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RESIDENT'S

ETTER
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A look out my office window shows that
Philadelphia has a special place in the history of
central banking. I can see Independence Hall, and
only a short distance away are the sites of the First
and Second Banks of the United States. They were
the nation's first central banks and together they
lasted only from 1791 to 1836.
The nation's third central bank, the Federal
Reserve System, is now 75 years old and going
strong. This Diamond Anniversary is a time for reflection
and it strikes me that the
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Federal Reserve.
The First and Second
Banks functioned well in
many ways, but they became
extinct because they had
serious flaws - their powers
were overly concentrated,
their locations too centralized,
they wc;ic uui, uiiuied by special interests, and
they became snared in bitter partisan politics.
In contrast, the Federal ReserveSystem that
born
was
on December 23,1913, has a regional
structure, all sorts of checks and balances, and a
workable blend of public and private interests. In
addition, it was carefully insulated from short-run
politics.
Time has proven that the founders of the
Fed knew what they were doing. Although there
have been many changes in the Federal Reserve
during the past 75 years, the basic design is still
valid. The Fed changed its procedures as the world
about it changed but never abandoned its basic
principles.
In addition to presenting information on the
year 1988, this annual report commemorates the
75th anniversary year of the Bank. To do so, we
feature photographs from 1914 on and interviews
with present and former staff members. I want to
thank Charles Herman, who joined the Bank in
1920,and all the others who shared their memories.
The Bank began in the time of inkwells and
now is well into the electronic era. Our operations
kept up with every step, changing from adding
machines to punch cards, then to magnetic ink
and now to powerful mainframes.
All the while, the Bank has maintained its
birthright values - values that are grounded in
public service. We have emphasized outreach,

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going into the District to meet our constituents,
gather information, and provide services to satisfy
their needs. Obviously, staying out of partisan
politics is as appropriate today as it was in 1913.
For much of its history, the Bank has been
employee oriented and considered a good place
to work. For example, we pioneered pensions, job
evaluation, and salary administration. Retirees
have told us that the Bank's work force had a
sense of pride and identity in its first decade, and
1 believe it still does.
When the Bank first opened for business
in 1914, the Federal Reserve had responsibility
for promoting the efficiency of the nation's cash
and check payment systems, and, as the Federal
Reserve Act said, for "establishing more effective
supervision of banking. " We still have these
responsibilities, only more so. Combine them with
our long-term emphasis on innovation, and you
come down to some of the Bank's most important
1988 accomplishments.
We are one of the lead banks in a pilot
project to develop the most reliable electronic
payments system for the 1990s, and work accelerated throughout the year. In addition, the Bank
was selected to manage the Federal Reserve
System's Check Product Office, which coordinates
check services for all Reserve Banks. In our own
shop, we made major changes in return-item
processing to meet the standards of the new check
availability regulations which took effect on
September 1,1988.
Through the years, this Bank's
Supervision Department was
known for its high standards,
which are as important now as
ever. The financial system is in
the midst of momentous change

and new bank charters and expanded international operation:
have increasedour examinatio,
caseload. We responded by
strengthening our examinatio
staff and adopting the latest dim"
.. automated techniques.
Looking ahead, I'm sure u)u uvuraii pace
of change will continue, if not accelerate, and this
Bank must keep pace. The challenge will be to
maintain our traditional standards of quality and
efficiency, to make sure we remain flexible and
innovative, and to sustain staff motivation and
morale. No mean feat, but hardly daunting when

you considerour 75-yearrecord or accompüsrnmenr.
The recent performance of banks in our
District must not cause complacency because we
are in that time of the business cycle when good
time excesses often carry over and worsen the
next recession. Both management and regulators
should be particularly watchful to be sure that
lending standards are upheld.
The business expansion entered its seventh
year in 1988, which qualified it for a book of
records. The Third District economy continued to
compare favorably to the nation in broad measures
of activity such as unemployment, residential
construction and sales.
Inflation threatened throughout 1988, but
the Federal Reserve did a good job of helping to
contain it. A major part of the reason is that we
acted early before rising prices could gain
momentum. As a result, only relatively small
increases in interest rates were required, and they
didn't choke the expansion.
In this anniversary year, the nation's prime
economic objective still is to keep prosperity rolling.
With fiscal policy constrained by politics and
deficits, I believe that the Fed can contribute most
effectively to sustained prosperity by keeping
inflation in line. This lesson of the past should
remain valid in years to come: stay ahead of the
inflation curve.

H

hilade/phia got its first look at the new
Federal Reserve System when this Bank
opened its doors at 406-08 Chestnut
Street on November 16,1914.
It was a difficult time. The nation was in a
recession, and Secretary of the Treasury William
G. McAdoo had insisted that the Reserve Banks
open before they were fully prepared to do all the
jobs assigned to them. A typewriter company and
severalcommercial banks loaned clerical workers
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to augment our own staff in the first few
months of operation.
With the U.S.'s entry into World
War! in 1917, the Philadelphia Fed
went into high gear, managing the
Liberty Bond drives that helped
finance the war effort. We raised
almost $1.6 billion in four such
bond drives. The task called for
I vast amounts of clerical work, and
the Bank grew from 28 employees in
1914 to 430 employeesby the end of 1918.
To make room for all those workers, the Bank
moved to larger quarters at 925 Chestnut Street,
the address it would call home for almost 60 years.
After the war came the job of redeeming
the war bonds and handling new issues to refinance the debt, which made for busy days at the
Philadelphia Fed.
"As one issue matured, they refinanced it
with another. We worked Saturdays, Sundays, it
didn't make any difference," remembered Charles
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Herman, who joined the Philadelphia Fed's Fiscal
Agency Department in 1920 at a salary of $100 a
month. That may not sound like much today, but
consider that the Bank's cafeteria charged 25
cents for a meal, and a dime for dessert, in those
days.
Monty Magee came to work at the Philadelphia Fed as a page boy in the late 1920s. Our
pages would attend high school one day a week
and work the other four and a half days.
The page boys sat in a row "on the bench, "
oving up each time the first boy in
line left to run an errand,Magee said.
Ray Yarroll, another page,
remembers that Governor (as the
Bank's CEO was then called)
George W. Norris was served tea
each afternoon by the head of the
Building Department.Thepage boys
'would have to take the tray back
to the cafeteria, and all eleven of us
would try to get in the No. 1 spot on the
bench when Governor Norris would have his
tray returned because there were always a couple
of pieces of toast or crumpets left on the tray, "
said Yarroll.
Afternoon tea may have been a muchneeded break for Governor Norris in the 1930s,
when he led the Philadelphia Fed through the
difficult days of
bank closings.

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rom his vantage point
in the Transit Department (as the Check
Department was called
then), Al Roberts saw the bank
closings mount at the end of
1932 and the beginning of 1933.
"When the banks started
closing, we were the first ones
to know" because checks drawn
against those banks would
become unpaid items, he said.
When the Banking Holiday was declared in March
1933, we kept right on working,
because all the checks then in
the Transit Department had to
be processed and sent to the
banks on which they were drawn
before they reopened. "My wife
never knew what time i was
coming home for supper, " said
Roberts.
The PhiladelphiaFed also
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100 typists drafted to work
overtime. "Friday night, all day
Saturday and possibly all day
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were typing, preparing lists of
securities, " said Yarroll.

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"Checks were sorted by hand
on tables and listed on sheets
of paper, " said Warren Moll,
who joined the department in
1933. '7t was very difficult and
settlement was a horrendous
problem. "
Magee and Yarroll, who
graduated from the page boys'
bench to the Audit Department,
recalled the manual labor that
went into periodic audits of the
securities in the Bank's vault.
The two men would scour the
Bank on Friday night for 100
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capital to businesses under a
law passed by Congressin 1934.
Virginia M. Lilley was
one of many Philadelphians
who lost a bank job during the
Depression,but she was luckier
than most; the very day she
was laid off, a friend told her
that the Philadelphia Fed was
hiring. "I hotfooted it up to 10th
and Chestnut" and filed an
application, Lilley said. That
night, she received a message
to report the next morning for a
physical. She had the job.
Lilley, who worked in
Cash
Department, recalled
the
how much of the Bank's work
was done by hand in those
days. "All the money was
counted and sorted, one piece
at a time, " she said.
In the Check Departit
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he nation went to war again in 1941,
and, just as the Reserve Banks helped
finance World War I with Liberty Bonds,
so they undertook to sell War Savings
Bonds. It was an enormous task and required
many, many hands.
The Fiscal Agency Department, as Herman
remembered it, had 39 employees when Pearl
Harbor was bombed. After the declaration of
war, "we expanded within five months to 586
people. "
Savings bonds carried coupons that were
submitted for payment of interest. "Millions and
millions of them came rolling in, " said Herman.
"There wasn't enough room at 10th and Chestnut,"
and the Bank had to rent space in other buildings
to house the savings bond operation.
Finding enough clerical workers at a time
when many Philadelphians, including Fed
employees, had gone to war tested Personnel
Director Robert Hilkert's creative thinking. He
solved the problem when he took his wife's
advice and enlisted married women to work parttime, a solution with a modern ring to it.
More than one retiree has pointed to the
change in the way employees were treated under
the leadership of Bank President Alfred Williams,
beginning in 1941.
"Before Williams, the Bank was very hierarchical, with everybody in his place, " recalled
David Eastburn, who joined the Bank in 1942 as
a statistical clerk and rose to be president. "I give
Williams a great deal of credit for changing that.
When I was president, we tried to continue in that
tradition. "

As Hilkert recalled the 1942 personnel situthere
ation,
were vague job descriptions, pay
scales apparently unrelated to market conditions,
and varyingrules for promotions and pay increases.
When that situation was cleaned up, the next
challenge was to improve fringe benefits and
establish clubs and classes that fit with employees'
leisure-time interests.
Williams led the Bank in forging closer ties
throughout the Third District. He personally
toured far and wide for War and Victory bond
drives and, in 1946, began the annual field
meetings that still take representatives from the
Philadelphia Fed to various parts of the District to
speak with local bankers.
About the same time, the Research
Department's Business Review began focusing
less on the collection of numbers and more on
articles written in a readable style, said Eastburn,
who was then in the Research Department.

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hortly after World War
ll, the Bank began an
innovative training
program. It had dual
help
to
goals:
returning veterans
find careers and to help banks
whose management was aging
and lacking in younger,groomed
successors.
Traineeshad to go to
the Wharton School of the
University of Pennsylvania to
study for an M. B.A. while they
worked in most departments of
the Bank. They would start in
Night Transit and end up in
Research, said Hilkert. After
two years, they usually moved
on to management positions in
commercial banks. "There was
a period when practically every
president of every Philadelphia
bank came from that training
program, " he said.
Changes in machinery
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their jobs in the 1940s. Money
was still sorted by hand, and
only humans could determine
whether a bill was too worn to
recirculate, but machines were
developed that could count the
bills fed into them, said Lilley.
In the 1940s, punch
cards began to replace manual
operations. The location of
holes in the cards would introduce information into tabulating
machines. Hugh Barrie had a
knack for fixing machines and
tinkering with radios, and he
was selected to go to school at
IBM to learn about punch cards.
One of the first applications of this new technology was
to improve the Bank's payroll
system, remembered Barrie.
"That proved to be successful,
and we looked for other
applications, " said
Barrie. "The Safekeeping

Department held securities for
member banks, and every time
the auditors came in, they would
have to type up lists showing
each one. We converted the inventory over to punch cards,
which provided a current, dayto-day record" and eliminated
the need for the 100 typists and
typewriters that Magee and
Yarrollrecalled. In the late
1940s,major improvements were
r made in

the Check Department. The
introduction of proof machines
ended the hand-sorting of
checks on tables, said Moll.
"The proof machine, which
contained revolving pockets,
performed four functions. It
proofed the checks, it endorsed
the checks, it sorted them

and it listed the items in
each new sort. "

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he proof machine was only the beginning of a whole series of improvements
in the check clearing system that took
place during the 1950s and the early
1960s. For example, we were the first Reserve
Bank to set up its own transportation network to
move checks more quickly and efficiently, said
Moll.
"First, we'd get one or two carriers to
deliver checks to banks not far from Philadelphia.
When that worked well, we'd move out to another
group of banks. When volume increased enough
to make it practical, we started flying checks to
Harrisburg, Williamsport, Scranton and other
areas."
As the Eisenhower era drew to a close,
the Philadelphia Fed began testing high-speed
machinery for check sorting and, in 1962, we put
it into operation, Moll said. The equipment read
magnetic ink characters at the bottom of each
check and moved it at high speed into the appropriate pocket.
The first true computer arrived in the
Philadelphia Fed in 1961, and its effect was felt
in almost every department of the Bank. Hugh
Barrie and his team, with their punch cards and
increasingly versatile tabulating machines, had
already found ways to use their new tools in
many of the Bank's operations. With the advent
of true computers, those jobs could be done
much faster and with much greater control on
machines that were smaller. The ways the Bank
could put computers to use grew.
"I had great cooperation from senior

management and we became a leader in certain
fields of automated accounting, " said Barrie.
Computers also had a large impact on the
Bank conducted bank examinations.
the
way
"When / first did exams, they were entirely
different from today," said Lou Pinola, who joined
the Bank in 1960. "First, we would go into a bank
and seal up the cash and collateral. Then we
would count the teller cash and the vault cash
and make sure that balanced. Next we would
check the collateral, making sure that what was
on the books was actually there, " he said.
In an examination of a large bank, the
Supervision and Regulation Department frequently would not have enough people to handle
all the counting and inventorying, and other
Philadelphia Fed employees would be drafted to
help.
By the time Pinola retired in 1984, he said,
"a lot of the information an examiner needs is
now prepared in the Reserve Bank before an
examination even starts. " With computers able to
compile information from various sources,
examiners can get printouts showing exactly
what's involved before they leave the office.

The Bank's operating departments weren't
the only ones to change in the 1960s. The whole
field of economics, and consequently the Philadelphia Fed's Research Department, was
changing too, says Eastburn, who headed the
Research Department during that decade.
Economic analysis was becoming more sophisticated and far more mathematical. The Business
Review "became more professional, more analy-

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was still important, said Eastburn.
Eastburn said there's no question that the
to
move hiring more highly trained economists
served him well when he became president of
the Bank in 1970. They would help him prepare
for meetings of the Federal Open Market
Committee, which establishes monetary policy.
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n 1974, the Automated Clearing House
(ACH) Department began operations.
With a speed and accuracy unthinkable
before computers, it became possible
to transfer millions of dollars between financial
institutions in the wink of an electronic eye.
According to Eastburn, declining membership was one of the biggest problems confronting
the Philadelphia Fed, and the entire System,
during the 1970s.
Membership in the Federal ReserveSystem
was dropping because many banks viewed the
costs of membership (required reserves) as
outweighing the benefits (free services), he said.
The problem wasn't resolved until 1980,
the
Monetary Control Act launched the
when
Philadelphia Fed and the entire System into a
new era. The act required that all depository
institutions be treated the same with respect to
reserves held at the Fed, whether they were
members or not, which removed the incentive to
withdraw. At the same time, the Fed's services
were made available to all financial institutions,
but only at a fee.
The Bank had to learn to compete for
business such as check clearingand wire transfers,
which large commercial banks also offer, and
high-quality work was crucial. The Bank learned
to cover its expenses with its revenues, just as
private businesses do.
The Bank tackled this job under the
leadership of Edward G. Boehne, who succeeded
Eastburn as president in 1981. "lt was a real
change and a tough job the first few years, " said
Boehne. "We had to learn to think more like a
private company in some respects. "

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d
munity Affairs Department in
1984 to provide information to
help financial institutions better
serve their own communities.
"We're a catalyst, " said
Fred Manning, who has headed
the department since its organization. By bringing differing
groups together to discuss
community development, "we
put education in front of the
people who can be the agents
of change, " he said.
The Bank expanded its
outreach to the public in 1984
with a tour program in which
Bank retirees work part-time as
guides. Ed Smith joined the
tour program when it started,
and still enjoys the wide variety
of people he meets. "A couple
of years ago, I took a group of
ten foreign bank representatives
on a tour. That group included
seven different nationalities, "
he said. "We also get high
school groups in, and sometimes
about half of the kids are interested and about half aren't. It is
a challenge to work with the
ones who are interested and try
to stir up the ones who aren't. "

nn Dwyer, a Philadelphia Fed account
representative who
calls on financial institutions to explain and sell our
services, remembered the initial
confusion some financial institutions had about the Fed's
new role. "All the savings and
loan people would assume,
when they heard the word
'federal,' that we were from the
Federal Home Loan Bank, " she
said.
Dwyer also remembered
the credit union executive who
was learning, in light of the new
law, about the Fed's reserve
requirements. Upon hearing
that vault cash counts toward
reserve requirements, she facetiously asked if the credit union
had to now buy a vault.
Under Boehne, the Bank
expanded its outreach programs
to financial institutions and the
public at large. Just as a
Consumer Affairs Department
was set up in 1976 to provide
consumers with information
and resolve their complaints,
the Bank established a Com-

A major operational
improvement arrived in the
Bank's Cash Department when
the first high-speed currency
verification units began operating in 1981. Not only could
these machines count currency
at incredible speeds, but for
the first time a machine was
able to sense unfit bills, withdraw them for destruction and
detect possible counterfeit
money.
In the mid-1980s, the
Philadelphia Fed took on an
important leadership role with
the design and operation of the
Treasury Direct Book-Entry
System, which simplified the
way the public buys and holds
U.S. Treasury securities.
Treasury Direct was a
time-consuming, team project,
remembered Ed Coia, the officer
in charge. "The typical workday
was 12 hours, and in the beginning, we still managed to get
weekends off. In the final seven
months, we went to a sevenday workweek, " Coia said.

EIGHTIES

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he Expedited Funds Availability Act of
1987 put limits on the length of time
financial institutions can hold funds
from check deposits and gave the
Federal Reserve the job of implementing the law.
To make this law work both for consumers and
financial institutions, the Philadelphia Fed and
the other Reserve Banks worked to streamline
the processing of checks.
The law resulted in a lengthy Federal
Reserve regulation, and a massive job for our
print shop, which produced thousands of copies
of 350-page books for two rounds of seminars
we conducted for financial institutions. "That job
was strung across the shop end-to-end, "
remembered Bob Burns. "We had plates out our
ears, paper out our ears, and we lined our pockets
with overtime. "
The Philadelphia Fed prepared, at the end
of 1988, to again assume a leadership role in the
Federal Reserve System when it was designated
the lead Reserve Bank in the Electronic Payments
Processor Pilot Project, the goal of which is to
develop a new electronic payment system for the
1990s.
The tools will continue to change and the
jobs will change, but the basic missions will be
the same missions that those first Bank employees assumed in 1914: Keeping the nation's
banking system safe and sound, making sure the
payments mechanism works well at all levels of
the economy, and steering a policy course that
will maintain the country's economic strength.

20

jum

McGrail,

copyright

196o.

Q

The quality and efficiency of many major operating systems
were improved significantly through the Performance Improvement Program, now in its third year.

Q

Overall, the Bank improved its financial performance compared
with 1987 while meeting a very challenging operating plan.

Q

We completed conversion to Fedline ll, which now offers a
much broader gateway for the delivery of electronic services to
financial institutions.

Q

The Automated Clearing House (ACH) service was upgraded
with a new automated return-items system.

Q

The Bank improved the TreasuryDirect program with processing
enhancements.

Q

Check Operationsinstalled a new service to expedite return items,
as necessitated by the Expedited Funds Availability (EFA)
legislation.

Q

The Fiscal Department put in a new definitive book-entry system
designed to process FHA debentures. Also installed was the
new E-Z Clear System for processing redeemed U.S. Savings
Bonds.

Q

The Bank offered an early retirementprogram that was accepted
by 97 employees.

Q

Computer Services improved the security of electronic funds
and securities transfers by encrypting transmittal messages.

Q

Weinstalled a new uninterrupted power supply system for the
Bank's computers.

Q

Supervision and Regulation substantially increased its examination resources.

Q

Research expanded its international efforts with articles on the
Eurocurrency market, LDC debt, and the trade deficit among
other topics.

Q

The Bank extended its public outreach with new Community
Affairs Councils in Wilmington and Harrisburg.

Q

We took on a new System leadership role when work began on
the Electronic Payment Processing (EPP) pilot system.

Q

The Bank was selected to manage the System's Check Product
function.

THEBANK
HADMANY
ACCOMPLISHMENTS
IN1988:

m

ýOARD

ýIRECTORS
0F

Nevius M. Curtis, chairman and chief executive officer of
Delmarva Power & Light Co., completed his term as chairman of
the board in 1988. Peter A. Benoliel, chairman of Quaker Chemical
Corp., became deputy chairman, succeeding George E. Bartol, Ill,
chairman of Hunt Manufacturing Co.
Twonew directors joined the board in 1988. Constantinos 1.
Costalas, chairman, president and chief executive officer of
Glendale National Bank of New Jersey, took office as a Class A
director. He succeeded Ronald H. Smith, president and chief
executive officer of CCNB Bank, N.A. Jane G. Pepper, president of
the Pennsylvania Horticultural Society, was appointed to a term as
a Class C director.
In addition, Charles F. Seymour, chairman of JacksonCross Co., was reelected a Class B director in 1988.

Chairman
Nevius M. Curtis
Chairman and Chief Executive Officer
Delmarva Power & Light Co.
Wilmington, DE
Deputy Chairman
Peter A. Benoliel
Chairman
Quaker Chemical Corp.
Conshohocken, PA
George A. Butler
Chairman and Chief Executive Officer
First Pennsylvania Bank, N.A.
Philadelphia, PA
Constantinos I. Costalas
Chairman, President and Chief
Executive Officer
Glendale National Bank of New Jersey
Voorhees, NJ
Clarence D. McCormick
President
Farmersand Merchants National Bank
Bridgeton, NJ
Jane G. Pepper
The Pennsylvania Horticultural Society
Philadelphia, PA

eýiairneýcn
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Nicholas Riso
Executive Vice President
Ahold U.S.A.
Harrisburg, PA
Charles F. Seymour
Chairman
Jackson-Cross Co.
Philadelphia, PA

Carl E. Singley, Esq.
Philadelphia, PA

6FFICERS

In 1988, Malcolm T. Humphrey was promoted to Senior
Vice President in charge of the Computer Services Department,
Joanna H. Frodin moved up to Vice President and Check Product
Manager, and John B. Shaffer became Vice President of General
Administrative Services.
Sherrill L. Shaffer joined the Bank as a Research Officer
and Economist, and Herbert E. Taylor was promoted to Research
Officer and Economist.
In other official changes, Gerard A. Callanan was named
Planning Officer; Patrick L. Donahue was promoted to Assistant
Vice President in the Business Development Department; Edward
J. Fox was appointed Financial Services Officer; Stephen M.
Hoffman was named Assistant Vice President in the Supervision
and Regulation Department; Alan L. Kiel was promoted to Assistant
Vice President with responsibility for coordinating disaster planning
activities; Mary M. Labaree was appointed Assistant General
Auditor; Thomas P. Lambinus became Assistant Vice President in
Accounting.
Also, Edward C. Morrison was promoted to System DevelopOfficer;
Benjamin L. Nadola joined the Bank as Assistant
ment
Vice President in Check Operations; Camille M. Ochman was
named Budget Officer; Richard A. Sheaffer was promoted to
Assistant Vice President in the Fiscal Department; Milissa M.
Tadeo was appointed Fiscal Officer; Marie Tkaczyk was promoted
to Assistant Vice President in Computer Services; and Sharon N.
Tomlinson was named Staffing and Development Officer.
Edward G. Boehne
President
William H. Stone, Jr.
First Vice President

Malcolm T. Humphrey
Senior Vice President
Richard W. Lang
Senior Vice President and
Director of Research
J. Warren Bowman, Jr.
Vice President
Steven P. Cohen
Vice President
Edward J. Coia
Vice President
Peter M. DiPlacido
Vice President
Robert A. Dobie
Vice President
James B. Duffy
Vice President
Ronald G. Foley
Vice President
Joanna H. Frodin
Vice President

Konstanty G. Adack
Executive Vice President

Stephen A. Meyer
Vice President and Associate
Director of Research

Thomas K. Desch
Senior Vice President and
Lending Officer

Donald J. McAneny
Vice President and
General Auditor

Donald F. Doros
Senior Vice President

Lawrence C. Murdoch, Jr.
Vice President and Secretary

James F. Gaylord
Senior Vice President

Louis N. Sanfelice
Vice President

Hiliary H. Holloway
Senior Vice President and
General Counsel

John B. Shaffer
Vice President
Vish P. Viswanathan
Vice President
Robert J. Bucco
Assistant Vice President and
Assistant Secretary
James F. Burns
Assistant Vice President

E

Gerard A. Callanan
Planning Officer

Edward C. Morrison
Systems Development Officer

Theodore M. Crone
Research Officer and Economist

Camille M. Ochman
Budget Officer

Patrick L. Donahue
Assistant Vice President

Benjamin L. Nadola
Assistant Vice President

Robert N. Downes, Jr.
Applications Officer

Patrick M. Regan
Data Communications Officer

William Evans, Jr.
Assistant Vice President

Edward G. Rutizer
Assistant Vice President

Edward J. Fox
Financial Services Officer

Sherrill L. Shaffer
Research Officer and Economist

Eugene E. Hendrzak
Assistant Vice President

Richard A. Sheaffer
Assistant Vice President and
Assistant Secretary

Stephen M. Hoffman
Assistant Vice President
Jerry Katz
Assistant Vice President
Alan L. Kiel
Assistant Vice President
Robert H. Klein
Assistant Vice President
Mary M. Labaree
Assistant Vice President
Thomas P. Lambinus
Assistant Vice President
Edward M. Mahon
Associate General Counsel
Frederick M. Manning
Assistant Vice President and
Community Affairs Officer

Ronald R. Sheldon
Data Services Officer
Milissa M. Tadeo
Fiscal Officer
JoAnne Tarnoff
Automation Planning Officer
Herbert E. Taylor
Research Officer and Economist
Marie Tkaczyk
Assistant Vice President

COMMUNITYBANK
ADVISORYCOUNCIL
Chairman
F. Parker Renelt
Citizens State Bank

Sharon N. Tomlinson
Staffing and Development Officer

Deputy Chairman
Frank Kaminski, Jr.
Pennsylvania Independent Bank

Elizabeth S. Webb
Assistant Counsel

Gary E. Burl
Delaware National Bank

Bernard M. Wennemer
Examination Officer

Dennis W. DiLazzero
Minotola National Bank
William K. Francis
Citizens & Northern Bank

m

Wayne H. Hainley
Glendale National Bank of New Jersey
John R. Howell
First ValleyBank
Jon C. Nichols
Felton Bank
Harold A. Queen
Mauch Chunk Trust Co.
David L. Tressler
Northeastern Bank of Pennsylvania
George R. Welch
Continental Bank of New Jersey
Robert G. Zullinger
Farmers & Merchants Trust Co.

ýý

ýý

ý /1/DVISORY
----

7n0UNCIL

The Bank's four advisory councils meet regularly with
President Boehne and other officers to exchange information and
discuss problems. In 1988, the Nonmember Bank Advisory Council
was renamed the Community Bank Advisory Council and opened
to member and nonmember banks alike. The 1988 members of
advisory councils are listed below.

SMALLBUSINESS/
AGRICULTURE
COUNCIL
CREDIT
UNION
ADVISORY
COUNCIL
Chairman
Robert Smith
Tri-County Area Federal Credit Union
Deputy Chairman
Donald A. Stiles
Deepwater Industries Federal
Credit Union
Betty L. Baker
Delaware State Employees
Federal Credit Union

Chairman
Donald C. Hershey
Hershey Farms
Deputy Chairman
Linda J. McAleer
Melior Group
Walter Ellis
New Jersey Farm Bureau
William J. Gordy
Gordy Farms and
Gordy Poultry Farms
Cynthia Hudson
Waterfront Corporation

Edward J. Boyle
NJDOT Credit Union

Walter P. Lomax
Lomax Health Systems

Gladys Duling
Louviers Federal Credit Union

Noah Kreider, Jr.
Kreider Farms

Alice R. Gift
Rohm and Haas Del- Val Credit
Union

Howard Papen
Papen Farms Inc.

Helen Hirsch

Fischer & Porter Employee
Credit Union
John Ladd
609 Area Federal Credit Union
Michael R. Prettyman
Defense Activities Federal Credit
Union
Teresa C. Trudeau
Southwest Germantown Federal
Credit Union
Frank Wielga
Pennsylvania State Employees
Credit Union
Virginia Williams
F.A. A. Technical Center Federal
Credit Union

Charles A. Wiggs
Town & Country Sheet Metal
Corp.
Robert A. Winner
Pleasant Acres Dairy Farm
John H. Wright, Jr.
Wright Motor Sales Co.
Abram S. Zeiset
Zeiset Farms

THRIFTINSTITUIONS
ADVISORY
COUNCIL
Chairman
David W. Lindstrom
Franklin Savings & Loan
Association
Deputy Chairman
Robert W. Pullo
York Federal Savings & Loan
Association
Pearl H. Brown
Gloucester County Federal
Savings Bank
Frank M. Calletta
Empire Savings Bank, SLA
Ronald P. Crouch
Ninth Ward Savings & Loan
Association

Armondo Felicetti
Fidelity Federal Savings & Loan
Association
I. Maximilian Martin
Berean Savings Association
Virgil P. Moir, Ill
Progress Federal Savings Bank
William C. Gamble
Dime Savings Bank of Chester
County
John M. O'Brien
Central Pennsylvania Savings
Association
Robert H. Trewhella
First Federal Savings & Loan
Association
Gregory L. Walker
Huntingdon Savings & Loan
Association

m

ATEM

ENT

OF

ASSETS
Gold certificate account
Special drawing rights certificates
Other cash-coin
Loans and securities:
Discounts and advances
Federal Agency obligations
United States government
securities
Totalloans and securities
Other assets:
Cash items in process of collection
Bank premises-net
Operating equipment-net
All other
lnterdistrict settlement account
Total assets

DECEMBER 31,1988

DECEMBER 31,1987

$ 389,000,000
162,000,000
29,001,574

$ 385,000,000
162,000,000
23,639,616

168,030,000
197,503,576

131,525,000
228,558,271

6,624,445,534

6,624,142,252

$6,989,979,110

$6,984,225,523

420,822,813
45,902,623
12,004,535
596,824,027
469,653,714

477,347,586
46,222,477
12,787,107
542,821,293
(598,874,816)

$9,115,188,396

$8,035,168,786

$6,654,710,948

$5,705,826,311

1,776,712,363
0
7,200,000
5,613,595

1,647,973,725
0
7,050,000
28,217,510

$1,789,525,958

$1,683,241,235

374,895,992
90,497,599

368,685,906
82,923,734

$8,909,630,497

$7,840,677,186

102,778,950
102,778,950

97,245,800
97,245,800

$9,115,188,397

$8,035,168,786

LIABILITIES AND CAPITAL ACCOUNTS
Note liabilities:
Federal Reserve notes
Deposits:
Reserve accounts of depository
institutions
U.S. Treasury-general account
Foreign
All other
Totaldeposits
Other liabilities:
Deferred availability cash items
All other
Totalliabilities
Capital accounts:
Capital paid in
Surplus
Total liabilities and capital
accounts

fýlARNINGS

AND

Z11

v. _._____
Current earnings:
From U.S. government securities
From discounts, advances and
miscellaneous sources
From services to depository
institutions
Total current earnings
Net expenses:
Operating expenses (after
deducting reimbursable expenses)
Cost of earnings credits
Total net expenses
Current net earnings
Additions to current net earnings:
Gain on sales of government
securities
Gain on foreign currency
transactions
Miscellaneous nonoperating income
Total additions
Deductions from current net earnings:
Assessmentby the Board of Governors:
Board expenditures
Federal Reserve currency
Loss on foreign currency transactions
Miscellaneous nonoperating expenses
Totaldeductions
Net additions
Net earnings before payment to
U.S. Treasury
Dividends paid
Paid to U.S. Treasury (interest on
Federal Reserve notes)
Transferred to surplus, additions

1988

1987

$522,231,597

$497,305,569

17,362,397

19,546,033

32,017,493

30,841,255

$571,611,487

$547,692,857

$ 53,212,802
8,872,596

$ 50,643,891
8,970,751

$ 62,085,398

$ 59,614,642

$509,526,089

$488,078,215

$

$

$

$

693,204

1,268,641

0
9,075

84,801,017
4,393

702,279

$ 86,074,051

4,014,300
4,421,601
24,522,019
2,706,399*

$

3,789,200
4,817,304
0
7,399,965*

$ 35,664,319

$ 16,006,469

$ (34,962,040)

$ 70,067,582

$474,564,049

$588,145,797

$

$

6,039,635

5,537,791

462,991,264
5,533,150

541,827,706
10,780,300

$474,564,049

$558,145,797

m
*Includes nonreimbursed Treasury services

I/

/PERATING

'ff

TAT

ISTICS

1988

1987

Millions of Dollars
Loans to depository institutions
Currency received and counted
Coin received and counted
Checks handled:
U.S. government checks
All other
Issues, redemptions and exchanges of
U.S. government securities
Transfersof funds
Food stamps redeemed

$

7,804
13,422
166

$

8,276
13,755
169

27,540
859,672

31,440
821,334

2,495,551
8,958,131
369

2,240,210
6,927,621
405

1,566*
1,098,100
1,042,100

1,694 *
1,099,500
1,006,600

27,500
951,960

31,700
916,400

15,100
4,000
81,300

13,850
3,600
87,100

Thousands of Items Processed
Loans to depository institutions
Currency received and counted
Coin received and counted
Checks handled:
U.S. government
All other
Issues, redemptions and exchanges of
U.S. government securities
Transfers of funds
Food stamps redeemed

'Unfounded data

w

Design by NGS Associates
Photographs on pages 3,19,20 and 22 by John McGrail
Additional photography by Edward J. Bonner
Newspaper material on page 10, copyright 1941
by The New York Times Co. Reprinted by permission.
Newspaper material on page 6, copyright 1914
by The Philadelphia Inquirer; on page 15,
copyright 1969 by The Philadelphia Inquirer.
Reprinted by permission.
Text and project coordination by Jane Hinkle
Typesetting and printing by the Federal Reserve
Bank of Philadelphia


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102