WALTER H. SEYMOUR, Senior Examiner. This report based upon preliminary report and complete investigation by Committee Examiner C. H. Horton.

Mr. PECORA. Now, Mr. Chairman, there is another report prepared by Mr. Seymour and entitled "The Guardian Trust Co.-Officers' and Directorate's Representation in other Concerns." The only copy of that report which we had here in Washington is now in the hands of the Government Printing Office. Have you seen that report, Mr. Meehan?

Mr. MEEHAN. Yes, sir.

Mr. PECORA. Do you know it now to be in the hands of the Government Printing Office?

Mr. MEEHAN. I do, for I sent it to them.

Mr. PECORA. Having sent it do you recognize it to be a copy of another report made by Mr. Seymour as a result of his investigations conducted under your immediate supervision?

Mr. MEEHAN. Yes, sir.

Mr. PECORA. Mr. Chairman, I ask that that report be received in evidence, together with the exhibits therein referred to.

Senator CoSTIGAN. The committee will receive in evidence the report and exhibits offered by committee counsel, with the explanation he has made.

(A report entitled "The Guardian Trust Co.-Officers' and Directorate's Representation in other Concerns", together with the exhibits referred to therein, both now being at the Government Printing Office, were received in evidence and are to be marked "Committee Exhibit No. 17, May 3, 1934", and are as follows:)

COMMITTEE EXHIBIT NO. 17-MAY 3, 1934

(This exhibit, together with the accompanying papers offered by Mr. Pecora, are now at the Government Printing Office and will be inserted at this point by the Government Printing Office.)

Mr. PECORA. I now show you what purports to be another report made by Mr. Seymour, entitled "The Guardian Trust Co.-Guardian Securities Co.-Stock-market activities." Do you recognize it as being a copy of a report made by Mr. Seymour as a result of his investigations conducted under your immediate supervision?

Mr. MEEHAN. Yes, sir.

Mr. PECORA. Mr. Chairman, I offer that report in evidence, together with the exhibits referred to therein.

Senator COSTIGAN. The report and exhibits offered by committee counsel will be received in evidence.

(The report entitled "The Guardian Trust Co.-Guardian Securities Co. -Stock-market activities", together with the exhibits referred to therein and now at the Government Printing Office, were received in evidence and marked "Committee Exhibit No. 18, May 3, 1934,' and are as follows:)

COMMITTEE EXHIBIT NO. 18-MAY 3, 1934

STOCK MARKET ACTIVITIES

While the Guardian Securities Co. was organized as the security affiliate of the Guardian Trust Co. it never engaged very extensively in the securities business. Its records consist of a small journal and

a ledger about 14 by 8 inches. We have carefully checked its affairs and find that it never participated in any large underwritings or trading accounts. Its largest single activity seemed to be in the stock of the

INLAND INVESTORS, INC.

(G-17-1a)

This company, the Inland Investors, Inc., was organized under the laws of Delaware on June 24, 1927, with 100,000 shares of common capital stock authorized. The function of the company was as an investment trust of the management type.

(G-17-1a)

The original board of directors of the company included J. A. House, president of the Guardian Trust Co.; H. C. Robinson, vice president and executive vice president of the Guardian Trust Co.; J. Ô. Eaton, later replaced as president by H. C. Inglis; Floyd Anderson, and Paul J. Bickel.

(G-17-1a, G-17-2a, G-17-3, G-17-4)

Immediately after the formation of the Inland Investors, Inc., Otis & Co. was employed as selling agent to dispose of 40,000 shares of the common stock at $52.50 per share payable 50 percent at time of purchase, 25 percent September 1, 1927, and the remaining 25 percent November 1, 1927. A contract was executed wherein Otis & Co. received a commission of $2.50 on each share sold and a supplementary contract wherein the Guardian Securities Co. underwrote the sale of 10,000 shares of the 40,000 shares which Otis & Co. undertook to sell, the $2.50 commission on the 10,000 shares accruing to the Guardian Securities Co.

Thereafter, beginning on July 19, 1927, and extending to September 27, 1927, the Guardian Securities Co. purchased this Inland stock from the Guardian Trust Co. and sold it to individuals as follows:

(G-17-5)

Purchased 5,278 shares, at $47.50 per share.

Sold 3,274 shares, at $52.50 per share.

Sold 2,004 shares, at $50 per share to employees.

As stated above, all of the stock was purchased from the bank and all except 2,004 shares were sold to outside customers at $52.50 per share.

(G-17-6)

On August 31, 1927, 2,004 shares of Inland Investors, Inc., was sold to the employees of the Guardian Trust Co., at $50 per share, on a partial payment plan. This plan evidently was fostered by J. A. House, president of the Guardian Trust Co., as appeared in a letter from W. R. Green to C. R. Mergerth, both of the Guardian Trust Co., dated July 19, 1927, outlining the plan as follows:

Mr. House desires that the Guardian officers and employees be permitted to buy Inland Investors, Inc., stock on a partial payment plan; namely, the stock is selling for $52.50 per share and it is proposed to sell the stock on a downpayment of $2.50 a share and $2.50 per share per month, until paid.

This will be purchased through the Guardian Securities Co., who will borrow the money on its note from the Guardian Trust Co. at 5 percent and will take notes of the employees at the same rate.

From the foregoing it will be seen that the Guardian Trust Co. loaned the money to its subsidiary for the purchase of Inland Investors stock based upon the employees' individual notes.

Regarding the bank employees' participation in the stock purchase, in conversation with several of former bank employees they indicated that the transaction was profitable for them. One said that he had purchased his stock at $50 and sold it at $67, an appreciation of $17. This is probably not true of all the employees, however, especially those who have retained their stock which at the present date (Mar. 21, 1934) is quoted by Hornblower & Weeks at from $9 to $11 per share.

(G-17-7, G-17-5)

The Guardian Securities Co., during 1928, purchased 5,000 more shares direct from the Inland Investors, Inc., at $52 a share and by November 2, 1928, had disposed of all of the original 10,000 shares and the additional 5,000 shares at $56 per share.

(G-17-5)

From January 7, 1929, to April 25, 1929, 830 shares were purchased at various prices ranging from $60 to $67 per share. As of September 23, 1929, the number of shares remaining unsold in the Guardian Securities Co. inventory was 132 at a total value of $7,123 or $53.97 per share. The value of these shares at the present-day market price of from $9 to $11 per share would show them as $1,188 and $1,452, respectively, a reduction of approximately $5,000.

(G-17-9)

An analysis of the declining condition of Inland Investors, Inc., as shown in an analysis prepared from Moody's Investors Manual by years from 1928 to 1933, inclusive, is submitted herewith as an exhibit.

WALTER H. SEYMOUR, Senior Examiner. This report based upon preliminary report and complete investigation by Committee Examiner J. H. Winchester.

Mr. PECORA. I now show you what purports to be another report made by Mr. Seymour, entitled "The Guardian Trust Co., re Hotel Hollenden Co. and DeWitt Hotels Co." Do you recognize it as being a copy of a report made by Mr. Seymour, based upon his investigations conducted under your immediate supervision?

Mr. MEEHAN. I do.

Mr. PECORA. Mr. Chairman, I offer that report in evidence, together with the exhibits referred to therein.

Senator COSTIGAN. The report and exhibits offered by committee counsel will be received in evidence.

(The report entitled "The Guardian Trust Co., re Hotel Hollenden Co. and DeWitt Hotels Co.", together with the exhibits referred to therein and which are now at the Government Printing Office, were received in evidence and marked "Committee Exhibit No. 19, May 3, 1934," and are as follows:)