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I have attached to this written statement detailed suggestions on the various provisions of the Act. In view of the time of this committee which I have already consumed, I will not attempt to read into the records of this committee all of these details which are, however, available if desired.

Then follows a so-callled “exhibit A", entitled “Specific Recommendations for Amedment to the Securities Act of 1933."

Senator COUZENS. Mr. Pecora, do you want to read them?

Mr. PECORA. I will not take the time to read them. They will be made available to the committee.

Senator COCZENS. Very well. Mr. PECORA. Now, Mr. Lord, is there anything that you particularly want to call attention to?

Mr. LORD. No. I tried to cover it briefly.

Mr. PECORA. There are a number of views expressed by Mr. Lord in this prepared statement of his that, if time permitted, I should like to question him about. But perhaps that might be reserved for some future time. However, I do want to call his attention to this statement contained in his prepared siatement:

This Nation of ours- -the most progressive in the world in the development of industry and commerce-was without doubt materially aided along these lines by the courage, foresight, and vision of its bankers.

Mr. Lord, don't you think that a very substantial responsibility rests at the door of bankers, so-called, for the debacle of 1929 and what has followed since?

Mr. LORD. I think it might be equally divided between the public and the bankers, Mr. Pecora. I do not think that any single class, industry or business or individuals, can be handed that responsibility or that blame. I think we were all at fault, bankers as well as others.

Mr. PECORA. Wasn't the policy of banks and bankers such as to advertise that they would advise their depositors and customers with regard to the making of investments?

Mr. LORD. Yes; I think it was generally so. And some gave good advice and some gave bad advice.

Senator TOWNSEND. And some advice that they thought was good turned out bad, and

Mr. LORD (interposing). Yes, sir.

Senator TOWNSEND (continuing). And some that they thought was bad might have turned out good ?

Mr. LORD. Well, I don't know about that.

Mr. PECORA. At any rate, securities affiliates of banks, organized selling campaigns to sell securities which they issued and underwrote, and which they underwrote under circumstances that charged them with knowledge as a result of reports made to them by their own observers and experts, and that put a very full responsibility upon them. For instance, in the case of Peruvian bonds, issued by J. & W. Seligman & Co. and the National City Co., evidence of that was presented to this committee last February, as you will recall, when 90 million dollars of bonds of the Peruvian Government were sold to the American public by the National City Co. and J. & W. Seligman & Co.

Senator TOWNSEND. Oh, that was indefensible.

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Mr. LORD. I do not know the circumstances at all.

Senator Couzens. How many other groups are there operating besides the Northwest Co.!

Mr. LORD. There is the Marine Midland, which is a group in New York State with a big bank in Buffalo, and the Marine Trust Co. in New York, and a string of banks all through the State. There are smaller groups. There is a group around Seattle. There is a group around Ogden, Utah, and there are other smaller groups. This man Bremer, whose son was just kidnaped, has a small group of banks.

Senator COUZENS. There is some difference between chain banking and group banking, is there not?

Mr. LORD. Yes, I think there is, Senator. As I recall the definition of chain banking, there is the question of a single ownership of an individual, where, perhaps, one bank owns an interest in another bank instead of all centering in one holding company without any bank relationship.

Senator COUZENS. Which do you think the safer practice, chain banking or group banking ?

Mr. LORD. I do not like chain banking at all, because I think there is an overlapping. There was quite a chain down in Arkansas, as I remember it, that failed several years ago.

Senator TOWNSEND. There was a chain down in Florida, too.

Mr. LORD. Yes. I will admit that there are weaknesses in group banking. There is no question about it. The only answer in this country to the banking situation is branch banking. It has got to come, because the small community cannot support a unit bank with the safety the community ought to have.

Senator COUZENS. Do you have anything else to say, Mr. Lord ? Mr. LORD. No, sir. Mr. PECORA. You come very close to favoring the nationalization of banks.

Mr. Lord. I do; under one single system-not State systems but a national system.

Senator TOWNSEND. That is very nearly accomplished, is it not, under the guaranty plan?

Mr. LORD. To a great extent I think it is.
Mr. PECORA. That is all I have.

Senator COUZENS. The committee will adjourn until tomorrow morning at 10 o'clock.

(Thereupon, at 5 p.m., Tuesday, Jan. 23, 1934, the subcommittee adjourned to meet Wednesday, Jan. 24, 1934, at 10 a.m.)

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Dec. 29, 1931 Guardian Bank of Dearborn
Mar. 28, 1932 .do
July 20, 1932 do.
Dec. 29, 1931 Grand Rapids Nat'l Bank

Guardian Bank of Trenton.
Dec. 30, 1931 Union Guardian Trust Co.
Dec. 29, 1932

....do
Dec. 31, 1931 Guardian Bank of Grosse Pointe.
Jan. 8, 1932 City Nat'l. Bk. & Tr. Co., Niles.
Do.. City Nat'l. Bk. & Tr. Co., Battle

Creek...
Jan. 11, 1932 National Bank of lonia
Sept. 17, 19321 F.N.B. Securities, Kalamazoo

20

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$135, 944. 41

Dec. 29, 1931 Guardian Bank of Dearborn
Mar. 28, 1932 ...do
July 20, 1932 .do.
Dec. 29, 1931 Grand Rapids Nat'l Bank
Do.

Guardian Bank of Trenton
Dec. 30, 1931 Union Guardian Trust Co.
Dec. 29, 1932
Dec. 31, 1931 Guardian Bank of Grosse Pointe
Jan. 8, 1932 City Nat'l. Bk. & Tr. Co., Niles.

City Nat'l. Bk. & Tr. Co., Battle

Creek
Jan. 11, 1932 National Bank of Ionia.
Sept. 17, 1932 F.N.B. Securities, Kalamazoo..

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Total

1, 519, 412. 37

28 824, 544. 15 21,853. 35 8, 414,501. 28

! Purchased direct by Congress Corporation.

COMMITTEE EXHIBIT No. 91, JANUARY 17, 1934
Certificate of deposit withdrawals (Feb. 1 to 11, inclusire)

Date

Name

Amount

Feb. 1, 1933

Feb. 2, 1933

iii

Feb. 3, 1933

Feb. 4, 1933
Feb. 6, 1933

Feb.

Alfred P. Herbert & Alice.
Suburban Development Co.
John W. Ripper & Maggie.
Clara Adams.
Conductors Protective Assurance Co..
Theodore W. Dunn & Isabel C.
Eva M. Jones & James G. Jones
Posen State Bank.
Murray W. Sales Co. (Directors int.).
Ernest Venn.
William H. Venn.
Capac State Savings Bank
General Motors Truck Co.
Otto S. Goertsen
Helen D. Nerreter
Florence L. Chain berlin.
Fostoria State Bank
Traub Mfg. Co.
C.G.T.Co. Tr. for Charles G. Oakman.
John Dettloff & Anna
+George W. Trendle (Director)
Wayne Realty & Investment Co.
Electromaster, Inc.
General Motors Truck Corp
Wilcox-Rich Corp
Detroit Trust Co. Agent for Trustees of Childrens Fund of Michigan
Lettie Emerick
Truman Newberry
V.G.T. Co. Rec'r for Grand Trunk Rwy. Terminal & Cold Stor.Co.
Goldberg, Max F

7, 1933

$1,500.00 4,000.00 1,000.00 1.000.00 17,000.00 8,000.00 1, 400.00

1,000.00 25,000.00 2,000.00 3,000.00

2, 500.00 100,000.00

1,500.00 1.000.00 5, 660.00 2,500.00 35,000.00 2,000.00 3,300.00 10,000.00 1,500.00

1,000.00 100,000.00

50,000.00 100,000.00

1,500.00 5, 400.00 60, 238. 90 3,000.00

Feb.

8, 1933

Feb.

9, 1933

Feb. 10, 1933

Feb. 11, 1933

HEARINGS

BEFORE THE

COMMITTEE ON BANKING AND CURRENCY

UNITED STATES SENATE

P

SEVENTY-THIRD CONGRESS
SECOND SESSION

ON
S. Res. 84

(72d CONGRESS)
A RESOLUTION TO INVESTIGATE PRACTICES OF STOCK
EXCHANGES WITH RESPECT TO THE BUYING AND
SELLING AND THE BORROWING AND LENDING

OF LISTED SECURITIES

AND
S.Res. 56 and S.Res. 97

(73d CONGRESS)
RESOLUTIONS TO INVESTIGATE THE MATTER OF BANKING
OPERATIONS AND PRACTICES, TRANSACTIONS RELATING TO
ANY SALE, EXCHANGE, PURCHASE, ACQUISITION, BORROW-
ING, LENDING, FINANCING, ISSUING, DISTRIBUTING, OR
OTHER DISPOSITION OF, OR DEALING IN, SECURITIES OR
CREDIT BY ANY PERSON OR FIRM, PARTNERSHIP, COMPANY,
ASSOCIATION, CORPORATION, OR OTHER ENTITY, WITH A
VIEW TO RECOMMENDING NECESSARY LEGISLATION, UNDER

THE TAXING POWER OR OTHER FEDERAL POWERS

PART 11

DETROIT BANKERS COMPANY
JANUARY 24 TO FEBRUARY 1, 1934

Printed for the use of the Committee on Banking and Currency

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