Mr. PECORA. Mr. Chairman, I ask that the committee reporter mark for identification each and every paper or document that has been produced by the witness.

Senator CouZENS. That will be done after the examination of the witness for the day has been concluded. And the committee reporter will see that they are kept intact, and mark them in order in which they are now submitted.

(The papers and documents turned over to the committee by the witness, Mr. Verhelle, were marked " Committee Exhibits for Identification, No. 16 to No. 96", both inclusive, and forwarded to Mr. Pecora at the Mayflower Hotel during the evening with the day's transcript of proceedings.)

Mr. PECORA. Now, Mr. Verhelle, to get back to the memorandum addressed to Mr. Ballantyne under date of March 7, 1932, which you have said you dictated, and which has been received in evidence as Committee Exhibit No. 15. I want to call to your attention the opening statement in this memorandum, reading as follows:

Mr. JOHN BALLENTYNE,

President Detroit Bankers Co.:

During October 1931 we estimated total losses at $48,793,000

Who estimated those total losses at that figure?

Mr. VERHELLE. Well, I seriously question that letter, sir, becausewell, I would like to refresh my memory on it. I could not particularly recall it when I read it here. It was rather strange to me. Mr. PECORA. Why, after you read it you said, while you were under oath here, that you dictated it.

Mr. VERHELLE. I did, sir.

Mr. PECORA. All right. Now, when you dictated it what had you in mind as the thing to which you referred when you stated in this memorandum :

During October 1931 we estimated total losses at $48,793,000.

Mr. VERHELLE. I presume that what I had in mind when I dictated that was that that was an estimate of the total amount that might be considered as losses.

Mr. PECORA. Sustained by the Detroit Bankers Co. and its various units?

Mr. VERHELLE. And all the units; yes, sir.

Mr. PECORA. Do you know why no mention whatsoever was made of those losses in the annual report sent to the stockholders of the Detroit Bankers Co. for the year 1931?

Mr. VERHELLE. Well, those losses were corrected, sir.

Mr. PECORA. What was that answer?

Mr. VERHELLE. Those losses were corrected.

Mr. PECORA. When were they corrected?

Mr. VERHELLE. By the adjustment of the invested capital, earnings, and so forth, of those units.

Mr. PECORA. When were they corrected?

Mr. VERHELLE. During the course of-well, during the last week, I suppose, in December that would have been.

Mr. PECORA. During the last week of December 1931?

Mr. VERHELLE. I presume so; yes, sir.

Mr. PECORA. Are you sure of that?

Mr. VERHELLE. No; I am not sure that it would be during that week; but at least over a period of time about then.

Mr. PECORA. Are you sure that those losses were corrected?

Mr. VERHELLE. Not particularly these losses, because the question of losses is entirely a matter of judgment.

Mr. PECORA. Who made this estimate that you referred to in this memorandum?

Mr. VERHELLE. I presume I made it, sir.

Mr. PECORA. You made it?

Mr. VERHELLE. Yes, sir; I presume so.

Mr. PECORA. Then some time in October of 1931 you made an estimate which showed that the total losses of the Detroit Bankers Co. and its unit aggregated over $48,000,000?

Mr. VERHELLE. I would presume that I did.

Mr. PECORA. What was the occasion for your reminding Mr. Ballantyne of that in March of 1932?

Mr. VERHELLE. I should like to read the whole memorandum and make myself clear on the whole occasion.

Mr. PECORA. Haven't you read the whole memorandum?

Mr. VERHELLE. No, sir; I did not. I just glanced through it. May I read it now, please?

Mr. PECORA. All right. Here it is.

(After reading it, the witness returned the paper to Mr. Pecora.) Mr. PECORA. Now, Mr. Verhelle, can you answer the question after having read Committee Exhibit No. 15?

Mr. VERHELLE. Well, I have just this recollection of that particular memorandum, that I think there are subsequent memoranda to that; and the two memoranda mentioned in there I recall specifically, and

Mr. PECORA (interposing). What is that?

Mr. VERHELLE. There are two memoranda mentioned in this particular memorandum, which I recall specifically, and which are recommendations in there. It is my recollection that that particular memorandum was, in my mind, rather incomplete at the time and that I wanted to make an analysis of my own, and an inspection, or examination rather, of my own before making any commitment as to what those losses definitely were, because I felt I was too far away from what others definitely believed and presumed to be the situation.

Mr. PECORA. Now, Mr. Verhelle, I want you to look very carefully at this memorandum marked "Committee Exhibit No. 15", and point out to me therein anything that is set forth in it which indicates what you have just said [handing the memorandum back to the witness].

Mr. VERHELLE. Well, one statement, for instance: "Losses on mortgages on land contracts, $5,000,000." That would require a little substantiation.

Mr. PECORA. Just read into the record anything in that memorandum that is the basis for the answer you have made.

Mr. VERHALLE. The figures in "Additional losses on loans, 812 million dollars ", are entirely too general a statement. So are the figures in "Mortgages on land contracts." And so is the statement "Our requirements at this time are approximately $40,000,000."

Mr. PECORA. Now, what did you mean by that statement in that memorandum, which is dated March 7, 1932:

Our requirements at this time are approximately $40,000,000.

Mr. VERHELLE (looking over the paper again). I do not recall, sir. I think that is probably one of the reasons

Mr. PECORA (interposing). You do not recall what you meant by something you wrote?

Mr. VERHELLE. But did not send.

Mr. PECORA. Do you mean to say that you never sent it?

Mr. VERHELLE. It does not look like it.

Mr. PECORA. Do you mean to say you never sent that to Mr. Ballantyne?

Mr. VERHELLE. I seriously question it. I don't know.

Mr. PECORA. I wish you would carefully search your mind, Mr. Verhelle, and make an effort to tell us about that.

Senator COUZENS. You are not trying to protect Mr. Ballantyne because he is your superior officer, are you?

Mr. VERHELLE. Senator Couzens, I have never done anything but state the truth on any question.

Senator COUZENS. Well, you may sometimes state the truth and yet not all the truth.

Mr. VERHELLE. What was that?

Senator COUZENS. I say, you may sometimes say the truth and yet not state all the truth. I am just recalling to you that when you took the oath here you said that you would tell all of the truth and not only a part of it.

Mr. VERHELLE. Well, that makes no difference to me, sir.

Mr. PECORA. Do you mean that the taking of the oath would make no difference to you?

Mr. VERHELLE. Oh, no. That I always tell the truth so far as the telling of the truth is concerned.

Mr. PECORA. All right. Now, did you tell the truth when you dictated that memorandum and stated, regardless of whether or not you sent it to Mr. Ballantyne, that in October of 1931 you estimated the losses of the company at over $48,000,000?

Mr. VERHELLE. As to this memorandum, I question whether I used it or not.

Mr. PECORA. I did not ask you whether you used it or not. I asked you if it was the truth when you dictated that memorandum and stated in October of 1931 that the losses of the Detroit Bankers Co. and its units had been estimated at over 48 million dollars.

Mr. VERHELLE. As to a memorandum of this kind, when dictated and unless signed and used, it does not necessarily mean that it contains the true story, or anything of that sort, and there might be typographical errors in it, or any one of a thousand things.

Mr. PECORA. When you dictated that memorandum what did you dictate it for? What did you intend to do with it after it was transcribed?

Mr. VERHELLE. Well, at that particular moment when I dictated it I probably set down on paper my first thoughts, or something of that sort; or this might have been my second or third thoughts on it, and with the definite purpose in mind of accomplishing certain things.

Mr. PECORA. When you dictated that memorandum you started out by saying, in substance, in October of 1931 we estimated losses at 48 million dollars plus. Now, were you drawing upon your imagination when you dictated that statement on March 7, 1932?

Mr. VERHELLE. No, sir. I doubt very much if I was.

Mr. PECORA. Well, that was dictated by you as a statement of fact, wasn't it?

Mr. VERHELLE. Yes, sir.

Mr. PECORA. Now, let me have that memorandum again, please. Mr. VERHELLE. All right. [Handing the memorandum back to Mr. Pecora.]

Mr. PECORA. Now, when in this same statement or memorandum you dictated the following:

Our requirements at this time are approximately $40,000,000.

What did you mean by it?

Mr. VERHELLE. I cannot recall that, sir.

Mr. PECORA. Well, you have been recalling a lot of things not so important as this.

Mr. VERHELLE. I know I have been recalling a lot of things, but

Mr. PECORA (interposing). Why is it that you cannot recall this? Mr. VERHELLE. I think I have done pretty well at recalling things. Mr. PECORA. That is your opinion, anyway, isn't it?

Mr. VERHELLE. Yes, sir. Because I think I would recall a memorandum of that kind, and I just don't recall it.

Mr. PECORA. Well, you have recalled it. You testified here that you dictated it.

Mr. VERHELLE. Yes; because of the fact that this photostatic copy of memorandum with what is on it there at least now indicates that I dictated it. But that was not from memory but by the very fact of the memorandum itself. That was the basis for my statement

to you.

Mr. PECORA. Don't you recognize your language in it?

Mr. VERHELLE. Yes, sir. That was another factor that caused me to say that.

Mr. PECORA. There isn't a shadow of a doubt in your mind, then, at this moment, that you dictated this memorandum, is there?

· Mr. VERHELLE. There isn't a shadow of doubt about that, but whether I dictated it exactly that way, or whether there are any typographical errors in there, I wouldn't know.

Mr. PECORA. With that exception, there isn't a shadow of doubt in your mind that you dictated substantially what appears in this memorandum, is there?

Mr. VERHELLE. No, sir.

Mr. PECORA. Now, can't you search your memory and tell us what you meant by the statement in this memorandum [reading]:

Our requirements at this time are approximately $40,000,000.

Mr. VERHELLE. Yes, sir; I think I could sit down and think it out. Mr. PECORA. Please do so.

Mr. VERHELLE (taking up a writing pad as if to write on it and then stopping to think). What is that date, Mr. Pecora?

Mr. PECORA. March 7, 1932.

Mr. VERHELLE. Will you let me have that memorandum again? Mr. PECORA. All right. Here it is.

Mr. VERHELLE (after some figuring and looking at the memorandum). I cannot reconcile the figures on this thing itself. They do not tie in or together there at all.

Mr. PECORA. What did you say?

Mr. VERHELLE. The figures on that memorandum do not tie in at all. I cannot reconcile them, one with another.

Mr. PECORA. You cannot reconcile the figures embodied in a memorandum which you prepared?

Mr. VERHELLE. I cannot reconcile them with themselves. They do not tie in.

Mr. PECORA. Well, that is because of the way you dictated it and prepared it, isn't it?'

Mr. VERHELLE. Well, of course, it wasn't a finished article, or at least that would be my recollection of it.

Mr. PECORA. What was the finished article?

Mr. VERHELLE. Well, I would say it would have been much more full and complete than that.

Mr. PECORA. Can you produce the finished article, or any copy of it?

Mr. VERHELLE. No; I cannot, sir.

Mr. PECORA. Are you willing to swear that this memorandum was not the finished article?

Mr. VERHELLE. I could not swear that it was either, sir. In the first place, the figures do not reconcile with one another as they appear right on the statement itself. You really cannot make heads or tails out of it by analyzing it, and they do not tie together. In the second place, I am in the habit of putting my initials on copies of everything, and generally on all copies when I sign the original. That is the general way I have.

Mr. PECORA. That is the general way you have?

Mr. VERHELLE. Yes, sir.

Mr. PECORA. Let us take a look at some of the copies of memoranda you have produced here this afternoon.

Mr. VERHELLE. Those necessarily would not be file copies.

Mr. PECORA. Would not necessarily be what?

Mr. VERHELLE. File copies.

Mr. PECORA. Didn't you say that these were extra copies made, and that they were in the files in your desk?

Mr. VERHELLE. Not file copies, sir.

Mr. PECORA. What do you mean by "file copies as distinguished from these copies?

Mr. VERHELLE. Well, a record of every piece of correspondence and communication, one copy goes in the files, and that copy

Mr. PECORA (interposing). Where the copy bears your signature or your initials, does that mean that it is a file copy?

Mr. VERHELLE. No, sir. It means that it is an accurate copy of one I did sign.

Mr. PECORA. Well, why did you say that the file copies would show your signature or initials?

Mr. VERHELLE. If that original had been signed, when I signed the original I would have simultaneously signed at least one more

copy.