The Postal Money Order: my last word on the "missing bank stamps" factoid

[Lance Payette]

I’ve largely abandoned the JFKA Follies in favor of practicing my putting and chipping, but I did feel an obligation to preserve for Follies posterity my magnum opus on the Postal Money Order factoid that I began long ago and never got around to finishing until now. Be forewarned that this is tedious stuff, but it does illustrate the lengths to which we truly dedicated factoid-busters will go. I think I ended up spending more time on this than any appellate brief I ever wrote. Prepare to suffer ...

How I tumbled down the Postal Money Order rabbit hole

Conspiracy enthusiasts know that researcher John Armstrong, author of Harvey and Lee: How the CIA Framed Oswald, has long claimed that the Postal Money Order (PMO) by which Oswald ostensibly purchased the assassination rifle from Klein’s Sporting Goods is bogus because it lacks “bank stamps” (i.e., bank endorsements) on the reverse. Ergo, says Armstrong, the Klein’s PMO never went through the banking system and was planted to frame Oswald.

The Klein’s PMO is Warren Commission Exhibit 788: https://www.history-matters.com/archive/jfk/wc/wcvols/wh17/pdf/WH17_CE_788.pdf. The only endorsement is the stamp that Klein's put there before the PMO was deposited into the company’s account at the First National Bank of Chicago. It reads:

PAY TO THE ORDER OF
The First National Bank of Chicago
50 91144
KLEIN’S SPORTING GOODS, INC.

William J. Waldman of Klein’s identified this as the company’s standard deposit stamp:  https://www.history-matters.com/archive/jfk/wc/wcvols/wh7/pdf/WH7_Waldman.pdf. Below this are the initials of those in the chain of custody when the PMO was retrieved from the Federal Records Center in Alexandria, Virginia the day after the assassination. There are indeed no other endorsements or bank stamps.

I entered the PMO fray in 2015, when I was still a gee-whiz conspiracy enthusiast who thought Mark Lane and David Lifton were credible and was frankly wowed by the seeming depth of knowledge of the heavyweight participants on the JFK Assassination Debate at The Education Forum. On the recommendation of Walt Brown, I bought Harvey and Lee for $80 directly from Armstrong. A footnote on page 451 in the discussion of the Klein’s PMO stated that Robert K. Wilmouth, Vice President of the First National Bank of Chicago, had said the PMO should have “four levels” of bank stamps. Indeed, this supposed “Wilmouth statement” seemed to be the only basis for Armstrong’s claim that the PMO should have bank stamps.

Purely as a matter of curiosity, I decided to see what Wilmouth had actually said. The only relevant document referencing him is part of Warren Commission Document 7 (the Gemberling Report of December 10, 1963). It’s an FBI report of an interview with Wilmouth on November 23, 1963: https://www.maryferrell.org/showDoc.html?docId=10408#relPageId=199. It doesn’t report Wilmouth as saying anything whatsoever about endorsements or bank stamps.

Puzzled by this, I weighed in on a thread at The Education Forum that had been started by the late Sandy Larsen, “Yes, postal money orders do require bank endorsements!”, https://educationforum.ipbhost.com/topic/22439-yes-postal-money-orders-do-require-bank-endorsements/. My early posts make clear that (1) I then had no clue what I was talking about insofar as PMOs were concerned and (2) it first appeared to me that the Klein’s PMO actually should have bank stamps as Armstrong (and Larsen) had claimed. I had no idea the debate about the authenticity of the Klein’s PMO had already been raging for years, with some of the proverbial heavyweights insisting the PMO was bogus.

I did raise the issue – repeatedly, on that thread and others – about the missing “Wilmouth statement” and the seeming lack of any factual support for Armstrong’s claim. This was simply ignored - repeatedly - as though it were unimportant, even though the apparently nonexistent Wilmouth statement had long been accepted by the conspiracy community as the sole authority for Armstrong’s claim. (For what it’s worth, Wilmouth became a truly major banking figure and lived until 2017: https://legacy.suntimes.com/us/obituaries/chicagosuntimes/name/robert-wilmouth-obituary?id=16471005.)

In fact, I’m still puzzled: Where did Armstrong get the idea the Klein's PMO should have bank stamps? I thoroughly reviewed the PMO materials in the John Armstrong Collection at Baylor University and found nothing relevant. Most of the PMO materials are in Box 18, Tab 22, Notebook 2, https://digitalcollections-baylor.quartexcollections.com/Documents/Detail/rifle-info-money-order/717522?item=717523, which is a testament to Armstrong’s diligence and contains lots of interesting material including his notes but absolutely nothing about bank stamps. (For the record, the FBI also interviewed Lester Gohr, Assistant Cashier for the Federal Reserve Bank of Chicago. I thought Armstrong might have confused him with Wilmouth, but he likewise said nothing about bank stamps: https://www.maryferrell.org/showDoc.html?docId=10408#relPageId=200.)

Looking at the Klein’s PMO back in 2015, I noticed ten prominent numbers right across the top, beginning with 138 followed by a space and then 4159796. “I wonder what those mean?” I asked myself. As far as I could tell, no one else – including Armstrong – had asked this rather obvious question in the 52 years since the assassination.

In an hour or so on Google, I had the answer. It was found in an article by G. F. Stickney of the Treasury Department entitled “The Check Payment and Reconciliation Program of the U.S. Treasury” that had been published in 1966 in the Conference Proceedings of an International Workshop On Managing Requirements Knowledge held by the American Federation of Information Processing Societies. See https://www.computer.org/csdl/proceedings-article/afips/1966/50680479/12OmNzmclTx.

Stickney explained that in 1957 the Treasury Department had adopted a new electronic system for processing Treasury checks and that the system for PMOs was “quite similar” since checks and PMOs were both in punch-card format. The article indicated that the feasibility of incorporating PMOs into the system began to be explored in 1960 and that the actual conversion process began in June of 1962 and had been completed by April of 1963.

The new system involved stamping each check and PMO with a unique File Locator Number (FLN) as the final step in transferring the item to magnetic tape at the Federal Records Center at which the item would be stored. Stickney described the FLN as a “hugely significant innovation that allows Treasury to handle each item only once, as opposed to the previous 15-20 times.” The article included a sample Treasury check with an FLN; the numbers across the top of the Klein’s PMO were identical, and this was clearly the answer to my question.

The significance was this: The Klein’s PMO had made its way through the postal/banking system and been placed into storage at the Federal Records Center in Alexandria after being assigned an FLN. If it was defective for not having bank stamps, no one seemed to have noticed or cared. This suggested that bank stamps were not necessary after all.

Wasn’t this the death knell for the “missing bank stamps” issue? I certainly thought so, but Larsen and his supporters vehemently disagreed. In fact, they didn’t miss a beat. PMOs did require bank stamps, they insisted, the Klein’s PMO had been faked and planted at the Records Center, and by the way the report of the Wilmouth interview had been dummied up by the FBI long after the fact (OK, fine, but it still said nothing about bank stamps as Armstrong had claimed). We were off to the races, with Larsen playing lawyer just as he often played medical expert; I believe he was some sort of engineer, whereas I actually am a retired lawyer. I finally gave up and allowed Larsen to declare victory, which he loudly and proudly continued to do long after I had left the forum. The fruits of his labors now appear on a page at the Harvey and Lee site that is a mishmash of authoritative-sounding nonsense: https://harveyandlee.net/Guns/PMO/Money_Orders.html.

After discovering the FLN and its significance, I found myself referred to across the internet as an “assassination researcher.” I had no illusions that I deserved this description after spending a mere hour on Google. However, I also no longer had any illusions that those I had once thought to be conspiracy heavyweights were serious researchers either; they were more like religious fundamentalists determined to preserve the tenets of their faith at any cost. (Somewhat humorously, Larsen defender Jim DiEugenio accused me of thinking that I had “in just a matter of days and sixteen posts … done what say Gil Jesus, David Josephs, John Armstrong, Martha Moyer and the later Ray Gallagher could not do in literally years of research, going back to the nineties.” Well, yes, thank you, Jimbo – although it was more like an hour than “days.”)

This post addresses the facts of how PMOs were actually processed in 1963. It’s an arcane and difficult-to-research subject, and I’m actually sympathetic to the legal quagmire in which a non-lawyer like Larsen managed to entangle himself.

Once I decided to dive more deeply into the bank stamps issue, I hit one brick wall after another. I corresponded with the National Postal Museum and the author of the two leading articles on the history of PMOs. I joined JSTOR just so I could access another scholarly article. I searched in vain for a paid PMO to compare to the Klein’s PMO. All to no avail.

The record retention schedules for PMOs were quite short. This is undoubtedly because they were sold by the tens of millions annually, so storage would be a major burden. Still, I anticipated that at least one enterprising federal employee would have saved a paid PMO signed by Mickey Mantle or Marilyn Monroe. Alas, apparently not.
 
For the record, the Klein’s PMO was located at the Federal Records Center in Alexandria on November 23. The circumstances are set forth in detail in Warren Commission Document 87, a Secret Service report dated January 8, 1964. The relevant document is a Secret Service memorandum dated November 26: https://www.maryferrell.org/showDoc.html?docId=10490#relPageId=118.

Consistent with what I’ve said above about the FLN, the memo describes that J. Harold Marks, Finance Officer of the Post Office Department in Washington, first advised that “some difficulty was experienced in bringing the computer machines up to operational level; however, he believed that it would take approximately 15 minutes for the machines, when in full operation, to locate subject postal money order.” It would then take about 20 minutes for an employee of the Records Center to physically locate the PMO. At 9:35 PM, Marks informed the Secret Service agents that a Records Center management analyst named Robert Jackson had located the PMO and that it was now in his possession. Marks and Jackson then met the Secret Service agents at Marks’ home and surrendered the PMO; their initials are on the back of the PMO.

I have no idea what the “planted PMO” proponents do with the above scenario. Do they think the PMO was prepared long in advance and planted at the Records Center to be located by an innocent Jackson at such time as JFK was assassinated? Do they think it was prepared in advance but wasn’t in the Records Center at all, and that Jackson and Marks were part of the conspiracy? How do they explain the conspirators being sophisticated enough to do whatever they supposedly did, including the inclusion of the Klein’s endorsement and the FLN, but inexplicably failing to realize that the absence of bank stamps would be a red flag for a sharp cookie like Armstrong? Like much of conspiracy lore, the logic isn’t clear to me.

More than you want to know about PMOs

PMOs were introduced in 1864, primarily as a safe way for Civil War soldiers to send money home. You can read the original legislation (Thirty-Eighth Congress, Session 1, Ch. 87) here: https://www.govinfo.gov/content/pkg/STATUTE-13/pdf/STATUTE-13-Pg76.pdf. It provided in section 6 that the original payee of a PMO could endorse it over to one other person, but no more. More than one endorsement rendered the PMO invalid and non-payable; the original payee then had to apply to the Post Office for the issuance of a duplicate PMO.

The first PMO-related regulations that I could find are those set forth in the United States Official Postal Guide for 1874, https://dn720406.ca.archive.org/0/items/unitedstatesoffi1894unit/unitedstatesoffi1894unit.pdf.  Section 297 of the chapter on PMOs merely repeated the language about one endorsement as set forth in the 1864 legislation. At this time, banks were simply not part of the process. The original payee or his endorsee had to present the PMO to the issuing Post Office for payment.

In time, however, banks began allowing their customers to deposit PMOs. The bank then had to get paid by the Post Office. If the PMO already had one endorsee, would the bank’s stamp showing it had accepted the PMO constitute a prohibited second endorsement?

From 1874 to 1898, the language about endorsements remained the same in every Official Postal Guide. The first reference to bank stamps was in the Guide for 1899, https://babel.hathitrust.org/cgi/pt?id=hvd.hn4jgj&seq=928.  A New York Times article dated June 23, 1898 indicated this change was pursuant to an agreement between the Treasury Department and the Post Office. The 1899 Guide provided as follows in sections 13 and 14 of the chapter on PMOs:

13. Bank Stamps. – The stamp impressions which banks ordinarily place upon money-orders left with or sent to them for collection, are not regarded as endorsements transferring ownership of the orders.

14. Payments to banks. – When a money-order purporting to have been receipted by the payee, or first endorsee, is deposited in a bank for collection, the postmaster at the office drawn upon may effect payment on due presentation of the same thereat by the bank, provided there be a clear understanding and guarantee on the part of the bank that the latter will refund the amount of it afterwards appear that the depositor was not the owner of the order. A money order thus paid should bear upon its face the impression of the stamp of the bank.

In 1899, therefore, the Klein’s PMO would have required a stamp by at least the First National Bank of Chicago, and this and any other bank stamps would not have been deemed endorsements. In 1899, Armstrong and Larsen would have been correct!

What changed? Nothing, for quite some time. The 1925 Official Postal Guide, which “lawyer” Larsen discovered and regarded as his smoking gun, contained (in sections 26 and 27 of the chapter on PMOs) substantially the same language as the 1899 edition: https://www.google.com/books/edition/United_States_Official_Postal_Guide/5qciAQAAIAAJ?hl=en&gbpv=1&bsq=%22postal%20money%20order%22.

“Case closed,” announced Larsen. "I'm the winner."

Well, no.

Now we must backtrack to 1913, when the Federal Reserve System was created. All banks chartered by the federal government are required to be members of the Federal Reserve System. State-chartered banks may join but are not required to do so. Only about 38% of state-chartered banks have joined. Hence, thousands of banks and similar financial institutions aren’t members of the Federal Reserve. This, as you will see, is the key to Larsen’s confusion.

The First National Bank of Chicago, into which the Klein’s PMO was deposited, was and is a member of the Federal Reserve System, which is divided into 12 regions. The regional Federal Reserve Bank for the Chicago area is the Federal Reserve Bank of Chicago. Keep this in mind as we proceed: The Klein’s PMO was never outside the Federal Reserve System.

Now we fast-forward to 1951.

Massive changes to the PMO processing system occurred in July of 1951. First, the format of the PMO itself was changed to a punch card for easier processing, tabulation and storage. This was noted in the Official Postal Guide for 1951, https://babel.hathitrust.org/cgi/pt?id=mdp.39015073765532&seq=141. (The Guide was last published in 1955. Just to clarify, the Guide was a publication for general use. Official regulations were and are in Title 39 of the Code of Federal Regulations and in the Postal Manual, which began publication in 1954 but was preceded by a similar publication called Postal Laws and Regulations. The regulations in effect in 1963 can be found in the box at the John Armstrong Collection that I cited above, as well as in the 1954 edition of the Postal Manual, https://babel.hathitrust.org/cgi/pt?id=osu.32435066710534&seq=5. They merely provided in 39 CFR section 171.321 that a punch-card PMO “may be cashed at any post office or bank” and in section 171.351 that a PMO “with more than one endorsement is invalid.” They said nothing about bank stamps.)

Second, in 1951 the Post Office Department, the Treasury Department and the Comptroller General, together with representatives of the American Bankers Association and the Federal Reserve, developed a plan to streamline the processing of PMOs. This is described at page 806 of the Federal Reserve Bulletin for July 1951, https://fraser.stlouisfed.org/files/docs/publications/FRB/1950s/frb_071951.pdf.

The new PMOs would be “handled like checks.” All of them, even those cashed at Post Offices and banks that were not members of the Federal Reserve, would ultimately find their way into the Federal Reserve System:

"The new type of orders, whether cashed at post offices or cashed at or deposited with banks, will ultimately be deposited with a Federal Reserve Bank or branch, which, after processing the orders, will charge them to the account of the Treasurer of the United States and turn them over to the regional accounting office of the Post Office Department in the Federal Reserve city of the district [for auditing purposes]."

Under this arrangement, “Postal money orders will be handled in accordance with an agreement made by the Postmaster General, in behalf of the United States, and the Federal Reserve Banks as depositories and fiscal agents of the United States pursuant to authorization of the Secretary of the Treasury.” https://fraser.stlouisfed.org/files/docs/historical/ny%20circulars/1960_04928.pdf.

Larsen failed to appreciate the significance of this “agency” language. When the Federal Reserve handled PMOs from any source after 1951, it did so as an agent for the United States – i.e., the Postmaster General. It was an agent acting on behalf of its principal, the Post Office.

To cut to the chase, the Klein’s PMO was deposited in the First National Bank of Chicago, a Federal Reserve member bank. The First National Bank transmitted the PMO to the Federal Reserve Bank of Chicago, its regional bank. The Federal Reserve Bank of Chicago charged the PMO to the account of the Treasury Department, sent the PMO to the Post Office auditing center in Kansas City (the sole auditing center after 1955), and the center audited the PMO (for fraud or other irregularities, which the Federal Reserve was not obligated to do). Lastly, the auditing center sent the PMO to the Federal Reserve Bank of Richmond, Virginia to be placed into storage at the nearby Federal Records Center (for a limited retention period in case some sort of claim was made and the PMO was needed as evidence).

Can you now see the absurdity of what Armstrong is claiming? To repeat: The Klein’s PMO was never outside the Federal Reserve System, which had been acting as the agent for the Post Office since 1951. For the First National Bank of Chicago, the Federal Reserve Bank of Chicago and the Federal Reserve Bank of Richmond to “endorse” the PMO – yes, Armstrong actually believes the Richmond bank should have endorsed it after receiving it from the Post Office auditing center! – would have been the equivalent of the Post Office endorsing the PMO to itself because the First National Bank and Federal Reserve Banks of Chicago and Richmond were its appointed agents. Thius would be like claiming that a local Post Office had to "endorse" a paid PMO before sending it on.

What did the First National Bank of Chicago actually do? As the Federal Reserve Bulletin stated, PMOs were treated like checks. In Federal Reserve parlance, they were “cash items.” Cash items have been defined to include Treasury checks, checks drawn on banks listed on the Federal Reserve Par List, Savings Bonds and even Food Stamp coupons before they went digital. A Federal Reserve member bank was allowed to transmit these items in bulk to its regional Federal Reserve Bank via a “cash letter.” See the 1960 version of Federal Reserve Operating Circular No. 4, “Collection of Cash Items:” https://fraser.stlouisfed.org/files/docs/historical/ny%20circulars/1960_04928.pdf.

But wait, what about a state-chartered bank that was not a member of the Federal Reserve System? What did it do if it accepted a PMO from a depositor? Since it wasn’t a Federal Reserve member, it’s wasn’t acting as an agent of the Post Office and couldn’t simply transmit the PMO to the regional Federal Reserve Bank via a cash letter. Ah, now we're back in the world of bank stamps – or at least we were in 1963!

In 1963 and until the entire financial world went electronic, nonmember banks dealt with the Federal Reserve through clearinghouse banks that did have a relationship with the Federal Reserve. The clearinghouse bank might or might not be a member of the Federal Reserve, but in any event it was authorized to act in this capacity. When nonmember banks transmitted PMOs to their clearinghouse banks, they did indeed have to stamp them.

This is made clear in a 1962 case I discovered: United States v. Cambridge Trust Co., 300 F.2d 76 (First Circuit 1962). A Ralph Porter had purchased 699 PMOs payable to himself. He cleverly raised each order by about $90 and sent them all to EMF Electric Supply Company. EMF delivered each PMO to Cambridge Trust Company, a state-charted bank, with the endorsement “For deposit only EMF Electric Supply Co. and Camera Exchange.”

The key portion of the court’s opinion for our purposes is this: “The [state-chartered] 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’ and transmitted the orders to the First National Bank of Boston [a Federal Reserve member and Cambridge’s clearinghouse bank] for collection. That bank in turn presented each order to the Federal Reserve Bank of Boston for payment, and it paid the full face amount of each order as raised.”

Catch that? The state-chartered bank stamped the PMOs with its clearinghouse stamp before transmittal to its clearinghouse bank. The clearinghouse bank, the First National Bank of Boston, had been a Federal Reserve member since its formation in 1914, so the PMOs were now in the Federal Reserve System. (The clearinghouse system is now all electronic in the form of an Automated Clearing House, and how it works is not relevant here and beyond me anyway. See https://www.federalreserve.gov/paymentsystems/fedach_about.htm.)

The Klein’s PMO did not require bank stamps because it was never outside the Federal Reserve System. It was part of a bulk transmittal by a Federal Reserve member bank to its regional Federal Reserve bank, both banks acting as agents of the Post Office pursuant to an agreement. If Klein’s had deposited the PMO in a state-chartered bank, that bank would have stamped it before transmitting it to a clearinghouse bank. If the clearinghouse bank were not itself a member of the Federal Reserve, perhaps its stamp would also have been required; I don’t believe so, but I really don’t know. Note that Operating Circular No. 4, concerning the collection of cash items, repeatedly refers to “member and nonmember clearing banks.”

This solves the “missing bank stamps” mystery, at least to my satisfaction. Armstrong’s assertion that the Klein’s PMO should have bank stamps from the First National Bank of Chicago, Federal Reserve Bank of Chicago and Federal Reserve Bank of Richmond is simply goofy. As I recall, at one time he even suggested the Treasury Department should have endorsed the PMO, which would account for his claim that Wilmouth had said “four levels” of bank stamps were required!

Larsen did have one final smoking gun. You will note that the 1960 version of Operating Circular No. 4 appears to require in section 13 that all cash items must be endorsed, to wit:

13. 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.

Voila, said Larsen, all cash items required endorsements. “Case closed. I'm the winner."

I believe section 13 was referring to items sent from outside the Federal Reserve System, such as those sent by nonmember banks through clearinghouse banks. This is the only context in which the language makes sense. The identical language appeared in the 1946 edition of Operating Circular No. 4, which had a very limited definition of cash items and did not mention PMOs at all: https://fraser.stlouisfed.org/title/federal-reserve-bank-new-york-circulars-466/3094-collection-cash-items-10583?page=3&deep=true. No such language appears in the current version, which is now Operating Circular No. 3: https://www.frbservices.org/binaries/content/assets/crsocms/resources/rules-regulations/010526-operating-circular-3.pdf.

The whole point of allowing cash items to be transmitted in bulk by Federal Reserve member banks as agents of the Post Office was to streamline and expedite the process. It would simply make no sense for a Federal Reserve member bank to endorse every Treasury check, PMO, Savings Bond or Food Stamp coupon (!) as Larsen’s reading would require. My guess is that the endorsement language was intended for nonmember clearinghouse banks and was simply carried over from 1946 (or earlier) to 1960. You will note that both versions of Operating Circular No. 4 are addressed “To the Member and Nonmember Clearing Banks” of the Federal Reserve District. You will also note that the language of the endorsement of the state-chartered Cambridge Trust Company in the 1962 case precisely mirrors the language of the Operating Circular (“to the order of any bank, banker or trust company”).

If this all weren’t complicated enough, PMOs went to a paper format in 1973, with a preprinted ABA routing number. The current procedures for processing by the Federal Reserve are in Chapter 7000 of the Treasury Financial Manual, https://tfx.treasury.gov/tfm/volume2/part4/chapter-7000-procedures-processing-postal-money-orders. The procedures note that some punch-card PMOs are still in existence and say these are to be processed in the same manner as mutilated paper PMOs. The procedures say nothing about endorsements or bank stamps.

And that’s all I have to say about that.

[Martin Weidmann]

Now I remember where I know you from...