Mr. BALLANTYNE. Some were; yes. Senator COUZENS. That was the prior question asked by Mr. Pe cora. Mr. BALLANTYNE. Yes, sir. Senator COUZENS. How many of those whose names have just been read off were members of boards of directors of unit banks? Mr. BALLANTYNE. I would have to get them read off again in order to be able to tell you. Senator COUZENS. Let me see those minutes, please. Mr. PECORA. Here they are. Senator COUZENS. Mr. Ballantyne, tell us those on the list that were members of the board of directors of the Detroit Bankers Co. and also on the boards of directors of unit banks? Mr. BALLANTYNE. Well, Friedel was not, and—————— Senator COUZENS. Just tell us the names of those that are. Mr. PECORA. Sit down at your accustomed place so that all may have the benefit of the loud speaker. Mr. BALLANTYNE. Let me see. One, two, three Senator CouZENS. Just name them. Mr. BALLANTYNE. John Ballantyne, Ralph Stone, Julius Haass— is that the list (inquiring of his associate)? Senator COUZENS. That is the list of proxies that the Detroit Bankers Co. appointed. Mr. BALLANTYNE. These are members of the Detroit Bank group. Senator CouZENS. And also members of the units. Mr. BALLANTYNE. Let me see. Mr. PECORA. And also directors or officers of the unit banks. Senator COUZENS. That is what I want. Are there just three of them? Mr. BALLANTYNE. I wonder if I got that question right? I want to be very careful about it. Senator COUZENS. Mr. Pecora asked you whether or not it is a fact that some directors of the Detroit Bankers Co., and who were trustees, also sat as members of boards of directors of the unit banks. Mr. BALLANTYNE. Well, these were not members of boards of the units necessarily, were they? Senator COUZENS. No; but how many of them were? Mr. BALLANTYNE. Were members of the boards of the units? Senator COUZENS. Yes. How many of those who were members of the board of directors of the Detroit Bankers Co., were also members of the board of directors of the unit banks? I understood you to say before it was Ballantyne, Haass, and Stone. Is that correct? Mr. BALLANTYNE. Well, we were also on the boards of units. Senator COUZENS. Well, that is enough. Mr. PECORA. Practically all officers and directors of the Detroit Bankers Co. were also officers or directors of one or more unit banks, isn't that so? Mr. BALLANTYNE. Well, I fancy I was. I don't know about the others. Mr. PECORA. Well, Senator Couzens, that fact appears definitely in the pamphlet marked "Committee Exhibit No. 7", it giving the officers and directors for the year 1930 of the Detroit Bankers Co. and also the names of officers and directors of the different unit banks. Senator COUZENS. All right. Mr. PECORA. Now, Mr. Ballantyne, isn't it the fact that the directors of the Detroit Bankers Co., the holding company, at the annual elections of officers and directors of the different unit banks, made up the slates of officers and directors to be chosen at those annual elections of officers and directors of the different unit banks? Mr. BALLANTYNE. I presume that is probably so. Mr. PECORA. Well, in order to resolve any doubt about that let me call your attention to the minutes of the annual meeting of the board of directors of the Detroit Bankers Co. held on January 12, 1931, at which the following resolution was adopted, according to the photostatic copy of the minutes of that meeting which I have before me. Under the caption " Directors of affiliated institutions ", appears the following minute : Under date of December 23, 1930, various individuals were authorized by the board to vote the shares owned by this company at the several annual meetings of stockholders. For the purpose of instructing these proxy holders to nominate directors in each instance, the following resolutions were offered and moved for adoption: Resolved, that John Ballantyne, who has heretofore been appointed proxy to attend the annual meeting of the stockholders of the First National Bank, be and he is hereby directed to nominate the following as directors of the bank. Then follows a list of names. Mr. BALLANTYNE. Just so it may be clear on the record that they were not really dictating the board of directors of the First National Bank. They were simply complying in large measure with the First National Bank in respect to its board; and the same would apply with equal force to the others. They were not acting like a czar in the matter, and dictating new boards, or anything of that sort. They were being influenced by the banks themselves, and using judgment, I suppose. Mr. PECORA. Let me read the resolution giving the names: Frederick M. Alger, John Ballantyne, Lawrence D. Buhl, Leo M. Butcel― Senator COUZENS. I do not think you need read all those names, Mr. Pecora. Mr. PECORA. Doubtless not. But there is quite a list of names. Now, reading further: Resolved that Ralph Stone, who has heretofore been appointed proxy to attend the annual meeting of the stockholders of the Detroit Trust Company, be and he is hereby directed to nominate the following as directors of the company. Then follows a long list of names of persons. Mr. BALLANTYNE. Yes. Mr. PECORA. And reading further: Resolved that Julius H. Haass, who has heretofore been appointed proxy to attend the annual meeting of the stockholders of the Peoples Wayne County Bank of Detroit, be and he is hereby directed to nominate the following as directors of the bank. Then follows a long list of names. Mr. BALLANTYNE. Yes. Mr. PECORA. And I read further: Resolved that J. C. Friedel, who has been heretofore appointed proxy to attend the annual meeting of the stockholders of the Peoples Wayne County Bank of Hamtramck, be and he is hereby directed to nominate the following as directors of the bank. Then follows a long list. And I read further: Resolved that Henry A. Haigh, who has heretofore been appointed proxy to attend the annual meeting of the stockholders of the Peoples Wayne County Bank of Highland Park, be and he is hereby directed to nominate the following as directors of the bank. Then follows a long list of names. I read further: Resolved that William H. McClenahen who has heretofore been appointed proxy to attend the annual meeting of the stockholders of the Peoples Wayne County Bank of Deaborn, be and he is hereby directed to nominate the following as directors of the bank. Then follows a long list of names. And I read further: Resolved that Henry Roehrig, who has heretofore been appointed proxy to attend the annual meeting of the stockholders of the Peoples Wayne County Bank of Wyandotte, be and he is hereby directed to nominate the following as directors of the bank. Then follows a long list of names. Resolved, that Ignatius J. Saliotte, who has heretofore been appointed proxy to attend the annual meeting of the stockholders of the Peoples Wayne County Bank of Ecorse, be and he is hereby directed to nominate the following as directors of the bank. Then follows a long list of names. Resolved that Arnott H. Moody, who has heretofore been appointed proxy to attend the annual meeting of the stockholders of the Peoples Wayne County Bank of River Rouge, be and he is hereby directed to nominate the following as directors of the bank. Then follows a long list of names. Resolved, that Frank W. Hubbard, who has heretofore been appointed proxy to attend the annual meeting of the stockholders of the Grosse Pointe Savings Bank of Grosse Pointe, be and he is hereby directed to nominate the following as directors of the bank. Then follows a long list of names. Resolved that Emmor Bales, who has heretofore been appointed proxy to attend the annual meeting of the stockholders of the River Rouge Savings Bank of River Rouge. be and he is hereby directed to nominate the following as directors of the bank. Then follows a long list of names. On motion, being duly seconded, the foregoing resolutions were unanimously adopted. Now, Mr. Ballantyne, that indicates, does it not, the general policy that was pursued by the Detroit Bankers Co. with regard to naming directors of the various unit banks? Mr. BALLANTYNE. I wonder if it was not necessary for the stockholders of those banks? They did not use duress, I am sure. There was no duress to it, particularly as to the directors' names. They might have added 1 or 2 to strengthen the situation; but there was no duress used. Mr. PECORA. What do you mean by that? Mr. BALLANTYNE. There was no force at all. The regular boards were named, as a general thing, and this was the authority given to those men to vote the stock for the reelection of the banks' boards. Quite generally the same boards were on there. Of course they had the power to change it. Mr. PECORA. But, Mr. Ballantyne, take your case, for instance. At the time of the creation of the Detroit Bankers Co. were you a director of more than one of the unit banks that came into the holding company? Mr. BALLANTYNE. No. Mr. PECORA. After the formation of the Detroit Bankers Co. were you made a director of more than 1 unit bank? Mr. BALLANTYNE. No; not until I assumed-I don't think I was until I assumed the duties of a man who died. Mr. PECORA. According to the resolutions that I have read from. which were adopted at the annual meeting of the board of directors of the holding company held on January 12, 1931, you were nominated to be a director of the following unit banks at that timeMr. BALLANTYNE. I was put on Mr. PECORA. Wait a moment. Mr. BALLANTYNE. Yes. The First National Bank? Mr. PECORA. The Peoples Wayne County Bank of Detroit? Mr. BALLANTYNE. Yes. I have them all here and can read them to you. Mr. PECORA. I can get them from the record here. What others have you got? Mr. BALLANTYNE. On April 24 I was appointed president of the Detroit Bankers Co. That was in 1931. On May 1 I was appointed chairman of the board of the First National Bank. Ôn April 24, 1931, I was appointed president of the Detroit Bankers Co. On May 4 I was appointed director of the Peoples Wayne County Bank. On May 12, a director of the First Detroit Co. On June 2, a director of the Detroit Trust Co.; also on the executive committee. October 6, a director of the First National Bank. I think that is all. Mr. PECORA. Was it the fixed policy of the Detroit Bankers Co. to make up the slates of directors to be elected for the various unit banks at the annual meetings? Mr. BALLANTYNE. No; I don't think so. They might have interpolated a name. Mr. PECORA. But they named the directors, did they not? Mr. BALLANTYNE. Yes; they named the directors that were there. I suppose they exercised the power to reelect the same directors, if that is what you want me to admit. Yes; they did so. Mr. PECORA. Do you know anything about a service charge made by the Detroit Bankers Co. which was paid to it by the various unit banks? Mr. BALLANTYNE. I think, Mr. Pecora, I can answer your question. There was a service contract entered into and it involved some expense on the part of the Detroit Bankers Co. For instance, they had a force of expert insurance people over there; tax experts; but the duties were prescribed, I think, in the contract that was written. They were express or implied, the specific duties were. think all of them were manifestly good. I Mr. PECORA. I show you what purports to be a photostatic reproduction of that so-called “service contract" that you have referred to. This photostatic copy purports to be a copy of a service contract entered into between the Detroit Bankers Co. and the People's Wayne County Bank of Detroit. Will you look at it and tell me if that is a true and correct copy of the service contract to which you have referred? Mr. BALLANTYNE. Yes; that is a copy. Mr. PECORA. I ask that it be marked in evidence. Senator COUZENS. The same will be marked in evidence without being spread upon the record. (Photostatic copy of service contract referred to and identified by the witness was received in evidence, marked "Committee Exhibit No. 8, Jan. 24, 1934.") Senator COUZENS. The subcommittee will take a recess until 2 o'clock. (Whereupon, at 12:40 p.m., a recess was taken until 2 o'clock of the same day, Jan. 24, 1934.) AFTERNOON SESSION Upon the expiration of the noon recess, the committee resumed the hearing at 2 p.m. Senator COUZENS (presiding). I desire to announce that Chairman Fletcher has charge of the gold bill on the floor of the Senate and has asked me to preside while he has charge of that bill on the floor of the Senate. The meeting will come to order, please. TESTIMONY OF JOHN BALLANTYNE, DETROIT, MICH., PRESIDENT OF MANUFACTURERS' NATIONAL BANK OF DETROIT AT THE PRESENT TIME-Resumed Mr. PECORA. Mr. Ballantyne, were these service contracts, of which committee's exhibit no. 8 is a sample copy, entered into between the Detroit Bankers Co. and each and every one of the banking units of that holding group? Mr. BALLANTYNE. Mr. Pecora, I wonder if you would mind if I would transfer that question to Mr. Verhelle, who is under oath? Mr. PECORA. All right. Mr. BALLANTYNE. I think perhaps he will answer it a little more intelligently than I will. Mr. PECORA. Are you unable to tell us anything about these service contracts? Mr. BALLANTYNE. I know in a very general way about them, as I spoke about them to you. Mr. PECORA. Suppose you tell us first what you know of them, even if it be only in a general way. Mr. BALLANTYNE. The terms of the contracts, the service contracts, the express terms, are mentioned in the contract. Mr. PECORA. Yes. Mr. BALLANTYNE. I think there were changes, some implied terms, something was done that was not expressed; but there was obviously |