View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

LIBRARY
APR 1 ” 1968

President’s Annual Report Operations For The Year 1967

Federal Reserve Bank of Philadelphia







r




President’s Letter
Business and Banking Highlights
Third District Map

4

5

DEPARTMENTAL REPORTS

Accounting
Audit
Bank Examination
Bank Relations and Services
Building
Cash
Collections
Credit Discount
Data Processing
Emergency Planning
Federal Taxes
When We’re Not Working
Government Securities and Safekeeping
Guards
Personnel
Public Information
Research
Vault
Other Departments
Organization Chart
Directors
Officers
Committees
Comparison of Earnings and Expenses
Comparative Statement of Condition
Capital Stock Account

6-7
8-9
10-11
12
13-14
15
16-17
18-19
20
21
22-23
24-25
26-27
28
29-30
31
32
33-34
35-36-37
38-39
40
41
42-43-44
46
47
48

Federal Reserve Bank of Philadelphia
Philadelphia, Pennsylvania 19101

Office

of the

President

The Board, of Directors of the
Federal Reserve Bank of Philadelphia, and
Member Banks of the Third Federal Reserve District

March 21, 1968

Most operations of this Bank continued to grow in both volume
and efficiency during 1967. Looking back, however, I am impressed., not
so much by what happened during the year, but by what was planned.
Many projects were seeded in 1967 that will have a vital effect on the
ability of this Bank to serve the Third. District economy in 1968 and.
beyond..

For example, several of our officers participated in a Systemwide study which may lead to fundamental changes in the discount mecha­
nism. In the Bank itself, we ordered, two third-generation computers for
delivery in 1968. One will be used, jointly by the Data Processing and
Research Departments and the other by the Department of Collections.

A committee of officers was appointed in September to study
our present building and determine its adequacy to meet long-run needs.
Meanwhile, plans were made to install a larger emergency generator and
to rebuild the marble columns in the main office area.
Important improve­
ments in our security system, including the use of more sophisticated
electronic devices, were designed, in 1967 and should be operative in a
few months.
The Government Securities and Safekeeping Department spent
much of the year getting ready for the new book-entry method of issuing
Government securities, which is scheduled, for use in early 1968. The
effectiveness of our planning has received special recognition from the
Board, of Governors and the Treasury.
We also intend, to place increasing emphasis on our services to
member banks and., in 1967, a new Bank Relations and. Services Department
was created for this purpose.

It gives me particular pleasure to note that many of our employes
also are planning well for their future. About fifteen per cent of our
entire work force now is attending job-related schools on their own time.




THIRD DISTRICT BUSINESS AND BANKING HIGHLIGHTS

After a sluggish start the Third District economy was rolling in high
gear at year’s end. The tight labor market of last year showed some
signs of easing in the early months of 1967 but by December new pressures

were building.
A look at the 13 major labor areas in the District shows only one
with greater than 6% unemployment. Of the remainder, six had un­
employment rates between 1.5 and 2.9% and six others were in the 3.0
to 5.9% bracket.
Increased productivity wasn’t quite able to offset higher wages and

labor costs rose steadily during the year. In this environment the con­
sumer price index for Philadelphia climbed about 3%.
Construction turned in a strong performance in 1967. An overall

rise of 8% reflected advances in both residential and nonresidential
building. During the previous year, in comparison, housing starts

dipped 12%.
Relatively easy money conditions coupled with a reduced loan
demand enabled member banks to increase their investment portfolios
and holdings of U. S. Governments and other securities swelled 21%
during the year. Third District country member banks continued to be
net sellers of federal funds. Reserve city banks, on the other hand,
generally were frequent purchasers. The growing participation of
member banks in the federal funds market along with easier money,
were the major reasons for a reduction in borrowing at the discount
window.
Member bank loan activity here, though brisk, failed to equal last
year’s growth rate. Even so, the District rate exceeded that of the Nation
by more than 2%.
Whatever the causes—resistance to higher prices, favorable interest
rates, uncertainty over Vietnam, taxes, and the economic outlook—
people saved more in 1967 than in any other year in the past decade.
Third District time deposits increased over 15% and demand deposits,
too, rose sharply when compared to 1966—about 7%.
On entering 1968 the Third District economy appears to have a
green light. Business and banking activities seem scheduled for another
period of expansion.

4






New Jers ey
5

DEPARTMENTAL REPORTS

ACCOUNTING
Accounting operations include maintenance of the Bank's general books, General Account of the
Treasurer of the United States, expense and disbursement records of the Bank, and preparation,
recording, and distribution of budget and expense data by function and department. Other operations
include continuous analysis of member bank reserve accounts to insure compliance with System
regulations; maintenance of member bank reserve account statement files; settlement of group and
wire clearance plans; collection and reconcilement of payments received for checks sent to District
country banks; reconcilement of accounts with other Reserve Banks; securing payments for services
rendered Government agencies; and transfer offunds by wire and mail for member banks. In addition
to operating the Bank's leased wire telegraph services, connected with the Board of Governors, all
other Reserve Banks and Branches, and the Treasury, the Department utilizes commercial wire
services, and a closed circuit teletypewriter system for receiving transfer requests from six Philadelphia
banks.

Bankers must have used sharper pencils in
1967. The number of reserve deficiencies was
reduced approximately 24% which seems to
indicate closer attention is being paid to re­
serve maintenance by member banks. From
the members’ point of view better reserve
management cuts back excess reserve balances
and puts idle funds to work.
Regulation D, Reserves of Member Banks,
was amended by the Board of Governors on
two occasions during the past year. In March
required reserves on all savings and time de­
posits under $5 million were reduced by one
percentage point in a series of two steps. In
December the required reserve on demand de­

posits in excess of $5 million was increased by
one-half of one percentage point for all mem­
ber banks, effective January, 1968.
Wire transfers of funds showed greater ac­
tivity again in 1967. The combination of out­
going, incoming, and intradistrict transfers of
funds during the year added up to nearly a
quarter of a million items—a new high.
To provide better service in this area our
Operating Circular was amended to permit
member banks to initiate transfer requests by
telephone. With the same goal in mind an
additional teletype machine was installed to
receive transfers from Philadelphia banks.
While more and more of today’s banking

The Account Adjustment Division of the Accounting Department traces errors, makes adjustments, and
verifies entries to member bank reserve accounts. (Shown left to right are Carmen Marra, Carmela Puracchio,
Phylis Halperin, and Agnes Boady.)

6



operations are processed by computer systems
the human factor is still very much in evidence.
The Adjustment Division processes a seem­
ingly ever increasing volume of varied and
complex adjustments.
In addition to traveling by wire, money
moves throughout the country in various other
ways: Reserve Bank cash letters, direct send­
ings, collection items, etc. Obtaining payment

is the prime interest of the Reserve Bank
Reconcilement Division. Timeliness of pay­
ment is also important to eliminate unneces­
sary “float.”
This Department is also custodian of the
Bank’s purse strings. Would you believe that
net expenses of the Bank in 1967 showed an
increase of less than one-half of one per cent
over 1966?

The Reserve Reconcilement Division of the Accounting Department maintains member bank reserve account
statement files and reconciles payments received for checks sent to District country banks and accounts with
other Reserve Banks. (Margaret Garr, foreground, Henry Wright and Rachel Eastlack.)




MOVEMENT of FUNDS
1967

1966
Number
of items

Dollar
Value

$219,815

232,991

$192,718

79,516

89,680

76,826

82,282

88,315

84,485

81,279

76,048

Number
of items

Dollar
Value

247,814

(millions)

Transfers of Funds
Outgoing
Incoming
Intradistrict
Direct Sendings

(millions)

79,983

45,650

74,886

34,388

456,825

$ 48,863

428,862

$ 44,659

J

AUDIT
The Audit Department is supervised by the Vice President and General Auditor, who is directly
responsible to the Board of Directors through its Audit Committee. The Department conducts
audits and examinations, reviews and appraises adequacy, soundness, and application of internal
controls in other departments and functions of the Bank. The frequency and extent of audits and
examinations conform with schedules approved by the Audit Committee of the Board of Directors.
Reports of all audits, examinations, and special investigations are submitted to the Audit Committee
monthly or more frequently if required by the Committee.

ing, have created complex operations that de­

Verifying the existence and accuracy of the
assets and ascertaining the reliability of the ac­
counting data are among the primary objec­
tives of the Audit Department. Another very
important function of the audit program is
to assist management by furnishing objec­
tive appraisals of and recommendations on
operations.
Procedures are reviewed with the goal of
lessening risk by eliminating conditions that
permit laxities and irregularities. Such reviews
are an aid to the auditor as well as the operator
for adequate controls reduce the exposure and
require less audit attention.
New operating techniques, including the
widespread use of electronic data process­

mand flexible and imaginative auditing pro­
grams. An auditor today should have technical

knowledge, informed judgment, and a broad
outlook, not restricted by tradition.

Obtaining and retaining individuals with

these attributes was one of the most challeng­

ing tasks the Audit Department faced during
1967 according to Vice President and General

Auditor William Metz. He says: “Audit sys­
tems are only as efficient as the auditor and his
staff who are charged with their responsibility
and maintenance. To grow to its ultimate
stature, internal auditing will need men cap­

able of living up to its rising standards.”

AUDIT ACTIVITY—1967
Periodic Audits

70

Spot Audits

39

Proofs and Verifications

8



224

Confirmations Requested by Audit

13,300

Confirmations Furnished to Others

2,650

Bank auditors Peter Roberts (left) and Doug Spotts (center) discuss a settlement with Charles Sullivan, Jr.,
during an audit of checks in process of collection. The Audit Department conducted 109 periodic and spot
audits within the Bank in 1967.




9

BANK EXAMINATION
It is the policy of this Bank to conduct an examination, in cooperation with the respective State
banking authorities, of every State member bank in the District during each calendar year. The
field work of the Bank Examination Department also includes (7) examinations of nonmember
banks applying for membership, (2) examinations for the Federal Reserve Board of Edge Act
Corporations located in this District, (3) investigations of applications of State member banks for
branch offices, (4) examination of off-premises data processing service centers under the provisions of
the so-called “Bank Service Corporation Act,” and (5) investigations in connection with applications
to merge, consolidate or purchase assets and assume liabilities. Supervisory responsibilities of the
Department include processing of applications for mergers when the surviving bank is a State member
bank, rendering of opinions to the Board of Governors of the Federal Reserve System on competitive
factors in connection with mergers when the surviving bank is a national or State nonmember insured
bank, processing of reports regarding criminal violations, processing of applications to form Edge
Act Corporations, and providing information on regulations issued by the Board of Governors of
the Federal Reserve System.
Since July 1, 1967, the Board of Governors delegated to the Federal Reserve Banks authority
to approve certain applications; the chief activity under delegated authority has been approvals of
applications by State member banks to establish branches.
The Department also does certain analytical work on various reports and statistical data and
does the initial processing of adjustments in member bank holdings of Federal Reserve Bank stock.

Chief Examining Officer Jim Giacobello and Examining Officer Len Markford (standing) discuss examining
procedures with visitor Nakorn Borwornsin, Bank Examiner from Bank of Thailand, Bangkok, Thailand.

10




At the close of 1967, 35 State member
banks were subject to examination by our

be national or insured nonmember State
banks.

Bank Examination Department. Of these, 23

There are four Foreign Financing (Edge

had trust departments; 15 operated one bank­

Act) Corporations in this District. All of them

ing office and 20 had two or more offices. The

have affiliated corporations. The corporations

total number of State member bank offices in­

and affiliates were examined by the Depart­

creased by 22 during the year to 290.

ment in 1967, although technically our ex­

All State member banks in the District were

aminers functioned as direct representatives of

the Board of Governors of the Federal Reserve

examined during 1967.

The number of State member banks in the

System.

District decreased by one during 1967 as a

Although not intended as a training ground

result of the merger of one State member bank

for bank executives the Department has, over

with an insured nonmember State bank.

the years, made a contribution toward main­

Over the year the number of national banks

taining the quality of bank management

was reduced by fifteen. Twelve were merged

throughout the Third District. Nearly a score

or consolidated with other national banks and

of former examiners now hold key official

three merged into State nonmembers.

positions in commercial banks in the area.

The Department processed two applications

And in this Bank William Metz, vice presi­

under the Bank Merger Act in 1967, where the

dent and general auditor, Jack Besse, assistant

surviving bank would be a State member

vice president, Walter Brobyn, assistant gen­

bank. We also prepared 24 opinions on the

eral counsel, and Sam Culbert, Jr., bank

competitive factors involved in merger pro­

services officer, are former members of the

posals where the surviving institutions would

Bank Examination Department.




DISTRICT MEMBER BANK STRUCTURE
1967

1966

As of December 31
(Dollar amounts in millions)

State Member Banks
Number
Assets of Commercial Departments
Assets of Trust Departments

35
$ 6,179
$ 8,30s1

36
$ 5,366
$ 8,117

335
$11,296

350
$10,139

National Banks

Number

Assets of Commercial Departments

1 Based on book values which usually are substantially less than real values.

11

BANK RELATIONS AND SERVICES
Objectives of the Bank Relations and Services function are to maintain liaison with member banks
and banking associations and groups concerning services, operations, and policies of this Bank and
the System. Activities include (7) annual visits to all Third District country banks, (2) special
bank visits upon request, (3) circulation internally of reports on a county-by-county basis covering
bank visits, (4) annual field conferences, (5) participation in meetings of banking groups and associ­
ations, (6) preparation of special reports, charts, and ratios for member banks, and (7) providing
an annual Functional Cost Analysis program for member banks.

Services . . . This was the keynote for 1967.
Not only was the Department’s name changed
to include the word Services but Samuel J.
Culbert, Jr., was appointed Bank Services
Officer. It is becoming more apparent that
member banks have definite need for more
and better technical assistance services.
Department personnel are being trained to
improve the scope of our services. Use of com­
puter equipment is stressed. New uniform ac­
counting procedures and reporting require­
ments have been studied so that a greater
variety of assistance can be offered to members.
The Functional Cost Analysis program was
streamlined in 1967 to reduce the amount of
work participating banks must perform. This
program has become increasingly popular
with member bankers who desire an analysis of
their operations by function, year-to-year in­
ternal measurements, and comparisons of their
functions with other banks of similar size.
Emphasis on technical assistance in no way
curtailed the Department’s other activities.

During the year each country bank was visited
at least once by a field representative. These
bank visits are becoming increasingly technical
in nature. Bankers visited are shown trend
charts of their deposits, loans, investments,
etc., which have been prepared at our Bank
immediately prior to the visit. Further discus­
sion of problem areas is arranged with “ex­
perts” in various departments of this Bank.
Ratio studies concerning nonearning assets are
also presented for consideration.
We assume from continued capacity attend­
ance that our regional field meetings are well
received by District bankers. In 1967, the
Bank’s 22nd annual series of meetings attracted
a total of 1,884 guests. As in the past, officers of
the Bank presented views on current economic
developments and Federal Reserve policy.
Members of the Department missed few, if
any, opportunities to attend bank-sponsored
meetings, conferences, conventions, and similar
gatherings throughout the District.

Bank Services Officer Sam Culbert (left) reviews Functional Cost Analysis program data with technical assist­
ants Glenn Manthorpe (center) and Chuck Soule. Fifty-one member banks participated in the program during
1967.

12



The Building Department is responsible for the care, cleaning, operation, maintenance, and alter­
ation of the physical plant, including rented space. Its staff maintains and operates air-conditioning
and other mechanical equipment, repairs and fabricates special devices for other departments, and
does painting work throughout the Bank. Plant maintenance and service personnel operate on a 24hour schedule.

The majesty of ancient cathedrals, the
charm of primeval castles, and the rustic sim­
plicity of antique farm houses could hardly be
recaptured in modern design. Fascinating as
old buildings may be to look at, they present
myriad problems to those responsible for their
condition.
Our Bank consists of four buildings joined
together; the oldest was built in the 19th cen­
tury and the youngest dates back to the early
1930’s. These vintage structures have their
charm but they require continuous mainte­
nance and updating. Problems must be

anticipated and corrected before they get out
of hand.
While performing a routine check of the
Bank building, Adam Arnold, head of the
Building Department, noticed cracks and
bulges at the top of one of the marble columns
that beautify the Bank’s main office. Further
investigation revealed the facing was separat­
ing from the structural cores of this column and
others, as well. This potentially dangerous
situation called for major repairs; which are
now in progress.
During the year firefighting apparatus was

Ira Tull of the Building Department tests tension of a fan belt on one of the Bank’s ventilating systems. These
systems, which have run continuously for the past 14 years, require constant surveillance.



13

surveyed and modernized. New fluorescent
lighting, illuminating panels, and acoustical
ceilings were installed in many parts of the
Bank. A fireproof, bulletproof door was put in
to protect the Bank’s Ludlow Street loading
platform. A raised floor and electrical and airconditioning conduits were installed to accom­
modate new and heavier computer “hard­
ware.” A new larger emergency generator is
planned—a need that became apparent during
the citywide power failure last June—together
with an additional electric substation.
Partly because of structural antiquity, house­
keeping costs had grown over the years until
the Bank’s position in the System was out of

line. A committee was formed to investigate
and make recommendations. An important
result of the committee’s work is an attitude of
cost-consciousness among Building Depart­
ment personnel. Costs were reduced and our
System ranking improved during the year.
A combination of death and retirement re­
moved both senior and junior officers in charge
of the Building from Bank service in 1967.
Larry Murdoch, Jr., vice president and secre­
tary, is now senior officer in charge of the De­
partment. Russell Connor, appointed assistant
secretary in June, was named building officer
in November.

Building Department’s Carmen DeStefano installs new, plastic diffuser in Research Department. This diffuser
and a new type of fluorescent lamp provide greater safety and better lighting than those formerly used.

14



The Cash Department maintains an inventory op Federal Reserve notes, Treasury currency, and
coin to meet demands of banks in the Third Federal Reserve District. Currency and coin move into
and out of circulation through banks in response to increases and decreases in public demand. All
bank orders for cash are charged, and all cash shipments are credited, to member bank reserve accounts.
The Post Office Division of the Cash Department operates under United States Postal Regulations
by contract agreement. It processes incoming and outgoing registered mail containing coin, currency,
and securities, and certified mail.

According to Harry Roeder, who stoutly
bore the undeserved title of “vice president in
charge of the coin shortage” for many trying
months, coin flowed freely in 1967. The Mint
wasn’t quite able to cope with continued
strong demand for half dollars but “halves”
were the only coins rationed during the year.
With an eye toward anticipating and pre­
venting future coin shortages the Bureau of the
Mint in late 1967 initiated a program to im­
prove forecasting of coin needs. Reserve Banks
were asked to select commercial banks that are
large users of coin and have these banks report
each month a 15-month projection of the coin
they expect to require. These reports, in turn,
are used by the Reserve Banks in estimating
and reporting their own coin needs to the
Mint’s Coin Management Division.
Last spring the Treasury announced that
after June, 1968 silver certificates would no
longer be redeemed in bullion. As a result the
volume of silver certificates redeemed by us for
face value dropped dramatically. Apparently,
holders either plan to purchase bullion before
the deadline or are selling the fast disappearing
certificates to collectors.
The Treasury Department also advised the
Reserve Banks that as of January 1, 1968, all
unfit Federal Reserve notes up to and includ­
ing $100 denominations would be verified and
destroyed by the Reserve Banks. Prior to this
announcement the Reserve Banks were author­
ized to destroy only notes of $10 denomination
or less.
Federal Reserve Agent Willis J. Winn, who
also is Chairman of the Bank’s Board of Direc­
tors, had a busy year. He and his assistants au­
thorized the issuance of $698 million in Federal
Reserve currency in 1967 and held an inven­
tory of $472 million Federal Reserve notes at
year’s end. The agent issues currency as re­




quested by the Cash Department and it must
be collateralized with gold and securities
before it is circulated.
Cash Department activity increased from
1966 in all categories save one. Counterfeit
notes detected in incoming deposits dropped
slightly in number and dollar volume.

Cash Department's Henry Martino (left) and Frank
Lewandowski assemble “fit” currency for redistri­
bution to member banks. Notes have been sorted
from member bank shipments.

COIN INVENTORY
Year-end

(Millions)

1967

$8.0

1966

6.1

1965

4.2

15

COLLECTIONS
Federal Reserve Banks provide, on a nationwide basis, a system for the clearing and collection of
checks and other cash items, and for the collection of noncash items such as drafts with documents
attached, coupons, and securities. Fast processing and presentation of MICR qualified cash items and
checks are achieved by the efficient use of automated reading and sorting equipment.
The Department of Collections also handles and processes return items, adjustment of cash
letters, food stamp coupons, and claims for refunds on previously paid items.
These services are extended directly to member banks and agencies of the Federal Government.

Business as usual might best describe the
Department of Collections in 1967. This
“team” has set such high efficiency standards
in the past that reporting last year as usual is
much the same as saying the Green Bay
Packers had an ordinary season in the National
Football League.
The volume of checks processed increased,
as it has almost every year, but improved facili­
ties and procedures made it possible to handle
the heavier workload with approximately the
same number of employes.

At year’s end 29 counties in the Third Dis­
trict were participating in the Federal Food
Stamp program and nearly 18 million food
stamps were processed by the Department dur­
ing the year. This figure, a 100 per cent gain
over 1966, should increase again next year
because many additional counties have ap­
plied to participate in the program.

Philadelphia banks speeded the collection
of Third District country checks by sending
about 25 per cent more items in sealed
packages. This improvement became possible
when the Department of Collections extended
the close-out for carrier service approximately
one and one-half hours for several key routes.

As more country banks use one variety of
off-premise bookkeeping or another our “inter­
cept” program continues to expand rapidly.
The program permits the Department, when
properly authorized, to send cash letters of
Third District country banks direct to the
correspondent bank or service center for de­
mand deposit processing. At present 120 Third
District banks are using this speed-up service
and volume has tripled in the past two years.
Early in 1967 area bankers expressed con­
cern that the September 1 deadline for han­
dling checks as noncash items on which the
routing symbol-transit number of the payor
bank had not been pre-printed or post encoded
might prove a hardship. It was thought the
number of items slowed in collections or re­
turned to the sending banks might be drasti­
cally increased. Fears, however, proved
groundless. The number of unacceptable
checks has been practically nil.

16



Supervisor Herb Dietrich of the Collections Depart­
ment sorts checks for carrier runs throughout the
District. The Bank sent checks by carrier service to
500 District banks in 1967.

Supervisor Bob Shaw of the Collections Department explains equipment operation to Diane DiNardo as Loretta
Gonnella processes Food Stamp Coupons. Twenty-nine counties in the District participated in the Food Stamp
Program in 1967.




VOLUME OF OPERATIONS

1967

1966

Dollar
Value

Number
of Items

Dollar
Value

Number
of Items;

(Millions)

(Millions)

61.0

$42,052.0

216.9

$ 43,503.8
50,526.0

213.1

46,417.9

280.8

$ 94,029.8

274.1

$88,469.9

Drafts on This Bank

—

3,624.8

—

3,586.4

Return Items

2.6

392.7

2.5

366.5

Government Checks

32.7

7,982.9

30.8

6,993.0

Postal Money Orders

17.3

247.7

18.2

254.4

333.4

$106,277.9

325.6

$99,670.2

$

1,103.9

0.8

$

827.3

$

23.3

9.8

$

12.7

City Checks
Country Checks

Subtotals

Totals

Noncash Items

Food Stamp Coupons

63.9

0.8
17.4

17

CREDIT DISCOUNT
Federal Reserve Banks are empowered to supply funds under prescribed conditions to member banks
through extension of credit. The Credit-Discount Department administers loans to member banks.
It is also responsible for administration of defense production loans on behalf of Government agencies
guaranteeing the loans under the Regulation V Program, and for the administration of the Foreign
Credit Restraint Program. In addition, the Department maintains records of the earning assets of
the Bank and of the accruals and income thereon, including participations in the System Open
Market Account, holdings of Foreign Currencies and Foreign Loans on Gold.

Relatively easy money conditions during
much of 1967 were reflected in reduced dis­
count window activity at this Bank.
Country banks in the Third District con­
tinued to increase their participation in the
federal funds market, usually as sellers. This
helped potential borrowers at the window find
accommodation in the federal funds market
instead.
Though fewer in number, borrowing banks
were served with a minimum of red tape.
Telephone requests again accounted for 70%
of all advances made. This Bank’s policy of
accepting telephone requests is becoming more
important to member banks as mail deliveries
lag.
The discount rate was reduced from 4jT%
to 4% on April 7, 1967—the first change since
late 1965. The reduction was in line with de­
clines in market rates. On November 21, 1967,
the rate was raised back to 4%%. The action
was influenced by the British Government’s
decision to devalue the pound.
The Discount Committee in December ap­
proved the practice that any rebate of un­

18



earned discount or interest shall be made at

the same rate as the rate charged on the
original advance.
Changes designed to better adapt the dis­
count mechanism to current conditions were
studied throughout the year. Officers of the
Bank have been actively engaged in this
Systemwide reappraisal which will continue
into 1968.
Administration of the Foreign Credit Re­
straint Program was continued with the assist­
ance of the Department of Research. Report­
ing banks and nonbank financial institutions
cooperated in a satisfactory manner and no
major problems developed during the year.
Although revised guidelines for the program
liberalized reporting requirements, the U. S.
Balance of Payments problem will require
close supervision under the new guidelines.
In June, representatives of the Department
attended the Collateral Evaluation School es­
tablished by the Board of Governors in Wash­
ington. The program proved to be highly

informative and key Department personnel
will enroll at future sessions.

Credit-Discount Department’s Bernie Beck answers member banker’s questions about borrowing, aided
by Assistant Vice President Al Spencer (standing) and Phil Delphey. The Department accommodated 79 mem­
ber bank requests for 363 advances in 1967.




LENDING ACTIVITY

Number of Advances to Member Banks
Dollar Value (Thousands)
Number of Member Banks Accommodated

1967
363
$322,959
79

1966
889
$1,806,298
135

19

DATA PROCESSING
The Data Processing Department is primarily a service unit for other departments of the Bank.
It takes source documents from these departments and transcribes them into punch cards that may be
sorted, counted, and recorded by electronic and mechanical equipment. It then produces desired
information and necessary records.

Back in 1961 the Bank installed its first
computer and in less than one year virtually
all tabular operations were converted. In 1967
the Bank ordered a new, more sophisticated
computer complex with a larger memory ca­
pacity, greater speed, and more accessories. A
major effort of the Department during the
year was devoted to evaluating and selecting
the computer and planning for its installation.
Proposals of two manufacturers were con­
sidered before the Department determined
which third-generation computer complex
would best serve Bank needs now and in the
foreseeable future. Planning for the physical

installation of the complex required reorganiz­
ing the Department’s equipment and workflow.
Departmental supervisors and programmers
performed considerable maintenance on our
computer systems during the year to provide
more diversified applications and greater
variety of services. Data processing techniques
are constantly evaluated to expedite work de­
mands of other departments in the Bank.
Members of the Department also devoted a
great deal of time during the year to establish­
ing techniques that isolate components of float
for a Systemwide study.

Research Department programmer Susan Case places disk pack containing program operating system on
disk drive as Grace Hamilton (seated) dials program into IBM 360 computer console.

20



The Federal Reserve System, in participation with other Government agencies and departments, has
been assigned certain responsibilities in the formulation of emergency financial and stabilization
policies including, but not limited to, programs for continuity of its operations and the Nation's
banking system under emergency conditions. As a part of basic System planning, this Bank maintains
a Relocation Office to which copies of vital records are sent daily. Emergency operating programs have
been developed for essential functions and are under continuous review.

Each day, in the wee early hours of the morn­
ing, a carrier leaves the Federal Reserve Bank
and proceeds to Lewisburg, Pennsylvania. He
is delivering vital records of the previous day’s
activities to our Relocation Office in the base­
ment of Roberts Hall on the campus of Bucknell University. The site was selected because
it was far removed from possible military or
industrial targets.
The records are processed by a group of
part-time employes under the guidance of an
office supervisor. Four times each year account­
ing consultants reconstruct this Bank’s balance
sheet and related accounts.
At least once every year employes of this
Bank visit the Relocation Office to test various
aspects of the emergency operating program.
In 1967, for example, the System’s Open
Market Account was reconstructed from the

records available in Lewisburg. “Test decks”
of checks and currency transactions were also
distributed to selected banks in the District for
processing in accordance with emergency in­
structions. Subsequent review of the tests dis­
closed very few errors.
Why do we do all this? The System has the
responsibility of insuring the continuity of
Federal Reserve operations and the Nation’s
banking system under emergency conditions.

All Third District banks have been issued
manuals of emergency instructions on how to
conduct daily transactions with the Fed in the
event of an emergency. In addition, certain
District banks have been designated Cash and
Check Agents. They will distribute cash and
clear checks in specified areas during a
national emergency.

Supervisor Lois Geiger (right) and Frances Gallicano, Doris Martin, and Dorothy Reish review data sent from
our Philadelphia headquarters to Bank’s relocation center in Lewisburg.




21

FEDERAL TAXES
Federal Reserve Banks, as Fiscal Agents of the United States, are authorized to accept tax funds either
from employers directly or through qualified commercial banks. These tax funds represent withheld
income taxes of employes, Social Security taxes of employers and employes, Railroad Retirement
taxes, and certain excise taxes. Regulations and forms are supplied to banking institutions and
receipt forms are supplied to employers.

In February, 1967, the Internal Revenue
Service lowered its requirement for semi­
monthly deposit of withheld Social Security
and income taxes from $4,000 to $2,500. This
change increased the number of receipts the
Department processed by 20 per cent over
1966.
The Internal Revenue Service also changed
its method of collecting and crediting certain
corporate and individual income taxes. Form­
erly, the Service sorted large checks it received
in payment of income taxes and sent them to
Reserve Banks for collection. The Reserve
Banks then credited a portion of each check to
the depositary bank’s Treasury Tax and Loan
Account by special draft. In April the special
draft procedure was discontinued.

In March the Internal Revenue Service sup­
plied a new Federal Tax Deposit Form 503 to

accompany corporate and individual tax pay­
ments made to Reserve Banks or deposited in
commercial banks. A detachable stub now be­

comes the taxpayer’s receipt, eliminating the
need to return validated depositary receipts

and making tax collection more efficient and

economical.

The Internal Revenue Service is distributing
a new Federal Tax Deposit Form for each class
of federal taxes which is to be used for the first

1968 payment. The prepunched and prein­
scribed forms, with a detachable stub, will be
sent to each taxpayer at the address indicated

on his previous tax returns.

SUMMARY OF TAX RECEIPTS
1966

1967

Number of
Receipts

Dollar
Value

Number of
Receipts

(Millions)

(Millions)

Total

798,975

Withheld and Social
786,964
Security Taxes
11,207
Excise Taxes
804
Railroad Retirement Taxes

22



Dollar
Value

$3,935.1

663,011

$3,348.0

3,508.1

654,033

2,969.2

375.6

8,414

316.6

51.4

564

62.2

Ronald Sheldon (left) and Melvin Cooper prepare to run Federal Tax receipts through processing equipment.
Machines that count, sort, print, select and perform many other operations are in constant use during the day
in our Data Processing Department.




23

“AND THEY SING, TOO”

"25 YEAR CLUB AT PLAY”

When
P'e're

The choral group sings at Christmas and social activities during the year.
‘HE DUBBED IT”

The Pioneer Club enjoying its 22nd annual dinner and show at the
Benjamin Franklin Hotel. About 20% of the bank staff has 25 years
or more of service.

Vo/

"NOT EVEN A NIBBLE”

“AND LET A WINNER LEAD THE WAY”

Working
Golf outings are popular with Fed employes. Duffers are welcome. Scores
ranged from 82 to 162 last time around.

Our Fishing Club, known as the "Anglers” is very active.
Half a dozen trips a year are supplemented by monthly
meetings where strategy is discussed. Catches are usually
small but the stories are big.

"WHY DOESN’T SOMEBODY LOOK AT THE PINS?”
"A LONG OUT”

"DID ANYONE BRING THE FILM?”

Talented artist Ann Blasioli accepting an award
from Bill James and Olga Matuck. Our annual art
show is one of the high spots in the year’s activ­
ities.

24



Diane James poses prettily while members of the Camera
Club prepare to shoot.

The girls’ bowling teams are always in the thick of
the fight for Financial League laurels. The men’s
teams—well, better luck next year.

Our Bernie Beck was voted the Financial League’s most valuable player in
1967. Here Bernie backs a rival outfielder against the fence with a
long drive.

25

GOVERNMENT SECURITIES AND SAFEKEEPING
As Fiscal Agents of the United States, Federal Reserve Banks sell new issues of Treasury marketable
securities to the general public, conduct refunding operations, exchange and transfer bonds and notes,
pay Government and agency coupons, and maintain Treasury Tax and Loan Accounts. Reserve
Banks are authorized to issue, reissue, and redeem United States Savings Bonds and Retirement
Plan Bonds, to issue and reissue United States Notes, and to process and pay Armed Forces Leave
Bonds. Reserve Banks qualify commercial banks and others as issuing agents of Series E Savings
Bonds and of savings notes, and as paying agents of Series A through E bonds and of matured Series
F, G, J, and K bonds.
Reserve Banks also act as depositaries for securities owned by member banks. All securities are
serviced as to collection of interest, redemptions, and exchanges. Purchase or sale of any Government
security can be made through Reserve Banks by member banks without charge.

The year 1967 was a pivotal one for fiscal
agency operations. After months of planning,
the United States Savings Bond Department
and the Government Bond and Custody De­
partment merged in order to achieve greater
efficiency and to centralize operations on a
single floor. The new Department was re­
christened, Government Securities and Safe­
keeping.
During 1967 members of the Department
contributed to the acceptance of a book entry
method of issuing Government securities by
presenting the proposed procedure to Treasury
and System officials. The Treasury authorized
use of the book entry method by all Reserve
Banks, effective January, 1968. This method
eliminates certain manual tasks and reduces
expensive protective measures.
During 1967 the Department abolished un­
wieldy Depositary and Custody documents
used in the safekeeping of securities by Operat­
ing Circular 12B. The circular explains terms
and conditions of custody and itself constitutes
a legal agreement. Depositing banks merely cer­
tify that they have read and understand the
terms and conditions in the circular. The new
procedure will become effective in early 1968.
By the end of 1967, virtually all member
banks in the Third District had authorized the
Department to place restrictive endorsements
on securities in safekeeping when these securi­
ties are presented for payment within the Third
District. The endorsement, which eliminates
the need to insure shipments, saved member
banks several thousands of dollars during the
past year.

26



Continuing its decentralization plan, the
Treasury authorized Reserve Banks to issue
registered Treasury Bonds or Notes effective
January, 1968. Reserve Banks are also au­
thorized to redeem registered Government
bonds and bonds submitted in payment of
estate taxes, and to exchange registered bonds
for coupon bonds. Localizing these tasks have
cut processing time from weeks to days.
In 1967 the Treasury invited large volume
issuing agents of United States Savings Bonds
to report their sales on magnetic tape. This
procedure will speed processing of bond sales
data and result in other economies.
Certain regular purchasers of Series E
bonds were rewarded in May when the Treas­
ury offered them “Freedom Share” notes bear­
ing 4.74 per cent interest and maturing in four
years and six months. A Freedom Share can be
purchased only with the simultaneous pur­
chase of a Series E bond under payroll savings
plan or through a bond-a-month plan and
annual purchases by any one individual are
limited to $1,350. Sales in the District started
slowly, but picked up rapidly in the latter half
of the year.

Purchasers of Retirement Plan Bonds will
get new benefits in 1968. Under amendments
to the Keogh Act of 1962, self-employed per­
sons will be able to deduct from their taxes the
full amount (to maximum $2,500) set aside
from earned income for retirement purposes.
Formerly, they could deduct only half of
the amount.

Ileen Thomas of the Government Securities and Safekeeping Department shows how card records can replace
cumbersome marketable securities. Book entry method of issuing government securities becomes effective
in 1968.




MARKETABLE SECURITIES
1967

1966

(Millions)

(Millions)

$3,652

$3,156

Delivered Subscriptions

2,156

2,323

Redemptions

3,967

4,228

Securities in Custody 12/31

ISSUED and REDEEMED SAVINGS BONDS
1967

1966

(Thousands)

(Thousands)

Series E Bonds

$359,280

$358,646

Series H Bonds

37,132

49,737

334,400

319,500

500

908

50,175

60,500

Issued (price)

Redeemed (value)
Series A-E Bonds
Series F & G Bonds
Series H, J, & K Bonds

27

The Guard Department is responsible for safeguarding Bank property and personnel. Under super­
vision of a Captain, Lieutenant, and four Sergeants, armed guards man posts strategically located
throughout the Bank. The Department also supervises the use of Bank automobiles.

Visitors to the receiving section of the De­
partment of Collections may not know it but
they now are on candid camera, so to speak.
As an additional security measure two new TV
cameras were installed in 1967, and everything
that goes on in this vital area is seen on monitor
screens in our guard control office. Six impor­
tant areas within the Bank are now under con­
stant surveillance by television.
In 1967 plans were made to install a new
highly sophisticated electronic control panel
incorporating all monitors and alarm systems
with some new hush-hush features. The way
it looks now the entire guard control office will
be moved from the first floor to more spacious
and secure quarters on the second.
For the seventh consecutive year our guards’
pistol team was runner-up in the Eastern

Pennsylvania Police League. Being second like
Avis, we try harder. For example, a competi­
tive shooting program has been activated
within the Guard Department and scores are
improving. Just wait until next year.

Guard management and personnel attended
numerous meetings and seminars conducted by
the Police Chiefs Association, the Securities
Officers Association, and the American Society
of Industrial Security throughout the year.
According to all reports the sessions proved
to be highly informative.
The Bank’s internal alarm and security
system was improved in 1967 by the addition
of various equipment specifically designed to
cope with civil disorders and any other newtype emergencies that may arise.

Sergeant Art Hall of our Guard Force scans control monitor. Six vital areas in the Bank are televised to insure
constant surveillance.

28



PERSONNEL
The Personnel Department administers Bank policies and programs op employment, job classification,
and salary administration, together with payroll operations, including Retirement System and Social
Security matters. Employe counseling, the direction of the cafeteria, the Medical Division, and
employe and supervisory development and education are among its other major responsibilities.

The lot of a personnel officer is not always
a happy one in today’s labor market. Not only
does the demand for management personnel
exceed the supply, but there is a shortage
of skilled clerical people throughout the
Third District and perhaps the entire Nation.
Personnel Officer William James has man­
aged to sleep fairly well at night, however. It’s
true he has gotten a bit gray on top in recent
years, but he is fortunate in having a few
things going for him that would be considered
a blessing in most shops.
For example, 20% of all employes have
been with the Bank for a quarter century or
more. This means that despite a total turn­
over of just under 20% a year, we can rely
on a stable nucleus of about 165 “old pros.”
A formal job evaluation plan first was de­
veloped for the Bank in 1946. The objective
was to provide a sound basis for ranking jobs
according to difficulty and responsibility.

While no major problems had developed in
the program, it was decided a fresh look at the
job evaluation method was in order. Members
of the Bank staff under the guidance of an
outside consultant worked on the project
throughout the year and every job is being re­
examined. The project is expected to be com­
pleted in the spring of 1968.
Two significant changes in the benefits of
the Retirement System were made on July 1,
1967. Retirement allowances were granted
without full actuarial discounts to certain
qualified active members retiring prior to age
65. Allowances to qualified retirees and
surviving annuitants were supplemented on a
schedule ranging from 6% to 34% depending
on the date of retirement. These expanded
benefits were funded from unallocated re­
serves of the Retirement System.
During the year 108 employes took advan­
tage of the opportunity to further their educa-

Members of the Bank’s Job Evaluation Committee appear pleased with results following periodic meeting.
Committee’s task is to rank bank employe jobs according to difficulty and responsibility for internal alignment.




29

tion at Bank expense. This includes attendance
at American Institute of Banking, other
schools and colleges, and special banking
schools.
In order to help reduce the shortage of
skilled clerical people in center city Philadel­
phia, the Bank joined with nine other firms in
training unemployed girls. With guidance of
the Urban League 26 girls were selected for
the program and all but one are now em­
ployed. The Philadelphia school system ex­
pressed interest in expanding this program for
next year.
Incidentally, girls, take note. For the first
time in many years the number of male em­
ployes in this Bank exceeds the number of
female employes.
On the agenda for 1968 the Bank will par­
ticipate in the Business Experience Education
Program which provides work opportunities
for school youth while permitting them to
complete their education. The program aims
to motivate good school performance, while
giving paid work experience and training in
bank operations.
“Operation Native Son,” a program that
keeps local residents attending out-of-town

colleges informed of job opportunities in the
Philadelphia area, bore fruit in 1967. Dozens
of applicants applied for positions within the
Bank.
At year’s end the number of unfilled per­
sonnel requisitions was only slightly higher
than December, 1966 despite a tightening
labor market.

EMPLOYMENT FIGURES
1967

1966

Full Time Employes 12/31

823

842

Appointments

146

153

Separations

165

162

Annual Turnover Rate

19.7%

19.1%

A new pioneer in 1967, First Vice President Bob Hilkert is congratulated by Pioneer President John Brenner
(center) and Bank President Karl Bopp. An employe with 25 years’ service is eligible to join Bank’s Pioneer
Club.

30



PUBLIC INFORMATION
This Junction provides the business community and the public at large with information about the
Federal Reserve System and its policies, this Bank, and the District and national economies. In
cooperation with other departments, officers and staff members write articles, deliver speeches, organize
seminars, and represent the Bank at various conferences. Improvement of economic education in local
high schools and colleges is a major objective. Public Information personnel prepare and distribute
press releases emanating from the Bank and maintain personal liaison with communications media.
Guided tours of the Bank are conducted on a regular basis.

Artemus Ward, an American humorist,
once said that with most people “it ain’t ignor­
ance that does the damage, it’s knowing so
many things that ain’t so.”
This Bank feels that better public under­
standing of the Federal Reserve should be
promoted through education. Most programs
of the Public Information Department, there­
fore, place emphasis on describing purposes
and functions of this Bank and of the System in
general. Policy goals and actions are explained
whenever an opportunity to talk to the public
arises.
The Department appreciates the necessity
of tailoring its approach to the public at the
proper level of sophistication. Thus, our public
information program is many faceted and
varied, using different media and techniques.
In 1967 the Department hosted nearly 3,000
visitors who wished to tour the Bank and be­
come better acquainted with its operations.
Students accounted for the bulk of our visitors
and, on the whole, they showed a genuine in­
terest in banking and proved to be surprisingly
knowledgeable. Let us hope that approaching
maturity with its divergent interests does not
dim their enthusiasm.
Recognizing the need for an easily read pub­
lication to provide a better understanding of
current economic issues, the Bank initiated
its Series for Economic Education in 1962.
After six years and ten pamphlets, the series
remains popular. Last year, nearly 1.5 million
copies were distributed, raising the total
number in circulation to almost 6 million.
The Business Review, the Bank’s more sophis­
ticated monthly publication, enjoys an ever
growing mailing list which now stands at
14,000 names. Review articles are not confined
to monetary and banking matters, but include
a wide range of subjects which contribute in a




broad way toward a better understanding of
the economy.
Both the Series for Economic Education and
Business Review are available free of charge to
readers outside, as well as within, the Third
District. Some other publications also available
upon request are Defending the Dollar, The Quest
for Stability, and Monetary Policy: Decision-Mak­
ing, Tools, and Objectives.
During the autumn of the year the Bank
again sponsored seminars at Bloomsburg,
Trenton, Millersville, and West Chester State
Colleges. Approximately 150 college economics
teachers attended these meetings in order to
exchange ideas with this Bank’s economists and
each other.
Money on the Move, the System’s “GWTW,”
was viewed by a combined audience of ap­
proximately 20,000 within the District in 434
separate showings during the year.
Taking the risk that the question might be
asked, “Who’s minding the store?” the De­
partment reports that 173 speeches were made
during the year by Philadelphia Fed men who
also attended a total of 898 System and other
meetings.
Have briefcase—will travel.

Tour guide Obadiah Craig of the Public Information
Department explains vault structure to visitors.
The Bank was host to nearly 3,000 visitors in 1967.
31

RESEARCH
The principal functions of the Department of Research are to provide basic data and analyses needed
in the formulation and evaluation of Federal Reserve policy, to keep abreast of national and inter­
national developments, to analyze regional growth within the District, to study financial markets
and the techniques of central banking, to maintain a cooperative liaison with the financial, business,
academic, and civic community, and to contribute to the public’s understanding of monetary policy and
the workings of the economy.

The Department explored such diverse
areas as bank deposits, the location of corpo­
rate headquarters, municipal bond markets,
and hydrospace during the year. The findings
were communicated through the Bank’s Busi­
ness Review and internal System memoranda,
speeches, outside publications, and special
conferences.
In addition, staff members participated in a
System study dealing with the discount mecha­
nism, which has proposed redesign of the
Reserve Banks’ lending operations. The De­
partment also assisted in System surveys deal­
ing with automation in banks, the growth of
bank credit cards, and state and local govern­
ment financing during periods of tight money.
Our economists acquired an important new
duty in 1967. They began to investigate the
impact of bank mergers on existing institu­
tions, business firms, and consumers. The idea
is to provide more information on which to
base recommendations on merger applications
by member banks.
The Department also cooperated with the
Greater Philadelphia Movement and Penjerdel
in a major study of the economic interdepend­
ence of the Philadelphia metropolitan area.
This work should provide a model for con­
tinuing study of this and other areas.
Dave Eastburn, vice president in charge of
the research function, was designated a mem­
ber of the Governor’s Economic Advisory
Council (Pennsylvania) during the year.
Willis Winn, Chairman of the Board of Direc­
tors of this Bank, also chairs the Council.
32



A committee of professors was formed in
1967 to further research on monetary policy
and to strengthen the Bank’s relationship with
District universities. The group will commis­
sion research projects by faculty members and
graduate students.

Computers continue to play an increasing
role in the work of the Research Department.
A larger, more powerful and more versatile
computer was ordered during the year for
concurrent use by Research and the Data
Processing Department.

Dave Eastburn, Vice President in charge of Re­
search, and Sheldon Stahl, Research Officer and
Economist, discuss Business Review edition with
Art Director Don Hulmes. Bank’s monthly publica­
tion is supplied free of charge upon request.

VAULT
The Vault Department is responsible for the custody and servicing of United States Government and
other securities and the storing of currency and coin. Dual control and in some cases triple control
measures are employed to provide maximum security. Coupons are cut at interest periods according to
instructions. Deposits and withdrawals are permitted only upon receipt of authorized instructions from
originating departments.

Our Vault Department is popular with
visitors. Students, the general public, and, yes,
even bankers always seem impressed by the

immense wealth contained there. Currency
in the vaults can exceed $1 billion on any
given day. In addition we have custody
of up to $14 billion in negotiable securities.

Students studying American History some­

times leave the vault with first-hand knowledge
of an obscure, but interesting fact: former

President Woodrow Wilson’s portrait appears
on a $100,000 Gold Certificate.

Visitors are also impressed by the extensive
protective measures we employ in the Depart­

ment. A closed-circuit television system, moni­
tored by the guard control center, scans every­

thing that goes on in the foyer between the two
vaults. Armed guards patrol the foyer at all




times. The vaults’ walls, ceilings, and floors are
made of concrete reinforced with steel which
contain alarms sensitive to vibration and
piercing. Each vault is “suspended” by steel
I beams, permitting a lighted space beneath
that can be observed through a series of
mirrors. A 50-ton circular steel door seals the
entrance to one vault; a rotary steel unit
weighing 80 tons secures the other.
Vault Department personnel are subject to
strict security measures. All are long-service
Bank employes who have earned excellent

reputations for integrity and ability. Efficiency
and accuracy are a must. In 1967, for example,
Department personnel cut without loss a
record 2.3 million coupons from securities
housed in the vaults in addition to myriad
other tasks involving daily issue and receipt of
coin and currency.

VAULT INVENTORY

Total

Unissued Government Securities Stock

Securities Held for Banks
All Other Securities
Unissued Federal Reserve Notes Held
for Federal Reserve Agent

Vault Tellers Cash

1967

1966

(Millions)

(Millions)

$15,047.8

$15,593.7

10,863.5

11,764.4

3,637.6

3,138.5

19.6

25.5

471.9

620.7

55.2

44.6

33

Vault Department Head John Brenner observes as Assistant Department Head Clarence Brehm demonstrates
how easily the perfectly balanced 50-ton steel door to the vault can be closed.

34



OTHER DEPARTMENTS

Assistant Counsel Walt Brobyn, of the Legal Depart­
ment, seeks precedent in the Bank’s Law Library
which is well stocked with reference works on banking
law and Federal Reserve regulations.

nr

•'
|

..L,'

•a

\3 '

kt Bill Kennedy loads unfit notes, each “cancelled” by four
holes, onto elevator for delivery into gas-fired incinerator.
Final step is to sift the ashes, to make certain all notes
are fully consumed. The Currency Verification Unit de­
stroyed over 440 million dollars in currency in 1967.




Dietitian Mary Alice Schwinhart supervises preparation of meals
by members of the cafeteria staff. Nearly 600 meals are served
daily in the Bank employes’ cafeteria. (Clockwise, Gertrude
Tarka, Ethel Kauffman, Mary Alice, and Anna Hart.)

35

Printing Department's Barbara Gerkensmeyer observes
as Dot Keys puts final touch to chart. Our Printing De­
partment can perform all phases of the printing process
including composition, platemaking, printing, and bind­
ery operations on the premises.

Purchasing Agent Art Masland approves requisition form
prepared by Dot Loos. The Purchasing Department ac­
quires equipment, supplies, and services necessary to
conduct the Bank’s business.

Filing Department Head Nora Shakespeare answers inquiry with help
from Frances Fritz. The Filing Department processes, maintains, and
destroys certain Bank records. It also codes, sorts, and safekeeps
documents relating to the purchase, redemption, and reissue of
United States Savings Bonds.

36



Bank’s telephone operators Betty Thiel and Helene Rowinski (rear)
place calls. The Telephone Department places outgoing calls and as­
signs priority to private wire calls. Nearly 250 thousand message units
were used in 1967.

Bank physician Albert J. Snyder examines employe Angela Emanuele’s
throat as nurses Camille Smith (center) and Mary Hunter observe.
The Medical Department gives each new employe a physical examina­
tion in addition to treating minor aches and pains and on-the-job injuries.




Librarian Doris Zimmermann helps Research Assistant Sue Robinson
gather data as Barbara Turnbull checks card catalogue in Bank’s
10,000 volume library. Information is made available to bankers, stu­
dents, and the general public.

37

BOARD OF DIRECTORS
BANKING

BUSINESS

PUBLIC

"A” DIRECTORS

“B” DIRECTORS

"C” DIRECTORS

HOWARD C. PETERSEN—1968
CHAIRMAN OF THE BOARD

HENRY A. THOURON—1968
CHAIRMAN OF THE BOARD AND PRESIDENT

WILLIS J. WINN—CH.—1970
DEAN, WHARTON SCHOOL

THE FIDELITY BANK
PHILADELPHIA, PA.

HERCULES INCORPORATED
WILMINGTON, DEL.

UNIVERSITY OF PENNSYLVANIA
PHILADELPHIA, PA.

ROBERT C. ENDERS—1969
PRESIDENT

EDWARD J. DWYER—1969
PRESIDENT

BAYARD L. ENGLAND—DEP. CH.—1969
CHAIRMAN OF THE BOARD

BLOOMSBURG BANK-COLUMBIA TRUST COMPANY
BLOOMSBURG, PA.

ESB INCORPORATED
PHILADELPHIA, PA.

ATLANTIC CITY ELECTRIC COMPANY
ATLANTIC CITY, N. J.

H. LYLE DUFFEY—1970
EXECUTIVE VICE PRESIDENT

PHILIP H. GLATFELTER, 111—1970
PRESIDENT

D. ROBERT YARNALL, JR.—1968
PRESIDENT

THE FIRST NATIONAL BANK OF McCONNELLSBURG
McConnellsburg, pa.

P. H. GLATFELTER CO.
SPRING GROVE, PA.

YARWAY CORPORATION
BLUE BELL, PA.

COMMITTEES OF THE BOARD

R. W. YARROLL

PRESIDENT
KARL R. BOPP

OFFICERS’
DISCOUNT COMMITTEE

OFFICERS’ COUNCIL

VICE PRESIDENT

VICE PRESIDENT

VICE PRESIDENT

V. P. & GEN, COUNSEL

FIRST VICE PRESIDENT

OTHER OFFICERS’ COMMITTEES

ROBERT N. HILKERT

AUTOMATION, COMMUNICATIONS, AND ELECTRONIC SYSTEMS
BUDGET
EMERGENCY PLANNING
PURCHASING
BUILDING
OPERATIONS
SPACE
PERSONNEL

VICE PRESIDENT

VICE PRESIDENT

VICE PRESIDENT

VICE PRESIDENT

V. P. & SECRETARY

VICE PRESIDENT

RESEARCH

BANK EXAMINATION
REGULATIONS
AFFECTING
MEMBER BANKS
REGULATIONS
“T” & “U”

COLLECTIONS
LEGAL AFFAIRS

MEDICAL
A. J. SNYDER, M.D.
CAFETERIA
M. A. SCHWINHART

CREDIT-DISCOUNT
BANK REGULATIONS
& SERVICES
BALANCE OF
PAYMENTS
PROGRAM

PLANNING
DATA PROCESSING
METHODS

ASST VICE PRES.

ACCOUNTING CONTROL
BUDGET
CASH
POSTAL DEPOSITS UNIT
EMERGENCY PROGRAM
POST OFFICE
VAULT

FISCAL AGENCY
RECORDS
PROTECTION
GUARDS
MESSENGERS
K. F. WREN

PUBLIC INFORMATION
G. C. HAAG

K

ASS’T VICE PRES.

ASS’T VICE PRES.

ASS’T VICE PRES.

CREDIT-DISCOUNT
REGULATION “V”
J. B. EVERMAN

PLANNING
DATA PROCESSING
DEPARTMENT
J. F. LOGAN

ACCOUNTING
DEPARTMENT
J. H. MUNTZ
SECURITY FILES

ASS’T VICE PRES.

ASS’T VICE PRES.

J. M. CASE

CHIEF EXAMINING OFFICER

ASS’T PERSONNEL OFFICER

J. P. GIACOBELLO

D. P. NOONAN

DEPARTMENT
OF BANK EXAMINATION
E. D. KERNS

PERSONNEL
J. R. JOYCE

R. D. BOWERS
H. A. CHAIRNOFF
E. P. DEUTERMANN
R. W. EPPS
W. F. STAATS
H. A. WATSON

E. C. LODGE
STATISTICS
J. H. HELMUTH
COMPUTER
D. F. ZIMMERMANN
LIBRARY

BANK SERVICES OFFICER

ASSISTANT SECRETARY
& BUILDING OFFICER

EXAMINING OFFICERS

ASS’T COUNSEL

ASS’T CASHIER

T. K. DESCH

W. J. BROBYN

J. A. AGNEW, JR.

W. L. ENSOR

CHECKS
ADJUSTMENTS &
COLLECTIONS
A. A. KUDELICH

L. E. MARKFORD




GOVERNMENT
SECURITIES AND
SAFEKEEPING
CURRENCY
VERIFICATION
a. j. McKinley
FILING AND
RECORDS STORAGE
N. SHAKESPEARE

S. J. CULBERT, JR.

BANK SERVICES
FUNCTIONAL COST
ANALYSIS
BANK VISITS

J. H. JAMES

CASH DEPARTMENT
POSTAL DEPOSITS UNIT
POST OFFICE
J. J. KIEFER
VAULT
J. J. BRENNER, JR.

FEBRUARY 15, 1968

D. R. CONNOR

BUILDING
A. ARNOLD
PRINTING-CIRCULARS
V. F. PHELAN

PURCHASING
J. A. MASLAND
TELEPHONE
J. McATEER

Chairman
WILLIS J. WINN
Dean, Wharton School of Finance and Commerce
University of Pennsylvania
Philadelphia, Pa.

Deputy Chairman
BAYARD L. ENGLAND
Chairman of the Board
Atlantic City Electric Company
Atlantic City, N. J.

J

A

r

H. LYLE DUFFEY
Executive Vice President
The First National Bank of McConnellsburg
McConnellsburg, Pa.

HOWARD C. PETERSEN
Chairman of the Board
The Fidelity Bank
Philadelphia, Pa.

EDWARD J. DWYER
President
ESB Incorporated
Philadelphia, Pa.

HENRY A. THOURON
Chairman of the Board and President
Hercules Incorporated
Wilmington, Del.

ROBERT C. ENDERS
President
Bloomsburg Bank-Columbia Trust Company
Bloomsburg, Pa.

D. ROBERT YARNALL, JR.
President
Yarway Corporation
Blue Bell, Pa.

PHILIP H. GLATFELTER, III
President
P. H. Glatfelter Co.
Spring Grove, Pa.

Member of Federal Advisory Council
HAROLD F. STILL, JR.
President, Central-Penn National Bank
of Philadelphia, Philadelphia, Pa.

40



OFFICERS

Officers’ Council meets in the Board room.

KARL R. BOPP, President

ROBERT N. HILKERT, First Vice President

EDWARD A. AFF, Vice President

HENRY J. NELSON, Assistant Vice President

HUGH BARRIE, Vice President

KENNETH M. SNADER, Assistant Vice President

JOSEPH R. CAMPBELL, Vice President

ALBERT SPENCER, JR., Assistant Vice President

NORMAN G. DASH, Vice President

SHELDON W. STAHL, Research Officer and Economist

DAVID P. EASTBURN, Vice President

RUSSELL P. SUDDERS, Assistant Vice President

WILLIAM A. JAMES, Vice President

JAMES P. GIACOBELLO, Chief Examining Officer

DAVID C. MELNICOFF, Vice President

THOMAS K. DESCH, Examining Officer

G. WILLIAM METZ, Vice President and General Auditor

WILLIAM L. ENSOR, Examining Officer

LAWRENCE C. MURDOCH, JR., Vice President and Secretary

JACK H. JAMES, Examining Officer

HARRY W. ROEDER, Vice President

LEONARD E. MARKFORD, Examining Officer

JAMES V. VERGARI, Vice President and General Counsel

JAMES A. AGNEW, JR., Assistant Cashier

JACK P. BESSE, Assistant Vice President

WALTER J. BROBYN, Assistant Counsel

JOSEPH M. CASE, Assistant Vice President

D. RUSSELL CONNOR, Assistant Secretary and Building Officer

WARREN J. GUSTUS, Research Officer and Economist

SAMUEL J. CULBERT, JR., Bank Services Officer

RALPH E. HAAS, Assistant Vice President

A. LAMONT MAGEE, Assistant General Auditor

WARREN R. MOLL, Assistant Vice President

DAVID P. NOONAN, Assistant Personnel Officer




41

A number of internal committees have been formed to make certain decisions and determine policies.
In addition, several larger groups of officers and employes meet regularly to discuss problems and
exchange information. Many senior officers of the Bank also serve on Federal Reserve System
committees which set policies and help solve problems for the Reserve Banks as a group.

IN THE BANK

SYSTEMWIDE

You’ve heard the old story about a camel
being a horse that was designed by a commit­
tee. Indeed, there are things committees can’t
do well—creative work, for example. But com­
mittees can bring together divergent back­
grounds, skills, and experiences and focus them
on common problems. As a result, committee
decisions often are sounder than if made by a
single individual.
This Bank makes frequent use of committees
in areas where the interests of a number of de­
partments are concerned or where several
different points of view are desirable.
In addition to the intrabank committees
listed below, the Officers’ Council, consisting
of all officers, meets from time to time to dis­
cuss subjects of general importance. The De­
partment Heads of the Bank get together
regularly to exchange views and information.
Prior to each Federal Open Market Committee
meeting, the Staff Policy group of officers and
economists convenes to appraise the latest eco­
nomic indicators and advise President Bopp on
current business developments.

At least four times each year the chief execu­
tive officers of all Reserve Banks meet in Wash­
ington. This Conference of Presidents makes
decisions on operational and administrative
matters of more than local interest. Reserve
Bank vice presidents serve on the many work­
ing subcommittees of the Conference.
The Federal Open Market Committee con­
sists of the seven members of the Board of
Governors, the president of the Federal Re­
serve Bank of New York, and four other Re­
serve Bank presidents serving on a rotating
basis. The Federal Open Market Committee
determines much of the Nation’s monetary
policy. In 1968, President Bopp will be an
alternate member.
Officers of this Bank also serve on the System
Research Advisory Committee, the System
Retirement Committee, and other ad hoc
groups formed for specific tasks.

OUR MEMBERSHIP ON SYSTEM COMMITTEES
KARF R. BOPP, President
Steering Committee, Fundamental Reappraisal of the Discount
Mechanism
Conference of Presidents
Committees of the Conference of Presidents:
Chairman, Committee on Bank and Public Relations
Committee on Collections
Committee on Fiscal Agency Operations
Trustee (Ex Officio), Retirement System of the Federal Reserve Banks:
Investment Committee of the Retirement System

42



ROBERT N. HILKERT, First Vice President
C.O.P., Subcommittee on Personnel
Retirement System of the Federal Reserve Banks:
Retirement Committee
EDWARD A. AFF, Vice President
C.O.P., Subcommittee on Bank Services
HUGH BARRIE, Vice President
C.O.P., Subcommittee on Methods and Automation
NORMAN G. DASH, Vice President
C.O.P., Subcommittee on Fiscal Agency Operations
Alternate, Insurance Committee
DAVID P. EASTBURN, Vice President
System Research Advisory Committee:
Committee on Banking and Credit Policy
C.O.P., Subcommittee on Bank Supervision and Legislation
C.O.P., Ad Hoc Subcommittee to Study Regionalism
DAVID C. MELNICOFF, Vice President
Secretariat, Fundamental Reappraisal of the Discount Mechanism
C.O.P., Chairman, Subcommittee on Bank and Public Relations
C.O.P., Ad Hoc Subcommittee to Review District and Branch
Boundary Lines
G. WILLIAM METZ, Vice President and General Auditor
Conference of General Auditors:
Standing Committee
C.O.P., Ad Hoc Subcommittee to Study More Effective Use of
Vault Space
LAWRENCE C. MURDOCH, JR., Vice President and Secretary
System Research Advisory Committee:
Committee on Education and Publications
C.O.P., Liaison Officer, Subcommittee on System Purchasing
Procedures
HARRY W. ROEDER, Vice President
C.O.P., Subcommittee on Currency and Coin
C.O.P., Ad Hoc Subcommittee to Study Extension of
Reserve Bank Services Across District or
Branch Boundaries
JAMES V. VERGARI, Vice President and General Counsel
C.O.P., Subcommittee on Collections
C.O.P., Subcommittee on Improving the Payments Mechanism
Insurance Committee:
Executive Committee of the Insurance Committee
Subcommittee of Counsel of the Insurance Committee
KENNETH M. SNADER, Assistant Vice President
System Research Advisory Committee:
Committee on Current Reporting Series
Committee on Computers in Research
WARREN J. GUSTUS, Research Officer and Economist
System Research Advisory Committee:
Committee on Business Analysis
SHELDON W. STAHL, Research Officer and Economist
System Research Advisory Committee:
Committee on Financial Analysis
EMERSON M. SEWARD, Audit Department
Trustee, Retirement System of the Federal Reserve Banks




Note: C.O.P. indicates Conference of Presidents
43

AUTOMATION, COMMUNICATIONS, AND
ELECTRONICS SYSTEMS COMMITTEE

J. V. Vergari, Chairman
H. Barrie
L. C. Murdoch
H. W. Roeder
K. M. Snader
BUILDING COMMITTEE

L. C. Murdoch, Chairman
D. P. Eastburn
D. C. Melnicoff
H. W. Roeder
J. V. Vergari
BUDGET COMMITTEE

H. W. Roeder, Chairman
R. P. Sudders, Secretary
H. Barrie
D. C. Melnicoff
L. C. Murdoch
J. V. Vergari

DISCOUNT COMMITTEE

K. R. Bopp, Chairman
A. Spencer, Secretary
E. A. Aff
J. R. Campbell
D. P. Eastburn
R. N. Hilkert
D. C. Melnicoff
J. V. Vergari

JOB EVALUATION COMMITTEE

E. G. Battista, Chairman
C. P. Brehm
A. A. Kudelich
S. W. Linton
J. F. Logan
J. A. Masland
D. P. Noonan
E. M. Seward
K. M. Snader

OPERATIONS COMMITTEE

J. V. Vergari, Chairman
J. P. Besse, Secretary
H. Barrie
N. G. Dash
R. E. Haas
H. W. Roeder

PERSONNEL COMMITTEE

R. N. Hilkert, C/zazmarz
W. A. James, Secretary
N. G. Dash
L. C. Murdoch
H. W. Roeder
J. V. Vergari

PURCHASING COMMITTEE

L. C. Murdoch, Chairman
H.J. Nelson, Secretary
H. Barrie
N. G. Dash

EMERGENCY PLANNING COMMITTEE

H. W. Roeder, Chairman
R. P. Sudders, Secretary
E. A. Aff
J- R. Campbell
N. G. Dash
L. C. Murdoch
J. V. Vergari

44



SPACE COMMITTEE

L. C. Murdoch, Chairman
W. A. James, Secretary
H. Barrie
N. G. Dash
H. W. Roeder




FIFTY-THIRD ANNUAL STATEMENT
OF THE FEDERAL RESERVE BANK
OF PHILADELPHIA

45

COMPARISON OF EARNINGS AND EXPENSES

1966

1967

Current Earnings:

$

95,513,283.30

From U. S. Government securities..............................................

$ 110,223,545.60

From discounts and advances and miscellaneous sources . . . .

1,439,853.33

1,862,289.49

Total current earnings ..................................................

111,663,398.93

97,375,572.79

8,742,162.60

8,501,070.34

Federal Reserve currency................................................................

1,016,559.87

1,294,992.91

Assessments for expenses of the Board of Governors.............

567,000.00

483,300.00

Total net expenses .........................................................

10,325,722.47

10,279,363.25

Current Net Earnings...............................................................................

101,337,676.46

87,096,209.54

Net Expenses:

Operating expenses (after deducting reimbursable or recover­
able expenses) ..........................................................................

Additions to current net earnings:
.............

39,599.98

Miscellaneous non-operating income............................................

77,499.09

93,123.26

Total additions.................................................................

117,099.07

93,123.26

Profit on sales of U.S. Government securities (net)

Deductions from current net earnings:
127,323.86

Loss on sales of U. S. Government securities (net) ..................

Miscellaneous non-operating expenses........................................

1,638.49

2,618.92

Total deductions .............................................................

1,638.49

129,942.78

Net deductions (additions) ....................................................................

115,460.58

36,819.52

Net earnings before payment to U. S. Treasury.................................

101,453,137.04

87,059,390.02

Dividends Paid ..........................................................................................

1,853,711.26

1,790,166.93

Paid to U. S. Treasury (interest on Federal Reserve notes) ...........

97,702,875.78

84,885,673.09

Transferred to Surplus..............................................................................

1,896,550.00

383,550.00

$ 101,453,137.04

46



$

87,059,390.02

COMPARATIVE STATEMENT OF CONDITION
ASSETS
GOLD CERTIFICATE RESERVES:

Dec. 31, 1967

Dec. 31, 1966

Gold certificate account..................................................................
Redemption fund — Federal Reserve notes..............................

$ 560,612,533.50
101,189,381.16

$ 698,901,939.93
96,258,341.16

Total Gold Certificate Reserves............................................

661,801,914.66

795,160,281.09

FEDERAL RESERVE NOTES OF OTHER FEDERAL
RESERVE BANKS ........................................................................

48,727,515.00

48,058,230.00

OTHER CASH..........................................................................................

8,609,606.96

6,772,654.79

LOANS AND SECURITIES:
Discounts and advances ..................................................................
United States Government securities .........................................

1,430,000.00
2,525,715,000.00

545,000.00
2,289,202,000.00

Total Loans and Securities....................................................

2,527,145,000.00

2,289,747,000.00

OTHER ASSETS:
Cash items in process of collection................................................
Bank premises ...................................................................................
All other ..............................................................................................

631,426,294.03
2,433,366.22
98,935,196.36

541,949,515.85
2,509,967.86

TOTAL ASSETS ....................................................................

3,979,078,893.23

3,748,320,884.31

NOTE LIABILITIES:
Federal Reserve notes......................................................................

2,444,267,528.00

2,305,966,989.00

DEPOSITS:
Member bank — reserve accounts................................................
United States Government.............................................................
Foreign ................................................................................................
All other..............................................................................................

853,005,524.48
76,536,105.32
7,280,000.00
26,459,844.51

896,032,697.06
504,908.06
8,640,000.00
8,599,445.59

Total Deposits ..........................................................................

963,281,474.31

913,777,050.71

Deferred availability cash items....................................................
All other..............................................................................................

493,310,625.51
14,567,965.41

456,784,718.25
11,933,926.35

TOTAL LIABILITIES.........................................................

3,915,427,593.23

3,688,462,684.31

CAPITAL ACCOUNTS:
Capital paid in .................................................................................
Surplus ................................................................................................

31,825,650.00
31,825,650.00

29,929,100.00
29,929,100.00

TOTAL LIABILITIES AND
CAPITAL ACCOUNTS ..............................................

$3,979,078,893.23

$3,748,320,884.31

64,123,234.72

LIABILITIES

OTHER LIABILITIES:




47

(Representingamount paid in, which is 50% of amount subscribed)
(Dollar amounts in thousands)

1967

Paid in—January t.............................. .

1966

1965

Shares

Dollar
Amount

Shares

Dollar
Amount

Shares

Dollar
Amount

598,582

$29,929

590,911

529,545

582,283

529,114

495

25

Issued during year:
To new member banks..............

Increases in Capital
and Surplus............................... .

40,073

2,004

15,210

761

22,449

1,122

1,946

97

7,523

376

14,265

713

196

10

16

1

51

3

636,513

531,826

598,582

529,929

590,911

529,545

Cancelled during year:

Mergers, absorptions and
other cessations of
membership...............................
Surrender of stock through

reduction of capital and
surplus..........................................

Paid in—December 31....................... .

48



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