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money moving Faster In THE SEVENTH DISTRICT 1971 annual report Federal Reserve Bank of Chicago Table of Contents President's Letter 1 I m p r o v i n g the District's Payments M e c h a n i s m 2 Statement of O p e r a t i o n s 7 Statement of Earnings a n d Expenses Statement of Condition 8 9 Directors 10 Officers 11 A p p o i n t m e n t s , Elections, Promotions, a n d Retirements 12 To the member banks of the Seventh Federal Reserve District: The economy resumed growth in 1971 after the decline in production and employment that marked the previous year. Monetary policy was cautiously stimulative—its purpose, to encourage economic growth while avoiding a resurgence of inflation. Although recovery was underway from the start of the year, the pace was disappointingly slow, and evidence of a deceleration in the rate of increase in prices was inconclusive. The dollar came under severe international pressure as our trade balance deteriorated. In August, the President launched his new economic program—designed to deal in a comprehensive way with these interrelated problems. By yearend, the wage-price "freeze" had given way to a more flexible control mechanism, tax legislation was providing modest fiscal stimulation, and basic agreement had been reached on the realignment of major currencies. The effectiveness of these actions will be measured by the performance of the economy in 1972. Greater stability in both domestic prices and international currency values can be expected to promote gains in employment and production. But the attainment of sustainable, balanced growth remains a challenge. The Federal Reserve System will provide the reserves to enable banks to finance the necessary expenditures but will resist demands in excess of the economy's capacity to produce. In my letter to you last year, I stressed that our bank is committed to finding sensible solutions to handling the flood of paper arising from the "normal" flow of financial transactions. I am happy to report that in 1971 we made real progress in building a base for an improved payments mechanism in the district. The details of this progress are summarized in the body of this report. The financial statements of our bank reflect the direct and indirect effects of monetary policy actions. Assets totaled just under $16 billion on December 31, 1971, up $1.1 billion from a year earlier. Holdings of U. S. Treasury securities and federal agency obligations, which were purchased outright for the first time in 1971, increased $1.6 billion. Total security holdings, which accounted for 71 percent of assets at year-end, reflect our bank's participation in Federal Reserve open market operations that supply reserves to the banking system. Increases in outstanding Federal Reserve notes and member bank reserve accounts absorbed over three-fourths of the funds supplied through asset expansion for the year. Total earnings in 1971 were $626 million, $12 million less than 1970 earnings, reflecting lower interest rates. Earnings on securities accounted for over 98 percent of 1971 earnings. Earnings on loans to member banks declined $6 million, reflecting lower average borrowings and reductions in the discount rate. Net earnings amounted to $576 million, of which $564 million were transferred to the U. S. Treasury. Your cooperation with—and responsiveness to—our activities during the past year has been admirable. On behalf of our directors, officers, and staff, I thank you. Sincerely, Robert P. Mayo President December 31, 1971 1 Improving the District's Payments Mechanism Money transfers in the United States are made largely by means of currency or check, with about 90 percent of all such payments by check. In 1970, about 22 billion checks, amounting to more than $16 trillion, were written, and recent estimates indicate that the number of checks will double within ten years. Faced with the prospect of a rapidly increasing number of checks, the Board of Governors of the Federal Reserve System issued a policy statement in June 1971 calling for renewed Reserve System efforts to improve the payments mechanism. The Board directed the presidents of the 12 Federal Reserve banks to make the current check payments mechanism more efficient by establishing regional c h e c k p r o c e s s i n g c e n t e r s (RCPCs) throughout the United States, and to e n c o u r a g e m e m b e r b a n k s and their customers to make greater use of the Federal Reserve's telecommunications system for the electronic transfer of funds. The objectives are: 1. To present checks faster to paying banks. 2. To collect funds faster from paying banks. 3. To r e t u r n d i s h o n o r e d i t e m s faster. 4. To reduce the number of handlings per check. 5. To reduce the distance checks travel in the clearing process. 6. To reduce commercial bank and Federal Reserve float. 7. To provide an interim step bet w e e n the p r e s e n t p a y m e n t s mechanism and an ultimate electronic payments system. To implement these objectives the Federal Reserve Bank of Chicago has established a new department headed by Senior Vice President Harry S. Schultz and has appointed a committee of officers to study and advise on means of improving the payments mechanism. Mr. Schultz and his staff are devoting their full efforts to improving the payments 2 mechanism in the Seventh District. In addition, Mr. Schultz is assisted on a part-time basis by Arthur M. Gustavson, former vice president in charge of Cash and Safekeeping at the Federal Reserve Bank of Chicago. A time for change The renewed emphasis on measures to improve the payments mechanism is not in response to any glaring weakness now evident. Rather, it is a move to take full advantage of transportation and communications capabilities already available, and to establish the capability of e x p e d i t i o u s l y h a n d l i n g the large growth in payments by check in prospect for the 1970s. An ideal payments mechanism would a c c o m m o d a t e s i m u l t a n e o u s debit of payors and credit of payees. Payments made with currency do this because the transfer of purchasing power is instantaneous—one party gives up money as the other acquires it. But currency is not a practical or convenient means of making most payments. The costs and risks of loss and theft associated with storing and shipping large amounts of currency are obvious. Considerations of cost, convenience, and security require that the great majority of money payments be effected by some means other than transfers of currency. These factors account for the popularity of the check as a vehicle for payments. Checks should be collected as rapidly as feasible in order to consummate payments quickly. Delays in the consummation of money transfers effected by checks arise because it is checking account balances, and not checks themselves, that are spendable money. When someone writes a check, this does not result in either an immediate debit to his checking account balance or an immediate credit to another's checking account balance. The check must move through the check collection process until it is presented to the issuer's bank. Only at that point, when a debit is made to the issuer's account, is the payment consummated, often several days after the check was written and the payment process initiated. Causes of delays The time it takes for checks to reach banks for collection and for payment to be made is determined by the time that elapses before recipients of checks deposit them with banks and by the speed with which the checks, once in the hands of banks, can be processed and routed to the issuer's bank for payment. Currently, an average check passes through two or three processing points (usually banks] and is handled about ten times. In addition, there are delays in payment associated with the proximity of paying banks to Federal Reserve banks or branches. Reflecting transportation and communication arrangements, banks located in Federal Reserve cities pay for checks presented to them by Federal Reserve offices on the day of presentment in immediately available funds, e.g., on Monday in funds available on Monday. In contrast, banks located outside the 37 cities where a Federal Reserve bank or branch is located (or a small number of areas where RCPCs have already been established) have been paying for checks presented to them through the Federal Reserve System on the day following receipt. For example, banks located outside Federal Reserve cities and not in an RCPC area normally pay in funds available on Tuesday for checks presented to them by Federal Reserve offices on Monday. Expediting check collections The lapse of time between the writing of checks and the payment of checks can, and should, be reduced. This would have a number of favorable results. It would provide earlier credit to holders of checks, reduce "float," reduce exposure to "kites" and other offensive practices, expedite return of "bad" checks, and further enhance the acceptability of checks as a means of payment. As a first step, Federal Reserve banks are establishing regional check processing centers (RCPCs) in key cities across the country to serve banks in areas as large as can be accommodated with present modes of transportation. The outstanding feature of RCPCs is that all intra-RCPC-area checks will be cleared in one day. This means that overnight, checking account balances of RCPC-area banks and their customers will be debited and credited for all checks drawn on other banks in the same RCPC area. This accelerated clearing will be accomplished through special handling of RCPC-area checks, utilization of improved transportation, later closing hours for receipt of deposits at RCPCs, and payment for checks in immediately available funds on day of presentment to payor banks. RCPCs will have varying effects on banks, depending on their location. Illustration I compares the current day-to-day clearing process between two member country banks in the same Federal Reserve district with the RCPC clearing process between two country banks in the same RCPC area. Currently, for most checks, four days elapse from the time they are deposited with the first commercial bank to the time payment is obtained from the bank on which the check is drawn (if other than the bank of deposit). Typically, the check is deposited at the customer's (recipient's) bank on the first day. On the second day, the customer's bank deposits the check with the Federal Reserve. The Fed presents the check to the issuer's bank on the third day, and receipt of the payment by the Fed and the credit of funds to the reserve account of the depositing bank occur on the fourth day. Under the RCPC arrangement, the first two events of the clearing process— the commercial bank customer's deposit and the commercial bank's deposit with the RCPC—occur on the same day. The steps in the clearing process that take place on days three and four under the current process—presentment of items to paying banks and receipt of payment by the Federal Reserve—are accomplished on the second day under the RCPC arrangement. RCPC-area banks pay for checks presented to them in immediately available funds on the day of presentment, and Federal Reserve banks pass credit to depositing banks on the day the credit is received. Therefore, an 3 RCPC-area bank making deposits of RCPC checks on one day will receive credit to its reserve account or the reserve account of a designated member bank the next day. The net effect of the RCPC arrangement on country member banks in the same RCPC area is to reduce by two days the time required to clear RCPC-area checks. The effect of the RCPC arrangement on clearing checks between two country member banks located in different Federal Reserve districts is shown in Illustration II. The RCPC arrangement cuts one day from the clearing time for checks originating in one Federal Reserve district but drawn on RCPC-area banks in other districts. With these checks, the improvement results largely from the payment by RCPCarea banks on day of presentment in immediately available funds. However, the Federal Reserve is attempting to speed up the inter-district movement of checks, also for the purpose of expediting the collection process. Under the current a r r a n g e m e n t , credit is passed by Federal Reserve banks to depositing banks according to a 4 Illustration I Comparison of Check Collection Systems for an Intra-district Country M e m b e r Bank I t e m RCPC arrangement Current arrangement Event Day 1 Bank A receives check d r a w n on Bank B. Day 1 Day 2 Day 3 Bank A deposits check w i t h Federal Reserve Bank of Chicago. Federal Reserve Bank of Chicago presents check to Bank B for p a y m e n t . Day 2 Day 4 Federal Reserve receives p a y m e n t f r o m Bank B a n d passes credit to Bank A . Illustration II Comparison of Check Collection Systems for a n Inter-district Country M e m b e r Bank I t e m RCPC arrangement Current arrangement Day 1 Day 1 Day 2 Day 2 Day 3 Day 3 Event Bank B receives a check d r a w n on Bank A . Bank B deposits check w i t h its Federal Reserve office. Bank B's Federal Reserve office sends it to Federal Reserve Bank of Chicago. Federal Reserve Bank of Chicago presents Day 4 check to Bank A for p a y m e n t . O t h e r Federal Reserve office credits Bank B. Day 4 Federal Reserve Bank of Chicago receives Day 5 p a y m e n t f r o m Bank A a n d passes it to other Federal Reserve office. definite time schedule with the maximum deferment of credit being two days from the day the deposit is received by the Federal Reserve. This time schedule means that credit is passed by the Federal Reserve for inter-district country items before payment is received. This occurs between days four and five in the current clearing process and is the operational factor that results in a large amount of Federal Reserve float. Under the RCPC arrangement, this type of Federal Reserve float is eliminated because credit is passed to the bank of initial deposit on the same day that credit is received from the payor bank. Chicago Regional Check Processing Center The Federal Reserve Bank of Chicago plans to implement the first RCPC in the Seventh Federal Reserve District early in 1972. This will be the Chicago Regional Check Processing Center (CRCPC), serving at the outset approximately 285 banks in ten counties around Chicago. It will include Illinois banks l o c a t e d in C o o k (other than Chicago Clearing House Association banks], Du 5 Page, Grundy, Kane, Kankakee, Kendall, Lake, McHenry, and Will Counties, and in Indiana, the 13 banks in Lake County. The size of area served is limited by the capability to assemble, process, and present for payment on an overnight basis the checks drawn on and deposited by banks in the area. The CRCPC area will be expanded to include additional banks as transportation and check processing capabilities permit. Banks affiliated with the Chicago Clearing House Association (CCHA) will continue to exchange checks as they do now. The association requires banks to pay for checks presented to them by other banks in the city on the day of presentment in immediately available funds. Thus, overnight clearings among CRCPC-area banks will complement the existing arrangement of CCHA banks. All banks located in the CRCPC area may deposit with the CRCPC. Member banks may deposit all items currently eligible for deposit with the Federal Reserve Bank of Chicago. Nonmember banks may continue to deposit with correspondent banks or may deposit directly with the CRCPC items drawn on other CRCPC-area banks, as well as U. S. Government checks, food stamp coupons, and postal money orders. The CRCPC will accept deposits of CRCPCarea items until 12:30 a.m. for credit the same day. For example, deposits of CRCPC items received by 12:30 a.m. Tuesday will be credited on Tuesday. Deposits received after 12:30 a.m. Tuesday will be credited Wednesday. In order to receive immediate credit on CRCPC items, banks must have their checks fully encoded in the manner prescribed by the American Bankers Association, must have checks amountencoded, and must deposit checks in a separate cash letter. U. S. Government checks, postal money orders, and food stamp coupons must also be deposited in separately sorted cash letters for credit on day of receipt at the CRCPC. Proceeds for cash letters deposited by CRCPC-area banks will be credited to their reserve accounts or to the reserve account of a designated member bank of the Federal Reserve Bank of Chicago. Payment for cash letters will be effected on day of presentment by a 6 debit to a member bank's reserve account or the reserve account of a designated member bank. Cash letters will be debited in full with subsequent adjustments for return items and errors. Chicago correspondent banks are cooperating in establishing the CRCPC and will assist CRCPC-area banks with sorting and encoding requirements. Chicago correspondent banks will also aid in making arrangements for debits and credits to their own reserve accounts on behalf of CRCPC-area banks. Des Moines Regional Check Processing Center A second RCPC facility, to be located in Des Moines, will provide overnight clearing of checks for banks in most of Iowa. This facility is planned to be in operation in the third quarter of 1972. Other areas in the district are being studied to determine the opportunities for improving the check clearing process by establishing regional check processing centers or other means. Wire transfers encouraged In addition to establishing RCPCs, the Federal Reserve System is encouraging greater use of its capability to provide electronic transfers of funds. Member banks may use the Federal Reserve System's wire network to transfer amounts of $1,000 or more for their own accounts or those of customers to other member banks or their customers anywhere in the country without service charge. A number of Seventh District member banks have direct wire links to Federal Reserve Bank of Chicago computers and the Federal Reserve's communications network, and can transfer funds directly to other commercial banks having similar capability. Expansion of the facilities at the Federal Reserve Bank of Chicago will enable additional members to obtain direct linkage with the System's communications network. Although it is contemplated that checks will be used for many years to come, electronic transfers will become more and more prevalent and reduce dependence on conventional checks. The experience gained with electronic transfers will help to smooth the transition to an ultimate electronic payments system. Statement of Operations Number of items 1970 1971 Value 1970 1971 (thousands) (millions) Clearing and collection $ Currency and coin Currency received and counted Coin received and counted Unfit currency withdrawn from circulation Safekeeping of securities Definitive securities* * Securities received $ Loans Total loans made during the year Daily average outstanding Number of banks accommodated $ $ $ 5,399 164 $ 5,249 4,372 254 6,175 $ 15,934 16,071 4,800 $ 37,521 167 $ 441,905 24,573 2,948 1,138,754 5,153 176 1,474 766,990 1,371,810 5,217 4,831 194 5,298 517 403 3,014 1,540 345 403 2,924 1,426 8,992 8,299 4,937 14 10 15 10 43,949 236 101,100 1,813 350,250 — $ Transfer of funds Funds transferred 1,062,164 100,088 1,886 727,546 1,479,880 312,855 — _ - 184f Investment Purchases and sales of securities for member banks Services to the U.S. Treasury Marketable securities Issued: Bearer and registered Book entry $ 1,613 Coupons detached In safekeeping on December 31 Book-entry Treasury securities* * Securities deposited Securities withdrawn On deposit on December 31 512,412 26,205 1,644 - 287f 645 6 10 $2,391,889 $2,034,540 1,285 1,170 $ $ 19,231 3,638 373 8 567 5 804 16,108 6,824 $ Serviced: Bearer and registered Book entry 58,283 19,577 46,896 12,654 793 14 1,422 11 Redeemed: Bearer and registered Book entry 22,482 3,496 22,985 999 804 7 1,443 4 1,261 274 27,826 1,747 1,381 23,671 224 19,231 26,157 1,578 21,892 5,123 247,904 4,535 166,474 Savings bonds and savings notes Issued Reissued and replaced Redeemed Federal tax deposit forms processed Food stamps processed $ 1,480 332 1,139 $ $ $ 24,580 387 $ $ * l n c l u d e s postal m o n e y orders. * * l n c l u d e s c o l l a t e r a l custodies. "fActual n u m b e r . 7 Statement of Earnings and Expenses 1970 1971 Current earnings: Advances and discounts U. S. Government securities $ 8,733,021 $ 14,933,619 600,673,056 614,380,420 Foreign currencies 395,960 7,276,478 All other 145,150 171,248 $609,947,187 $636,761,765 $ 45,974,533 $ 41,533,264 Federal Reserve currency 3,611,570 3,955,139 Assessment for expenses of Board of Governors 4,893,000 3,137,100 $ 54,479,103 $ 48,625,503 Total current earnings Current expenses: Operating expenses Total Less reimbursement for certain 5,076,056 5,319,490 Current net expenses fiscal agency and other expenses $ 49,403,047 $ 43,306,013 Current net earnings $560,544,140 $593,455,752 $ 16,418,733 $ Additions to current net earnings: Profit on sales of U. S. Government securities (net) All other Total additions 30,344 1,347,366 532,001 $ 16,449,077 $ $ $ 1,879,367 Deductions from current net earnings: Loss on sales of U. S. Government securities (net) All other Total deductions — 1,306,592 $ 1,306,592 — 27,210 $ 27,210 Net deductions from (—) or additions to current net earnings 15,142,485 1,852,157 $575,686,625 $595,307,909 $ $ Net earnings before payments to U. S. Treasury Dividends paid 6,485,409 6,065,780 Payments to U. S. Treasury (interest on Federal Reserve notes) Transferred to surplus 563,996,366 $ 5,204,850 582,782,779 $ 6,459,350 Surplus account Surplus, January 1 Transferred to surplus—as above Surplus, December 31 8 $105,455,600 $ 98,996,250 5,204,850 6,459,350 $110,660,450 $105,455,600 Statement of Condition December 31, 1971 December 31, 1970 $ 1,784,956,860 $ 2,209,626,441 Special drawing rights certificate account 70,000,000 70,000,000 Federal Reserve notes of other banks 81,508,000 60,299,000 Other cash 28,404,018 31,942,741 Assets Gold certificate account Loans: Secured by U. S. Government securities 3,400,000 Other Total loans $ Federal agency obligations, bought outright $ 226,925,000 79,307,000 — 9,785,675,000 $11,364,600,000 $10,012,600,000 2,498,129,973 2,327,046,039 Cash items in process of collection Bank premises 16,475,936 16,887,444 113,809,762 124,793,062 $15,957,884,549 $14,853,194,727 $ 9,573,220,598 $ 9,003,044,980 3,749,985,300 3,429,976,085 254,844,087 103,606,870 Other assets Total assets 3,400,000 224,375,000 11,281,893,000 U. S. Government securities Total loans and securities 2,550,000 " Liabilities Federal Reserve notes Deposits: Member bank reserves U. S. Treasurer-general account Foreign 42,000,000 18,500,000 137,920,942 282,154,793 $ 4,184,750,329 $ 3,834,237,748 1,883,770,142 1,713,965,571 94,822,580 91,035,228 $15,736,563,649 $14,642,283,527 $ $ Other Total deposits Deferred availability cash items Other liabilities Total liabilities Capital accounts Capital paid in Surplus Total liabilities and capital accounts 110,660,450 105,455,600 110,660,450 105,455,600 $15,957,884,549 $14,853,194,727 $ $ Contingent liability on acceptances purchased for foreign correspondents 38,235,000 37,014,800 9 EMERSON G. H I G D O N , President The Maytag Company Newton, Iowa Chairman and Federal Reserve Agent DIRECTORS as of December 3 1 , 1971 J O H N W . BAIRD, President Baird & Warner, Inc. Chicago, Illinois W I L L I A M H. D A V I D S O N , President Harley-Davidson Motor Co., Inc. Milwaukee, Wisconsin W I L L I A M H. FRANKLIN, President Caterpillar Tractor Company Peoria, Illinois Deputy Chairman M E L V I N C. LOCKARD, President First National Bank, Mattoon, Illinois Mattoon, Illinois H O W A R D M . PACKARD, Vice Chairman S. C. Johnson & Son, Inc. Racine, Wisconsin Seated: W . H. Franklin, E. G . H i g d o n , a n d J. O . W a y m i r e . Standing: F. F. W h i t m o r e , E. B. Smith, W . H. Davidson, J. W . M . C . Lockard. EDWARD B. S M I T H , Chairman of the Board The Northern Trust Company Chicago, Illinois Baird, H . M . Packard, and JOSEPH O . W A Y M I R E , Vice President, Finance (Retired) Eli Lilly and Company Indianapolis, Indiana FLOYD F. W H I T M O R E , President The Okey-Vernon National Bank of Corning Corning, Iowa Detroit Branch PETER B. CLARK, Chairman of the Board and President Evening News Association Detroit, Michigan Chairman W I L L I A M M . DEFOE, Chairman of the Board Defoe Shipbuilding Company Bay City, Michigan ELLIS B. MERRY, Chairman of the Board National Bank of Detroit Detroit, Michigan ROLAND A. M E W H O R T , Chairman of the Board Manufacturers National Bank of Detroit Detroit, Michigan L. W I L L I A M SEIDMAN, General Partner Seidman & Seidman, C.P.A. Grand Rapids, Michigan Seated: B. P. S H E R W O O D , JR., President Security First Bank & Trust Co. Grand Haven, Michigan GEORGE L. WHYEL, President Genesee Merchants Bank & Trust Co. Flint, Michigan Standing: B. P. S h e r w o o d , P. B. C l a r k , a n d G . L. W h y e l . R. A . M e w h o r t , L. W . S e i d m a n , W . M . D e f o e , a n d E. B. M e r r y . Member of Federal Advisory Council GAYLORD FREEMAN, Chairman of the Board The First National Bank of Chicago Chicago, Illinois 10 OFFICERS ROBERT P. M A Y O , President CARL E. BIERBAUER, Senior Vice President ERNEST T. BAUGHMAN, JAMES R. MORRISON, First Vice President Senior Vice President a n d Control Officer DANIEL M . DOYLE, Senior Vice President HARRY S. SCHULTZ, WARD J. LARSON, Senior Vice President, BRUCE L. SMYTH, Senior Vice President Senior Vice President G e n e r a l Counsel, a n d Secretary GEORGE W . CLOOS, LE ROY A. DAVIS, Vice President a n d Economist Vice President FRED A . D O N S , General Auditor RICHARD A. MOFFATT, Vice President RAYMOND M . SCHEIDER, KARL A. SCHELD, Vice President Vice President a n d Director of Research ELBERT O. FULTS, Vice President VICTOR A. HANSEN, Vice President EDWARD A. HEATH, Vice President ARNOLD J. ANSCHUTZ, BUDDIE J. BELFORD, Assistant Vice President Assistant Vice President HARRIS C. BUELL, JR., CHARLES L. CARTER, Chief Examiner Examining Officer ROBERT P. CORNELISEN, Assistant Vice President LYNN A. STILES, Vice President a n d Economist JACK P. THOMPSON, ALLEN G. WOLKEY, Vice President RICHARD H. RAMSDELL, WILLIAM ROONEY, CHARLOTTE H. SCOTT, ROBY L. SLOAN, Assistant Vice President Assistant Vice President ROBERT E. SORG, Assistant Vice President DAVID R. STARIN, FRANKLIN D. DREYER, Assistant Chief Examiner ADOLPH J. STOJETZ, RUDOLPH W . DYBECK, Assistant Vice President Assistant G e n e r a l Counsel Assistant Vice President Assistant Vice President F R E D E R I C K S. D O M I N I C K , Assistant General Auditor WILLIAM H. GRAM, Vice President Assistant Vice President ARTHUR G. STONE, Assistant Vice President Assistant Vice President HILBERT G. SWANSON, Assistant Vice President a n d Assistant Secretary ROBERT JOHNSON, Assistant Vice President DANIEL P. KINSELLA, ERICH K. KROLL, Assistant Vice President Assistant Vice President JOSEPH G. KVASNICKA, Assistant Vice President THOMAS C. TUCKER, EUGENE J. WAGNER, CARL C. WELKE, Assistant Vice President Assistant Vice President Assistant Vice President ROBERT W . WELLHAUSEN, Assistant Vice President a n d Economist WILLIAM T. NEWPORT, DOROTHY M . NICHOLS, Assistant Vice President Assistant Vice President P A T R I C I A W . W I S H A R T , Assistant Vice President THOMAS L. WOLFE, Examining Officer a n d Economist Detroit Branch DANIEL M . DOYLE, Senior Vice President WILLIAM C. CONRAD, RONALD L. ZILE, Vice President Vice President LOUIS J. PUROL, Assistant Vice President ROBERT W . COOK, Assistant Cashier 11 Appointments, Elections, Promotions, and Retirements Federal Advisory Board Gaylord Freeman, chairman of the board of The First National Bank of Chicago, was appointed Seventh Federal Reserve District representative on the Federal Advisory Council for 1971. Directors Emerson J. Higdon, president of the Maytag Company, Newton, Iowa, was reappointed chairman of the board and Federal Reserve Agent for a one-year term, and William H. Franklin, president, Caterpillar Tractor Company, Peoria, Illinois, was reappointed deputy chairman for a one-year term by the Board of Governors in Washington. John W. Baird, president, Baird & Warner, Inc., Chicago, was appointed to a three-year term as a Class C director by the Board of Governors. Mr. Baird succeeded F. J. Lunding, chairman of the Finance Committee of Jewel Companies, Inc., Melrose Park, Illinois. At the Detroit branch, Ellis B. Merry, chairman of the board, National Bank of Detroit, was appointed to a three-year term by the Board of Governors. The Board of Directors of the Detroit branch elected Peter B. Clark, chairman of the board and president, Evening News Association, chairman of the Detroit bank's Board of Directors. Promotions Victor A. Hansen was appointed vice president, Cash Department. Daniel P. Kinsella was promoted from administrative assistant to assistant vice president, Cash Department. Richard H. Ramsdell, superintendent in the Building Department, was appointed assistant vice president. 12 At the Detroit branch, Robert W. Cook was appointed assistant cashier, and William C. Conrad and Ronald L. Zile were promoted from assistant vice president to vice president. Retirements Arthur M. Gustavson, vice president of the Cash Department, retired after more than 36 years with the Chicago Fed. Gordon W. Lamphere, vice president and assistant general counsel of the Detroit branch retired after more than 20 years. Joseph J. Srp, vice president, Building Department, chose early retirement after more than 44 years of service with the Federal Reserve System. Retiring with more than 45 years service were William Murphy and Doris Reilly of the Chicago bank, and Thomas L. Ferguson and Elmer Knoch of the Detroit branch. Employees who retired with more than 49 years of service were: Henry G. Ahlers Walter Brzezinski Francis Cromey Alfred Le Compte Harvey J. Wishart Retiring after more than 25 years of service were: Mildred N. Becker Erwin Keller Anne Lasser Emily Menke Catherine E. Meuer Ethel C. Milan Katheryn Newberg Helene R. Parro Archie A. Sexton Frank Sobject Helen W. Walls