same shall be voted at all elections of directors for a person or persons who at the time of such election shall be the holder of a certificate for ten (10) shares of said Trustee Stock issued in manner and form as provided in Paragraph "11" hereof and each of the parties hereto agrees to vote accordingly the said shares at each and every such time held by him. Each Trustee shall have full right to vote for himself for Director.

IV

In the event of the death, resignation or inability to act or removal of any of the parties hereto or of any successor appointed as herein provided the vacancy in the Trustees hereunder thereby caused shall be filled on nomination by the President of Detroit Bankers Company by and with the approval of a majority of the then remaining Trustees hereunder. Except upon the unanimous approval of all the then remaining Trustees such nomination shall be made from among the then surviving persons who were the depositors prior to incorporation of said Detroit Bankers Company for exchange for shares of Common Stock thereof of shares of the capital stock of the same Bank or Trust Company as the party who is to be succeeded by such nominee. For the purpose of this paragraph the several Trustees shall be deemed to have been selected from the following institutions respectively, namely:

the spirit of the foregoing being to perpetuate a proportionate representation of each of the foregoing institutions or their successors during the period of the trust. Upon approval of a nomination as aforesaid the person so approved shall become a party hereto by signing on the counterpart hereof in the possession of the Depositary hereunder or signing an independent writing making appropriate reference hereto and having the effect of making such person a party hereto and delivering such writing to the Depositary hereunder. The deposited Trustee shares of the person who shall have so then vacated said trusteeship shall then be surrendered to the Company on payment by said successor therefor of the issuance price thereof specified in the Articles of Association of said Detroit Bankers Company and a new certificate shall then be issued in the name of such successor with the same addition thereto as provided in Paragraph “11” hereof. Thereupon such successor shall without any other or further act by any party become and be successor Trustee hereunder with like force and effect from that time as though an original party hereto.

V.

Any Trustee may be removed at any time at a meeting of the Trustees called for that purpose. At least five days' notice in writing of such meeting shall be given to each Trustee including the one whose removal is to be acted upon. The Notice shall specify clearly the purpose of the meeting. Such removal shall be effected only by resolution adopted at such meeting or an adjournment thereof by the vote of at least five-sixths of the whole number of Trustees. It shall not be necessary for such notice and resolution to assign any cause or reason for such removal but it shall be sufficient that such is the will of the Trustees as evidenced by their vote on such resolution. The vote on such resolution shall be in person and not by proxy.

VI

The President of Detroit Bankers Company shall be Chairman of the Trustees. The Trustees may select and remove from time to time a Secretary (Who may but need not be a Trustee) of the Trustees. The Trustees may from time to time adopt and change such by-laws and regulations not inconsistent herewith for the procedure and government of the Trustees as the Trustees may deem proper.

VII

The full legal title to all shares of said Trustee Stock represented by each certificate therefor shall be vested in the person in whose name said certificate shall have been issued as Trustee as aforesaid and such person shall have full right to exercise all rights, powers and privileges of absolute owner of such shares subject only to the trusts herein agreed and declared. No holder of Common Stock of said Detroit Bankers Company shall have any title or interest in said Trustee shares but shall have only the equitable right to have the trust herein agreed and declared and each and every of the terms, conditions and provisions hereof executed and performed according to the intent and meaning hereof. The acceptance of the position of Trustee by any person now or hereafter shall be deemed conclusively an obligation on his part to perform and carry out the provisions hereof.

This Agreement and Declaration of Trust shall continue in full force and effect so long as said Trustee shares shall continue to be outstanding and shall not be modified or changed in any particular other than by the unanimous agreement of all the parties hereto and their successors respectively.

IN WITNESS WHEREOF the parties have hereunto set their hands and seals the day and year first above written.

IN THE PRESENCE OF:

STATE OF MICHIGAN,

County of Wayne, ss:

A.D. 1929, before me, a Notary Public in and for said

known to me to be the persons named in and who executed the foregoing Instrument, and severally acknowledged that they executed the same freely and for the intents and purposes therein mentioned.

My Commission expires

Notary Public, Wayne County, Michigan.

COMMITTEE EXHIBIT NO. 4, JANUARY 24, 1934.

(This exhibit consists of a copy of certificate of trustees' shares, Detroit Bankers' Co., and is not printed.)

COMMITTEE EXHIBIT NO. 5, January 24, 1934

(This exhibit consists of a copy of certificate of common stock, Detroit Bankers' Co., and is not printed.)

STOCK EXCHANGE PRACTICES

THURSDAY, JANUARY 25, 1934

UNITED STATES SENATE,

SUBCOMMITTEE OF THE

COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The subcommittee met at 10 a.m., pursuant to adjournament 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. Senator COUZENS (presiding). I desire to make an announcement. Chairman Fletcher is in conference with the members of the House Banking and Currency Committee this morning and requested me to call the meeting to order and go on with the hearings until he can get here.

The subcommittee will now come to order. Mr. Pecora, you may proceed.

Mr. PECORA. Mr. Chairman, I will ask Mr. Verhelle to take the stand. But you may remain where you are, Mr. Ballantyne. Mr. BALLANTYNE. All right.

TESTIMONY OF JOSEPH F. VERHELLE, GROSSE POINTE, MICH.

Resumed

Mr. PECORA. Mr. Verhelle, at the conclusion of the hearing yesterday afternoon you and Mr. Ballantyne were being questioned with regard to the disposition that was made of the special cash dividend one one and one-half million dollars that was declared by the First National Bank in Detroit on December 23, 1931. Do you recall that, Mr. Verhelle?

Mr. VERHELLE. Yes, sir.

Mr. PECORA. You undertook, when left the stand yesterday afternoon, to acquaint yourself with the details of the disposition of that fund. Have you done so?

Mr. VERHELLE. I tried as well as I could, by a long-distance call. And, incidentally, Mr. Pecora, I should like a little information as

to who will cover the expense in regard to any action taken to secure data upon which to answer such questions.

Mr. PECORA. Suppose you answer the question propounded to you, and we will take up later the other matter. That has nothing to do with this record.

Mr. VERHELLE. Well, I was not able to obtain

Senator COUZENS (interposing). I did not quite get that request made by the witness. Will you please repeat it?

Mr. VERHELLE. I should like to know how far I can go in obtaining information of that kind, because it is quite difficult to get it, and there are, apparently, many factors involved, and in connection with this particular question I did not quite get the information.

Mr. PECORA. Do I understand that it was necessary for you to telephone to Detroit, and what else?

Mr. VERHELLE. It was necessary for me to do that; yes.

Mr. PECORA. You may proceed with the information you have at hand, and we will decide the other matter later.

Mr. VERHELLE. The only information I have at hand is that at one time, toward the latter part of December, there was specifically a total of 32 million dollars in the hands of the Detroit Bankers Co., either in the form of certificates of deposit, or certificates of deposit and other instruments, or other instruments; that those 311⁄2 million dollars consisted of a 12-million-dollar dividend declared by the First National Bank, a 2-million-dollar liquidating dividend declared by the First Detroit Co.; that the First National Bank dividend was paid prior to the payment of that First Detroit Co. dividend, and that at the very end of the year both had been paid. In other words, both were paid prior to January 1, 1932. Now, that is

Mr. PECORA (interposing). Well, the special dividend of 11⁄2 million dollars was declared on December 22, 1931, and was paid the following day, December 23. And what you call the special liquidating dividend of $2,000,000 paid by the First Detroit Co., was paid on December 28, 1931. Incidentally, that special liquidating dividend was not a special liquidating dividend of $2,000,000, as you undoubtedly know, Mr. Verhelle.

Mr. VERHELLE. No; I do not.

Mr. PECORA. It was the proceeds from a special dividend of 30,000 shares of the capital stock of the First Detroit Co.

Mr. VERHELLE. Well, that is what I meant.

Mr. PECORA. And 20,000 of which shares were a few days thereafter surrendered for cancelation, and that was how the $2,000,000 was paid to the Detroit Bankers Co. You know that, don't you? Mr. VERHELLE. Yes; it reduced the invested capital from substantially $4,000,000 to $2,000,000.

Mr. PECORA. Well, will you please refer to this matter on the basis of the facts and not as a special liquidating dividend of $2,000,000, which you know it was not.

Mr. VERHELLE. Well, I am not quite certain what it was, then. Mr. PECORA. You were the comptroller of the Detroit Bankers Co.. weren't you?

Mr. VERHELLE. Yes, sir.