Evening star., 1934-01-12
BANK ACTION DELAY
IS LAID TO HOOVER
Witness Says Fear of "Rock-
ing Boat" Caused U. S.
to Defer Move.
Continued From First Page.l

about reopening the Union Guardian
Trust Co.. and the examiner said:
why 1t would have taken -Houdini
to open that bank"
But he's Dead" Pecora observed.
SOS that bank" Leyburn retorted.
Ferdinand Pecora, committee counsel,
opened today's session by questioning
Ford briefly about the Ford Motor
Co. purchase Of Government securities
for four days at the end of 1882, but
then turned to the bank operations.
Pecora asked about transaction in
July, 1882, when the Guardian group
borrowed $2,500,000 from the Conti-
mental Illinois Bank & Trust Co. of
Chicago on Ford's Endorsement. This
was part Of $12,000.000 in credit ex-
tended by Ford to the group when 1t
was attempting to continue operation.
The questioning was delayed as Ford
and his attorney. Louis Colombo, ex-
amined q document relative to the
transaction.
Assets Of the group banks were being
criticized by the national examiners,
Ford said, and the money was used to
take out the criticized assets.
Contract Concerning Debt.
ACuQ tliC COibld dCb, RnONldhlt
for the group to assume a debt Of s4,-
100000 by the Bankers Trust Co. Of
New York to the Guardian Detroit Co.
and for the former to extend an addi-
tional loan Of s3,000,000 to the latter.
From the minutes Of the groups
board, Pecora then read authorization
for the directors to borrow up to s15,-
000, 900 to lift out criticized assets of
mpmher hanks
Dropping this phase Of the subject,
Pecora pointed out the group had ap-
parently been so much in need Of funds
at the end Of 1890 1t had borrowed
$5,50000o and yet paid substantial
dividends" In 1891.
did YOU sanction those dividends?"
he asked.
"I don't recall actually sanctioning
them" Ford replied, but knew they
were being paid and / didn't criticize
them"
Have you a good memory?" Pecora
asked
It think so,' Ford said
You haven't recalled most of the
important things I've asked you about, u
Pecora scolded.
"I'm sorry" Ford replied. adding that
he had many other transactions daily
to remember.
Questioned by Pecora, Ford said the
Ford Motor Co. paid the S4,500. 900 and
50. 500, 900 loans on February 10, 1888
four days after the bank holiday in
Michigan He added he still held these
obligations against the group.
In addition. Ford testified the Ford
Motor Co. extended a loan OF SO 500.
600 to the Union Guardian Trust Co
in December, 1882.
Fords Sole Stockholders.
While Pecora examined some papers
Ford explained to Chairman Fletcher
that he and his parents were the sole
stockholders in the Ford Motor Co.
The $3.500000 loan was extended
without collateral Ford said, and has
not been repaid. He added he did not
know whether any interest had beer
paid.
Pecora questioned Ford about nego-
tiations for help from the Reconstruc-
ton Finance Corporation early in 1888
Ford said Ernest B. Kanzler chair
man of the group board and his wife's
brother -in-law. discussed the situation
with him, adding that he concurred ir
the plan to seek r. F. G. aid.
The Union Guardian Trust Co. vas
in the worst condition. he said, and
the plan was devised to put all the
banks in good shape.
Ford said he was informed of The
condition of the various banking units
but not in detail.
Did you ever attend a meeting o1
the directors of the group at which tht
condition of the banks was disCussed?'
Pecora asked.
IT don't remember" Ford replied. ex'
planning his information came from dis
cussions with oficers Of the group.
He said he was informed the Unior
Guardian Trust Co. was in frozen
condition.
Other Units Forgotten.
Ford said he could not remember
which other units he was told were II
bad condition" but thought they in
cluded the banks at Flint and Lansing
When it was decided to ask fol
enough from the r. F. C. to take care
of all the units. Ford said, the loar
figure ran to about 100000, 900, bu'
later 1t was reduced to SAL 100000 Of
S45, 600. 900
All the remaining assets were Offered
for the loan, Ford said, but they were
not sufficient.
The deficiency. he added under ques.
tioning, was about 100000. The col.
lateral first offered. he said, was moi
considered by the r. F. c. Of "sufh'
cient value "
Ford said he was asked to supply the
collateral deficiency by subordinatins
the $7,500,000 of Ford deposits in th'
Union Guardian Trust Co.
Later a suggestion was made, he said
that he supply additional new capita
and also subordinate the deposits.
I'VE decided we wouldn't do It," For'
said, referring to the additional cap
ital. I'VE didn't come to definite
understanding on the subordination
but it was generally understood W
would do that"
Ford said they were asked to suppl,
5000 900 as capital for a mortgag
company to make the loan from tn
pecop sfruction Finance CORPORATION