14. Copy of annual report, 1931, filed with Michigan Securities Commission by Detroit Bankers Co., 5183____ 15. Memorandum March 7, 1932, Verhelle to Ballantyne, 5185_ Page 16. Papers and documents turned over to committee by the witness: 16-96. Marked for identifications only, 5185-- (**) 91. A letter from H. G. Hentschell to Detroit Bankers Co., dated January 25, 1932, 5210__. 5211 92. A letter from the comptroller of the Detroit Bankers Co. to R. G. Hentschell, dated February 10, 1932_ 5211 93. Letter February 16, 1932, Hentschell to Verhelle_.. 5215 5216 95. The document referred to, heretofore marked for identification as (*) (*) 5271 100. Memorandum dated May 28, 1932, from Joseph F. Verhelle to John Ballantyne, 5280-- 66 101. Pamphlet referred to and identified by the witness, entitled The 105. A number of statements, verified by Mr. Van Every, auditor of the 106. Set of statements signed by A. J. Colvin and by Mr. Van Every, certifying to certain facts with regard to the issuance of participating mortgage certificates, 5325__ 5312 5312 (*) 5315 5316 5305 (*) 5375 107. Tabulation headed Detroit Trust Co., Certificates of Participation as of January 1, 1934, 5328_. 5375 108. Report or statement dated December 20, 1933, signed by F. C. Van Every 5335 109. Letter dated September 18, 1931, from R. A. Carroll, examiner, to Detroit Trust Co--- 5336 110. Letter, Thomas to Reichert, October 27, 1931. 5338 5377 112. A photostatic reproduction of a certificate of deposit issued by the Detroit Trust Co., dated August 8, 1931, payable to the First National Bank in Detroit for $1,700,000, 5351_-. 113. A photostatic reproduction of a certificate of deposit issued by the Detroit Trust Co., dated August 8, 1931, payable to the Detroit Savings Bank for $300,000, 5351- 5377 5377 114. A letter dated January 11, 1934, from William J. Thomas, treasurer 5352 5354 116. A carbon copy of a letter dated August 2, 1932, addressed to the Department of Banking, Lansing, Mich., by W. J. Thomas, treasurer of the Detroit Trust Co____ 5355 117. A memorandum of Detroit Trust Co., of certificates of deposit held by the First National Bank in Detroit, 5358 5377 118. Photostat copy of statement from files of the Detroit Trust Co., dated June 1, 1933, identified by the witness Stone, 5360__-. (*) (*) Not printed because of length or for reasons given in text. (**) Some of these latter appear under different exhibit numbers as, for instance, no. 16 appears as regular exhibit no. 91. 119. Photostatic copy of certificate of deposit dated August 2, 1929, pay- 120. Photostatic copy of certificate of deposit dated August 13, 1928, pay- Page 5377 5377 5377 122. Photostatic copy of certificate of deposit dated September 11, 1929, payable on demand to the Ford Motor Co. in the sum of $1,000,000, 5360 5377 123. Photostatic copy of certificate of deposit dated December 29, 1932, payable on demand to the First National Bank of Detroit in the sum of $2,500,000, 5360___ 124. The copies of four certificates of deposit issued by Detroit Trust Co., 5377 5377 5390 5390 127. Portion of subpena duces tecum _ _. 5427 128. Statement of loans. 5427 129. Statement of purchases and sales of Detroit Bankers stock by Mr. 131. The witness' copy of the private and confidential memorandum made by Mr. Verhelle and addressed to Mr. Mills, as chairman of the board of the First National Bank, dated May 18, 1932, 5439_____ (*) Not printed because of length or for reasons given in text. 5428 5449 (*) STOCK-EXCHANGE PRACTICES WEDNESDAY, JANUARY 24, 1934 UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON BANKING AND CURRENCY, Washington, D.C. The subcommittee met at 10 a.m., pursuant to adjournment 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. The CHAIRMAN. The subcommittee will please come to order. Mr. Pecora, who will you have first? Mr. PECORA. Mr. Chairman, this is the beginning of the hearings in connection with the Detroit Bankers Co. I will call Mr. Ballantyne as the first witness. The CHAIRMAN. Mr. Ballantyne, will you please come forward to the committee table, stand, hold up your right hand, and be sworn? You solemnly swear that you will tell the truth, the whole truth, and nothing but the truth, regarding the matters now under investigation by the committee. So help you God. Mr. BALLANTYNE. I do. The CHAIRMAN. Just take a seat there opposite that microphone on the committee table. TESTIMONY OF JOHN BALLANTYNE, 1750 BALMORAL DRIVE, DETROIT, MICH., PRESIDENT OF MANUFACTURERS' NATIONAL BANK OF DETROIT AT THE PRESENT TIME Mr. PECORA. Mr. Ballantyne, will you give your full name, address, and business or occupation? Mr. BALLANTYNE. My name is John Ballantyne. I reside at 1750 Balmoral Drive, Detroit, Mich. My occupation at the present time is president of the Manufacturers' National Bank of Detroit. Senator COUZENS. Mr. Longley, are you attorney for Mr. Ballantyne? Mr. LONGLEY. Yes, sir. Mr. BALLANTYNE. How was that, Senator Couzens? Senator COUZENS. I asked Mr. Longley if he was your counsel. I thought he was counsel for the Guardian-Detroit people. Mr. BALLANTYNE. Well, I have new counsel. Mr. PECORA. Mr. Ballantyne, were you connected with a company known as the "Detroit Bankers Co."? Mr. BALLANTYNE. Do you ask, was I? Mr. PECORA. Yes. Mr. BALLANTYNE. Oh, yes. Mr. PECORA. When was that company organized? Mr. BALLANTYNE. It was organized, or rather was formed on January 8, 1930. Mr. PECORA. Under the laws of the State of Michigan? Mr. BALLANTYNE. Yes. Mr. PECORA. Was it organized as a holding company to acquire, hold, and own stock of banking institutions and other corporations? Mr. BALLANTYNE. No. Well, now, I would have to know the law on instruments to be able to answer that, and I do not know the law. Mr. PECORA. Well, you can tell me whether Mr. BALLANTYNE (continuing). As a matter of fact, Mr. Pecora, at that time, let me say, so you may have the genesis of this matter: This operation was discussed for years almost before I knew anything about it. Mr. PECORA. Do you mean that the organization of the company was discussed for a year before its actual incorporation? Mr. BALLANTYNE. Oh, I think so, all of that time. Mr. PECORA. Did you participate in any of those discussions? Mr. BALLANTYNE. No; I didn't know a thing about it until the fall of 1929. Mr. PECORA. The fall of 1929 was prior to the incorporation of the company, wasn't it? Mr. BALLANTYNE. Yes. Mr. PECORA. Did you from that time up to January 8, 1930, participate in any discussions or conferences with regard to the formation of this company? Mr. BALLANTYNE. To some extent; yes. Mr. PECORA. With whom did you have such discussions, Mr. Ballantyne? Mr. BALLANTYNE. Oh, I think there were meetings held of the proposed participants in it. Mr. PECORA. Who were they? Mr. BALLANTYNE. At that time Julius Haass was the chief party in it; and Emory Clark, and Dwight Douglas, and I think Ralph Stone, and Mac Browning, and Palmer Livingstone, and Mr. Chittenden, and I think John Woody. I believe those were the men, principally, who discussed the matter then. Mr. PECORA. Now, Mr. Ballantyne, in the course of those discussions, or as a result of those discussions, what did you learn to be the purpose for which the Detroit Bankers Co. was created? Mr. BALLANTYNE. Primarily to avoid-well, to get rid of unwise competition. To cut down the number of branches in Detroit. Mr. PECORA. To cut down the number of branches of what? Mr. BALLANTYNE. The number of branches of banks. There probable were three-hundred-and-odd branches at that time, or 360-am |