Mr. BALLANTYNE. We describe the fact that it is the result of the units of the Detroit Bankers Co., in another part of that report, in the same paragraph that you are referring to. Mr. PECORA. How was this figure of $7,475,293.47, which was stated in this report to be the net operating income after customary reserves, arrived at? Mr. BALLANTYNE. It was furnished to me in the way it always had been made, by the officers of the bank, with assurances that those figures were correct. Obviously, I could not be chargeable with these figures personally. I had to depend on Mr. Verhelle and others to substantiate the correctness of those figures. Mr. PECORA. When you said in this report for the year 1931 that the net operating income after customary reserves was $7,475.293.47, did you mean to inform the stockholders of the Detroit Bankers Co. that that was the operating income of the company, or only of the unit banks? Mr. BALLANTYNE. The unit banks. Mr. PECORA. The unit banks? Mr. BALLANTYNE. Yes, surely. Mr. PECORA. And when you stated, in this report to the stockholders of the Detroit Bankers Co. that that net operating income was equal to $4.21 a share on the 1,776,2051⁄2 shares, were you referring to the shares of the Detroit Bankers Co.? Mr. BALLANTYNE. I think, however, Mr. Pecora, you have done so well with Mr. Verhelle, and he had so much more actual contact with the making of that report and the furnishing of the figures to me, that he could answer your questions much more intelligently than I could. I necessarily had to depend on the officers of the bank for the figures. I got them in the usual way that figures are gotten. Mr. PECORA. I will question Mr. Verhelle subsequently about this, but meanwhile I want to ask you some questions about it, because this report is your report as the president of the Detroit Bankers Co. Mr. BALLANTYNE. Yes. Mr. PECORA. When you said in this report that the earnings for 1930 were equal to $4.14 a share, you meant to give the stockholders of the company a comparative statement of the earnings for 1930 compared with the earnings for 1931, did you not? Mr. BALLANTYNE. Yes, sir. Mr. PECORA. And we have already seen that you stated in this report to the stockholders that the earnings for 1931 were equal to $4.21 a share, as compared with $4.14 a share for the year 1930; is that not true? Mr. BALLANTYNE. Yes, sir. Mr. PECORA. In other words, you wanted to give the stockholders the impression that the earnings of the company for 1931 per share exceeded the earnings of the company for 1930 per share, did you not? Mr. BALLANTYNE. I wanted to make an honest statement above anything else. There was nothing else in my mind but to make an honest statement in this case. I wanted honest values back of every figure, and that is so there. These facts stated in that letter I believe to be absolutely correct. Mr. PECORA. Why do you believe them to be absolutely correct? Mr. BALLANTYNE. I got them from very dependable men. Mr. PECORA, Who were they? Mr. BALLANTYNE. Mr. Verhelle, Mr. Wilson Mr. PECORA, Mr. Mark Wilson? Mr. BALLANTYNE. Yes; Mr. Joseph Verhelle, and the other officers of the company. They came through Mr. Verhelle and Mr. Mark Wilson. Mr. PECORA. When you stated in this annual report for 1931 that the earnings were equal to $4.21 a share as companred with earnings for 1930 equal to $4.14 a share, did you mean to convey to the stockholders of the company that the company's business in 1931 was more prosperous and profitable than its business for the year 1930? Mr. BALLANTYNE. I meant to convey the facts to them. Mr. PECORA. Did you mean to convey that as the fact? Mr. BALLANTYNE. Absolutely. Mr. PECORA. To your knowledge, Mr. Ballantyne, were the actual earnings and profits of the Detroit Bankers Co. for 1931 greater than those for 1930? Mr. BALLANTYNE. I have only the word of the officers to that effect. Mr. PECORA. To your knowledge, was the company's business more profitable to it in 1931 than it had been in 1930? Mr. BALLANTYNE. It was less expensive. Mr. PECORA. Was it more profitable, to your knowledge, in 1931 than it was in 1930? Mr. BALLANTYNE. My dear sir, I had only the knowledge that was furnished to me. Senator COUZENS. You must answer Mr. Pecora's question. Mr. BALLANTYNE. I had only the knowledge that was furnished to me. Senator COUZENS. No one is denying that. Mr. BALLANTYNE. I could not guess at any figures. Senator COUZENS. Mr. Pecora did not ask you that. Will you please repeat the question, Mr. Pecora asked. The witness will have to answer that question. (The reporter read the last question by Mr. Pecora.) Mr. BALLANTYNE. The only knowledge I had was the knowledge obtained from the officers of the company, which I submitted in that report. Senator COUZENS. That does not answer the question, Mr. Ballantyne. The question is whether or not you believed the profits in 1931 were greater than they were in 1930. That is a simple question. Mr. BALLANTYNE. I think I am giving you a perfectly fair answer. Mr. PECORA. What is the answer, yes or no? Mr. BALLANTYNE. My knowledge was comprised of what I was informed from the officers of the company. I accepted their word on it. I had confidence in them. Obviously they were more, according to these statements. Mr. PECORA. You mean that obviously, according to these statements embodied in the annual report Mr. BALLANTYNE. More money had been earned. Mr. PECORA. Will you let me finish the question before you answer, Mr. Ballantyne? Do you mean to say that obviously, according to the statements embodied in your report to the stockholders for the year 1931, the company's business that year was more profitable to it than had been its business for the year 1930? Mr. BALLANTYNE. I believed that when that report went out. Mr. BALLANTYNE. Yes. Mr. PECORA. Was that belief based upon any personal knowledge that you had as president and a director of the Detroit Bankers Co., of its business transactions? Mr. BALLANTYNE. I do not know that I had any knowledge that other folks did not have, Mr. Pecora. Mr. PECORA. I am asking you about your own individual knowledge, and not somebody else's knowledge; and in asking you that, I am asking it of you because you were not only a director of the company during all the years of 1930 and 1931, but you were also president of the company from May 1931 to the end of that year and subsequently. Mr. BALLANTYNE. Yes. Mr. PECORA. And I assume that as a director and as president you had some personal knowledge other than that given to you by accountants, that indicated to you whether or not the company's business was more profitable in 1931 than it had been in 1930. Mr. BALLANTYNE. Mr. Pecora, I did not. Mr. PECORA. What is that? Mr. BALLANTYNE. I did not. Mr. PECORA. You did not what? Mr. BALLANTYNE. Have any knowledge other than was furnished me by the accountants and officers of the bank. Mr. PECORA. Didn't you have knowledge, necessarily, of the company's business and operations which was acquired at first hand as a director of the company and as its president? Mr. BALLANTYNE. No; nothing more than was furnished by the officers of the bank. Mr. PECORA. You were the head officer of the company, were you not, the chief executive officer of the company, from May 1931 until the end of the year? Mr. BALLANTYNE. Have you read the bylaws, Mr. Pecora? Mr. PECORA. Will you answer my question, please, Mr. Ballantyne? Mr. BALLANTYNE. I have answered it to the best of my ability. Mr. PECORA. You answered it by asking me if I had read the bylaws. Mr. BALLANTYNE. You said I was the chief officer. Mr. PECORA. Weren't you? Mr. BALLANTYNE. I do not know. That is why I asked you if you had read the bylaws. Mr. PECORA. What were your duties as president of the company when you assumed that office or were elected to it in May 1931? Don't you know? Mr. BALLANTYNE. President of the company. Mr. PECORA. What were your duties as president of the company? Were you merely a figurehead? Mr. BALLANTYNE. To preside at the meetings. Mr. PECORA. Were you merely a figurehead? Mr. BALLANTYNE. I suppose I was. The Bankers Co., as such, shortly after I—well, immediately following the consolidation-was superseded by another organization called the governing board. Mr. PECORA. What consolidation are you referring to? Mr. BALLANTYNE. The Peoples Wayne and the First National. Mr. BALLANTYNE. Yes. Mr. PECORA. You became president of the Detroit Bankers Co. in May 1931. Mr. BALLANTYNE. Mr. Pecora Mr. PECORA. So, what in the world Mr. BALLANTYNE. If you are asking me something I can answer obviously-I will answer this to you. Obviously, I had reasons for recommending the consolidation. Mr. PECORA. I am not asking you about the consolidation that took place on December 31, 1931, between the First National Bank in Detroit and the Peoples Wayne County Bank. I have not asked you about that, have I? Mr. BALLANTYNE. No. Mr. PECORA. Then why, in your answers, do you refer to that consolidation, when my questions in no way relate to that consolidation? Mr. BALLANTYNE. You are trying to get something out of me that I do not know. Mr. PECORA. Don't you know what your duties as president of the Detroit Bankers Co. were? Mr. BALLANTYNE. I do not know that I do to preside at the meetings of the Detroit Bankers Co. Mr. PECORA. Were you also the executive head of the company? Mr. BALLANTYNE. There were no activities in the Detroit Bankers Co. The Detroit Bankers Co., Mr. Pecora, were just trustees. Mr. PECORA. Of what? Mr. BALLANTYNE. Just trustees. Mr. PECORA. Just trustees of what? Mr. BALLANTYNE. For the stockholders and for the directors of these banks. Mr. PECORA. The Detroit Bankers Co. was a company that owned virtually all of the capital stock of a number of large banks, was it not? Mr. BALLANTYNE. They were only trustees. No; they did not own it. Mr. PECORA. They did not own it? Mr. BALLANTYNE. No. I was trustee, for instance, for Horace Dodge, one of the biggest estates in this country. Mr. PECORA. We are not talking about the Horace Dodge estate. Mr. BALLANTYNE. I did not own his estate. I was a trustee, and that is all these men were. Mr. PECORA. Mr. Ballantyne, did not the Detroit Bankers Co. own outright the capital stock Mr. BALLANTYNE. No. Mr. PECORA. Wait. Let me finish my questions, won't you, please? Mr. BALLANTYNE. Yes. Mr. PECORA. I will start it again. As a matter of fact, did not the Detroit Bankers Co. own outright the capital stock of the various banks which it had acquired during the course of its existence, with the exception of directors' qualifying shares of various unit banks? Mr. BALLANTYNE (after conferring with an associate). I dare say I am confused about it. I was the chief executive officer of the Bankers Co., and we were the owners of this stock. Is that what you are asking? Mr. PECORA. I thought that was what I was asking. Mr. BALLANTYNE. I will answer in the affirmative. Mr. PECORA. You answer that question now in the affirmative? Mr. BALLANTYNE. Yes, sir. Mr. PECORA. And as president of the Detroit Bankers Co. you received a fairly substantial salary, didn't you? Mr. BALLANTYNE. Yes. Well, I received $50,000 a year. Mr. PECORA. $50,000 a year? Mr. BALLANTYNE. Yes. Mr. PECORA. You do not suppose that that $50,000 a year was paid to you for services rendered by a figurehead, do you? Mr. BALLANTYNE. No. Mr. PECORA. So that you yourself considered that you were something more than a figurehead when you became president of the Detroit Bankers Co. at a salary of $50,000 a year, did you not? Mr. BALLANTYNE. Well, Mr. Pecora, I would like to get this very clear in your record. I had no wish to be president of the Detroit Bankers Co. Fate, of course, sat on me; and when I took hold of that office it was with the definite understanding of everybody that it would be for short tenure. My years and my strength would not permit me to take care of it. As to intimate knowledge of anything pertaining to that bank, the Detroit Bankers Co., you are inferring that I might know something that others did not know. Mr. PECORA. NO; I am not inferring any such thing. Mr. BALLANTYNE. Perhaps I mistake your question. Mr. PECORA. The question that I last asked you, Mr. Ballantyne, was a very simple one. Mr. BALLANTYNE. Whether I knew Mr. PECORA. No. The question was, when you were made president of the Detroit Bankers Co. and received as its president a salary of $50,000 a year, did you consider that you were paid that salary for being something more than a mere figurehead of the company? Mr. BALLANTYNE. I thought so. Mr. PECORA. And the duties assigned to you and which devolved upon you as president of the Detroit Bankers Co. were very responsible duties, were they not? Mr. BALLANTYNE. They proved to be. Mr. PECORA. You knew that they would be in advance, did you not? Mr. BALLANTYNE. I do not know that I knew that they would be as responsible as they were. Mr. PECORA. You knew that your duties would be more than merely nominal as president of the Detroit Bankers Co., did you not? Mr. BALLANTYNE. Yes. Mr. PECORA. As president it was your duty to supervise the operation of the business activities of the company, was it not? Mr. BALLANTYNE. The Detroit Bankers Co., to my knowledge, were not supervising or running the banks, you know. |