Evening star., 1933-12-22
Shows Three Years Deficit.

|
$3.50, 900; 1e32-s714.ooo.
Lord said that although he had not
signed his name to the 1882 report, he
did not doubt its accuracy.
He said the signature of C. H. Haber-
korn, jr., as secretary of the group, was
also not written by Haberkorn.
The witness explained he believed the
original report was in Lansing and that
the committee had obtained the copies
| from the commissions Detroit head
! quarters.
Were any of these deficits reported
to stockholders" Ferdinand Pecora,
committee counsel asked.
I would say not" Lord replied.
why not?"
The figures for the annual reports
and for that report were prepared by
the groups accounting department. I
| had no reason to question the accuracy
Previous evidence had disclosed that
during the three years the bank holding
company, now in receivership, paid divi-
dends of more than 100000. They
were by years:
1930-S4 $4,000.
1931-$3, ,085 900.
1932-S375, 900.
The losses shown In the commission
reports were after the dividends had
been declared.
Senator Couzens, Republican, OF
Michigan. read from the report to stock
holders for 1880, saying:
Your company earned more than
sufhcient to pay during 1880 the regular
dividend of So and an extra dividend
of S1.20."
Couzens Reads Statement,
II assume that is literally correct"
Couzens added, but it is clear that you
did not sustain a loss, whereas the fact
is you did,
CouzenS also read a statement from
the 1881 report to stockholders giving
the net earnings of the bank and trust
company subsidiaries of $2,887,000 be-
fore certain deductions.
There is no reference to the fact
| that the group as whole showed any
deficit" Couzens said. If were read
ing the report as stockholder woulo
under no circumstances understand you
had sustained loss of S288000.
Lord asserted the statement to the
| stockholders was true" pointing out
that the report did not include opera.
tions of non-banking subsidiaries.
1T was half truth" Pecora asserted
1T was not intended as half truth,
the banker retorted.
Pecora added that in his opinion the
report was "a studious concealment,'
of the deficits from the stockholders.
Il would certainly say not" Lord re.
piled.
Chairman Fletcher suggested as to-
days hearing began that the dividend
Michigan banks was designed to give
the public an exaggerated" idea of its
strength.
His remark was made during cross
examination of John N. Stalker
former president of the Union Guardian
Trust Co., about the payment of a
per cent dividend in 1880 when it wa;
earning only per cent.
Continued to Buy Stock"
Fletcher suggested the dividend policy
was designed to impress the public
with the solid financial position" of the
group and enhance the value OF the
stock
It don't believe single director be-
lieved the strength of the group was
being overstated," Stalker replied.
81 didn't think we gave an eXag-
gerated view to the public. continued
to buy the group stock myself"
Stalked denied the board of directors
of the trust company had ''at any time
lost its right of independent action"
Correspondence before the committee
showed that Stalker protested the group
suggestion of q S per cent dividend.
Earlier Stalker told the committee
he knew of no banking system without
evils"
What were the evils OF this kline
of group banking?" he was asked.
while failure is less likely to occur
with group strength behind a bank,
Stalker said, when it does occur it il
likely to be disastrous"
Questioned about the trust company
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