Guardian National Bank of Commerce of Detroit, dated Dec. 24, 1932, from Elbert S. Burns, Vice President Guardian National Bank of Commerce of Detroit to Guaranty Trust Co. of New York was designated “Committee Exhibit No. 74, Jan. 11, 1934 ", and appears in full immediately following where read by Mr. Pecora.)

Mr. PECORA. The letter is marked “Exhibit No. 74" of this date on the letterhead of the Guardian National Bank of Commerce of Detroit and reads as follows. [Reading:

DECEMBER 24, 1932. GUARANTY TRUST COMPANY OF NEW YORK,

1.41 Broadway, New York, N.Y.

(Attention of Mr. Wm. L. Kleitz, Vice President.) DEAR Sies: We beg to confirm as follows the arrangements which we have made with you with respect to your purchase of $7,500,000.00 principal amount of U.S. Treasury One-year 34% notes dated December 15, 1932:

1. We hereby agree to purchase from you, and you agree to sell to us, on December 31, 1932, $7,500,000.00 principal amount of U.S. Treasury One-year 34% notes dated December 15, 1932 (hereinafter referred to as U.S. Treasury Notes) at a price of 100.40625, plus accrued interest thereon to December 31, 1932.

2. Payment for said U.S. Treasury Notes shall be made by us to you by our delivering to you, at your office in New York City on the morning of December 31, 1932, our Cashier's Check for said purchase price.

3. You are hereby authorized and directed to hold said U.S. Treasury Notes as collateral security for the payment of our above mentioned Cashier's check until said Cashier's Check has been paid in full.

Apparently they were not taking any chances with a Cashier's check.

4. It is our intention to sell the said U.S. Treasury Notes on December 31, 1932, to Ford Motor Company, and we hand you herewith the written consent and authorization of said Ford Motor Company to the pledge of said U.S. Treasury Notes with yourselves as collateral security as aforesaid.

If the foregoing is in accordance with your understanding of our agreement, kindly so indicate by signing and returning to us the enclosed carbon copy of this letter, whereupon this letter shall constitute a binding agreement between us. Yours very truly,

GUARDIAN NATIONAL BANK OF COMMERCE OF DETROIT,

By ELBERT S. BURNS, Vice President. The foregoing is hereby approved and accepted.

GUARANTY TRUST COMPANY OF NEW YORK, By W. L. KLEITZ, Vice President.

At the same time did the Guardian National Bank of Commerce of Detroit purchase from the Chemical Bank & Trust Co. of New York for the account of the Ford Motor Co. $7,300,000 of Fourth United States Liberty Loan bonds, 4% percent, for the principal amount, with accrued interest, of $7,648,372.21?

Mr. FORD. Did they?
Mr. PECORA. Yes.
Mr. FORD. I do not know.

Mr. Pecora. I show you what purports to be a photostatic copy of a letter addressed by Mr. Burns as vice president and cashier of the Guardian National Bank of Commerce of Detroit to Mr. B. J. Craig, secretary of the Ford Motor Co., Dearborn, Mich. Will you look at it and tell me if that is a true copy of such a letter?

Mr. FORD (after perusing document). I don't recall having seen that letter, sir.

Mr. PECORA. Well, I offer it in evidence subject to any correction of the record you may want to make if you should learn that that is not a true and correct copy.

Mr. Ford. I don't question it at all.
Mr. PECORA. What is that?
Mr. FORD. I don't question it.

Senator COUZENS (presiding). The same may be entered in the record.

(Photostat of letter on letterhead of Guardian National Bank of Commerce of Detroit, dated Dec. 30, 1932, from Vice President and Cashier to B. J. Craig, was designated “Committee Exhibit No. 75, Jan. 11, 1934”, and same appears immediately following where read by Mr. Pecora.)

Senator Couzens (presiding). I think, Mr. Pecora, that the committee should recess until 10:30 tomorrow morning on account of the Senate being in session now.

Mr. PECORA. This is the last letter I want to offer in evidence, and then I suggest an adjournment be taken.

The document received in evidence as committee's Exhibit No. 75 of this date reads as follows, on the letterhead of the Guardian National Bank of Commerce of Detroit. [Reading:]

DECEMBER 30, 1932. Mr. B. J. CRAIG,

Secretary, Ford Motor Company., Dearborn, Michigan. DEAR MR. CRAIG: Supplementing my letter of December 22, 1932, I wish to advise that the Chemical Bank & Trust Company are billing for delivery December 31, 1932 direct for the account of the Ford Motor Company $7,300,000.00 par value 4th 4/4% U.S. Liberty Bonds at 1032832, or a principal amount of $7,582,575.00, plus accrued interest to December 31, 1932 of $65,497.21, or an aggregate total of $7,648,372.21.

In accordance with our previous letter, we are charging your Treasurer's demand account for this amount on December 31, 1932, to cover the purchase of our Cashier's Check, payable to the Chemical Bank & Trust Company, Number C 24000, in payment of this purchase for your account.

In accordance with your agreement to sell these securities to us on January 3, 1933, as outlined in our letter of December 22nd, we are enclosing our confirmation of purchase from you of the above mentioned bonds at the same market value at which they were purchased by you, plus accrued interest to January 3, 1933 of $67,220.81, or an aggregate total of $7,650,095.81. On January 3, 1933 we will credit your Treasurer's demand account for this amount, as outlined in our letter of December 22nd. Yours very truly,

Signed by ELBERT S. BURNS,

Vice President and Cashier. Senator COUZENS (presiding). The witnesses will be present tomorrow morning at 10:30, and the committee will stand in recess until then.

(Accordingly, at 1:02 p.m., the committee adjourned until 10:30 a.m. of the following day.)

STOCK EXCHANGE PRACTICES

FRIDAY, JANUARY 12, 1934

UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C. The subcommittee met at 10:30 a.m., pursuant to adjournment on yesterday, in Room No. 301 of the Senate Office Building, Senator Duncan U. Fletcher presiding.

Present: Senators Fletcher (chairman), Costigan, Adams, and Couzens.

Present also: Ferdinand Pecora, counsel to the committee, Julius Silver and David Saperstein, associate counsel to the committee; and Frank J. Meehan, chief statistician to the committee; and Clifford B. Longley and Louis J. Colombo, attorneys for Edsel B. Ford.

The CHAIRMAN. The subcommittee will come to order. Mr. Ford will take the stand, please.

TESTIMONY OF EDSEL B. FORD, PRESIDENT FORD MOTOR CO.,

DEARBORN, MICH.-Resumed

Mr. PECORA. Mr. Ford, do you know what expense, if any, the Guardian National Bank of Commerce was put to in order to purchase Government securities for the account of the Ford Motor Co. at the end of 1931, buying them from the Ford Motor Co. ? Mr. FORD. No, sir.

Mr. PECORA. Did the Ford Motor Co. defray to the bank any of the expense that the bank might have been put to, or the loss which it might have incurred, in connection with that transaction?

Mr. FORD. I do not know, sir. I did not handle the transaction.

Mr. PECORA. On yesterday in the course of your testimony you told the subcommittee about a loan of 1 million dollars which you made to the Guardian Detroit Co. on December 11, 1930; and about a loan of 5 million dollars of securities which you made at about the same time to the same company, in order to enable that company to use those securities as collateral for a loan of 41/2 million dollars. Now, did you or your company make any other loans to either the Guardian Union Group, Inc., or any of its units?

Mr. FORD. The Guardian Detroit Union Group, Inc., made a loan at the Continental Commercial Bank, on which I was endorser.

Mr. PECORA. When? Mr. FORD (witness begins looking through some papers in his portfolio).

Senator COUZENS. While you are looking through your records, Mr. Ford, do you remember the amount? 175541—34-PT 10-07

4677

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