Evening star., 1933-08-18
CRIMINAL OFFENSE
LAID TO DETROIT
BANK BY COUzENS
Tells Prober Union Guardian
Jockeyed ChiIdren's Fund
Out of $500, 900.
DEPOSITS TAKEN DESPITE
INSOLVENCY, HE ALLEGES
Says Examiners Poor Judgment
Will Cause Loss of Millions in
First National Loans.
BY the Associated Press.

DETROIT. August Ex-senator
James Couzens Republican, of Mich
igan, today unleashed bitter criticism
of Detroit banking methods preceding
the Michigan bank holiday, demanded
an investigation of one bank transac-
ton with a view to criminal proceed
hgs, and charged in another statement
that poor Judgment of Federal bank
examiners" will cause a loss of many
millions in loans made by the closed
First National Bank of Detroit
Testifying for the second day be-
fore the one-man grand jury investigat-
ing the closing of the First National
and the Guardian National Bank OF
Commerce. the senior Michigan Senator
declared that while the condition OF
Detroit banks may have been known
to the Government, it was considered
question of judgment by Federal Of
f1cials whether to wait for prosperity
to return or insist on the letter of the
law and close the banks" That, he
said, was mot an easy question to an
swer"
AT hearings before the Senate Bank
ing and Currency Committee the con-
troller himself testified that he had
not enforced the law because he was
waiting, hoping there would be a re-
covery," said Couzens.
Investigation Asked.
Lashing out at banking methods In
Detroit, the Senator fatty asserted that
st know of no other city in the whole
world where there was such an orgy
of pyramiding of corporations and the
fixing of fictitious values and earnings" ;"
He charged the Union Guardian
Trust Co., the impending closing OF
which has been given as the reason Tor
the declaration of Michigan's banking
holiday February IA, had "jockeyed the
100000" and asked Prosecutor Harry
S. Toy to investigate with a view to
criminal proceedings. The chlldrens
fund. established in 1928 by the Sen
ator. has an endowment of $l0,000,000,
the income of which is to be spent
solely for crippled children of the State.
The trust company, said the Senator,
sold the fund 100000 worth of par
ticipation certificates" based on real
estate mortgages, but pleaded tenn
porary stringency of funds when pay
ment became due and asked the fund
management to take certificates OF de-
posit" instead.
Criminal Offense Charged.
He said the certificates had no col
lateral security behind them and only
100000 was caShed by the fund. The
remainder, he said, was not obtained
before the trust company closed and he
said he counted the 100000 'as prac-
tically a total loss"
Why" exclaimed the Senator, the
Union Guardian Trust Co. accepted de-
posits for 20 days after its officials knew
it was insolvent. 1t is my understand
ing that that is a criminal offense."
Turning to the First National Bank,
Detroit, CouzenS read from memo
which he said had been taken from the
banks books, and declared on the day
the bank closed its books showed more
than S6,000,000 loaned directly to di-
rectors; loans of more than S2,600,o0O
on which directors had signed as in
dorsers; loans totaling more than
81 400, 900 to employees, and loans total
ing more than S11 100000 to corpora
tions in which directors of the bank
We're interested.
The total of these loans-s22.190,0 600
will be lost to very great extent, due
to the poor Judgment of Federal bank
examiners" he said.
Reviews Treasury Policy.
Discussing the Governments policy
toward banks, Couzens said:
"All during the depression the ad-
ministration was in the hands of the
Republicans All during that time it
was under the control of my good
friend Mr.. Mellon and Ogden L. Mills"
Did you say your good friend Mr..
Mellon?'" asked the prosecutor, smiling.
II said it with smile" replied Sena-
tor Couzers. They were debating the
policy of the Treasury Department. All
the time they were violating the law
in respect to their attitude toward ma
tional banks Senator Carter Glass was
holding subcommittee hearings in 1882
and got testimony from former Con-
troller Pole and Await, his deputy, that
many banks were insolvent, but were
not closed because that would have
wrecked the communities.
This outraged Glass, who is very
able and honest man. I will read
~, Dooo Co1,y,,n