The Washington times., 1934-01-04
LORD DEFENDS
COVERING UP
Of DEFICITS .
Stockholders Interested Only
In Assets, Banker Tells
Senate ProberS
BY International News Service
Charged with "flagrant conceal.

BY International News Service
Charged with "flagrant conceal
nent Of losses in annual reports
to stockholders, Robert Owen
Lord, president of the crumbled
half-billion-dollar Guardian De.
troit Union group Of banks, to-
day told the Senate Banking and
Currency Committee:
"The stockholders were more
interested in the assets of the
bank units than in the fact
that the group, as a holding
company, showed a deficit in
$780,"
Losses Not on Reports
Lord, called to the stand for
further grilling by Ferdinand
Pecora, counsel to the committee,
admitted annual statements for
the years 1880, 1881 and 1882 did
not show the holding company
was losing huge sums of money.
He asserted, however, that the
losses were written into the re-
ports without being designated
as losses of the controlling COM
pany.
When he failed in an effort to
discover where such losses had
been covered in the reports, Lord
said that last week he had con-
suited with William B. Bonthron,
Detroit manager of Price, Water
house and Company, noted firm
Of public accountants. Lord said:'
'Mr. BOnthrOn told me that
/ had been wise to order the
annual reports drawn in the way
they were."
Asks BOnthrOn to Testify
Pecora then shouted at the wit
ness:
"Then those reports were
drawn up that way at your Or
ders, and not the way your
auditors might have wished.
"And another thing, I'd like
Mr.. BOnthrOn to come down
here and tell this committee in
person that he approved the
way you concealed losses Of the
group in those reports to stock
holders. He has my heartieSt
invitation to appear"
The committee summoned Ern-
est Kanseler, chairman of the
board Of the Detroit Union Group,
Incorporated, to appear later in
the day as a witness.
Missing Report Sought
Kanseler was to be asked what
became of the groups 1882 an
nual report, which. according to
minutes Of the annual meeting
held on January "a, 1888, was ap-
proved for distribution to stock
holders.
The report, which declared "the
condition of the unit banks is
better than ever before" never
was mailed out. Lord insisted
the minutes of the meeting were
in error in declaring it had been
finally approved by the directors.
Lord was questioned about the
number of banks operated by his
holding company which dipped
into capital and surplus in 1880 to
enable the holding company to
declare dividends and meet obn-
cations.
He said six Of the unit banks
began this practice in 1880 and
three paid $141,900 from such
funds to the holding company.
Practice Is Common
When Pecora asked the witness
II this was not "trying to lift your
self with your bootstraps." Lord
declared it was a common prac-
tice of banks when public conf
dence" in them was endangered.
Lord tried to get permission to
read into the record a list Of
many of "the largest banks" of
this country which have INDUCED
in this practice frequently during
the past few years. The COM
mittee refused permission.
Curb on Examiners Asked
Prompt request for legislation
prohibiting acceptance of a bank
lob by any national bank exam
iner for two years or more after
his resignation from government
service will be made in Congress,
Senator Couzens (R) Of Michi-
gan announced today.
The Senator's decision to ask
for this provision in the forthcom-
ing banking bill resulted from
testimony he heard yesterday as
q member of the Committee on