Evening star., 1934-01-11
EDSEL FORD TELLS
SENATORS OF HUGE
LOSSES IN BANKS


Continued From First Page.)
under the laws of the State of Michi.
gan?" Pecora asked.
No law levies such tax" Ford re.
piled. There was no tax involved, it i:
my understanding.
You better ask your counsel" Pecora
suggested with a smile.
Confers With Attorney.
After a conference with his attorney
attorney general Of Michigan that nc
Pecora suggested the State personal
property tax was involved, but Ford dis
sented.
He said he did not have the attorney
generals opinion with him.
Ford explained the transaction was
designed to show ''diversification" in
the annual statement and because Eve
didn't want to show so much cash; they
usually had big statement in the
papers about it.
Ford testified in a low but easily
audible voice He sat in the same wit
ness chair near the middle of the table
formerly occupied by such noted figures
as J. P. Morgan and Albert H. Wiggin
Before Ford testified, Alfred P. Ley
burn chief national bank examiner, told
the Senate investigators the bank crash
would have come in 1880 instead OF
1888 If leniency had not been ordered
by J. W. Pole, controller Of the cur
rency in the Hoover administration
After the investigators had produced
number Of orders issued by Pole di-
recting leniency In examining banks,
Leyburn said he believed the crash
would have been less serious if it had
been allowed to come in 1880.
The evidence disclosed that one OF
Poles orders told examiners to 'diSre-
gard market depreciation in bonds not
in default"
ITO what extent have events justi-
fed that policy?" Senator Adams,
Democrat, of Colorado, asked.
If it hadn't been followed" Ley
burn said, I'VE would have had the
crash in 1880 instead of 1888. 1t had
to come"
Ford Center Of Interest.
As the committee resumed its in
vestigation of the Detroit banks. the
summoning of the younger Ford re-
viVed interest in the inquiry and drew
a crowd from the airmail investiga-
ton a few doors down the Senate Office
Building corridor.
Senator Couzens, Republican. OF
Michigan, entered the room and walked
over to shake hands with Ford. Cou-
zens made millions in the Ford COM
pany. but later broke with Henry Ford
and retired.
Edsel Ford was accompanied by a
group of attorneys headed by Louis
Colombo. counsel for the Ford Motor
Co.. and a number OF Ford detectives
He chatted with associates while walt
ing to be called.
Stenographers from nearby Senators
offices crowded into the room to look
at the millionaire Detroiter.
Dressed in gray double-breasted
suit with a gray tie and shirt, Ford ap-
peared unconcerned by the commotlon
he caused.
Elder Ford Not to Be Called.
Pecora. who arrived late, announced
at the outset the committee did not
plan to call Henry Ford.
The Younger Ford took a seat among
the spectators as the committee began
questioning Leyburn, chief national
bank examiner.
Pecora questioned Leyburn, who was
In charge Of the Detroit area, about
the controller of the currency's lnStruc-
tions for leniency in dealing with the
banks.
He read a telegram from Pole to
Ieyburn. late in 1881, instructing leni-
ency in the appraisal of bank securities.
II Urged examiners to use every ef1ort
to encourage and sustain the morale" OF
bankers.
troller meant to "give them the break
in appraiSing securities as long as sooo
stocks were held and not cats and
He defined "cats and dogs" as pro-
motion mining stocks, second or tnlro
mortgages, or other undesirable securi-
ties"
Orders Depreciation Disregarded.
Pole. dated December 18, 1881, instruct.
inr all bank examiners to "dlSregaro
market depreciation On bonds not In
In a confidential letter he told .ex-
aminers the collapse OF market prices
had reduced prices OF sound bonos TO
distress levels" far out OF line with
real values.
The following July Pole wrote ex-
aminers that some of them apparently
had not appreciated" the instruc..
tions previously given and again urged
leniency, particularly with reference TO
collateral loans In excess OF collateral
held.
Leyburn said his examiners had fol-
lowed the controllers instructions with
reference to the Guardian banks.
Tells Of Near Riot"
Ford heard Leyburn mention his
name as one Of the directors present
when Bank Examiner walker warned
the group officials they had bought q
number of banks when they knew they
were rotten"
He said the remark almost caused a
"riot" and was withdrawn to restore
peace.
Leyburn said Michigan, in declaring
its bank holiday, "had Just beaten some
other States to the draw"
He cited the Guardian Trust Co. and
the Union Trust Co. of Cleveland, the
First National Bank Of Fort Wayne, the
Fletcher-American of Indianapolis and
the old First National of Fort Wayne
as examples Of banks that had about