Evening star., 1933-12-21
Justice Agents Hear Reversal
of Statement as to mo
Bills Payable"
PEC0RA QUESTION NOT
UNDERSTOOD, HE SAYS
Former Head of Guardian Group
of Michigan Corrects Asser-
tion Involving Practices.
By the Associated Press.

By the Associated Press
With two Justice Department agents
among the spectators, Robert o. Lord,
former head OF the Guardian group of
Michigan banks today repudiated his
testimony yesterday before the Senate
Banking Committee that these banks
at times had reported no bills payable"
when the reverse was true.
AT the opening of today's session.
Lord asked to change his previous testi-
mony that the banks made such a re-
port in their public statements when
there actually were bills payable.
Lord said his answer should have
been ''unqualfedly no." rather than
yes" to a question by Ferdinand
Pecora, committee counsel.
Pecora had asked whether a device
was used Ito enable the banks to show
no bills payable despite the fact there
were bills payable"
ITO the best Of my knowledge and
belief there were no bills payable on
December 81. 1880" Lord said, referring
TO date when the banks showed no
bills payable
Question Not Understood.
He added that he had given "an in
correct answer, not understanding the
question"
As a result of what Lord said yes
terday the criminal division Of the
Justice Department sent the two repre-
sentatives to the hearing to learn just
how the Detroit banks avoided show
ing the bills payable.
The Justice Department representa-
tives we're John S. Pratt, special as
sistant to the Attorney General in the
accountant. They refused to discuss
the case.
Before Lord testified today Pecora
described the process as window dress
ing" by the banks, but refused to
comment on whether it constituted
criminal violation of the law.
Clearing Up of Bills
Lord again testified today that the
banks had attempted to clear up all
bills payable before the controller Of
the currency's call for condition reports
In order to do this, he said, the
banks In the group outside Of Detroit
maintained accounts with the Guardian
National Bank OF Commerce of Detroit
The State bank would then give the
Detroit bank certificate OF deposit
he said, providing funds to pay the
bills
Thus, it was brought out, the De
troit bank, instead of holding bill
payable against the State bank: would
hold a certificate showing it held
deposit In the other institution.
Pecora asked If 1t was the policy
of the group to so adjust its affairs
before the bank call that the reports
would show no bills payable.
1T was our policy to have as small
an amount of bills payable as possible,
Lord replied.
Appears as Deposit.
Pecora had evidence that in some
cases where one bank in the system
owed another, instead of showing the
item as a bill payable" the creditor
would be given a certificate of deposit
for the amount, so that it showed up
in the bank statement as deposit in
stead of a debt of the other kind
Likewise, by this method, the cred
itor bank was able to show the item
under due from other banks" in
stead of accounts receivable" the in
vestigators said. Pecora said substan-
tial amounts were involved in some
cases.
Lord said that sometimes after the
statement was issued, the bookkeeping
process was reversed and the original
status of the loans re-established.