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Philip W. Buchen Files
Philip Buchen's General Subject Files
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Department of the Treasury. (1789 - )
Money
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Banks and banking
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The original documents are located in Box 63, folder "Treasury Department" of the Philip
Buchen Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 63 of the Philip Buchen Files at the Gerald R. Ford Presidential Library
THE ADMINISTRATOR OF NATIONAL BANKS
WASHINGTON, D.C. 20220
October 7, 1974
TO:
Secretary William E. Simon
THRU:
Deputy Secretary Stephen S. Gardner
FROM:
James E E. Smith
Comptroller of the Currency
SUBJECT: Sale of the Franklin National Bank
As you are aware, for the past five months the FDIC,
the Federal Reserve Board, and the Comptroller have been
searching for a solution to the unstable condition of the
Franklin which would protect all depositors of the bank and
which would minimize the impact of the bank's probable
demise upon the confidence of the public in the banking
system. We believe that a solution has been devised which
will achieve these two goals. The prospects appear to be
good that we will obtain on Tuesday, October 8, satisfactory
bids from one or more of four large banking organizations
for the purchase of a substantial portion of the assets and
all of the deposit liabilities of the Franklin. Deposit
liabilities presently approximate $1.4 billion. The tran-
saction contemplates that the depositors will have uninter-
rupted use of their funds, with the acquiring bank opening
all of Franklin's offices and accounts as their own the next
morning.
We are assured of bids from two of the four banks:
Manufacturers Hanover ($18 billion) and European American
(an association of six large European banks with combined
assets of $85-90 billion). We believe that two additional
banks, Chemical Bank ($16 billion) and First National City
Bank ($38 billion) will also probably bid on the Franklin.
Citibank has voluntarily suggested that, if it should
be the successful bidder, it would divest or close 45 of the
branch offices within 24 months to reduce anti-competitive
effects. The Anti-Trust Division is not entirely satisfied
with this proposal, although it has assured Citibank it will
not sue. However, Anti-Trust may endeavor to persuade me,
in the conduct of my duties under the Bank Merger Act, or
the receivership Court to reject a Citibank assumption if
d.
FORD
DEPAID
LIBRARY
- 2 -
European-American makes an acceptable bid close in amount to
Citi's. My present thinking is to approve a Citibank take-
over if it is in fact the high bidder. I believe that the
Franklin debenture holders and shareholders will have a
legitimate complaint if the high bid is not approved.
The procedure for this acquisition will be for the in-
terested banks to submit to the FDIC on Tuesday morning
their bids for the assets and liabilities package, on the
assumption that I will declare the Franklin insolvent later
on Tuesday. If there is a satisfactory bid, I will in fact
declare the bank insolvent at 3 P.M. Tuesday, appoint the
FDIC as receiver, and the FDIC will immediately proceed to
accept the most satisfactory bid. The bid amount will be
the premium for the going concern aspects of the purchase.
The assuming bank will be allowed to "cherry pick" all of
Franklin's assets (including those securing the FRBNY loan)
to obtain assets equal to the deposits and other liabilities
it will assume. The FDIC will give an interest-bearing note
to the Federal Reserve Bank of New York for the release of
its $1.7 billion note of the Franklin and receive in return
the $2.0 billion in assets of the Franklin being held by
FRBNY as collateral. The FRBNY note will be paid out as the
assets are liquidated by the receiver. Any balance remain-
ing at the end of three years will be paid in a single
payment by the FDIC. Any net return to the FDIC from the
premium and the assets, after paying the note to the FRBNY
and covering the FDIC's receiver costs, would be applied to
the claims of the bank's creditors.
If none of the bids received should meet the FDIC's
minimum figure, I would not proceed to the declaration of
insolvency on Tuesday. The regulators would have to recon-
sider the possibility of an expensively-assisted Franklin
continuing independently, versus the alternative of a payout.
However, on the basis of our present knowledge of the bidding
banks' intentions, I consider the possibility of receiving
no adequate bid as very remote. The FDIC's minimum figure
is required by statute to be sufficient to assure that in
all probability the assisted sale will result in a lower
cost to the government than a payout on the closed bank. We
expect to receive bids comfortably above the FDIC's calculated
target.
Assuming that the receiver has accepted a satisfactory
bid on Tuesday shortly after 3 P.M., we will proceed to a
pre-briefed federal judge who will hear the receiver's and
the Comptroller's arguments as to the necessity and fairness
of the proposed purchase-and-assumption transaction, and
presumably he will approve it. The Comptroller's affadavit
CENAL FORD LIBRAR
- 3 -
will contain an extensive explanation of the circumstances
leading to the declaration of insolvency, including the
temporary nature of the Fed's financial assistance and their
recent determination in a letter to me that it is not in the
public interest for the note to continue to remain unamortized,
a condition which the Franklin cannot remedy in the foreseeable
future. Also described will be the effort made by all
parties concerned to develop a resolution of the problem in
the form of the continued existence of the Franklin with
certain FDIC financial assistance; after extensive study it
was concluded that the cost would be too great for the FDIC.
I also had Blyth Eastman Dillon analyze the financial pros-
pects for Franklin if it received substantial FDIC assistance,
and they concluded that there was no realistic prospect even
then that the bank would become financially viable in the
foreseeable future.
Because of the possibility of immediate litigation for
a restraining order from some shareholders and creditors,
the whole transaction must remain undisclosed until shortly
after 3 P.M. Tuesday. The increasing, prospect of advance
restraining litigation and the possible dissolution of the
remaining going-concern value of the bank is one of the key
factors in the decision to press ahead with the bidding pro-
cedure at the earliest possible time. We will notify in-
terested members of Congress shortly after 3 P.M. Tuesday.
In conclusion, I should point out that the Franklin
situation is a relatively unique one that we do not expect
to see repeated. It had a ten-year history of only marginal
existence as a New York City bank and an unimpressive manage-
ment reputation that undercut confidence in it in financial
circles. Most importantly, it had expanded in the purchased
money area during 1973 at an incredible rate, leaving it no
ability to handle the tight money situation and the "move to
quality" by money market participants. At the time our
November 1973 examination revealed to us the serious state
of affairs at the bank, about 50% of its liabilities were in
the form of purchased money. We have no other banks in such
a drastic and unfavorable configuration as Franklin was, and
the greatly heightened awareness of both bankers and examiners
to the importance of liquidity should help prevent future
over-extension in this area. In addition, our agency's own
analytic and predictive skill in the liquidity area is being
expanded by an extensive liquidity data collection program,
which we will analyze ultimately with computer models. Our
Haskins and Sells study will also equip our agency during
the next year to better detect and deal with problem banks
generally, and particularly to curtail major problems in
their incipient stages.
of
FORD
914- 2801
10/8/74
SUBJECT: Franklin National Bank
Since the Bank's well-publicized difficulties in May which
came to light as a result of substantial foreign exchange losses,
the Federal Reserve Bank of New York has been providing, on a
temporary basis, advances of more the $1.5 billion secured by
pledged assets while the Comptroller of the Currency and the
Federal Deposit Insurance Corporation, along with the Federal
Reserve, attempted to work out a long-term solution to the Bank's
problems.
In September, the Bank's management submitted a plan to the
FDIC under a provision of the Federal Deposit Insurance Act that
would permit it to remain independent and convert its temporary
loans from the Federal Reserve to a series of credit arrangements
with the FDIC.
The plan was studied by the FDIC, the Comptroller of the
Currency (who regulates national banks), and the Federal Reserve.
The regulatory authorities engaged an outside consulting firm to
evaluate the plan. The consultants reported that the plan did
not present a realistic prospect and that' the Bank could become
financially sound in the foreseeable future. And the FDIC
reported to Franklin that the proposal was not satisfactory in
the form presented.
In addition to considering the Franklin's plan, the regulators
arranged for other large banks authorized to do business on Long
Island to present plans (bids) through which the bidders would
assume the deposit liabilities of Franklin and purchase a substantial
portion of the assets of the Bank.
Because Franklin has almost 100 branch offices in many
desirable locations, principally on Long Island, the banks in-
terested in acquiring Franklin's business are expected to offer
to assume the liabilities (deposits) at less than book value,
providing the FDIC with a cushion for liquidating the assets of
the Bank. This cushion is typically called a premium.
This is a highly sensitive procedure and requires a determina-
tion by the regulators that a bid is in fact satisfactory in
assisting the FDIC to achieve a lower cost to the government than
if the Bank were simply closed, the insured depositors paid, and
the assets liquidated.
The bidding procedure is taking place this morning. If an
acceptable bid is obtained, then the Comptroller of the Currency
must declare the Bank presently insolvent and appoint the FDIC a
receiver and obtain approval of the appointment FORD and the proposed
transaction in a federal court.
GERALD
-2-
A federal judge will hear these arguments shortly after
3:00 p.m. Because of the possibility of immediate litigation,
the whole transaction must not be disclosed until it reaches
the federal court. Further, if no satisfactory bids are
obtained, the regulatory authorities will have to develop
another plan for dealing with Franklin's problems.
It cannot be stressed enough that the sensitivity of this
whole process requires an orderly progression of events as
described above. A key reason is that the FDIC insurance in a
simple liquidation applies only to the extent of $20,000 of
depositors' funds. The regulators, to protect all depositors,
are developing a plan that will pay out the full amount of
deposit liability or assure its safety. A premature disclosure
and an aborted plan could have enormously disruptive effects on
the financial markets.
The processes going on now are the regular responsibilities
of the regulatory authorities concerned and have occurred in the
past with many smaller banks.
Franklin is the largest bank to have such difficulties in
recent times; and if its affairs can be managed to prevent any
loss to depositors and to effect an orderly plan of purchase and
assumption by a strong bank, confidence in the banking system
will be maintained.
The President's position should be that he knows the regu-
latory authorities--i.e., the Federal Reserve, the Federal Deposit
Insurance Corporation, and the Comptroller of the Currency (who
administers national banks) --are working very hard to assure an
orderly resolution of this large bank's problems. And if the
regulators do appear before the federal court with an acceptable
bid shortly after 3:00 p.m., he can say that he has been advised
that this proposal represents the best solution in the opinion
of the regulators to protect the depositors and customers of the
Franklin Bank and maintain the confidence of the public that our
banking system is sound and that we have the means within the
FDIC and the Federal Reserve of dealing with large banks who
get into such difficulties.
Further, we believe that the Franklin situation is relatively
unique and one that the regulators do not expect to see repeated.
FORD
SEAL
S. S. AND Gardner
ISSAPY
Deputy Secretary
of the Treasury
THE WHITE HOUSE
Treasury
WASHINGTON
March 6, 1975
MEMORANDUM FOR
Office of the Secretary of the Treasury
The attached letter from Mr. Vern Snyder has been acknowledged by
this office and is referred to your office for any appropriate action.
T.W.B
Philip W. Buchen
Counsel to the President
Enclosure
in LIBRAR STREET
THE WHITE HOUSE
WASHINGTON
March 6, 1975
Dear Mr. Snyder:
Thank you for your kind letter of February 9, 1975.
Your suggestion that the President deliver an economic report every
month is noted. However, the amount of time it would take to prepare
such formal reports makes it impractical. Also, daily public dis-
cussions by, and appearances of the President's economic advisers
serve to achieve the same result in part.
I will forward your letter to the appropriate office for review of
your second suggestion concerning a coal export tax.
Sincerely,
Thily W.Buchen
Philip W. Buchen
Counsel to the President
Mr. Vern Snyder
Rural Route 4 - Box 7-D
Punxsutawney, Pennsylvania 15767
FORD d STATES LIBRANY
Feb 9, 1975
Mr Bushem,
Wouldratocherpossible for the
President deliver a progress
repeatist the people every four to sis
weeks concerning his efforts to do
I am a registered Democrat
precident is trying
infortunately I missed
the last session with Chancellon and
Brokaw but was informed that Mr. Ford
really made a decent impression. If he
could make progress reports concerning the
economy in the evocative and candid manner
ala Harry Truman, we can only stand
to benefert.
Thank you,
PS- over
SEALE n. FORD LIBRARY
I sit possible to place a special
excise tax on every ton of cool shipped
from our country to a foreign nation?
If a large percentage of coal is
shipped overseas, than american
utility companies are going to pay
a premium price for coal, When this
happens, rising costs of the companies
involved naturally will be passed
to the consumer, thus the aple continues.
Bymputting onsexported
a percentage cofcued
to utility companies to cover their
rising operating costs, consumersiciould
have to benefect. The other percentage
of that money could revert to the
federal government to be used in
energy related research and future
implementation of upgrading current
energy systems,
n
FORD
SEALE
LIBRARY
Department
to Mr. Philip W. Buchen
of the Treasury
Treasury
date, 3/26/75
Under Secretary
room.
As promised.
D
CC: Mr. Hills
Mr. Silberman
Edward C. Schmults
room 3430
ext. 5363
SERALD FORD 1
March 26, 1975
REASONS WHY AGENCY COUNSEL SHOULD BE PRESENT
WHEN EMPLOYEES ARE INTERVIEWED
Tactically, various approaches can be used in negotiating
for the presence of agency counsel (not a supervisor), but it
seems that the overall point of fairness and due process for
the interviewee must be stressed. Following up on that point,
one should also urge that the presence of agency counsel will
not be a factor for delay but, indeed, will expedite the inter-
viewing process. In this connection, the staffs of the Commit-
tees should be urged to try the process before they take a hard
position against it. More specifically, the following points
could be mentioned in the negotiations:
1. Basic fairness and due process -- an employee may be
nervous and intimidated by the prospect of an interview.
Certainly, he is entitled to the assistance of an agency
lawyer in an interview about his official duties. The
alternative may be the employees would be forced to incur
the expense of a private lawyer which would create fur-
ther security problems and more delay, etc. ("Delay" is
a point to emphasize.)
2. The presence of agency counsel will expedite the inter-
viewing process because counsel will be able to assist
in rendering rapid determinations as to whether lines of
inquiry may be fully explored. The point is that a
nervous employee, uncertain of whether he is treading in
highly sensitive areas, etc., may be inclined to check
back repeatedly with his agency for clearance.
3. In the event a line of inquiry and the responses thereto
indicate a possible violation of law by an employee, it
seems only fair that the employee have somebody available
other than his interrogator to advise him that he may
wish to consult his own counsel before continuing. Surely,
Congress will not wish to raise the specter of a "star
chamber" process.
4. An agency has an obligation to investigate any misdeeds
by its employees and, thus, there is every reason why
the agency should be aware of the information furnished
by such employees. (The relationship between items 3 and
4 should be noted and handled carefully.)
5. The staffs of the Committees will be making notes of the
interviews, or taking transcripts, and the employee should
be permitted to have his own note taker there FORD This will
- 2 -
be of benefit to the staffs since the employee will be
free to think about and answer the questions. (Of
course, this raises the thought that if negotiations are
not successful, consideration should be given to insist-
ing on a copy of. the transcript of each interview.)
Two additional reasons for having agency counsel present
which are important but should not be argued are:
1. From a "morale" standpoint, it indicates to the employee
that his agency is standing with him.
2. With respect to former employees - and for that matter
present employees -- alert agency counsel could discern
questions which might seem uncontroversial, but which
when related to questions asked of other employees
reveal a line of inquiry that must be reviewed by senior
policy officials before responses are made.
E. FORD
THE WHITE HOUSE
WASHINGTON
March 25, 1975
Dear Congressman Esch:
Your letter of March 8 to the President concerning the Ferndale
Michigan School District case was forwarded to my office for
further response.
If the Secretary of the Treasury determines that a person in the
United States has been denied the benefits of any program or
activity funded by revenue sharing funds, then the Secretary may
(a) refer the matter to the Attorney General who may bring
a civil action;
(b) terminate revenue sharing funds to the activity or program;
or
(c) take other appropriate action as provided by law.
It is my understanding that the Secretary has only determined to
refer this matter to the Attorney General. No decision has been made
to seek a termination of any revenue sharing funds at this time. If
the Secretary decides to seek a termination at a later date of some
or all of these revenue sharing funds to effect compliance then a
very definite procedure must be followed. That procedure is set
forth in 31CFR $51. 32(f).
When a case of this kind is referred to the Department of Justice,
the Attorney General may decide to file suit to seek compliance.
At. any stage during litigation the Department will consider any
new school desegregation plan proposed by the Ferndale School
District. Furthermore, such consideration will be in accordance
with the congressional mandate which is found in the Esch Amend-
FORD
ment in the Equal Education Opportunities Act of 1974.
LIBRARY
At this time it would be premature for a Federal court to become
involved in determining whether a particular plan is proper under
the law because no final judicial decision has been rendered. How-
ever, if the Department obtains a court order as the result of such
2
litigation, then the Federal courts will become involved in finding
the appropriate remedy.
I do hope that this discussion answers the questions which you raised
in your letter. The persons at the Department of Justice who are
responsible for this case are most willing to meet with you to
discuss their actions.
Most Sincerely,
Philip W. Buchen
Counsel to the President
The Honorable Marvin L. Esch
House of Representatives
Washington, D.C. 20515
1
FORD
THE
THE WHITE HOUSE
Treasury
WASHINGTON
May 27, 1975
Dear Mr. Kahn:
By this letter I acknowledge receipt of your recent
telegram requesting a meeting with me to discuss your
proposal for payment of the national debt.
Because this matter does not come within my purview,
it has been referred to the appropriate officials for their
consideration.
Sincerely,
Philip W. Buchen
Philip(W. Buchen
Counsel to the President
Mr. Eli Kahn
1232 Winemac
Chicago, Illinois 60640
TOUS 3 STATE
Treasury
THE WHITE HOUSE
WASHINGTON
June 14, 1975
Dear Mr. 'Sragow:
This acknowledges your letter of May 24 regarding New York
City's request for temporary Federal financial assistance and
suggesting a joint Federal-State audit of the City's affairs.
On the basis of our analysis, we believe it is up to the City and
State of New York to resolve the City's financial problems. As
you know, the President has decided not to request Federal
legislation to provide temporary financial assistance to the City.
Therefore, a joint audit that would involve the Federal Government
would not seem to be appropriate.
Sincerely yours,
Thily W. Buchen
Philip V. Buchen
Counsel to the President
Mr. Stanley J. Sragow
Counselor at Law
28-53 Steinway Street
Long Island City, New York 11103
GERALD N. FORD LIBRARY
THE WHITE HOUSE
WASHINGTON
July 22, 1975
MEMORANDUM FOR:
ELISKA HASEK
FROM:
PHILIP BUCHEN T.W.B.
SUBJECT:
Autographing of Currency
Autographing of currency by the President does not raise a
legal problem. 18 U.S.C. 333 prohibits the mutilation,
defacement or disfiguration of currency with "the intent to
render such bank bill, draft, note, or other evidence of
debt, unfit to be reissued
"
The Secret Service legal
counsel has confirmed that neither this nor any other
statute prohibits the autographing of currency. The same
is true with respect to savings bonds.
In terms of whether this practice is appropriate, it is my
understanding that while a member of Congress, the President
adopted a policy to autograph currency. Additionally, the
attached bills indicate that the Secretary of the Treasury
and the Treasurer of the United States apparently feel that
this is not a problem. While I agree with you that we
should not encourage cash to be sent to the White House,
we do not assume the risk when people send it through the
mails. In terms of the risk, it is unlikely that people
will send in bills of large denominations. Finally, I see
no difference between using the autopen on a dollar bill
or a picture.
While I appreciate your concerns, I, therefore, defer to
Mildred Leonard as to what policy the President wishes to
adopt in this area.
FORD LIBRARY
THE WHITE HOUSE
WASHINGTON
July 16, 1975
Phil,
Just as the attached memo was being
sent out to you this morning, this
$200 savings bond was sent over
from Anne Kamstra's office.
E
Eliska Hasek
BERALE E. FORD LIE
THE WHITE HOUSE
WASHINGTON
July 15, 1975
MEMORANDUM FOR MR. BUCHEN
Phil, to my knowledge paper money sent to
the White House in previous administrations
for autographing by the President has always
been returned to the sender with a note that
it is not appropriate for the President to do
this.
I note that the attached memo from Mildred
says that your office has informed her that
it is absolutely not illegal. My question to
you is whether it is appropriate. There are
many requests of this type. So far the number
has been somewhat kept down because the re-
sponse has always been negative. If we start
doing this, however, many individuals will
start sending in not just one dollar bills, but
bills of higher denomination. We risk problems
of lost or misplaced money, complaints by peo-
ple that the signature is not real, etc. I think
that, before the long-standing policy we have
followed is reversed, we should think about
some of these potential problems and see if it
is really worth it. Couldn't we instead return
the money and send them an autographed photo ?
E
Eliska Hasek
Atts.
THE WHITE HOUSE
WASHINGTON
To Eliska Hasek
From Anne Kamstra
July 14, 1975
Please autograph the enclosed dollar bills.
-- per Mildred Leona rd and Phil Buchen
Thank you
Anne
i
FOR
THE WHITE HOUSE
WASHINGTON
TO: Anne
FROM:
MILDRED LEONARD
FOR: Information
Appropriate Handling
Anne - please have these autographed. I
have checked with Mr. Buchen's office and
I am told that it is absolutely not illegal,
and whether or not it was former White House
policy doesn't make any difference.
DATE: 7/11/70
Please autopen for John T. Vivian
THE UNITED STATES OFAMERICA
THIS NOTE 15 LEGAL TENDER
FOR ALL DEBTS, PUBLIC AND PRIVATE
E 60775156 B
WASHINGTON.D.C.
G. 5
5
the E
1784
345
5 E
50775156B
SERIES
1974
HINDI
Secretary Ef - Trease
ONE DOLLAR
Ple se autopen for:
(
la ence E. Ziegler, Jr.
FEDERALRESERVENOE
THE UNITED STATES OFAMERICA
THIS NOTE IS LEGAL TENDER
FOR ALL DEBTS, PUBLIC AND PRIVATE
E25390477B
WASHINGTON.D.C.
F, 5
O1
5
E
1789
5
SERIES
5
1974
Sentes.
Secretary fill of
ONE DOLLAR
Please autographthis bond for: Catherine D. Bellinger.
We have routed it through the Legal Office and they say there is
nothing illegal about signing a Savings Bond.
UNITED STATES SAVINGSBONDE
200
THE UNITED STATES OFAMERICA
200
AT THE ORIGINAL MATURITY HEREOF WILL PAY
1776 BICENTENNIAL 976
TWO HUNDRED DOLLARS
ISSUE DATE
WHICH IS THE FIRST DAY OF
153-16-2255
To
CATHERINE O. BELLINGER
JUNE 1975
OR
(MONTH)
YEAR)
CRISTIAN M. BELLINGER
FIRST STATE
P.O. BOX 1113
BANK
AGENT'S
GALLUP, NEW MEXICO 87301
DATING STAMP
JUN 20 1975
THIS SOND is ISSUED UNDER AUTHORITY
BOND ACT. AMENDED IS SUB-
DELAWARE
JECT THE TERMS AND CONDITIONS STATED
OK. VALID IF DULY
SCRIBED AND DATED. AND DELIVERED BY AM
RECEIPT ANYWENT INEREFOR
GALLUP, NEW MEX.
SERIESE
TREASURY DEPARTMENT
WASHINGTON
W.E.E.F.
R 200 008124E
Treas,
pept.
July 30, 1975
Dear Mr. Scott:
This is in response to your letter of June 25,
1975, to Dr. Theodore c. Marrs in which you
request an investigation into alleged harrassing
searches performed by the United States Custom
Service in connection with the Ambassador
College aircraft and its occupants.
I have referred your letter to the Department
of the Treasury which has supervisory juris-
diction over the Customs Service for appropriate
review and response directly to you. It is my
understanding that the Department will be in
touch with you shortly.
Sincerely,
Philip W. Buchen
Counsel to the President
William W. Scott, Esq.
Collier, Shannon, Rill & Edwards
1666 X Street, N. W.
Washington, D. c. 20006
bcc: David R. Macdonald
Ted Marrs
11. FORD LIBRARY
July 30, 1975
MEMORANDUM FOR
DAVID R. MACDONALD
ASSISTANT SECRETARY
OF THE TREASURY
The attached correspondence from Mr. William
W. Scott to Dr. Theodore C. Marrs, dated
June 25, 1975, concerning alleged harrassing
searches performed by the Customs Service
in connection with the Ambassador College
aircraft, has been scknowledged and is for-
warded to you for appropriate review and
response directly to Mr. Scott.
Thank you,
Barry N. Roth
Assistant Counsel
BNR:eb
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
August 4, 1975
Time:
FOR ACTION:
CC (for information):
Phil Buchen
Jim Cannon
Jack Marsh
Max Friedersdorf
Bill Seidman
FROM THE STAFF SECRETARY
DUE: Date:
August 7, 1975
Time:
Noon
SUBJECT:
Secretary Simon's Memo of July 31, 1975
re: Issuance of $2 Federal Reserve Note.
ACTION REQUESTED:
X
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X
For Your Comments
Draft Remarks
REMARKS:
Approved.
PWB
SENSE B. FORD
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Jim Connor
telephone the Staff Secretary immediately.
For the President
OF
THE SECRETARY OF THE TREASURY
WASHINGTON 20220
July 31, 1975
MEMORANDUM FOR THE PRESIDENT
Subject: Issuance of $2 Federal Reserve Note
Currency and coinage matters are understandably in the
public domain. For well over a year we have been receiving an
increased number of suggestions favoring the reissuance of the
$2 bill. Collectors, persons interested in the Bicentennial,
the American Revolution Bicentennial Administration, and a
number of congressmen have made such suggestions.
The Treasury has informally announced that it is studying
such a plan in response to these queries. We have met with and
obtained the concurrence of the Federal Reserve Board and have
established a Treasury/FRB task force for further planning. In
addition, the Bureau of Engraving and Printing is developing
design alternatives. I have the authority to act and I have
informally discussed the idea with the Economic Policy Board.
Before going further, I would like to seek your advice and/or
agreement.
Summarizing the important issues:
The $2 note, one of the earliest denominations in our
currency, was removed from circulation in 1966 because it did
not successfully circulate with the public. There have been
numerous studies of this lack of popularity, going back at
least to 1925. There is no consensus among analysts that
supports a single explanation for the public's apathy. Super-
stition, business resistance, confusion with $1 notes, and
other problems are cited.
The public is the key factor in the successful circulation
of coin and currency. Banks order specific denominations and
blocks of currency from the Fed to meet their business and
in
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individual customers' needs. When a coin or bill is not
popular, it is simply returned through this mechanism to the
Federal Reserve Banks.
Conversely, the Canadians have had good success with the
$2 denomination. That bill is a different color but that is a
characteristic of each unit of their paper currency. Further,
while some recent market analyses, the Harris Poll and a study
done for the Federal Reserve by the Harvard Business School,
have confirmed the lack of latent public demand, the consumers
polled indicated they would readily accept the $2 bill.
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The Bureau of Engraving and Printing estimates that the
replacement of one half of the $1 bills presently in circulation
could result in cost savings of approximately $4 million per
year. There would be additional savings to the Federal Reserve
System from reduced handling and destruction costs.
The Treasury/FRB task force believes that a reissuance of
the $2 bill will require a strong marketing effort to assure
that we achieve the objective of a useful level of circulation.
The Federal Reserve has asked that at least 400 million notes
be issued within the first year and the circulation level of the
note be the determinant of its continuation. This is for normal
currency use. A collateral program would also be run to print
and sell proof sets to satisfy the demands of collectors and
assure that the note does not become an oddity. The Harvard
Business School study conclusions emphasize that the success
of the project would require "an educational campaign designed
to dispel misconceptions and promote the advantages of the two
dollar denomination."
The most important aspect of such a promotion would be the
linking of the $2 bill to the Bicentennial year. The most recent
$2 bill contained the portrait of Thomas Jefferson, the author of
the Declaration of Independence. Some public inquiries and those
from the ARBA have indicated an interest in the commemorative
features of the bill. The Bureau of Engraving and Printing is
developing an engraving of the famous painting depicting the
signing of the Declaration for the back of the currency. This
will permit the insertion of the dates 1776-1976.
There have been other design suggestions, including the
use of different colors, different sizes of currency, and other
portraits. Some urge that a woman or a minority group figure
be shown on the face of the note. However, we do not think it
feasible to conduct public design competition.
While the reintroduction of the $2 bill will require a
vigorous effort to achieve wide public use, such a bill would
be a convenience to the public and to the government. The
project would be an Administration initiative that would touch
all citizens. Prior to making a final determination, I would
consult with the congressional committees and subcommittees on
the attached list. A number of the chairmen of these committees
will welcome the project. In addition, we would use interagency
and congressional help to develop the program and select an
appropriate Bicentennial theme.
Billy William V. Simon
Attachment
CONGRESSIONAL COMMITTEES and SUBCOMMITTEES TO BE CONSULTED in
CONNECTION with REISSUANCE of the TWO DOLLAR BILL
1. House Committee on Banking, Currency and Housing
Henry S. Reuss (Wisc) Chairman
Albert W. Johnson (Pa) Ranking Republican
A. House Subcommittee on Historic Preservation and Coinage
(of the House Banking Committee)
Robert G. Stephens, Jr. (Ga)
Chairman
Richard T. Schulze (Pa)
Ranking Republican
2. House Committee on Government Operations
Jack Brooks (Texas)
Chairman
Frank Horton (N.Y.)
Ranking Republican
A. House Subcommittee on Commerce, Consumer, & Monetary Affairs
(of the House Government Operations Committee)
Benjamin S. Rosenthal (N.Y.) Chairman
Garry Brown (Mich)
Ranking Republican
3. House Subcommittee on Treasury, Postal Service, and General
Government
(of the House Committee on Appropriations)
Tom Steed (Okla)
Chairman
Clarence E. Miller (0hio) Ranking Republican
4. Senate Committee on Banking, Housing and Urban Affairs
William Proxmire (Wisc)
Chairman
John G. Tower (Texas)
Ranking Republican
A. Subcommittee on Consumer Affairs
(of Senate Banking Committee)
Joseph R. Biden, Jr. (Del)
Chairman
Jake Garn (Utah)
Ranking Republican
5. Senate Subcommittee on Treasury, Postal Service, and General
Government
(of the Senate Appropriations Committee)
Joseph M. Montoya (N.M.) Chairman
Henry Bellmon (0k1a)
Ranking Republican
6. Senate Subcommittee on Consumers
(of the Senate Commerce Committee)
Frank E. Moss (Utah) Chairman
James L. Buckley (N.Y.) Ranking Republican
OF
DEPARTMENT THE TREASURY
Treas
THE GENERAL COUNSEL OF THE TREASURY
WASHINGTON, D.C. 20220
1789
SEP 2 1975
MEMORANDUM TO THE HONORABLE PHILIP W. BUCHEN
COUNSEL TO THE PRESIDENT
Subject: Duplicate Congressional Hearings
Pursuant to our discussion on August 28, 1975, the following is
a brief summary of the overlapping Congressional inquiries affecting
the Treasury Department.
U.S. Secret Service
In addition to the inquiries and investigations by the Select
Intelligence Committees of the House and Senate, the Secret Service has
dealt with requests from the Subcommittee on Government Information and
Individual Rights of the House Government Operations Committee.
Customs Service
Investigations have been conducted concerning intelligence activities
of the Customs Service by the Select Intelligence Committees and two
others. The Government Information and Individual Rights Subcommittee
and the Permanent Subcommittee on Investigations of the Senate Govern-
ment Operations Committee have sought various documents from Customs
concerning Southeast Asia narcotics trafficking and drug enforcement
operations and procedures.
IRS
The most extensive duplication of Congressional inquiries affecting
Treasury have related to the IRS. In addition to the Senate and House
Select Committees and the Senate and House Appropriations Committees,
the Secretary and Commissioner have appeared or are scheduled to appear
before various Congressional committees to discuss issues involving IRS
issues similar to those before the Select Committees. These have
included the following:
House
- Government Information and Individual Rights Subcommittee
of the Committee on Government Operations
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- Subcommittee on Labor Standards of the Education and
Labor Committee
- Commerce, Consumer and Monetary Affairs Subcommittee
of the Committee on Government Operations
- Ways and Means Oversight Subcommittee
- International Economic Policy Subcommittee of the
Committee on International Relations
Senate
- Oversight Subcommittee of the Senate Finance Committee
(Signed) Richard R. Albrecht
Richard R. Albrecht
General Counsel
THE WHITE HOUSE
WASHINGTON
August 7, 1975
Dear Mr. McGoff:
Your recent telegram to the President concerning the
Washington Star case before the Federal Communications
Commission has been referred to me for reply.
The comments of Secretary Simon in no way involved
urging that illegal action be taken within the Execu-
tive Branch, and they did not constitute an intrusion
on his part into the judicial processes of an
independent regulatory agency.
The criticism voiced by Secretary Simon went to the
inconclusive nature of the FCC order on August 1, 1975,
which had been issued in response to a petition filed
February 11, 1975, (which followed an earlier sub-
mission in November 1974) and to the delays still
ahead before the petition is disposed of one way or
the other.
Granted that the issues presented may be more complex
than appeared from newspaper reports of the case, it
is still in the public interest to urge that the time
within which conclusions are reached ought reasonably
to fit the exigencies of the case.
Sincerely,
Counsel to the President
Mr. John P. McGoff
President
Star Newspaper Company
P.O. Box 1740
East Lansing, Michigan 48823
Treasury
THE WHITE HOUSE
WASHINGTON
August 12, 1975
MEMORANDUM FOR
THE HONORABLE STEPHEN GARDNER
DEPUTY SECRETARY OF THE TREASURY
In connection with Bill Simon's interest in the
position taken by FCC in the Washington Star
proceeding, I enclose a copy of a memorandum
from the Department of Justice addressed to
Jim Cannon, with copy to me.
R.W.B.
Philip W. Buchen
Counsel to the President
Enclosure
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Treasury
THE WHITE HOUSE
WASHINGTON
September 2, 1975
MEMORANDUM FOR:
BARRY ROTH
FROM:
PHIL BUCHEN P.W.B.
Please check tomorrow's Federal Register for
a Treasury Department item concerning the tax
aspects of travel by various persons on the
Presidential plane and get a copy for me.
Sept 3.
SEALS R. FORD LISTED
THE WHITE HOUSE
=
WASHINGTON
September 16, 1975
Dear Mr. Secretary:
In behalf of the President, I direct protection, within the powers
and duties of the United States Secret Service, for the Foreign
Minister of the USSR, Andrei Gromyko, during the period from
September 15 until September 25, 1975, when he will be in the
United States.
Sincerely,
Counsel to the President
The Honorable William Simon
Secretary of the Treasury
Washington, D.C. 20023
OF R. FORD LIBRARY
Treas.
October 9. 1975
Dear Mr. Secretary:
In behalf of the President, I am directing protection within
the powers and duties of the Executive Protective Service
and the United States Secret Service for the Spanish Mission
to the United Nations located in New York City.
Protection for this Mission should continue until October 17
unless review of intelligence information justifies an carlier
termination date. Fixed post protection should be provided
to the Mission within the building where it is operating,
during the hours when the office is open for business.
Sincerely,
10/
Philip W. Buchen
Counsel to the President
The Homerable William Simon
Secretary of the Treasury
Washington, D. C. 20023
bee:
Howard R. Tyler, Jr., Deputy Attorney General, Justice
Robert S. Ingersell, Deputy Secretary of State
John Thomas, Assistant Secretary of State for Administration
Ambassador Robert O. Blake, Deputy Assistant Secretary for
International Organisation Affairs, State Department
H. S. Knight, Director of Secret Service
General Brent Scowcroft
Donald Rumsfeld
1. FORD LIBRARY
THE WHITE HOUSE
WASHINGTON
November 6, 1975
Dear Mr. Wood:
Thank you very much for your letter of
October 30.
I have referred a copy of it to the
Department of Treasury which has juris-
diction over the Secret Service.
Sincerely,
Thely Bucken Philip W. Buchen
Counsel to the President
Mr. William P. Wood
5545 Sky Parkway
#201
Sacramento, California 95828
R. FORD DERAIT
THE WHITE HOUSE
Treasury
WASHINGTON
December 17, 1975
MEMORANDUM FOR:
DICK CHENEY
FROM:
PHIL BUCHEN
P.
SUBJECT:
Request for Secret Service
Report on Incident of
Unauthorized Entry to the
White House Grounds
At this morning's staff meeting when you were
absent, Bill Simon raised the point that he
had not been advised of the request which the
press has reported was made by you to the
Secret Service for a report on the incident
of the man who twice scaled the White House
fence to get onto the White House grounds.
I suggest that you call Bill Simon on this
matter.
SALE FORD LIBERTY
THE WHITE HOUSE
Capy. Buchen
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
July 9, 1976
Time:
FOR ACTION:
CC (for information):
Phil Buchen
Bill Seidman
Jim Cannon
Jack Marsh
Max Friedersdorf
Brent Scowcroft
FROM THE STAFF SECRETARY
DUE: Date:
Monday, July 12
Time:
2 P.M.
SUBJECT:
William E. Simon memo 7/8/76
re: INTERPOL
ACTION REQUESTED:
For Necessary Action
X For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X
For Your Comments
Draft Remarks
REMARKS:
This controversy involves a total of three employees and thus
would not appear to be a question of Presidential dimension.
The Domestic Council should arrange a meeting between Justice
and Treasury in order to resolve the matter in an amicable
fashion.
Phil Buchen 7/13/76
FORD LIBRARY
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Jim Connor
telephone the Staff Secretary immediately.
For the President