THE LOWDOWN ON POSTAL MONEY ORDERS CIRCA 1963

[James DiEugenio]

LOL, good one Tommy.

[Jon G. Tidd]

David and Lance,

Simple question: Is there any proof First National Bank of Chicago got paid for the amount it allegedly credited to Klein's?

Law school and bar exam answer: No. Reason: First would have been paid by the Chicago FRB only if First had stamped the PMO.

You can argue all day about deposit slips, which are meaningless as a matter of law. You can argue all day about Federal Reserve routing numbers, which are meaningful but which could have been faked easily. Argue away. The Hidell PMO reveals no proof First got paid.

Dig up proof First got paid by the Chicago FRB, and I'll shut up.

I can guarantee everyone here, however, that the Chicago FRB would not have paid First without First's bank stamp. Absent First's bank stamp, no taker of the PMO would have recourse against First. That just wouldn't happen. Either in 1963 or today.

This isn't opinion. It's law.

[David Von Pein]

Jon,

First National's bank stamp was very likely present on a "cash letter" that accompanied a batch of bulk Postal Money Orders, one of which was the famous Hidell CE788 PMO. (IMHO.)

COMPLETE ARCHIVED "MONEY ORDER" DISCUSSION:

jfk-archives.blogspot.com/2015/10/jfk-assassination-arguments-part-1058.html

Edited January 9, 2016 by David Von Pein

[Jon G. Tidd]

DVP,

You write about "cash letters".

These were deposit slips.

Focus on the Hidell PMO. It is not stamped by First National Bank of Chicago.

[David Von Pein]

But, Jon, if the Hidell PMO was represented on a bulk deposit slip, why wouldn't that satisfy the Federal Reserve Bank requirement for bank stamps?

Please explain why such a bulk arrangement would not suffice?

Edited January 9, 2016 by David Von Pein

[Thomas Graves]

But, Jon, if the Hidell PMO was represented on a bulk deposit slip, why wouldn't that satisfy the Federal Reserve Bank requirement for bank stamps?

Please explain why such a bulk arrangement would not suffice?

David,

Jon is saying a deposit slip (the bulk deposit slip aka "cash letter") doesn't prove that First National Bank of Chicago was actually paid by the Chicago Federal Reserve Bank.

--Tommy

Edited January 9, 2016 by Thomas Graves

[Jon G. Tidd]

It's important for everyone to understand that items deposited with a bank were and are treated as discreet items.

[David Von Pein]

Jon is saying a deposit slip (the bulk deposit slip aka "cash letter") doesn't prove that First National Bank of Chicago was actually paid by the Chicago Federal Reserve Bank.

How could such a thing EVER be proved here in 2016---even if there were First National bank stamps all over the PMO?

Once again, CTers are asking (and expecting) too much from the evidence in the JFK case. Like when DiEugenio actually expects a Dallas post office employee to remember (in November) handing a package to an ordinary customer named Oswald (in March). It's crazy to expect that such a routine everyday activity would be singled out and recalled eight months after it occurred. But Jimmy expects it nonetheless.

Edited January 9, 2016 by David Von Pein

[Guest]

1. Those who squawk that Postal Money Orders must have bank endorsements rely on paragraph 13 of Federal Reserve Bank of New York Operating Circular No. 4, “Collection of Cash Items,” Revised August 4, 1960.

Paragraph 13 states, “All cash items sent to us, or to another Federal Reserve Bank direct for our account, should be endorsed without restriction to the order of the Federal Reserve Bank to which sent, or endorsed to the order of any bank, banker or trust company, or with some similar endorsement.”

Because Postal Money Orders were included within the definition of “cash items,” so the squawkers’ argument goes, Postal Money Orders obviously required endorsements - in this case, by The First National Bank of Chicago.

2. But wait: 39 United States Code § 5104, in effect in 1960 (and 1963), provided that only one endorsement was permissible on a Postal Money Order. The payee (Klein’s in this case) could transfer the money order once (and only once) by writing the name of the transferee on the “Pay to” line and then endorsing under that. This is clear from the language on the reverse of the Klein’s money order itself:

Ownership of this Order May Be Transferred to Another person or Firm if the Payee Will Write The Name of such Person or Firm on the Line Marked “Pay To” Before Writing His Own Name on the Second Line. More than One Endorsement Is Prohibited By Law. Bank Stamps are not Regarded as Endorsements.

3. Paragraph 13 of Operating Circular No. 4 thus could not possibly be referring to a further endorsement by The First National Bank of Chicago – such a purported endorsement would have been “prohibited by law” (i.e., by 39 U.S.C. § 5104). It would have been illegal.

4. End of discussion about the supposed need for “endorsements” by The First National Bank of Chicago, the Federal Reserve Bank of Chicago or the Treasury Department. Anyone who says otherwise is simply wrong. Paragraph 13 of Operating Circular No. 4 is, as I suggested to DVP many posts ago, a red herring.

5. This leaves the squawkers to squawk, “But there should be bank stamps! The law specifically said that bank stamps were not endorsements.” In the 1962 federal case I previously cited, U.S. v. Cambridge Trust Company, the non-Federal Reserve intermediary bank that processed the Postal Money Order did stamp the money order with its clearing house stamp before sending it to its clearing house bank, the step which got the Postal Money Order into the Federal Reserve system. But when the Klein’s money order was deposited with The First National Bank of Chicago, it was at that point in the Federal Reserve system since The First National Bank of Chicago was a Federal Reserve member. The issue thus is, was there some reason for The First National Bank of Chicago (or the Federal Reserve Bank of Chicago, or the Treasury Department) to stamp the Klein’s Postal Money Order – would any purpose have been served by this?

6. As I pointed out in my previous post, once a Postal Money Order was in the Federal Reserve system, everyone who touched it was acting as an agent for the Postal Service as the “paying bank.” I just happened to notice that this agency aspect was emphasized (from a different angle) in U.S. v. Cambridge Trust Company:

Thus the last legal owner of the money orders was E.M.F. Electric Supply Company, Inc., and the Bank and its correspondent through which the orders in due course came to the Federal Reserve Bank for payment could legally only be acting as E.M.F.'s agents for collection. And their agency was no secret to the medium authorized by law to pay the orders, the Federal Reserve Bank of Boston. It is chargeable with knowledge of the law preventing the transfer of ownership of postal money orders more than once and it knew from the endorsements on the orders themselves that ownership had been transferred once to E.M.F. Therefore, by honoring the orders by paying them, it could only have recognized that it was making payment not to the owner of the orders but to an agent of the owner for collection.

Inasmuch as the stamp on the Klein’s money order clearly showed that it had been credited to the payee’s account at The First National Bank of Chicago, a Federal Reserve member bank ... The First National Bank of Chicago routinely transmitted the money order as a cash item to the Federal Reserve Bank of Chicago ... and the Federal Reserve Bank of Chicago duly forwarded the money order to the Treasury Department, all as part of an agency transaction in which these entities were acting on behalf of the Postal Service, I defy anyone to give a rational reason “bank stamps” would have been required.

For what it’s worth, I found the following detailed description of the punch card procedure in the 1951 Annual Report of the Federal Reserve Bank of Cleveland. Although this was before the advent of the File Locator Number procedure, you will note the conspicuous absence of any reference to “endorsing,” “stamping” or anything of the kind. I might also add that a 50-state search of federal and state Postal Money Order cases turned up not one reference (other than the 1962 case mentioned above) to a Postal Money Order having been endorsed or stamped by a bank.

The new plan provided that, effective July

1, all postal money orders shall be issued in

punched card form; that the new type money

orders, when cashed or received for deposit at

banks, shall be deposited in the normal course

of business with the Federal Reserve banks

and branches as cash items for immediate

credit. The Federal Reserve banks in turn

receive payment through the U. S. Treasurer's

general account carried on the books of the

Federal Reserve banks.

When the money orders are received by a

Federal Reserve bank from local member banks

and nonmember clearing banks, or from out-of-

town member banks and nonmember clearing

banks for immediate credit to their account

on the books of the Federal Reserve bank,

the following procedure is followed:

1. The money orders are processed

through the use of punch-proof machines

which were designed and built for this

specific purpose. The operator lists the

amount of each money order and the

machine punches that amount in the

money order and automatically sorts and

tabulates the amount on the tapes supplied

for each of the twelve regional post

offices.

2. At the same time that the money

orders are listed and sorted according to

regional post offices the machine prepares

a master tape which is used to balance

the incoming deposits or cash letters.

3. At the end of each day the tapes

for each regional post office are assembled

and balanced to the total of money orders

received for the day. The money orders

are also assembled by regional post offices

and the listing tapes attached to each

separate sort.

4. After the day's work has been balanced,

the Federal Reserve bank charges

the U. S. Treasurer's general account on

the books of the bank for the total of the

money orders processed, and then prepares

the orders for delivery to the local post

office the morning of the next business day.

5. Each morning a representative of

the local post office located in the Federal

Reserve bank or branch city picks up the

money orders processed by the Federal

Reserve bank the previous business day.

The regional post office then tabulates the

money orders by regional districts, punches

new cards for all mutilated money orders,

balances and tabulates such cards and

verifies the total of the day's work as

reported by the Federal Reserve bank.

The regional post offices then make final

payment and settlement with the Treasurer.

As to the suggestion that the Federal Reserve Bank of Chicago would not have paid The First National Bank of Chicago without an endorsement (or bank stamp), this just makes no sense. They were both part of the Federal Reserve team processing Postal Money Orders as agents for the Postal Service. The Federal Reserve Bank of Chicago wasn't "paying" anything; it was simply debiting the Post Office's account at the Treasury Department and correspondingly crediting The First National Bank of Chicago. This was a routine agency procedure. This is why the Federal Reserve Bank's agreement with the Postmaster General said, in effect, "If a problem with the money order surfaces after we have performed our agency function, the problem is the Post Office's - you are going to have to deal directly with the bank that originally paid the money order." In other words, we're just your agent, and after we've done what we agreed to do any problem is yours. The fact that the money order was stamped with a File Locator Number and placed in storage is the proof it was paid.

At every turn, those who wish to preserve the "money order mystery" must invent sub-mysteries to keep it afloat. I feel 100% sure the reason no one before John Armstrong saw the "money order mystery" is because: THERE AIN'T NO MYSTERY.

Edited January 10, 2016 by Guest

[Sandy Larsen]

But, Jon, if the Hidell PMO was represented on a bulk deposit slip, why wouldn't that satisfy the Federal Reserve Bank requirement for bank stamps?

Please explain why such a bulk arrangement would not suffice?

It is easy to prove today -- right now -- that a bank stamp on a cash letter (bulk deposit slip) wasn't the way things were done in the 1960s.

For the sake of argument, let's suppose that cash items were NOT stamped individually, because it was done on the cash letter. If that were the case, then how would you explain check #7419 on this page?

On the reverse side of the check you can see the FRB Chicago stamp (rectangular), so you know the check was processed by an Federal Reserve Bank. And you can see two bank stamps for Fort Worth National Bank (one is a hexagon and the other a rectangle with a decorative border). Since this is a national bank, it was the one that submitted the check to FRB Chicago.

Why are those bank stamps there, David?? When one stamp on the cash letter would have sufficed?

Edited January 10, 2016 by Sandy Larsen

[Sandy Larsen]

1. Those who squawk that Postal Money Orders must have bank endorsements rely on paragraph 13 of Federal Reserve Bank of New York Operating Circular No. 4, “Collection of Cash Items,” Revised August 4, 1960.

Paragraph 13 states, “All cash items sent to us, or to another Federal Reserve Bank direct for our account, should be endorsed without restriction to the order of the Federal Reserve Bank to which sent, or endorsed to the order of any bank, banker or trust company, or with some similar endorsement.”

Because Postal Money Orders were included within the definition of “cash items,” so the squawkers’ argument goes, Postal Money Orders obviously required endorsements - in this case, by The First National Bank of Chicago.

Yes, that is correct. All cash items including PMOs were to be endorsed. Though, as has been discussed, endorsements on PMOs aren't treated the same as endorsements on negotiable instruments. Because PMOs are only negotiable once.

Prior to 1951 when PMO's weren't accepted by FRBs, the requirement for bank stamps was given in the United States Official Postal Guide. In that, it states that a bank stamp is required on the back sides of PMOs. The term "endorsement" isn't used. But a bank stamp was required before 1951, and continued to be required after that, as set forth in Regulation J. And later in Regulation CC.

2. But wait: 39 United States Code § 5104, in effect in 1960 (and 1963), provided that only one endorsement was permissible on a Postal Money Order. The payee (Klein’s in this case) could transfer the money order once (and only once) by writing the name of the transferee on the “Pay to” line and then endorsing under that. This is clear from the language on the reverse of the Klein’s money order itself:

Ownership of this Order May Be Transferred to Another person or Firm if the Payee Will Write The Name of such Person or Firm on the Line Marked “Pay To” Before Writing His Own Name on the Second Line. More than One Endorsement Is Prohibited By Law. Bank Stamps are not Regarded as Endorsements.

3. Paragraph 13 of Operating Circular No. 4 thus could not possibly be referring to a further endorsement by The First National Bank of Chicago – such a purported endorsement would have been “prohibited by law” (i.e., by 39 U.S.C. § 5104). It would have been illegal.

It states right on the back of PMOs that bank stamps are not regarded as endorsements. So they don't count toward the one-endorsement rule.

4. End of discussion about the supposed need for “endorsements” by The First National Bank of Chicago, the Federal Reserve Bank of Chicago or the Treasury Department. Anyone who says otherwise is simply wrong. Paragraph 13 of Operating Circular No. 4 is, as I suggested to DVP many posts ago, a red herring.

Paragraph 13 states, “All cash items sent to us, or to another Federal Reserve Bank direct for our account, should be endorsed without restriction to the order of the Federal Reserve Bank to which sent, or endorsed to the order of any bank, banker or trust company, or with some similar endorsement.”

A bank endorsement stamp isn't regarded as an endorsement when stamped on a PMO. As you've said many times, those holding the PMO after the first endorsement are acting as an agent for the owner of the PMO. So no law is broken.

End of discussion.

You yourself presented a law case study where an "intermediary" bank endorsed hundreds of PMOs. (UNITED STATES v. CAMBRIDGE TRUST COMPANY) In the study the following statements are made:

1. Porter cleverly raised each order about ninety dollars and then transferred them to E.M.F. Electric Supply Company, Inc., by the endorsement: "Pay to E.M.F. Electric Co. Ralph Porter, Payee." THAT IS ENDORSEMENT #1
2. E.M.F. delivered each order to the appellee bank, referred to hereinafter sometimes as the Bank, for deposit to the credit of its account with the endorsement: "For deposit only E.M.F. Electric Supply Co. and Camera Exchange" THAT IS ENDORSEMENT #2
3. The Bank stamped each order with its usual clearing house stamp reading: "Pay to the Order of Any Bank, Banker or Trust Co. Prior Endorsements Guaranteed, Cambridge Trust Company" THAT IS ENDORSEMENT #3

But there can be only one endorsement! So which is it? It's the one where ownership of the PMO is passed to someone else. Therefore only Endorsement #1 is considered to be an endorsement, and the other two are not. Even though the case study specifically called two of the three an "endorsement."

The point is that these stamps can be -- and are -- called endorsements because they perform one (or more) of the functions of an endorsement. They just don't transfer ownership. It's the transfer of ownership that is illegal..

5. This leaves the squawkers to squawk, “But there should be bank stamps! The law specifically said that bank stamps were not endorsements.” In the 1962 federal case I previously cited, U.S. v. Cambridge Trust Company, the non-Federal Reserve intermediary bank that processed the Postal Money Order did stamp the money order with its clearing house stamp before sending it to its clearing house bank, the step which got the Postal Money Order into the Federal Reserve system. But when the Klein’s money order was deposited with The First National Bank of Chicago, it was at that point in the Federal Reserve system since The First National Bank of Chicago was a Federal Reserve member. The issue thus is, was there some reason for The First National Bank of Chicago (or the Federal Reserve Bank of Chicago, or the Treasury Department) to stamp the Klein’s Postal Money Order – would any purpose have been served by this?

I know that any futher stamping makes no sense to you. Just like it makes no sense to DVP that individual items be stamped when a single stamp on the cash letter should do. But just because certain things make sense to you guys, it doesn't make them so.

6. As I pointed out in my previous post, once a Postal Money Order was in the Federal Reserve system, everyone who touched it was acting as an agent for the Postal Service as the “paying bank.” I just happened to notice that this agency aspect was emphasized (from a different angle) in U.S. v. Cambridge Trust Company:

Thus the last legal owner of the money orders was E.M.F. Electric Supply Company, Inc., and the Bank and its correspondent through which the orders in due course came to the Federal Reserve Bank for payment could legally only be acting as E.M.F.'s agents for collection. And their agency was no secret to the medium authorized by law to pay the orders, the Federal Reserve Bank of Boston. It is chargeable with knowledge of the law preventing the transfer of ownership of postal money orders more than once and it knew from the endorsements on the orders themselves that ownership had been transferred once to E.M.F. Therefore, by honoring the orders by paying them, it could only have recognized that it was making payment not to the owner of the orders but to an agent of the owner for collection.

Inasmuch as the stamp on the Klein’s money order clearly showed that it had been credited to the payee’s account at The First National Bank of Chicago, a Federal Reserve member bank ... The First National Bank of Chicago routinely transmitted the money order as a cash item to the Federal Reserve Bank of Chicago ... and the Federal Reserve Bank of Chicago duly forwarded the money order to the Treasury Department, all as part of an agency transaction in which these entities were acting on behalf of the Postal Service, I defy anyone to give a rational reason “bank stamps” would have been required.

Here's my rational reason for a bank stamp: To identify on the PMO itself the bank that had sent the PMO to the FRB. That could prove useful if 1) the computer tape holding a record of the bundle of cash items became corrupted; or 2) if a PMO were used as evidence in a court case, the PMO would contain a complete record of what happened to it. PMOs should even have a PAID stamp applied to them once processing is complete.

But, you see, that is merely what makes sense to me. And just because it makes sense to me, doesn't make it so.

The only way to know how to treat PMOs is to read Regulation J or the FRB Operating Circulars.

For what it’s worth, I found the following detailed description of the punch card procedure in the 1951 Annual Report of the Federal Reserve Bank of Cleveland. Although this was before the advent of the File Locator Number procedure, you will note the conspicuous absence of any reference to “endorsing,” “stamping” or anything of the kind. I might also add that a 50-state search of federal and state Postal Money Order cases turned up not one reference (other than the 1962 case mentioned above) to a Postal Money Order having been endorsed or stamped by a bank.

The new plan provided that, effective July

1, all postal money orders shall be issued in

punched card form; that the new type money

orders, when cashed or received for deposit at

banks, shall be deposited in the normal course

of business with the Federal Reserve banks

and branches as cash items for immediate

This is where the person is told to bank-stamp the PMOs. Because they know that all cash items are to be bank-stamped/endorsed.

credit. The Federal Reserve banks in turn

receive payment through the U. S. Treasurer's

general account carried on the books of the

Federal Reserve banks.

When the money orders are received by a

Federal Reserve bank from local member banks

and nonmember clearing banks, or from out-of-

town member banks and nonmember clearing

banks for immediate credit to their account

on the books of the Federal Reserve bank,

the following procedure is followed:

1. The money orders are processed

through the use of punch-proof machines

which were designed and built for this

specific purpose. The operator lists the

amount of each money order and the

machine punches that amount in the

money order and automatically sorts and

tabulates the amount on the tapes supplied

for each of the twelve regional post

offices.

2. At the same time that the money

orders are listed and sorted according to

regional post offices the machine prepares

a master tape which is used to balance

the incoming deposits or cash letters.

3. At the end of each day the tapes

for each regional post office are assembled

and balanced to the total of money orders

received for the day. The money orders

are also assembled by regional post offices

and the listing tapes attached to each

separate sort.

4. After the day's work has been balanced,

the Federal Reserve bank charges

the U. S. Treasurer's general account on

the books of the bank for the total of the

money orders processed, and then prepares

the orders for delivery to the local post

office the morning of the next business day.

5. Each morning a representative of

the local post office located in the Federal

Reserve bank or branch city picks up the

money orders processed by the Federal

Reserve bank the previous business day.

The regional post office then tabulates the

money orders by regional districts, punches

new cards for all mutilated money orders,

balances and tabulates such cards and

verifies the total of the day's work as

reported by the Federal Reserve bank.

The regional post offices then make final

payment and settlement with the Treasurer.

As to the suggestion that the Federal Reserve Bank of Chicago would not have paid The First National Bank of Chicago without an endorsement (or bank stamp), this just makes no sense. They were both part of the Federal Reserve team processing Postal Money Orders as agents for the Postal Service. The Federal Reserve Bank of Chicago wasn't "paying" anything; it was simply debiting the Post Office's account at the Treasury Department and correspondingly crediting The First National Bank of Chicago.

This was a routine agency procedure. This is why the Federal Reserve Bank's agreement with the Postmaster General said, in effect, "If a problem with the money order surfaces after we have performed our agency function, the problem is the Post Office's - you are going to have to deal directly with the bank that originally paid the money order." In other words, we're just your agent, and after we've done what we agreed to do any problem is yours. The fact that the money order was stamped with a File Locator Number and placed in storage is the proof it was paid.

At every turn, those who wish to preserve the "money order mystery" must invent sub-mysteries to keep it afloat. I feel 100% sure the reason no one before John Armstrong saw the "money order mystery" is because: THERE AIN'T NO MYSTERY.

[David Von Pein]

Why are those bank stamps there, David?? When one stamp on the cash letter would have sufficed?

Probably because you're talking about CHECKS and not POSTAL MONEY ORDERS in this example, Sandy. That's why. Big difference. The First National Bank of Chicago very likely handled Postal Money Orders differently (in bulk) than they did checks.

Edited January 10, 2016 by David Von Pein

[Thomas Graves]

Why are those bank stamps there, David?? When one stamp on the cash letter would have sufficed?

Probably because you're talking about CHECKS and not POSTAL MONEY ORDERS in this example, Sandy. That's why. Big difference. The First National Bank of Chicago very likely handled Postal Money Orders differently (in bulk) than they did checks.

Also note that checks say, "Pay To The Order Of" whereas Postal Money Orders say, "Pay To."

--Tommy

[Sandy Larsen]

Why are those bank stamps there, David?? When one stamp on the cash letter would have sufficed?

Probably because you're talking about CHECKS and not POSTAL MONEY ORDERS in this example, Sandy. That's why. Big difference. The First National Bank of Chicago very likely handled Postal Money Orders differently (in bulk) than they did checks.

But the part of the regulation you quoted, regarding bulk deposits and cash letters, applies to all cash items, not just PMOs. And cash items include checks, money orders and other such instruments.

So if the FRBs allowed bank stamps to be on the cash letter instead of individual items, that would apply to checks, PMOs, and the rest.

What I showed is that what you described wasn't the case for checks. And so it wouldn't have been be the case for PMOs either.

[David Von Pein]

Sandy,

The regulation says that cash letters "may" be used by the sending bank. It doesn't say it "MUST" be done that way.

Why couldn't First National have a certain way of processing checks and a different procedure for processing Postal Money Orders?

"MAY" doesn't equal "MUST".

Just as "SHOULD" does not mean "MUST".

Edited January 10, 2016 by David Von Pein