Mr. PECORA. So, with that general statement of the nature of these bylaws. I will not go further into any specific reference to the text of the bylaws.

Now, as a matter of fact, Mr. Lord, were the various banking units permitted in all instances to direct and control and shape their own policies?

Mr. LORD. I think they were, sir.

Mr. PECORA. Including the selection of officers and the election of directors?

Mr. LORD. We were frequently consulted-in fact, almost invariably consulted—when there were vacancies on the board, by the local board.

Mr. PECORA. Did the group officers at times advance suggestions to the different unit banks, without waiting for a request?

Mr. LORD. They might have done it.

Mr. PECORA. Do you know whether the group officers at any time did it?

Mr. LORD. I cannot answer that, sir. Some of them may have done it.

Mr. PECORA. Would you not be likely to know if that was done? Mr. LORD. I might not. Some other executive officer might have been handling a particular situation.

Mr. PECORA. Let me show you what purports to be a photostatic reproduction of a letter addressed to you as president of the Guardian Detroit Group by the cashier of the Bank of Hamtramck, dated January 6, 1930. Will you look at it and tell me if you recognize it to be a true and correct copy of a letter received by you on or about the date which that copy bears?

Mr. LORD (after examining paper). Yes, sir.

Mr. PECORA. I offer that in evidence.

The CHAIRMAN. Let it be admitted and entered on the record. (Letter Jan. 6, 1930, cashier, Bank of Hamtramck, to Lord, was received in evidence, marked "Committee's Exhibit 107, Jan. 24, 1934, and the same was subsequently read into the record by Mr. Pecora.)

Mr. LORD. May I see the letter a minute?

(The document was handed to Mr. Lord.)

Mr. PECORA. The letter received in evidence as exhibit no. 107 reads as follows, on the letterhead of the Bank of Hamtramck, Hamtramck, Mich., dated January 6, 1930 [reading]:

Mr. ROBERT O. LORD,

President Guardian Detroit Group,
Detroit, Mich.

DEAR SIR: We have your letter of December 31, addressed to Mr. John F. Koenig, president of our bank, with whom the writer has discussed the matter of the stockholders' meeting to be held on the second Tuesday in January. Please be advised that the directors whom we wish to be elected are as follows: John F. Koenig, Leopold Koscinski, Hon. Theodore J. Richter, Edwin R. Monnig, John A. Frosfield, and Wm. E. Dingman.

Yours very truly,

W. E. DINGMAN, Cashier.

Now, I notice in the letter that following the name in the last paragraph of Leopold Koscinski, the typewritten portion of the letter shows the name of another gentleman, B. H. Manning. Ap

parently the form of the letter received by you included the name of Mr. Manning as one of the gentlemen whom they wanted to elect as a director.

Mr. LORD. It looks like it; yes.

Mr. PECORA. Do you know who scrolled out Mr. Manning's name on this letter and wrote on the right-hand margin of the letter alongside of Mr. Manning's name the name " Charles Adams"?

Mr. LORD. I do not. I do not rceognize the writing.

Mr. PECORA. You do not recognize the handwriting. Does not that indicate that when this letter was received by you as president of the Group either you or somebody in the Group Co. suggested substitution of Charles Adams for B. H. Manning as a director?

Mr. LORD. Mr. Pecora, perhaps I can clarify that in this way: The Bank of Hamtramck, which was owned about 54 or 56 percent by the Group, was an institution that came in through the acquisition of the Union Commerce Corporation. Mr. B. H. Manning was a representative on that board put there by the Union Commerce Corporation and was an officer of the Union Trust Co., and at that time, as I recall it, Mr. Manning was in process of leaving the Trust Co. I suppose whoever wrote the name "Charles Adams "substituted Mr. Adams for Mr. Manning in view of that fact. Mr. Manning afterward killed himself and never did serve. I don't know whose writing it was. I don't recognize it.

Mr. PECORA. Now, let us see if this photostatic copy of what purports to be a letter addressed to Mr. Dingman, who was the writer of the letter just read in evidence, does not serve to refresh your recollection as to who suggested that Adams be substituted for Manning. [Handing document to Mr. Lord.] Will you look at that photostatic reproduction of such letter and tell me if you recognize it as being a true and correct copy of a letter sent to Mr. Dingman in behalf of the president of the Group Co.?

Mr. LORD. Yes; I assume that is correct.

Mr. PECORA. I offer it in evidence.

The CHAIRMAN. Let it be admitted.

(Letter dated Jan. 9, 1930, from Robert O. Lord to W. E. Dingman, was designated "Committee Exhibit No. 108, Jan. 23, 1934, and same appears in full immediately following, where read by Mr. Pecora.)

Mr. PECORA. As a matter of fact, you sent that letter to Mr. Dingman, didn't you, as the president of your company?

Mr. LORD. I assume so; yes.

Mr. PECORA. The letter received in evidence as Committee's Exhibit 108 reads as follows [reading]:

Mr. W. E. DINGMAN,

Cashier, Bank of Hamtramck,

Hamtramck, Mich.

JANUARY 9, 1930.

DEAR MR. DINGMAN: Replying to your letter of January 6, in respect of the board of directors of the Bank of Hamtramck to be elected for the ensuing year, it has been suggested that Mr. Charles H. Adams of the Union Trust Co. be substituted for Mr. B. H. Manning.

It is the intention of the Guardian Detroit Union Group, Inc., to have Mr. Adams attend your annual meeting on Tuesday next and vote the shares now owned by the group.

We trust this arrangement is satisfactory to you.

Yours very truly,

GUARDIAN DETROIT UNION GROUP, INC.

By you, I presume, as president. There is a facsimile of your signature on this copy.

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Now, as bearing further on the question of whether or not the Group Co. was responsible for changes in personnel of officers of any of the Group banks, as well as in its board of directors, I want to show you what purports to be a photostatic reproduction of a so-called Intragroup memorandum "from B. K. Patterson to J. N. Stalker, dated December 10, 1930, in the lower left-hand corner of which is the inscription reading "Copy to R. O. Lord." Will you look at it and tell me if you recognize the copy as a true and correct memorandum sent by Mr. Patterson to Mr. Stalker and copy also sent to you?

Mr. LORD. I do not recollect it in detail, but I assume I saw it. It has my name on it.

Mr. PECORA. I offer it in evidence.

The CHAIRMAN. Let it be admitted.

(Intragroup memorandum, dated Dec. 10, 1930, from B. K. Patterson to J. N. Stalker, was designated "Committee Exhibit No. 109, Jan. 23, 1934 ", and same appears in full immediately following where read by Mr. Pecora.)

Mr. PECORA. The memorandum received in evidence as committee's exhibit no. 109, this date, reads as follows, on the letterhead of Guardian Detroit Union Group, Inc., entitled "Intra-Group Memorandum, to J. N. Stalker, from B. K. Patterson ", dated December 10, 1930 [reading]:

For your confidential information, there were certain transactions which took place in the Jefferson Savings Bank, of Grosse Pointe, which became decidedly embarrassing to several of the directors, and it looks as though in time someone else will have to be selected for the presidency of the bank. During the time we are straightening out affairs we are working close to Mr. Jugh J. Ferry, whom you know to be another director of the bank, but meanwhile I learn that Mr. Louis A. DeHayes, a very desirable director and one whom we may hope to be the future president of the bank, has resigned his directorship, and the first intimation we had of Mr. DeHayes' resignation was contained in a memorandum dated December 9, addressed to Mr. Maxwell from your H. L. Stiff, in which he says and pursuant to instructions

66

**

of Mr. Bowlus, we delivered to him the 10 shares of group stock."

In view of the mix-up at Jefferson for the moment, it was decidedly not the proper thing to do to allow Mr. DeHayes to resign, nor to deliver to him his 10 shares of group stock, at least until Mr. Lord, myself, or Mr. Maxwell had been consulted.

Now, in order to get Mr. DeHayes back in the fold, we will have to work through Mr. Ferry and have the 10 shares of group stock redeposited.

Don't you think it could be arranged to get in touch with either Mr. Maxwell or myself before group stock deposited to support directors' qualifying shares, is released? I would greatly appreciate it if some such arrangement could be made. Will you kindly advise. I will appreciate it also if you will treat this memorandum as strictly confidential.

BKP H

Copy to R. O. Lord.

Now, Mr. Lord, do you recall the matter referred to in this memorandum?

Mr. LORD. You mean about the mix-up at Jefferson?

Mr. PECORA. About the mix-up at Jefferson and about the references to getting Mr. DeHayes back.

Mr. LORD. I recall it rather vaguely. I never knew Mr. DeHayes. A gentleman by the name of Julius Burns, as I recall it, was presi

dent of that bank, and as I remember it, he owned the bank's quarters, and there was some mix-up on the option of a lease. Mr. Burns also was interested in another bank up further along the shore, and as I remember it, it had some of the Jefferson deposits there which we did not want there. The bank afterwards closed, and I do not recall what particular mix-up they are speaking about. Mr. Pecora. But I know Mr. DeHayes was considered a valuable director for that bank, and as the letter states, we were anxious to keep him in on the board. Mr. Ferry was at that time a director of the Jefferson Savings Bank.

Mr. PECORA. Do you note the reference in this memorandum reading as follows:

But meanwhile I learned that Mr. Louis A. DeHayes, a very desirable director and one whom we may hope to be the future president of the bank, has resigned his directorship.

Mr. LORD. Well, I think that is a natural hope, as long as they were not satisfied with their own board with Mr. Burns as president, and he and other directors considered Mr. DeHayes as the most desirable man for the president of the bank.

Mr. PECORA. Mr. Patterson at the time he wrote this memorandum was a vice president of the Group Co., wasn't he?

Mr. LORD. I think he was.

Mr. PECORA. On December 10, 1930?

Mr. LORD. I think he had that title.

Mr. PECORA. And Mr. J. N. Stalker, to whom this intragroup memorandum was addressed, was also an executive officer of the Group Co.!

Mr. LORD. In 1930?

Mr. PECORA. December 10, 1930.

Mr. LORD. Inactive, I should say.
Mr. PECORA. Inactive?

Mr. LORD. Inactive in the group.

Mr. PECORA. Inactive in the group?

Mr. LORD. Mr. Stalker was never active as an officer. He was active as an officer of the Union Guardian Trust Co.

Senator COUZENS. Why would they direct that memorandum to him, then?

Mr. LORD. Because the Jefferson Savings Bank came in through the Union Commerce Corporation, and they knew the directors and personnel very much better than anyone in the Guardian Group. Mr. Stalker was at that time a vice president of the Group Co., according to the '29 report.

Mr. PECORA. He was vice president of the Group Co.?

Mr. LORD. Yes; he was.

Mr. PECORA. Yes; he appears in the annual report of the Group Co. for the year 1930 as not only vice president but a directorMr. LORD. He was an active vice president.

Mr. PECORA. And a member of the executive committee of the board of the Group Co.

Mr. LORD. That is right.

Mr. PECORA. The "we" referred to in that extract of this letter means certain officers of the Group Co.?

Mr. LORD. I don't know who it refers to, because I never knew Mr. DeHayes.

Mr. PECORA. As further bearing on this subject, let me show you what purports to be a photostatic reproduction of another so-called "intragroup memorandum" addressed by Mr. B. K. Patterson to Robert O. Lord, dated December 8, 1930. Will you look at it and tell me if you recognize it to be a true and correct copy of such memorandum that you received on or about that date from Mr. Patterson? Mr. LORD. Yes; I will accept it as correct.

Mr. PECORA. I offer it in evidence.

The CHAIRMAN. Let it be admitted.

(Intragroup memorandum dated Dec. 8, 1930, from B. K. Patterson to Robert O. Lord, was thereupon designated "Committee's Exhibit No. 110, Jan. 23, 1934 ", and appears in the record in full immediately following, where read by Mr. Pecora.)

Mr. PECORA. The exhibit received in evidence as exhibit no. 110 of this date reads as follows. It is on the letterhead of Guardian Detroit Union Group, Inc., entitled "Intragroup memorandum, to Robert O. Lord from B. K. Patterson", dated December 8, 1930. [Reading:]

The Lochmoor C.D.'s are now at $35,000, $10,000 having been loaned the Lochmoor Bank November 29, 12 days after Bryan's visit.

Mr. Bryan spent the morning at Jefferson today. They claim that a $10,000 deposit from some township treasurer will be made at Lochmoor very soon and the indebtedness at Jefferson reduced that much. However, Bryan is to get the directors of the Lochmoor Bank together this evening or Tuesday and get from them an authorization for that bank to borrow from Jefferson and put the present C.D.'s in note form, the note to be drawn on demand. Bryan is also to inspect the commercial loans and real-estate mortgage loans at Lochmoor and select collateral for the note at Jefferson, about on a 2-for-1 basis and select the best call paper he can find. Further, he is going to attempt to get the directors of Lochmoor to endorse the note. We will then place the note on a definite liquidation basis, tentatively not beyond January 15, but we may have to extend this to February 15 when another 30 days rolls around. Bryan intends to stay right on this job until it is entirely finished.

Now I want you to note particularly this expression :

Myself and Bryan have kept Mr. Ferry in touch with affairs and our plans. He is thoroughly disgusted with Berns and Webster and several other directors and frankly states that the whole board should be revamped promptly. I think so too-particularly as regards Berns, and I think that another president for the bank should be selected for 1931. Mr. Ferry believed Mr. Louis A. DeHayes could be induced to accept the presidency of the bank. He advised Mr. DeHayes is the president of the Sterling Coal Co., could be rated at worth about a million dolars, of a very conservative turn of mind and equally well acquainted with the customers and conditions in this vicinity as is Berns. Probably that is the only major change which should be made on the board at one time, with this small exception: If Webster is to continue he should be made to resign his directorate at Lochmoor.

Mr. Ferry discussed with myself and Bryan the location of the bank. He is very much against additional expenditures or additional space and I believe we all agree that that feature is "out" now. Mr. Ferry believes that it might be advisable to continue to occupy the present location until the lease expires, but that when this occurs to move the bank to the location at Mack and Maryland where we would have no rent, adequate facilities and reduced overhead which would compensate for a probable loss in deposits in moving from Beaconsfield and Jefferson.

You have mentioned heretofore in the course of your testimony the name of Mr. R. Perry Shorts, who was president of that banking unit known as the Second National Bank & Trust Co. of Saginaw.