Armstrong: Of Covert Ops, Fake Marines, of Classifieds, of Cabbages and Kings

[Tom Scully]

Drew,

Both Jack White and the author I believe he was quoting, George Michael Evica, have passed away.

Stay tuned, Armstrong's full reply is on the way.

You will get a full history of the whole money order process.

Edited by James DiEugenio, Today, 02:38 AM.

Now why would any such thing (a "full" history, according to John Armstrong.....) be necessary, Jim?

Again, I see the question as, do I seek the most accurate information, or information tending to support a theory?
I started out, on November 9, pushing against recent claims that the $21.45 was "key punched by the Federal Reserve Bank" and this was the proof that it was processed. I did disprove that claim, but the government named
two men of the Post Office Financial Department in Washington, DC (Herbert Marks and Charles E. Mc cusker)
who were reported to have found the original money order at their new Postal Money Order audit/data center and my research supports that this is the place all money orders purchased in the Dallas postal region from exactly 5 Jan., 1963, should end up.... after Federal Reserve Bank processing. So, I was misinformed until I myself checked it all out, from Postal and FRB documents.

Jim, whose research misinformed, me, as to the accurate destination of the $21.45 postal money order. Weren't you also
informed by the same source I was, that this money order should have gone from the Federal Reserve Bank to the Kansas
City Postal Money Order Center, and not to Washington, D.C.? I do not appreciate being presented inaccurate information
and theories, analysis, or accusations based on such information. Do you? Do I have to check everything from original sources?
Do you.....always? Have you? ...And how many people were involved in the postal money order fraud John Armstrong presented...
is it getting to be a busload of them.....?

http://www.history-matters.com/archive/j...E_1138.pdf

https://casetext.com/case/stewart-v-us-69 United States District Court, E.D. Michigan, S.D.·300 F. Supp. 1047 (E.D. Mich. 1969) "STEWART V. U.S., (E.D.MICH. 1969) James A. STEWART, Plaintiff, v. UNITED STATES of America, Defendant. Civ. No. 30490. United States District Court, E.D. Michigan, S.D. June 16, 1969. *1048 ....Plaintiff, a short time thereafter, discussed the problem with the superintendent of the Fenkell Station and was informed that Blumenfeld had cashed a number of money orders made out to Norwood Jewelry Company as payee on an endorsement "Pay to the Order of Clarence Blumenfeld, Norwood Jewelry Company, per Clarence Blumenfeld." Blumenfeld did not have the authority to cash said money orders. They were cashed during a five-month period August 6, 1963 to January 20, 1964. In all, Blumenfeld cashed 48 checks belonging to Norwood Jewelry Company, with a total value of $3,115.47. ...... Postal money orders are not negotiable instruments and hence are not governed by laws applicable to commercial paper, but are governed by postal laws. Levin v. United States (U.S. Court of Claims, 1959), 170 F.Supp. 646. This court is aware of the fact that postal money orders have limited characteristics which make them like negotiable instruments, but these characteristics are minimal and deprive them of being classified or considered as ordinary negotiable instruments. United States v. First National Bank of Boston (D.C.Mass., 1967), 263 F.Supp. 298. The operation of the postal money order system is a "sovereign function" and not a "commercial operation", notwithstanding it may have some aspects of commercial banking. United States v. Northwestern Nat'l Bank Trust Co. (D.C.Minn., 1940), 35 F.Supp. 484, at 486. *1050 ....."

[PDF]The Role of the Federal Reserve in the Payments System
https://www.bostonfed.org/economic/conf/...onf45f.pdf
by PM Connolly - pg. 136 "....The Federal Reserve's Role in Developing High-Speed Check

Sorting Equipment
When the ABA Technical Subcommittee talked to possible manufac-
turers of check automation equipment in 1955, it determined that thirteen
firms might have the potential for building and servicing this specialized
type of equipment. To provide operational and financial support for this
key initiative, the Federal Reserve worked with and partially subsidized
five firms that submitted acceptable proposals: the Burroughs Corpora-
tion, IBM, National Data Processing Corporation, the National Cash
Register Company, and Ferranti-Packard. The latter two firms assembled
systems using their own computers and check sorters made by Pitney
Bowes. Five Reserve BanksNew York, Chicago, Philadelphia, Boston,
and San Franciscoparticipated. Each experimented with the equipment
from one of these companies.
In each case the Reserve Banks paid the full lease cost, even though
the equipment was constantly being adjusted and modified. Thus, the
Federal Reserve provided a financial incentive for five different manu-
facturers to participate. In addition, the Reserve Banks devoted staff time and used
portions of their daily incoming check volumes to help the
manufacturers test their new equipment. The System hoped that, in the
long run, multiple firms would succeed. This would encourage compe-
tition among manufacturers and help create a network with common
standards, benefiting all banks.
The Federal Reserve started this pilot project in 1960. By 1965, most
of its offices and branches were running high-speed check-sorting equip-
ment supplied by Burroughs and IBM. Other manufacturers that partic-
ipated in the Reserve Bank tests developed lower-speed equipment that
many smaller commercial banks adopted.
During the entire experimental period, the accumulated knowledge
of the System was made available to the banking industry. ..."

https://www.chicagofed.org/utilities/abo...-1940-1964
Chicago Fed History: 1940-1964
"...By 1956, the Bank was operating 24 hours a day to clear more than half a billion
items annually. Approximately 40 percent of the Bank's employees were engaged in
clearing checks. The operation was, according to the Bank's annual report, the "world's
largest check-clearing installation."

Complicating the Bank's task was the labor-intensive, time-consuming nature of check
clearing. Although proof machines were introduced in 1940s to help automate the process,
each item had to be individually checked by an operator. The Federal Reserve System and
commercial bankers began to explore the possibility of automating the process in the
mid-1950s. The Federal Reserve and the American Bankers Association worked with bankers,
check printers, and business machine manufacturers to find an answer. The eventual
solution was MICR magnetic ink character recognition that would enable machines to
"read" and automatically process checks.

In 1961, the Chicago Fed and four other Reserve Banks began to test automated check-
sorting equipment from different manufacturers. Heading the project at the Chicago Fed
were Vice President Harry Schultz and Assistant Vice President Carl Bierbauer. The goal
was to automatically process 1,500 checks a minute on each machine, but there were a
variety of initial problems. Bierbauer, who went on to become a senior vice president at
the Bank, recalls, "There were days and weeks when things didn't go right. It wasn't a
case where we just brought in a machine and it worked.".."
[URL="http://www.legacy.com/obituaries/chicagotribune/obituary.aspx?n=carl-e-bierbauer&pid=155873924"]
http://www.legacy.com/obituaries/chicago...=155873924[/URL]
Carl E. Bierbauer, 96, of Naperville, IL, at peace Feb. 12, 2012, - ...."Carl retired
from the Federal Reserve Bank of Chicago in 1977 after more than 43 years of service. As
Senior Vice President, he was responsible for Fiscal Agent functions, accounting and
budgeting and all administrative services for eight years. He was one of the first
Federal Reserve Officers to see the advantages of automated paper check processing...."

http://www.gao.gov/products/B-149480#mt=e-report
B-149480, SEP. 26, 1962
TO BUSINESS SUPPLIES CORPORATION OF AMERICA, THE TABULATING CARD COMPANY DIVISION:
..... "IN ADDITION, SECTION 3.2 OF SPECIFICATION POD-F-172 (RE) CONTAINS THE STATEMENT

"THE AMOUNT WILL BE PRINTED AND PUNCHED AT THE MONEY ORDER SALES WINDOW BY A PRINT PUNCH

DEVICE WHOSE PERFORMANCE DEPENDS UPON PRECISE CARD DIMENSIONS, ACCURATELY PREPUNCHED

HOLES, AND ACCURATELY LOCATED IMPRINTING, I.E. DOLLAR VALUE BLOCK, ETC. FOR THESE

REASONS IT IS REQUIRED THAT EACH BIDDER FURNISH WITH HIS BID A CARTON OF 2,000 FORMS TO

BE PROCURED CONFORMING IN EVERY RESPECT TO THE REQUIREMENTS HEREIN.' ......YOU

APPARENTLY WERE AWARE THAT THE MONEY ORDER FORMS WERE TO BE USED BY THE TREASURY

DEPARTMENT ON HIGHER SPEED MACHINES THAN WERE PREVIOUSLY USED BY THE POST OFFICE

DEPARTMENT AT THE KANSAS CITY MONEY ORDER CENTER AND THAT, THEREFORE, CLOSER TOLERANCES

AND A HIGH DEGREE OF WORKMANSHIP WOULD BE REQUIRED. WHILE THE EXPERIENCE OF THE POST

OFFICE DEPARTMENT WITH THE MONEY ORDER FORMS FURNISHED BY YOU, UNDER THE 1962 FISCAL

YEAR CONTRACT, IS NOT STRICTLY APPLICABLY TO THE SAMPLES FURNISHED BY YOU AS TO WHAT YOU

PROPOSED TO FURNISH IF AWARDED THE CONTRACT FOR THE 1963 FISCAL YEAR,"

Same source, pg. 147: "..By the time the EFA became effective in
September 1988, the Federal Reserve Board had proposed for public
comment, and subsequently adopted, regulations to accelerate the return
process. A working group of banking industry and Federal Reserve
officials contributed operational expertise that supported the develop-
ment of practical and effective regulatory change.
The Board also used its new regulatory authority to propose and
adopt an essential new standard that previously had eluded the banking
industry. To accelerate the check return process, all participants in the
check system needed a ready means to identify the bank of first deposit.....As a bank of

first deposit, each institution needed to identify itself clearly and conspicuously. A

bank handling a check received from a bank of first depositfor instance, a

correspondent bank collecting the check on behalf of the bank of first depositwould

have to apply its endorse-
ment in a different format and in a different area of the reverse side of the
check, so as not to obscure the endorsement of any other bank. Even
the consumer depositing the check for collection would have to endorse
the check within a specified space.
The endorsement standard in place prior to the enactment of the
Expedited Funds Availability Act had proved inadequate to support
the clear identification of each bank involved in the collection of a check.
The banking industry, through the American National Standards Insti-
tute, or ANSI, had made substantial progress during the 1980s on a more
comprehensive standard. However, the banks, equipment manufactur-
ers, and check printers had not reached closure on an adequate new
standard, in part because of the competitive concerns of particular firms.
To support the EFA, the Federal Reserve officials who had participated in
the ANSI process took all that had been accomplished with ANSI and,
with Board of Governors staff, added the new features needed for an
effective standard...."

on page 119 with this link:
[URL="https://books.google.com/books?id=yccPAAAAIAAJ&dq=%22inconvenience+for+some+depository +institutions%2C+primarily+the+larger+institutions+that+may+receive+checks+from +several*%22&focus=searchwithinvolume&q=lack"]https://books.google.com/books?id=yccPAAAAIAAJ&dq=%22inconvenience+for+some+depository
+institutions%2C+primarily+the+larger+institutions+that+may+receive+checks+from
+several*%22&focus=searchwithinvolume&q=lack[/URL]

A check, unlike a postal money order is a negotiable instrument of
multiple endorsements, but....even a check, it turns out, is not required
to receive an FRB processing endorsement, at least circa 1984:

....and this is the longer quote.:
Page 118 - 119 : (if the page does not display using the link above, click on the

following link and you'll see a "look inside this book" search box and just
type in the word, "lack" w/out quotes......

Federal Reserve Pricing Policy on Check Clearing Services: ...
https://books.google.com/books?id=yccPAAAAIAAJ
United States. Congress. Senate. Committee on Banking, Housing, and Urban
Affairs - 1984 -

"Although the lack of the Federal Reserve endorsement on checks collected
through the fine sort program may be a source of inconvenience for some
depository institutions, primarily the larger institutions that may
receive checks from several several sources other than the Federal
Reserve, the fine sort program does not result in significant problems in
the return item process. We believe the fine sort program results in
improve- ments in the speed and efficiency of the nation's check
collection system" .....

https://books.google.com/books?id=SUbVAAAAMAAJ
United States. Congress. House. Committee on Appropriations - 1964 - ?Snippet view - ?page 143
Money Order Audit
Service Rendered
Paid domestic money orders flow through banks into the Federal Reserve Sys- tem where they are charged against the Post Office Department's account with the Treasury and forwarded to the Post Office Department. These orders and others settled directly through certain foreign countries must be verified by com- parison with reports of original issuance. The number of money orders issued has been steadily declining as the result of competition and increases in fees. annually. In the process of audit, raised, stolen, or improperly paid money orders are detected which are then referred to postmasters or to the Inspection Service for necessary action. The Audit Unit also handles inquiries as to whether or not specific orders have been paid and issues duplicate orders where originals are reported to have been lost.

Print-punch order machines
In 1951 the use of a punched card money order was adopted and in 1955 the audit work was
centralized in Kansas City, Mo., for the entire country. Only the money order serial number was prepunched on the card. The amount was not punched until the money order reached the Federal Reserve System. A charge has always been made by the Federal Reserve
for this keypunching work.

In fiscal 1961, the Department was given funds to buy money order issuing machines which could be used in all post offices and which would punch the amount into the order at the time of issuance. Deliveries of the equipment began late in the fiscal year 1962 and the machines were placed in operation in two regions.

http://www.uspostalbulletins.com/PDF/Vol83_Issue20342_19621227.pdf#searc... Page 2:


Page 4: http://www.uspostalbulletins.com/PDF/Vol...money%20or


Installation of the machines in the remaining regions was completed on March 29, 1963. As the money orders issued on the new machines flow into the Federal Reserve System, the Federal Reserve is no longer required to punch the amounts but can process them directly upon receipt. The annual payment to the Federal Reserve, approximately $600,000 in 1961, has now been eliminated. This saving is reflected in the operations appropriation under the clerk account. In addition, the new system will enable the Federal Reserve to detect raised money orders immediately. Under the old system, these frequently were not detected until months later when the money orders were matched with the original records at the Money Order Center at Kansas City. This early detecting will be of much assistance to the the Inspection Service in apprehending persons passing raised money orders.

https://books.google.com/books?id=z2E4AA...2C+and*%22
page 144 ( "banks, federal reserve, the public, and*" )
Closeout of Kansas City Money Order Center

Coincident with the installation of the print punch machines, the audit of the
money orders was transferred to a computer technique and consolidated with the audit
of Treasury checks at Washington, D.C., and the closeout of the Money Order Center at
Kansas City moved into its final phase. The Money Order Center was discontinued on December 1, 1963, except for three caretakers for the files, and all reports of money order issues now go to Money Order Audit Division in Washington, D.C. The last group of files at the Kansas City Center will be destroyed by March 31, 1965 (destruction age) and the caretakers will then be separated and the space leased to the GSA.

Money Order Audit Division, Washington, D.C.
In fiscal year 1965, 65 employees will handle payment, inquiry servicinng, and audit of the approximately 250 million money orders issued annually. The machine work will be performed by Treasury on a reim- bursment basis; but all contacts with banks, Federal Reserve, the public, and