Couzens on Detroit

U. S. Senator James Couzens is not a tactful man. Last week in Detroit, where he got his riches as Henry Ford's foreman-partner and his radicalism as a rambunctious police commissioner, silver-crowned Senator Couzens bluntly accused his home town bankers of pulling down their temples on their own heads.

Detroit has waited a long time to hear Michigan's Senior Senator tell his story of the banking fiasco which Judge Harry B. Keidan has been probing off & on all summer (TIME, Aug. 7). For in all the reckless charges and counter-charges that have been hurled since Detroit's banks were closed last St. Valentine's Day, there has been one unifying theme: that in some mysterious way Senator James Couzens was the man who threw the monkey-wrench into the creaking machine.

Irked by this notion of his constituents, he cabled Judge Keidan from the London Economic Conference last month that "complete testimony cannot be given without my presence." Last week he kept insisting that he knew more than he would tell, and if Detroit's bankers failed to furnish all the facts, Senator Couzens hinted darkly that he would then give the public the truth.

He frankly admitted warning President Hoover that if the R. F. C. made a huge loan to Detroit's big banks he would "denounce it from the housetops," but he asserted Washington officialdom from President Hoover down was opposed to the loan and for the same reason: inadequate security. The R. F. C., he said, was gun-shy after the public furor over Charles Gates Dawes's $90,000,000 loan and, aware of the nation wide banking crisis, was leery of sinking millions in Detroit. Furthermore R. F. C. Chairman Miller considered the loan "immoral" because the collateral offered had been stripped from the sound banks in the Guardian group while the loan was to buttress the weak unit.

As for the failure to reopen after the March holiday, that was clearly Detroit's own fault, said the Senator. Treasury officials were refusing to grant clean bills of health to any unsound bank and Detroit had been unable to agree on a reorganization plan. It was poppycock to claim that the banks were and still are solvent, snorted the Senator; months before they closed their solvency "was a matter of question"; if First National had written off the $49,000,000 that Federal examiners labeled losses, it would have been "hopelessly insolvent" in May 1932. Asked why the bank was not closed then & there, Senator Couzens smiled knowingly: "There was a political campaign on at the time." "High finance, wild and illegal high financing, through consolidations and group banks, caused the banking debacle in Detroit." And he charged the bankers with gross mismanagement, with irresponsibility, with making big (and bad) loans to officers and directors, even with making $50,000 loans to stenographers.

On one occasion, he declared, a check was "kited" so that the statements of two banks showed $6,000,000 more in cash than they actually had. Detroit Trust sent a $6,000,000 check to First National and then Detroit Trust deposited it in First National. Scanning a list of bank officials whose loans were still unpaid (but whom he refused to name), the Senator blurted: "Here is one director who, I understand, was informed by President Hoover that I was a dangerous man. I wish the court would invite President Hoover here to testify. That would allow me to tell why Mr. Hoover felt I was a dangerous man." But Detroit was still unsatisfied. The whole story had not yet been told. Asked whether he still had hope for reorganization of the closed banks Senator Couzens cheerily observed: "Even with all the inside information, I still have hope." Judge Keidan has had a sorry time piecing together the Detroit banking puzzle. His jurisdiction is purely State; many of the key actors in the crash were Federal officials, and the U. S. Treasury has forbidden its busy hirelings to take time off to testify. Furthermore, he has been under constant pressure to soft-pedal the inquiry lest it bog reorganization schemes. A tall, thick-set 51-year-old who keeps his weight down to 236 lb. by persistent walking and rowing, Judge Keidan entered politics as the hard-bitten prosecutor of roadhouse proprietors who abetted the fall of Detroit's girlhood. Now, holding all the powers of a full grand jury, he may, if he sees fit, hand down indictments that will make front-page news from coast to coast.

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