Independent Man: The Life of Senator James Couzens

• 41. THE SMEAR
• Chapter
• Wayne State University Press
• pp. 275-290
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CHAPTER XLI

THE SMEAR

The Detroit bank case had re-exploded.

Couzens first learned of this development between sessions in London when Jay Hayden showed him a cable from his newspaper, the Detroit News. The cable asked Hayden to get Couzens’ comments on testimony given before a one-man grand jury that day by Clifford Longley, the Ford attorney and the latest president of the defunct Union Guardian Trust Company.¹

Asked why the original RFC loan to the Guardian Group did not go through, Longley had said, “There was considerable opposition in Washington.”

“Why and by whom?”

Longley had paused for a moment. He laced his fingers together, and smiled. “Well, I think the largest single opposition to the loan in the amount we were asking came from Senator Couzens.” Couzens “was very antagonistic,” he said.

He “gathered” that “Couzens was very much put out because of our not coming to him in the first place.” He “gathered” that “Couzens opposed the loan very strongly.” He “gathered” that “Couzens’ opposition stopped the loan.”² All of which was reason enough for most of the Detroit and Michigan newspapers to carry banner lines on one theme:

COUZENS BLOCKED LOAN FOR BANKS!

2

It was soon apparent that this grand-jury investigation, presided over by Judge Harry B. Keidan, supposedly called to reveal the facts behind the bank crisis, actually was maneuvered from the beginning into an elaborate device for pinning the blame for the whole tragedy on Couzens personally.

At first, Couzens was not overly disturbed. Not even when a cable reached him from his lawyer-friend, Tom Payne, asking his permission for Payne to go before Judge Keidan to ask that the inquiry not be adjourned until after Couzens had testified. Couzens cabled the permission, and also dictated to Hayden a rejoinder to the Longley testimony to be published in Hayden’s paper.

His answer to Longley was a notably calm statement, wholly devoid of acrimony. In it he reviewed briefly the Guardian Group loan application of January 1933. He pointed out that none of the RFC directors had approved the loan application, and that this was also true of those who attended the White House conference. Recalling that Senator Vandenberg attended the White House meeting, he suggested that Vandenberg be “consulted for details.”³

The News did query Vandenberg. From Grand Rapids, he issued a statement which, while cautious, fully upheld Couzens.

“There is no question,” Vandenberg said, “that Senator Couzens is correct when he says that at the initial conference no one felt, on the basis of the figures submitted by the RFC, that the program could be put through as originally requested. This included Ogden L. Mills, Secretary of the Treasury, Charles A. Miller, president of the RFC, and President Hoover himself.”⁴

3

That seemed to take care of matters very well. On June 22, Couzens wrote to Payne, “Do not hesitate to make any expense to keep me informed and to protect my name, because I have nothing to hide and no financial interest to protect or to hazard.”⁵ Then he placed the matter pretty much out of his mind as he concentrated on the problems of the conference. But in the following week came news from Detroit that was more of a “bombshell” to him than was President Roosevelt’s July 3 rebuke to the gold-bloc nations of the conference.

This concerned some fantastically irresponsible testimony. For H. R. Wilkin, a vice-president of the Guardian National Bank, later convicted of fraud in connection with operations of one of the group units, had implied that Mrs. Couzens had made a “smart money” withdrawal from the Union Guardian Trust Company just before the bank holiday.

Illustrating the careless manner in which the grand jury investigation was conducted, Wilkin had injected Mrs. Couzens’ name into the hearing knowing, as his testimony itself shows, that his assertions were based on hearsay, a knowledge that also was shared by everyone else concerned.

Wilkin was being questioned at the time by Harry S. Toy, then Wayne County prosecutor. Toy had asked Wilkin to comment on reports that certain large withdrawals had been made from the Union Guardian Trust Company prior to the holiday. Wilkin mentioned that a bank in Houston, Texas, the bailiwick of Jesse Jones, the RFC board member, had withdrawn about $165,000 between February 8 and 11. Then:

Q—Were there any other large withdrawals made prior to the holiday?

A—Not to my knowledge.

Q—What do you mean to your knowledge? Did someone tell you about them?

A—Yes. One of the officers of the bank told me Mrs. Couzens had withdrawn nearly all her balance the Saturday before the holiday.

Q—How much did she withdraw?

A—I don’t know.

Q—Did you ever try to find out?

A—Yes, I saw the ledger card and it showed a pretty scant balance. Later I tried to find out from the receiver of the bank, (B. C.) Schram, and he told me he could not divulge the amount of the withdrawal without permission of the comptroller of currency.

Q—You say this withdrawal was made the Saturday before the holiday?

A—Yes.

Q—When was this withdrawal cleared through the Detroit Clearing House?

A—The clearing house cleared approximately $4,000,000 on the fifteenth. . . .

Q—Would the check of the average depositor have been cleared the same as the check of Mrs. Couzens?

A—Yes, I think so.⁶

That was all there was to this line of testimony. But it was enough to inspire headlines and stories all over the world which, if they did not say so directly, gave the impression that Mrs. Couzens had made a “smart money” withdrawal of a really substantial amount.

The facts? Mrs. Couzens had made a withdrawal from a personal account in the Union Guardian Trust Company. It was for approximately $5,000, which she requested transferred around February 6 to the Riggs National Bank in Washington, to be used by her for customary contributions to charities in which she was interested.⁷ Obviously this was not a “smart money” withdrawal, nor was it important in any respect to the fate of the trust company.

However, as a result of the way the Wilkin testimony was presented, Couzens, in London, experienced the jolt of his life when he saw on the front page of the Paris edition of the New York Herald the headline:

SENATOR’S WIFE BLAMED FOR WRECKING MICHIGAN BANKS BY SMART MONEY WITHDRAWALS

4

He turned red—and he saw red. Ever afterward, he could never recall this incident without feeling anger. “I was stabbed in the back, and my dear wife’s name was dragged into this mess. I’ll never rest until I get even with them,” he was later quoted as saying.⁸ Whether or not he used precisely those words, this was certainly how he felt. In this mood he returned to the United States, an angry man, determined to go before the Keidan grand jury and at last tell all he knew about the bank crash.

There was no longer any reason anyway, he concluded, to hold back the facts. He needed certain documents to back up what he had learned—reports and letters in the possession of the Comptroller of the Currency. So, before going to Detroit, he made it a point to call on President Roosevelt to report personally on the London conference, and obtained from the President permission to have access to the Comptroller’s records of the Detroit banks, including copies of confidential reports filed by various bank examiners.⁹

5

Couzens appeared as a witness before Judge Keidan on August 17, 1933. Up to then, the investigation had proved worthless as a fact-finding process. Even State Attorney General Patrick O’Brien, who had initiated the inquiry, had become disgusted. “We are getting nothing but speeches,” he said. However, after Couzens had been on the stand for two days, the Attorney General changed his mind. “I am satisfied to go on,” he said. “Now we are getting facts.”¹⁰

The kind of material that Couzens now presented was illustrated by a report drawn up in May 1931 by the examining committee of the Guardian National Bank of Commerce. This report, written by officers of the bank itself, said:

The committee finds in the list of bad loans many loans that obviously have no other purpose than speculation on the stock market. The makers of these loans had only limited earnings and no prospects of the payment of the loan otherwise than the rise in stock prices. They were made to clerks, stenographers, bank officers, and bank clerks, salesmen and others whose incomes were not sufficient to warrant any substantial credit. . . .

The committee also finds in the list of bad loans, loans to officers in other banks which were clearly made to assist or further stock market operations. . . .

We find on the list of loans a substantial number of individuals who have been recommended by directors of the banks for such loans, loans to associates of directors in business, and loans to concerns in which the directors are interested or in which they were officers.¹¹

If this document, and others of similar import, reflected fairly how the Detroit banks were being operated, what remained of charges that Couzens, Mrs. Couzens, or any other outsider—even the RFC, let alone “radicals”—had wrecked the banks?

6

But no one connected with the grand jury was happy over this kind of evidence. Prosecutor Toy, presumably intent upon getting the facts, proceeded to badger Couzens. The Free Press under Bingay carried articles to the effect that up to then the inquiry had been proceeding properly, but Couzens, by “casting a spell,” because of his position in public life, had changed the course of the inquiry into undesirable paths. Editorials by Bingay in the Free Press chided the prosecutor for being “awed” by Couzens. Prosecutor Toy should break through the “spell” by getting tougher, the editorials said.¹²

Toy obviously sought to comply. He subjected Couzens to a good deal of harassment. However, it was plain that Couzens had transformed the hearing into a true fact-finding inquiry, not by any “spell,” but through the force of facts.

Indeed, he furnished a classic example of the explosive nature of Truth in a controversy, of how it shatters the most carefully constructed alibis and melts through the layers of the most expertly contrived makeups.

7

At times, his anger betrayed him into a too-sweeping indictment of bankers in general. He included some individuals who apparently were blameless, notably certain directors of the First National Bank. This left him open to some equally anger-inspired counterblasts, such as one from James O. Murfin, a First National director, who said: “I can shorten this testimony by saying every time Jim Couzens mentioned my name, he lied!”¹³

Then, Longley returned to the stand to say “Couzens didn’t know anything about the [Guardian] assets at the White House. He didn’t know anything about them when he testified here. I don’t think he knows anything about them now.”¹⁴ The press featured these blasts, and Couzens was placed on the defensive.

His recital of why the banks failed also suffered at times from disorganized presentation of his material. This was not wholly his fault, although his emotional tenseness tripped him up in this respect. To reconstruct properly the whole story, months, even years, would be needed. Moreover, all the facts—the minutes of the RFC for example—were not then open to him or anyone else. His presentation suffered too, because he still chose to play down the part played in the whole episode by the Fords. But these flaws and errors were really matters of minor detail. The fact was, as a result of his appearance in five sessions scattered through August and September, Detroit really began to see for the first time what had happened to its banks.

8

Yet, the effect of Couzens’ presentation was not at all what should have been expected. Judge Keidan was strangely impatient with Couzens. Concerning Couzens’ declarations that the banks were undoubtedly insolvent, the judge demanded to know how this could have been the case inasmuch as the federal government permitted the banks to continue to operate until the holiday.

Was it not the law that the Comptroller of the Currency must close insolvent banks?

As the Comptroller did not act, was that not sufficient evidence that the banks were in fact solvent?

Such questions had logic in them. But Couzens answered them with some amazing evidence. He produced documents to show that the Comptroller of the Currency, J. W. Pole, had adopted a policy of extraordinary leniency with the nation’s banks. One such document read as follows:

October 6, 1931

A. P. Leyburn,

Chief National Bank Examiner,

164 West Jackson Boulevard, Chicago, Ill.

Please instruct all examiners to exercise extraordinary discretion in their work and to use every effort to encourage and sustain the morale in banks examined.

Leniency consistent with proper regard for public interest should be extended. Present conditions demand sympathetic treatment on the part of this office, and examiners can in important measure contribute to the alleviation of the difficult problems with which we are temporarily faced.

J. W. POLE, Comptroller.¹⁵

Couzens showed that later the Comptroller reiterated such instructions for “leniency.” In the following December, all national bank examiners were instructed by Pole that in cases of greatly depreciated securities held by banks, the examiner “should discuss the situation with the directors and urge recourse to methods by which the bank may be strengthened, but should make no mandatory demands.”¹⁶ In July 1932 the Comptroller had circularized all chief national bank examiners with a communication that criticized examiners for being too strict in their appraisals of securities.¹⁷

Couzens quoted a statement made in the Senate on May 1, 1933, by the “father of the federal reserve system,” Senator Glass:

For the last 12 or 14 years there has been no espionage on the weak national banks. The comptroller of the currency admits that if he had enforced the law he would have closed half the national banks of the country. This means that the comptroller’s office has not done its duty. It has allowed banks to engage in irregular and illicit practices. It has endangered the whole banking community. . . .¹⁸

Judge Keidan wanted to know why the federal government adopted such a policy. “On the theory,” Couzens answered, “that prosperity was just around the corner. Public officials, from the President down, were holding out that hope to the people.”¹⁹

He then made a point that later drew a vigorous protest from Hoover, who felt that it was a reflection upon his administration.²⁰ Couzens said:

“Your Honor must remember that there was a political campaign on and that there was undoubtedly a disposition on the part of the powers that be not to cause a bank collapse or bank difficulties while a political campaign was on.”²¹

9

Of course there was another side to this picture. Strict enforcement of the banking laws would have hastened the closing of many more banks than were closed, and nobody could be sure that this was correct national policy. But Couzens’ purpose was not to question the policy, rather to show what the banking situation had been.

In this, he not only received little cooperation from the judge, but more antagonism from County Prosecutor Toy. His statement that the political campaign influenced officials to be soft toward actually insolvent banks was hooted at, though he had merely anticipated the verdict of a well-known banking student, Professor Westerfield of Yale, who later wrote: “Most of the banks had portfolios choked with immobile and worthless loans and investments; banking supervisors had been restrained for political and other reasons from exacting obedience to bank law and had ceased to require banks to write off losses.”²²

A good deal of the material that Couzens presented was from so-called “yellow sheets.” These were letters that bank examiners had sent to Washington as supplements to their regular reports. They were confidential letters, designed only for the eyes of the Comptroller—letters in which the examiners told exactly what they thought about the banks they had examined, in which they set down comments which, for reasons of policy, were not included in the regular reports.

Because of their nature, these “yellow sheets” often were more revealing than the official “white sheets,” and especially so during the period of Pole’s “leniency.”

But because they were not “official,” Prosecutor Toy, backed up by Judge Keidan, proceeded to develop the theory that they were unreliable. The prosecutor scoffed at them. Who had ever heard of the “yellow sheets,” he asked, in effect. Why, no one had! This was precisely the point about them—that they were confidential. But to the prosecutor that vital point was enough to damn them as evidence.

Couzens asked that the bankers be recalled to the stand. They were. It was soon obvious that they were summoned not to be questioned on the records and the transactions he had mentioned, but to give them an opportunity to heap denunciation upon him. This they did in full measure. Indeed, the proceedings then became, rather than an investigation of the banks, a forum from which witness after witness assailed Couzens.

Even former Governor Groesbeck, Couzens’ original sponsor for the Senate, now receiver for the Guardian Union Detroit Company, joined in the attack. So also did aging Judge Connolly, whom Couzens had defeated for mayor back in 1919, now receiver for the Detroit Bankers Company.²³ Once again, almost all that was heard in Judge Keidan’s court was the refrain: “Couzens wrecked the banks!”

10

There was much cruelty in the way he was attacked, both in and out of the courtroom. Frederic L. Smith, who had become an admirer of Couzens since the days back in 1903 when Couzens had defied Smith’s Selden patent association, wrote him that the easiest way to start a row in the Detroit Club to which both belonged, was for someone to make a remark in his defense. “I tried this,” said Smith, “and ran the risk of being thrown out.”²⁴

How this group of Detroiters felt about him was made clear to Couzens in an experience of his own. On his going to his accustomed table for lunch at the Detroit Club, several of the men who had shared that table with him for years stiffly rose and carried their plates to another location.²⁵ Ever since he had joined the club many of the members had tolerated his general criticisms of the economic system by which they had become the industrial and financial leaders of Detroit. But now that he had become specific, and worse, had declared open war upon the most respected leaders of the city, the bankers and bank directors, they felt that he had put himself beyond the pale of polite society. Even for a “scab millionaire,” he had gone too far, they decided.

This bitterness toward him was more intense than any he had generated during his entire previous career, greater than that caused by his fight for M.O., his attack on the Mellon tax plan, or his opposition to Warren for Attorney General. Not since the 1890’s, when Mayor Hazen S. Pingree was expelled from his clubs and his church for advocating the reforms in municipal politics that Couzens was to carry out, had Detroit seen anything like it.

The whole atmosphere was distinctly that of a pack, snapping and snarling. The furor surpassed even the anger he had aroused back in 1914, when he had denounced the Board of Commerce members’ labor policies, the incident that had evoked a description of him in the Detroit Journal as a “commercial Savonarola.” This newspaper, now long out of existence, had said: “Society has an unpleasant way of crucifying those who tell it the truth one generation too soon. And woe to Couzens for his truth indulgences were he less strong in this community! For banks can crush and capital can ostracize.”²⁶

In the hot summer of 1933, those passages in the editorial printed in the long-ago winter of 1914 must have seemed highly prophetic to Couzens. He probably remembered them, for during the height of the storming, he once wryly remarked, “I’ll be lucky not to be hanged in person, not merely in effigy.”²⁷

11

But Couzens was neither crushed nor silenced. Because he had not been able to present before Judge Keidan all of his material gleaned from the government documents and, concluding from the judge’s attitude that he would not be permitted to do so, he attempted to proceed through direct action. He invited Prosecutor Toy and members of the prosecuting staff to come to his office in Birmingham. There he laid before them a mass of records, with the hope that they would make use of the material on their own. The prosecutors were strangely unprosecutorlike. They did nothing. Couzens then offered the material directly to the newspapers. The newspapers were decidedly cautious, perhaps for good reasons, in their view.

Indeed, almost the only result of this move was that, on September 14, he became involved in a furious argument with Malcolm Bingay when that journalist, instead of welcoming the material, proceeded to upbraid Couzens for “keeping up this endless argument and flinging of personalities.”²⁸

There was still Judge Keidan’s court. It was only right that Couzens should have the opportunity to testify there again, especially in view of the assaults made upon him. So he made ready to present new material to the grand-jury investigation. Day and night, “and Sundays included,” in his office in the Wabeek Building in Birmingham, he labored over the reports and figures. On September 15 he wrote to Judge Keidan that he had “considerable new evidence concerning the Guardian Detroit Union Group” and asked the judge to advise him when he might be permitted to testify again.²⁹

Before his letter could reach the judge, Couzens heard incredible news—Judge Keidan planned to adjourn the inquiry immediately, without hearing him. He promptly telephoned the judge, who agreed to meet him the following morning at Frank Couzens’ home. “Judge Keidan . . . argued against my again appearing on the witness stand for the reason that I might introduce new evidence, which would cause the bankers to again request a chance to be heard and further delay the conclusion of the grand jury,” Couzens later related. Finally the judge grudgingly consented to let him testify once more, on a condition: Couzens was to confine himself to answering the attacks made on him. Under no circumstances, said the judge, was he to bring up anything new.³⁰

With respect to influencing the findings of Judge Keidan, Couzens might well have saved himself that final three-hour exertion at the grand jury session. For as soon as Couzens finished, the judge ruled that the inquiry was over, and at once produced a previously prepared document setting forth his findings. This gave the bankers and the banks a clean bill of health.

12

Judge Keidan had enjoyed the reputation of being one of the most judicial of judges on the bench in Detroit and an honorable man. Couzens had esteemed him, at one time considered recommending him for a place in the federal judiciary. No breath of scandal or of venality of any kind had ever touched him. But it was clear from his conduct throughout the grand jury, and especially from his statement of findings, that Judge Keidan, for whatever reason, had no stomach for exposing any wrongdoing on the part of the bankers. He, at least, was no Savonarola.

The judge revealed clearly in his statement that his major concern was to have the grand jury create public pressure which would cause the federal government to come through quickly with money for paying off the depositors. He wrote: “In the final analysis, the public is interested in this help. Criminations and recriminations are futile.”³¹

In short, Judge Keidan’s view was to let sleeping dogs lie. The thing to do was to thaw out the frozen assets. He wanted no part of Couzens’ program of getting the causes of the banking crisis presented to the public.

13

Couzens then took to the speaking platform. At a meeting of depositors at the Northwestern High School Auditorium in Detroit, he gave a fiery two-hour speech. “I am satisfied,” he told this audience, “that a determined effort to get at all the transactions of the bank holding companies and their subsidiaries will convict somebody of a crime.”³² He was angry; no doubt about that.

However, he soon decided that such meetings would really get him nowhere. Obviously speeches were no weapons in the war that quickly opened up between him and Bingay of the Free Press, which then—this was before the Free Press came under a new and more objective management, that of the Knight Newspapers—was openly feuding with him. That he was at a disadvantage in this feud was brought home to Couzens when that newspaper devoted nearly three columns of its front page to an article which carried these headlines:

COUZENS ADMITS REVENGE
SPURS HIM ON IN ATTACK
UPON BANKS OF DETROIT

_________

Says He Is Moved
By Personal Hate

_________

Feels Safe Because
of Wealth and Office³³

14

Malcolm Bingay had written the article on the basis of the argument that they had engaged in on September 14. It was printed, said the Free Press, because “the strange attitude of Senator Couzens requires explanation”; because “it is necessary now for the people of Detroit and Michigan who have for so many years honored James Couzens to know his mental attitude.” As summed up by Bingay, there was nothing to Couzens’ efforts to bring out the facts in the bank situation except hatred of the bankers and a desire for revenge. Bingay shored up his thesis by quoting utterances by Couzens made in the heat of their personal argument in Couzens’ office in Birmingham.

After the heat of the bank controversy died down, it was plain what Bingay had done. He had goaded Couzens into a personal argument, knowing how easily Couzens lost his temper, and then had printed the result as if it were an “interview.”

True, Couzens had asked for this treatment. He had flown off the handle with a newspaperman. His ingrained outspokenness and anger had betrayed him into making remarks he obviously would not have made had he believed he were being interviewed for publication. A calmer man would never have let himself get into such a position.

To friends, he pretended that he was not bothered by Bingay’s article. Actually he was a good deal upset over it.³⁴ He promptly called off any further speaking engagements on the bank situation. He felt keenly that the public had been poisoned against him, that most Detroiters really believed that he had been responsible for wrecking the banks. He talked moodily with intimates about how his reward for twenty years and more of public service was that he had become an object of scorn. “I went through Hell,” he told Tom Payne.³⁵

15

Actually, it had been a mistake, from any angle, for him to participate in the Keidan grand jury investigation. As a Senator, he had at hand the most effective medium in the country for producing facts—a Senate investigation.

As early as the previous March, various persons had suggested that the Senate Committee on Banking and Currency, still probing into the New York Exchange and other financial institutions, might well turn its attention to the Detroit affair. In June, the City Council of Detroit adopted a resolution asking that the Senate committee “come to Detroit and conduct a thorough and public investigation.”³⁶

As a member of that committee, Couzens was not then convinced that the Detroit situation warranted a full-dress Senate inquiry, especially as new banking legislation already had been adopted, presumably for making impossible a repetition of the Detroit bank organizational defects.³⁷

However, after the Keidan investigation fiasco, he changed his mind. Besides, his spirits were now considerably elevated, in consequence of a special mayoral election held in Detroit at just this time that resulted in Frank Couzens’ being elected mayor by a handsome majority.

“I guess that shows that I haven’t ruined the family reputation after all!” Couzens exclaimed.

He was ready to fight again.

When he returned to Washington on October 1, he discussed with Pecora, still counsel to the Senate Banking and Currency Committee, the possibilities of a fruitful inquiry by that committee into the Detroit banking mess.³⁸ Soon after, the full committee, of which Senator Duncan U. Fletcher of Florida was chairman, voted to conduct such an inquiry.

This Senate investigation of the Detroit banks, which began in Washington on December 19, 1933, was decidedly different from the Keidan grand jury investigation. It laid bare in minutest detail the full story of the Michigan bank holiday, its causes and its aftermath. Almost everyone who had anything to do with the banks and the holiday was called to testify and subjected to searching examination by the expert cross-examiner, Pecora. Edsel Ford was called, though not Henry Ford, and from Edsel the role of the Fords was brought out clearly.

There were no “speeches” at this investigation, and no hearsay. Only facts. The facts filled 1,647 closely printed pages in the four volumes published by the Senate.³⁹

A study of those volumes leaves no doubt as to where the fault lay for the holiday, nor for the conditions which led up to it. The bankers themselves had wrecked their banks, albeit, the final Senate report in words approved by Couzens, rather obliquely put it: “Nor can the failure of these companies be attributed solely to the constituency, competency, or honesty of the persons controlling these institutions.⁴⁰

True, some of the truly shocking actions laid bare had been forced on them by the depression and represented desperate efforts to prevent the crash. But careful and honest banking, rather than recklessness and speculation and worse, obviously would have avoided the full extent of the crash. Moreover, it was unquestionably established that Couzens had nothing to do with the refusal of the RFC assistance asked for in the beginning, nor even with the scaling down of the ultimate loan granted.

If any one person had forced the bank holiday, this person was, not Couzens, but Henry Ford.

All this was placed on the record.⁴¹ That record constitutes more than a defense of the accusations against Couzens; it is a detailed description of the Michigan banking “magic” which turned out to be, not magic, but financial buccaneering on a scale beyond ordinary comprehension.

Studied efforts were made to discredit this Senate investigation. It was dubbed solely a “Couzens affair.”⁴² The truth was precisely the opposite, as even a cursory examination of the record shows. But angry men will say many things; Couzens did, and so did those who opposed him for one reason or another.

16

The Senate investigation came to an end exactly on the anniversary of the White House conference on the bank crisis. “We concluded our Detroit bank hearings at five o’clock tonight, and, I feel, with a blaze of glory, because today’s testimony was quite corroborative of my position,” Couzens wrote to Tom Payne.⁴³

He did not exaggerate. On that day the committee had heard Ballantine, Leyburn, and Awalt. Their combined testimony underlined emphatically what was plain to anyone who bothered to follow the hearing—that the bankers themselves, by the type of banking they had developed, had been at fault. There could be no doubt of that.

Frederic L. Smith, who, like Couzens, had lived through the panics of 1893, 1907, and 1921–1922, and had observed such Congressional investigations as the Pujo inquiry into the “money trust,” wrote to Couzens: “Your investigations have been more truly constructive, timely, and, I believe, ultimately ‘curative’ than those of any government-run investigations since I began to take notice. . . . They have opened the eyes of the man on the street.”

Couzens answered that, while he was “distressed” over the disclosures as to how the banks were operated, he was satisfied “they had to be made in the public interest. . . . What I wanted was for the Senate and the country to know.”⁴⁴ This he had accomplished.

He had shown, among other things, that so far from having been “responsible” for the closing of the Detroit banks, he had tried to do more than almost anyone else to keep them open, having gone to the length of offering a good slice of his personal fortune to save the situation, even though he had no stock in any of the banks and very little other personal financial interest. He had shown, too, that his objections to an “immoral” RFC loan were not at all a factor in the crisis—that no one else in the government approved the original loan requested after the facts were known. His statement about “shouting from the rooftops” was not at all a “cause” of the crisis. It had been torn out of context and used to misrepresent his position, also to make of him the scapegoat for the crisis brought about by others.

He had shown that the Detroit crisis was not something that had developed suddenly, but was long in the making, in large part because of “general conditions” and some unwise mergers, and also because of unsound and in some cases immoral as well as illegal banking practices. He had established also that whereas the Fords were involved in the crisis, his own relationship with the Fords, friendlier then than at other periods, was not a factor. Above all, he had shown that had the bankers as a class followed the safe, sane, and strictly ethical principles which he himself, when a banker, had epitomized, the situation might not have developed, certainly not so critically. Having established a record showing all this, he had good reason to be satisfied with the verdict of history.

17

On August 1, 1934, largely in consequence of the revelations at the Senate investigation, the Department of Justice obtained federal grand jury indictments against twenty-eight of the leading bankers in both groups on charges of technical violations of the federal banking laws.⁴⁵ Complicated cases brought some complicated results. In 1935 three bankers in the First National group were acquitted. But in 1936 three others of the same group were found guilty and fined, though the verdict in the case of one was later set aside. In 1937 all of the cases were dismissed after still another trio entered pleas of nolo contendere and were fined $1,000 each.⁴⁶

One banker did get a prison sentence on criminal-count conviction in a state court. This was Wilkin, the witness who had brought Mrs. Couzens’ name into the controversy before Judge Keidan. He was held responsible for “window-dressing” of the Union Industrial Bank of Flint, a unit of the Guardian Group.⁴⁷

As for Couzens, after the Senate investigation was over, he was content to let the bank matter pass into history. His principal interest after this was in the further unfolding of Roosevelt’s New Deal. And to this he devoted himself with much of his old-time zeal.