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119. Photostatic copy of certificate of deposit dated August 2, 1929, pay

able on demand to the Ford Motor Co. in the sum of $1,000,000,

5360 120. Photostatic copy of certificate of deposit dated August 13, 1928, pay

able on demand to the Ford Motor Co. in the sum of $300,000,

5360 121. Photostatic copy of certificate of deposit dated August 13, 1928, pay

able on demand to the Ford Motor Co. in the sum of $200,000,

5360 122. Photostatic copy of certificate of deposit dated September 11, 1929,

payable on demand to the Ford Motor Co. in the sum of $1,000,000,

5360 123. Photostatic copy of certificate of deposit dated December 29, 1932,

payable on demand to the First National Bank of Detroit in the

sum of $2,500,000, 5360---124. The copies of four certificates of deposit issued by Detroit Trust Co.,

payable to Ford Motor Co., dated December 29, 1932, 5366---125. Report dated July 9, 1932, signed by Truman H. Newberry, Wilson

W. Mills, Lawrence K. Butler, and George J. Pipper126. Report dated May 25, 1932, signed by Wilson W. Mills, J. 0. Murfin,

Truman H. Newberry, and Lawrence K. Butler.. 127. Portion of subpena duces tecum--128. Statement of loans--129. Statement of purchases and sales of Detroit Bankers stock by Mr.

Stair from January 8, 1930, to February 11, 1933. 130. Annual report of Detroit Bankers Co., dated December 31, 1932,

5429
131. The witness' copy of the private and confidential memorandum made

by Mr. Verhelle and addressed to Mr. Mills, as chairman of the
board of the First National Bank, dated May 18, 1932, 5439-----

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(*) Not printed because of length or for reasons given in text.

STOCK-EXCHANGE PRACTICES

WEDNESDAY, JANUARY 24, 1934

UNITED STATES SENATE,

SUBCOMMITTEE OF THE
COMMITTEE ON BANKING AND CURRENCY,

COMMITTEE ON BANKING ANWashington, D.C.

The subcommittee met at 10 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), Adams, Townsend, 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; Thomas G. Long, attorney for witnesses summoned in connection with Detroit Bankers Co.; Clifford B. Longley, attorney for John Ballantyne.

The CHAIRMAN. The subcommittee will please come to order. Mr. Pecora, who will you have first?

Mr. PECORA. Mr. Chairman, this is the beginning of the hearings in connection with the Detroit Bankers Co. I will call Mr. Ballantyne as the first witness.

The CHAIRMAN. Mr. Ballantyne, will you please come forward to the committee table, stand, hold up your right hand, and be sworn?

You solemnly swear that you will tell the truth, the whole truth, and nothing but the truth, regarding the matters now under investigation by the committee. So help you God.

Mr. BALLANTYNE. I do.

The CHAIRMAN. Just take a seat there opposite that microphone on the committee table.

TESTIMONY OF JOHN BALLANTYNE, 1750 BALMORAL DRIVE, DETROIT, MICH., PRESIDENT OF MANUFACTURERS' NATIONAL BANK OF DETROIT AT THE PRESENT TIME

Mr. PECORA. Mr. Ballantyne, will you give your full name, address, and business or occupation?

Mr. BALLANTYNE. My name is John Ballantyne. I reside at 1750 Balmoral Drive, Detroit, Mich. My occupation at the present time is president of the Manufacturers' National Bank of Detroit.

Senator Couzens. Mr. Longley, are you attorney for Mr. Ballantyne?

Mr. LONGLEY. Yes, sir.
Mr. BALLANTYNE. How was that, Senator Couzens?

Senator COUZENS. I asked Mr. Longley if he was your counsel. I thought he was counsel for the Guardian-Detroit people.

Mr. BALLANTYNE. Well, I have new counsel.

Mr. PECORA. Mr. Ballantyne, were you connected with a company known as the “ Detroit Bankers Co.”

Mr. BALLANTYNE. Do you ask, was I?
Mr. PECORA. Yes.
Mr. BALLANTYNE. Oh, yes.
Mr. PECORA. When was that company organized ?

Mr. BALLANTYNE. It was organized, or rather was formed on January 8, 1930.

Mr. PECORA. Under the laws of the State of Michigan?
Mr. BALLANTYNE. Yes.

Mr. PECORA. Was it organized as a holding company to acquire, hold, and own stock of banking institutions and other corporations?

Mr. BALLANTYNE. No. Well, now, I would have to know the law on instruments to be able to answer that, and I do not know the law.

Mr. PECORA. Well, you can tell me whether

Mr. BALLANTYNE (continuing). As a matter of fact, Mr. Pecora, at that time, let me say, so you may have the genesis of this matter: This operation was discussed for years almost before I knew anything about it.

Mr. PECORA. Do you mean that the organization of the company was discussed for a year before its actual incorporation ?

Mr. BALLANTYNE. Oh, I think so, all of that time.
Mr. PECORA. Did you participate in any of those discussions?

Mr. BALLANTYNE. No; I didn't know a thing about it until the fall of 1929.

Mr. Pecora. The fall of 1929 was prior to the incorporation of the company, wasn't it?

Mr. BALLANTYNE. Yes.

Mr. Pecora. Did you from that time up to January 8, 1930, participate in any discussions or conferences with regard to the formation of this company?

Mr. BALLANTYNE. To some extent; yes.

Mr. PECORA. With whom did you have such discussions, Mr. Ballantyne?

Mr. BALLANTYNE. Oh, I think there were meetings held of the proposed participants in it.

Mr. PECORA. Who were they?

Mr. BALLANTYNE. At that time Julius Haass was the chief party in it; and Emory Clark, and Dwight Douglas, and I think Ralph Stone, and Mac Browning, and Palmer Livingstone, and Mr. Chittenden, and I think John Woody. I believe those were the men, , principally, who discussed the matter then.

Mr. PECORA. Now, Mr. Ballantyne, in the course of those discussions, or as a result of those discussions, what did you learn to be the purpose for which the Detroit Bankers Co. was created?

Mr. BALLANTYNE. Primarily to avoid-well, to get rid of unwise competition. To cut down the number of branches in Detroit.

Mr. PECORA. To cut down the number of branches of what?

Mr. BALLANTYNE. The number of branches of banks. There probable were three-hundred-and-odd branches at that time, or 360-am

I right? (Inquiring of an associate.) Well, say 350 banking institutions in Detroit at that time.

Mr. PECORA. Was this company created for the purpose of taking over a number of different banks with many branches?

Mr. BALLANTYNE. Originally I don't think that was the intention, but I think it was rather confined to the two larger banks. But it later developed into the group of the Peninsula, the Bank of Michigan, and the Detroit Trust Co.

Mr. PECORA. Did you become an officer or director of the Detroit Bankers Co. at the time when it was incorporated !

Mr. BALLANTYNE. Yes, sir.
Mr. PECORA. What office did you hold in it at that time?
Mr. BALLANTYNE. Only that of director.
Mr. PECORA. Did you ever afterward become an officer?
Mr. BALLANTYNE. Did you ask, Did I have to be an officer?
Mr. PECORA. No. Did you afterward become an officer?
Mr. BALLANTYNE. Yes.
Mr. PECORA. What officer did you become in the company?
Mr. BALLANTYNE. Of what, the Detroit Bankers Co.?
Mr. PECORA. Yes.
Mr. BALLANTYNE. No; I did not until quite late, after Julius
Haass' death.

Mr. PECORA. Not until when?
Mr. BALLANTYNE. Not until the death of Mr. Julius Haass.

Mr. PECORA. What office did you then have, or were you elected to?

Mr. BALLANTYNE. I succeeded Mr. Haass.
Mr. PECORA. As what, the president of the company?
Mr. BALLANTYNE. Yes; of the Detroit Bankers Co.

Mr. PECORA. When did you become president of the Detroit Bankers' Co.?

Mr. BALLANTYNE. I believe it was in May of 1931.

Mr. PECORA. And for how long after that did you continue to serve as president of the Detroit Bankers Co.?

Mr. BALLANTYNE. Until I left, in May of the following year.
Mr. PECORA. In May of 1932!
Mr. BALLANTYNE. Yes.
Mr. PECORA. Do you know who succeeded you as president?
Mr. BALLANTYNE. Yes.
Mr. PECORA. Who was it?
Mr. BALLANTYNE. Do you mean of the Detroit Bankers Co.?
Mr. PECORA. Yes.

Mr. BALLANTYNE. Was it Mr. Mills? [Inquiring of an associate.] No; it was Mr. E. D. Stair.

Mr. PECORA. When you were succeeded by Mr. Stair as president of the company did you continue to serve as a director of the company?

Mr. BALLANTYNE. Oh, no.

Mr. PECORA. Did you at that time sever all of your official connection with the company?

Mr. BALLANTYNE. Absolutely.

Mr. PECORA. Now, I have here what purports to be a photostatic reproduction of the articles of association of the Detroit Bankers Co.

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