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Mr. FORD. I did not understand it at the time. It was all in the status of negotiation, and the figures changed all the time and the requirements changed, and the assets were being worked over and reappraised, or at least more thoroughly appraised. I do not know exactly how it was done, and I did not know at that time that an additional requirement was made beyond the subordination.

Mr. PECORA. Did you not know at some time of the additional requirement for raising capital for the new mortgage company?

Mr. FORD. That came later, as I remember it.

Mr. PECORA. Yes. When that did come up, what decision did you make or indicate!

Mr. FORD. I answered that, that we refused to add to the subordination; that we would not put up more new capital. We had put up what we thought was a great amount of money to help this situation through and we came to the end of it. We decided we could not do any more.

Mr. PECORA. According to evidence heretofore introduced before this committee, at a meeting with the Board of Directors of the Reconstruction Finance Corporation, held by Mr. Kanzler, Mr. Longley, and Mr. James L. Walsh, executive vice president of the Guardian Detroit Union Group, Mr. Kanzler stated-and I am quoting from the minutes of the Reconstruction Finance Corporation—that: in his opinion it would not be feasible to induce depositors to subordinate their claims during the life of the loan by the Corporation, if made, with the exception, possibly, of a few of the larger customers of the Guardian Group, including the Ford Motor Co. In connection with the deposits of this company, totaling about $30,000,000, in the various member banks of the Guardian Group, Mr. Kanzler stated that not only had Henry Ford within the past 3 years aided the group to the extent of about $16,000,000 but felt that he had done enough and that they would be obliged to go to Mr. Ford again to assist in raising $5,000,000 of new capital for the proposed mortgage company. Mr. Kanzler said that it would be impossible, in his opinion, to obtain this $5,000,000 advance from Mr. Ford if the deposits of the Ford Motor Co. in the Guardian Group of banks were frozen.

Does that represent-
Mr. FORD. Excuse me. What date was that?
Mr. PECORA. February 6, 1933.

Mr. FORD. I know nothing about that, Mr. Pecora. I was not at that meeting.

Mr. PECORA. I know that, but what I am asking you is this: Was that statement which Mr. Kanzler, according to the minutes of the R.F.C., made to the directors of the R.F.C. on February 6 last, correctly representing the attitude that you had indicated to Mr. Kanzler and his associates in the group that the Ford Motor Co. would take ?

Mr. FORD. That we would not furnish additional capital for the mortgage company?

Mr. PECORA. Yes.

Mr. FORD. As it turned out, that is what it was; but that was Mr. Kanzler's opinion at that time.

Mr. PECORA. In substance, he forecast the attitude that the Ford Motor Co. eventually took ? Mr. FORD. That is right.

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Mr. PECORA. Did you have any discussion of this subject with Mr. A. A. Ballantine, who at that time was Under Secretary of the Treasury?

Mr. FORD. At what time?
Mr. PECORA. In February of 1933.
Mr. FORD. Yes, sir. I met Mr. Ballantine twice.

Mr. PECORA. What was the substance of the discussion you had with Mr. Ballantine when you met him on those two occasions?

Mr. FORD. The first occasion was in the Secretary of the Treasury's office on the 8th, I think, of February. I was down here on another matter, and I met Mr. Ogden Mills and he asked me to come over to his office the following morning, which I did, and Mr. Arthur Ballantine was there and Mr. Miller, president of the R.F.C. I believe that is all.

Mr. PECORA. What was the discussion that you had ?

Mr. Ford. I understand; I am coming to that. There was very little detailed discussion then; it was a question of the general situation which they pointed out.

Mr. Pecora. Tell us what they pointed out.
Mr. FORD. I do not want to betray any-

Mr. PECORA. Assume that we are in complete ignorance of what happened between you and Mr. Mills and Mr. Ballantine, and tell us the substance of the conversation that you had.

Mr. Ford. I do not like to quote conversations of Cabinet officers. Mr. PECORA. Not the words, but the substance.

Mr. Ford. They pointed out the difficult situation in Detroit due to the more acute economic distress in Detroit and Cleveland. I think they mentioned Minneapolis. They mentioned the worst places in the country where the banking situation was the most tense; and they outlined to me what the negotiations had been with the Detroit bank officials. It was a very general discussion. I do not recall any more than that, on that occasion.

Mr. PECORA. Was anything said in the course of those discussions upon the subject of whether or not your company would freeze its assets or subordinate them?

Mr. FORD. Yes. I think Mr. Mills suggested the possibility of such a thing.

Mr. PECORA. How did you meet the situation ? Mr. FORD. I said we had already done some, and I could not give him a definite answer at that time. That is as I recall it.

Mr. Pecora. Did you eventually give them any kind of a definite answer on that?

Mr. FORD. Mr. Ogden Mills?

Mr. Pecora. Either Mr. Mills or Mr. Ballantine or anyone else connected with the Treasury Department or the R.F.C.

Mr. FORD. Mr. Arthur Ballantine was in Detroit on Monday, the

Mr. PECORA. The 13th of February?
Mr. FORD. The 13th, was it?
Mr. PECORA. Yes.

Mr. Ford. And he called to see me with Mr. Roy Chapin, who was Secretary of Commerce at that time. They urged very energetically the making of an additional financial commitment—not a commitment, but that we put up additional capital.

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Mr. PECORA. That is, they suggested that you and your father or your company put up additional capital?

Mr. FORD. Yes; in addition to
Mr. PECORA. In addition to subordinating your assets?

Mr. FORD. Yes; in addition to what we had already done and were considering at that time, and we told Mr. Ballantine we would not go any farther.

Mr. PECORA. Now, Mr. Ford, let me read to you what has already been placed in evidence before this committee, the following extract from the minutes of a board meeting of the Reconstruction Finance Corporation held on February 13, 1933:

Mr. A. A. Ballantine, Under Secretary of the Treasury, said Mr. Henry Ford stated that he would not freeze or defer the deposit of 712 million dollars of the Ford Motor Co. in the Union Guardian Trust Co., nor would he put any money in the proposed mortgage company. He indicated furthermore, Mr. Ballantine said, that he would withdraw the deposit of the Ford Motor Co. in the First National Bank of Detroit amounting to $25,000,000 tomorrow morning.

In the light of those developments it became evident that it would be impossible for the banking and business interests of Detroit to organize the proposed mortgage company in order to meet the situation. It was generally agreed by the bankers in Detroit, Mr. Ballantine said, that the Union Guardian Trust Co. would not open tomorrow morning.

Is that a fairly correct statement of the attitude of you, your father, or the company, or of all combined, as stated to Mr. Bailantine?

Mr. FORD. There was a lot of discussion. Mr. Henry Ford felt that when he had the suggestion put to him, that adidtional cash capital be put up, he felt that they were asking too much, and he then said that there would be no subordination or furnishing of additional capital. Then the discussrion revolved around whether the Union Guardian Bank could open or not. I think they said it could not open because the Union Guardian Trust Co.—or could not open bearing a similar name, of being affiliated with the group, the Guardian National Bank of Commerce, that it could not stand it if allowed to open. And they said that the bank should not be opened. And then discussion was had as to opening the First National Bank. I think Mr. Henry Ford had the feeling that there might have been some desire on somebody's part to open that bank and not to allow the Union Guardian Bank to open. He thought they should both be treated alike in every instance.

Mr. PECORA. That is, if one should be closed the other should be closed, or if one should remain open the other should remain open? Mr. FORD. That was his feeling.

Mr. PECORA. What, if anything, was said about the withdrawal of a deposit of about $25,000,000 from the First National Bank of Detroit by the Ford Motor Co.?

Mr. FORD. Mr. Henry Ford made that statement. That is, he impressed upon Mr. Ballentine his feeling that the two banks should be treated alike. He was quite incensed over the way the thing, turned out at the end; I mean this suggestion about a great amount of additional help after what we thought was a lot of help that had been given, that we had given in the past, and so he made that statement.

Mr. PECORA. And that was the end of the road at that time, wasn't it?

Mr. FORD. It was so far as he was concerned.

Mr. PECORA. And the following day, namely, Tuesday, February 14, all the banks in Michigan were closed under the moratorium or bank holiday declared by the Governor of Michigan, is that right?

Mr. FORD. That was on Monday, and did you say the 13th?
Mr. PECORA. No; the 14th.
Mr. FORD. Tuesday morning, the 14th ?
Mr. PECORA. Yes.

Mr. FORD. That night I think the Governor of Michigan issued the bank holiday proclamation.

Senator COUZENS. So in effect, after you had about 571/2 million dollars in the two large banks—and you testified on yesterday that you had 3242 million dollars in the Guardian Bank, I believe?

Mr. FORD. I did not say anything about the other bank.

Senator COUZENS. I know, but in view of the testimony given before you must have had about 25 million dollars in the First National Bank of Detroit.

Mr. FORD. I can tell you about that if you wish it.
Senator COUZENS. If you will.

Mr. FORD. The First National account, the Trust Co. account, and the Peoples Wayne County Bank of Dearborn, which was an affiliate, was about 18 million dollars.

Senator COUZENS. Then it was not nearly 25 million dollars as testified before the R.F.C.?

Mr. FORD. Those were doubtless general remarks. Senator COUZENS. All right. Mr. PECORA. Now, Mr. Ford, is there anything else you would like to tell this committee with regard either to the negotiations with the R.F.C. had in January and February of last year, or

Mr. FORD (interposing). That I had!

Mr. PECORA. That were had in behalf of the Guardian Detroit Union Group, Inc.

Mr. Ford. No, sir; I haven't anything else to suggest. I think it could be told much better by the men who dealt directly with them.

Mr. PECORA. Have you told the committee now substantially everything that is without your knowledge concerning those negotiations, any part that you played in them to the extent of conferring with officers of the group about those negotiations?

Mr. FORD. I cannot remember anything else at this time. Mr. PECORA. Is there anything you want to tell this committee with regard to the group itself, or its unit banks and their management and operation during the years 1929, 1930, 1931, and 1932?

Mr. FORD. Not that I can think of.

Senator COUZENS. Mr. Ford, I am a little uncertain about how the record stands here. In answer to a query by Mr. Pecora as to whether you were a director of any corporation or institution outside of these subsidiaries of the Ford Šotor Co. and the Guardian Group, I understand your answer was no. Is that quite correct?

Mr. FORD. Well, it isn't correct. But I do not believe I can remember any more at this time, or didn't at that time at least. Senator COUZENS. Can

you remember any more now? Mr. FORD. Well, there is the Ford Motor Co. of England

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Senator COUZENS [interposing). I mean outside of the Ford Motor Co. or any of its subsidiaries, were you a director in any other banks outside of the units of the group?

Mr. FORD. The Dearborn State Bank. Senator COUZENS. That was not a member of the group? Mr. FORD. No. Mr. PECORA. Any other bank besides that? Mr. FORD. No. Senator COUZENS. You are not a director in any bank besides that! Mr. FORD. No, sir. Senator COUZENS. Thank you. Mr. Pecora. Mr. Ford, is there anything else you want to tell this committee without being asked questions specifically?

Mr. FORD. I do not believe so. I think the whole situation is one of great trial, which we tried to face the best way we could.

Senator COUZENS. Mr. Ford, after your experience have you any opinion with respect to the efficacy of group banking? Mr. Forn. Well, there may be some values in group banking, and there may be some very definite faults connected with it, as in the instance of the Union Guardian Trust Co. being frozen, and the opinion that it was because it was an affiliate of the Union Bank of Commerce. If so, that was very decidedly a definite handicap. But it was a matter of opinion at the time. It may be the bank could have opened up and gone right along, but one does not know that. On the other hand, the Group Co., as to a lot of the smaller unit banks up in the State, tided them over or carried them along by reason of the assistance they gave them when perhaps they would have had to fail otherwise. It is a very involved question, and I have never studied it from that angle myself.

Senator COUZENS. Well, Mr. Ford, after having weighed the de. fects and the good points of group banking, which outweighs the other?

Mr. FORD. Well, of course, we were going through such abnormal times it is very difficult to say.

Senator COUZENS. I mean, now looking to the future.
Mr. FORD. Oh, looking to the future?

enator COUZENS. Yes. Mr. FORD. Well, I would rather not give an opinion. I do not think it would be worth anything.

Senator Couzens. Suppose you let us be the judges of that.

Mr. FORD. I really could not say. As I see the situation there are things that come up, and without a terrific analysis whether I could say one would outweigh the other, I just don't know.

Senator Couzens. If you had to start all over again would you prefer to be under the group system or under the individual unit system?

Mr. FORD. If we had to start all over again would it be the individual unit system or the group system?

Senator Couzens. Yes; based upon your past experience.

Mr. FORD. Well, past experience has been mad, but it may have been on account of economic conditions, that they caused it. I would not blame the group for that.

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