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Mr. STONE. Yes. (Handing to Mr. Pecora a paper.)

Mr. PECORA, I am going to offer in evidence the memorandum produced by the witness, and which is entitled “Detroit Trust Company, Certificates of Deposit held by the First National Bank in Detroit."

The CHAIRMAN. Let it be admitted in evidence.

(A memorandum of Detroit Trust Co., of certificates of deposit held by the First National Bank in Detroit, was marked “ Committee Exhibit No. 117, Jan. 31, 1934 ", and will be found at the end of the day's proceedings.)

Mr. Pecora. Mr. Stone, have you any knowledge of the presentation for payment by the banks to whom these three certificates of deposit were issued, which certificates have been marked " Committee Exhibits 111, 112, and 113”, I mean of their being presented for payment?

Mr. STONE. No, sir. Mr. Pecora. Or that any requests for payment were made by any of these banks?

Mr. STONE. No. That would be an administrative detail that would not come to my attention,

Mr. PECORA. The two certificates of deposit that had been issued on August 8, 1931, respectively, to the Peoples Wayne County Bank of Detroit and the First National Bank in Detroit, for the respective amounts of 412 million dollars and $1,700,000, eventually inured to the benefit of the consolidated bank known as the “First Wayne County Bank”, didn't they?

Mr. STONE. That is correct.

Mr. PECORA. Have you any schedule similar to the one you have just produced and which has been marked in evidence as “ Committee Exhibit No. 117", relating to any payments on account, made to the Detroit Savings Bank?

Mr. STONE. No; there were none.

Mr. Pecora. There were no payments on account made to that bank.

Mr. STONE. No, sir.

Mr. Pecora. Mr. Stone, I want to show you what purports to be a photostatic copy of a report or statement from the files of the Detroit Trust Co. bearing date June 1, 1933. Will you look at it and tell me if you know it to be a copy of such report or statement so on file in the Detroit Trust Co. records?

Mr. STONE. Yes; I recall that. It is a statement that was placed in each trust file where the trust had a balance in the fiduciary account, to instruct the trust officer in what manner the dividends received from time to time from the receiver of the First National Bank should be computed.

Mr. PECORA, I offer that in evidence.

Mr. STONE. It is purely an administrative matter. I do not know that I can explain the principles upon which the computation was made. Maybe I could, but it was an administrative matter.

The CHAIRMAN. The document is admitted.

(Photostatic copy of statement from files of the Detroit Trust Co. dated June 1, 1933, identified by the witness Stone, was received in evidence and marked " Committee Exhibit No. 118, Jan. 31, 1934.")

Mr. PECORA. Do you know who prepared this statement which has just been received in evidence as Committee's Exhibit No. 118?

Mr. STONE. No, I do not; somebody in the office.
Mr. PECORA. I will read it [reading]:

JUNE 1, 1933. On February 11, 1933, the last day of bank activity prior to the so-called Bank Holiday declared by Governor Comstock, the Detroit Trust Company had two bank accounts bearing the designation “ Detroit Trust Company Fiduciary Account ” and aggregating $3,621,449.52. One of them was carried in the First National Bank, Detroit, and amounted to $3,121,449.52 while the other, in the Detroit Savings Bank, had a balance of $500,000.

Immediately after the closing of the banks, every effort was made to release funds so that the distress through lack of money might be minimized. In this connection, all the banks of Detroit, Members of the Detroit Clearing House Association, (Detroit Trust Company also) agreed between themselves that 5% could be paid with safety on all deposit balances. This agreement was carried out and while some delay was encountered, the First National Bank, Detroit, paid 5% of the Fiduciary Account to the Detroit Trust Company on February 28, 1933. This payment amounted to $156,072.47. The Detroit Savings Bank, however, claimed an offset and refused to pay the Detroit Trust Company the $25,000.00 which otherwise would have been paid. Because of surrounding conditions, this $25,000.00 was advanced by the Detroit Trust Company and a full 5% of the February 11, 1933, balance was distributed to the trusts segregated as Fiduciary.”

Later on the banks decided to disburse another 5% and on March 22, 1933, the First National Bank, Detroit, again paid $156,072.48 to the Detroit Trust Company on the Fiduciary Account. No change had occurred in the attitude of the Detroit Savings Bank and again the Detroit Trust Company advanced $25,000.00 so that all trusts segregated as "Fiduciary could disburse an additional 5%.

On May 17, 1933, a payment of 30% amounting to $946,650.19 was received from the First National Bank, Detroit, on said Fiduciary Account. It will be noted that this is in excess of 30% of the balance as of February 11, 1933. This excess is caused by the bank having credited the Fiduciary Account with interest to the beginning of the moratorium. Meanwhile, no change had occurred in the attitude of the Detroit Savings Bank which still refused to make a disbursement against the Detroit Trust Company Fiduciary Account. In order to keep the record straight, it was decided that the Detroit Trust Company should be reimbursed for the funds advanced ; namely, $50,000.00, and this decision was put into effect at once, the remainder, $896,650.19, being turned over on a pro rata basis to the trusts carried in the Fiduciary Accounts.

I do not think it is necessary to read the balance of it. My purpose in reading it up to this point was to call your attention to the attitude of the Detroit Savings Bank with regard to its claim of offset.

The CHAIRMAN. From what sum were those certificates reduced ?

Mr. STONE. I think they were reduced from $6,700,000 to four and a half millions. The total was $6,700,000. Payments of $2,200,000 were made upon it, reducing it to four and a half millions.

Mr. PECORA. Mr. Stone, I want to show you what purport to be photostatic reproductions of five certificates of deposit issued by the Detroit Trust Co., four of them to the Ford Motor Co., payable to the Ford Motor Co., and the fifth one, in the sum of $2,500, payable on demand to the First National Bank of Detroit. Will you look at them and tell me if you recognize them as being true and correct copies of certificates of deposit issued at the dates mentioned on those copies, in the amounts thereof, and to the parties named ?

Mr. STONE. They are evidently on our form. I have no personal knowledge about them, but I should say they are on our forms.

Mr. PECORA. I offer them in evidence; and I would like to have them separately marked, and will ask that they be marked in chronological order. The CHAIRMAN. Let them be admitted.

(Photostatic copy of certificate of deposit dated Aug. 2, 1929, payable on demand to the Ford Motor Co. in the sum of $1,000,000, was received in evidence, marked “ Committee Exhibit No. 119, Jan. 31, 1934.")

(Photostatic copy of certificate of deposit dated Aug. 13, 1928, payable on demand to the Ford Motor Co. in the sum of $300,000, was received in evidence, marked " Committee Exhibit No. 120, Jan. 31, 1934.")

(Photostatic copy of certificate of deposit dated Aug. 13, 1928, payable on demand to the Ford Motor Co. in the sum of $200,000, was received in evidence and marked “Committee Exhibit No. 121, Jan. 31, 1934.")

(Photostatic copy of certificate of deposit dated Sept. 11, 1929, payable on demand to the Ford Motor Co. in the sum of $1,000,000, was received in evidence and marked " Committee Exhibit No. 122, Jan. 31, 1934.")

(Photostatic copy of certificate of deposit dated Dec. 29, 1932, payable on demand to the First National Bank of Detroit in the sum of $2,500,000, was received in evidence and marked " Committee Exhibit No. 123, Jan. 31, 1934.")

Mr. PECORA. These certificates of deposit have been marked in evidence as exhibits nos. 119, 120, 121, 122, and 123, respectively. Are you familiar, Mr. Stone, with the transactions represented by these five certificates of deposit?

Mr. STONE. No, sir.
Mr. PECORA. Are you, Mr. Thomas?
Mr. Thomas. I remember the withdrawal of those amounts.

Mr. PECORA. In chronological order, the first one of these certificates of deposit marked in evidence as "Exhibit 119 ” is dated August 2, 1929, and is payable on demand to the Ford Motor Co. in the sum of $1,000,000.

The next one, marked in evidence as “Exhibit 120", is dated August 13, 1928, made payable on demand to the Ford Motor Co. in the sum of $300,000.

The next one, dated August 13, 1928, made payable on demand to the Ford Motor Co. in the sum of $200,000, is marked as “Exhibit 121.

The fourth one, marked in evidence as “Exhibit 122”, is dated September 11, 1929, and made payable on demand to the Ford Motor Co. in the sum of $1,000,000.

And the fifth one, marked " Exhibit No. 123”, is dated December 29, 1932, and made payable on demand to the First National Bank of Detroit in the sum of $2,500,000.

I notice, Mr. Thomas, that the amount of the last certificate of deposit, namely, $2,500,000, corresponds to the aggregate amount of the other four certificates of deposit. Is there any relationship between this last certificate of deposit and the other four?

Mr. THOMAS. I do not know.

Mr. PECORA. Just look at them carefully and search your recollection, if you will.

Mr. THOMAS. All I know is that these certificates were cashed on the 29th day of December 1932.

Mr. PECORA. By the Ford Motor Co.?

Mr. THOMAS. Ýes; with instructions to us—they simply concern C.D.'s—to transfer the proceeds to the First National Bank.

Mr. PECORA. The First National Bank of Detroit ?
Mr. THOMAS. Yes.
Mr. PECORA. And that was done?
Mr. THOMAS. Yes.

Mr. PECORA. Now I want to show you what purports to be a photostatic reproduction of a deposit slip showing a deposit in the First National Bank, of Detroit, Mich., on December 29, 1932, of $2,500,000 and interest of $6,801, making a total of $2,506,801, which is attached to what purports to be a photostatic copy of a letter addressed to the Ford Motor Co., attention of Mr. D. J. Craig, assistant treasurer, by A. H. Rupp, cashier of the First National Bank of Detroit. Will you look at those photostatic copies of the deposit slip and the accompanying letter?

Mr. THOMAS. Yes.

Mr. PECORA. Is it apparent to you that that deposit slip refers to the $2,500,000 sent by the Detroit Trust Co. on December 29, 1932, to be deposited to the credit of the Ford Motor Co. in the First National Bank of Detroit?

Mr. THOMAS. Of course, we had nothing to do with making these deposit tickets. These were prepared by the First National Bank. We do not know what instructions they had from the Ford Motor Co.

Mr. PECORA. I know that; but the Detroit Trust Co. did send to the First National Bank of Detroit $2,500,000, which the Ford Motor Co. required in cashing those four certificates of deposit?

Mr. THOMAS. Yes.
Mr. PECORA. On December 29, 1932; is that right?
Mr. THOMAS. Yes, sir.

Mr. PECORA. As a matter of fact this last certificate of deposit issued by the Detroit Trust Co. for $2,500,000, payable on demand to the First National Bank of Detroit, was issued to that bank because that bank presented in behalf of the Ford Motor Co. these other four certificates of deposit for cashing, did it not ?

Mr. THOMAS. Of course we do not know whether that is the same money, but we got the same amount on the same date from the bank.

Mr. PECORA. Did you get the same money from the First National Bank of Detroit ?

Mr. Thomas. We must have, or we would not have given them that c.d. for two and a half millions.

Mr. PECORA. Did not the First National Bank of Detroit give you that $2,500,000 in order to enable the Detroit Trust Co. to cash. the four certificates of deposit aggregating that amount which had been presented by the Ford Motor Co.?

Mr. THOMAS. Í don't think so. I think we had a sufficient cash at that time to pay those c.d.'s.

Mr. PECORA. What was the reason for the issuance, as you recall it, of the certificate of deposit for $2,500,000 on December 29, 1932?

Mr. THOMAS. The reason for issuing it was because we got that. deposit from the bank on that date.

Mr. Picors. Ls that all you recall about it!
Mr. THOMAS. Yes. sir.
Mr. Pers. You have no other knowledge of the transaction!
Mr. Thomas. Xo, sir; I hare not.

Serator Cottexs. Have you any evidence here to the effect that you had sufficient money to pay those Ford Motor Co. certificates of deposit at the time they were presented!

Mr. THOMAS. That was December 1932?
Mr. Pecora, December 29, 1932.
Senator Coczex3. Which was just before the crash.

Mr. Thomas. The only statement I hare is of December 31, 1932, in which we show total cash on deposit in banks of six and one half millions.

Senator COCZENS. Where was that cash?

Mr. THOMAS. The First Wayne National Bank. Te had three or four accounts there; Detroit Savings Bank, a small balance in the commercial account in addition to our fiduciary account; New York Trust Co., Bankers Trust Co.; Continental Illinois Bank & Trust Co., and sundry small accounts.

Senator CODZENS. Of that six and one half million dollars that you said you had on hand on December 31, 1932, what proportion belonged to the fiduciary department?

Mr. THOMAS. $3,800.000.

Senator Cotzens. That is all the fiduciary balance you had on December 31, 1932?

Mr. Thomas. Yes, sir; according to this statement.

Senator COCZENS. So if you cashed those Ford Motor Co. certificates of deposit, assuming that you had the same balance on hand on December 29, you would have been practically stripped, would you not, if you had not got that two and a half million dollars from the First National Bank? (After a pause.) Is your answer yes!

Mr. Thomas. Yes. That is, our cash would have been down to a very low point, our company cash.

Nr. PECORA. As a matter of fact, when you said, in answer to Senator Couzens' question, that the amount of fiduciary accounts included in the cash on hand in another bank was only three million eight hundred thousand-odd dollars, were you not in error?

Mr. THOMAS. The First Wayne National Bank, fiduciary account, $3,876,000.

Mr. PECORA. How about the deposit in the fiduciary account in the Detroit Savings Bank?

Mr. THOMAS. That is right. That was not included.
Mr. PECORA. That makes $4.376.130.21 as the actual amount?
Mr. THOMAS. Yes,

Senator COCZENS. So, in effect, you did not have the money to pay the Ford Motor Co. certificates of deposit on the date of presentation!

Mr. THOMAS. Before answering that I would like to have a statement of condition on the date

Mr. PECORA. I will give you what purports to be a photostatic reproduction of statement of condition as of December 31, 1932, taken from the general journal of the Detroit Trust Co.

Mr. THOMAS. That is the one I have. I mean, the date the certificates were paid.

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