The report indicates the committee's awareness that marked technological advances are being made and that the Fed's expectations of their effect on float may be reasonable. However, the float has not always gone the way of expectations. The report, therefore, recommended to the Board of Governors of the Federal Reserve System that:

(1) It establish quantity and time goals for float elimination through technical developments, and provide for periodic reviews of the results thereof; and should the progress made not meet expectations, consider the advisability of action to lessen the float through adoption of (a) a plan of immediate debits-credits on checks; or (b) of time schedules which approximate actual collection times.

(2) Should efforts to reduce float fall short of expectations within a reasonable time, the Board should (a) develop records to make readily calculable the proportionate uses member banks make of float as reserves; and (b) study the question of whether user charges should be assessed against banks in proportion to the benefits they derive from float.

(3) It coordinate with Government agencies, in moving forward with technological developments, as contemplated by Public Law

89-306.

(b) Estimated monetary and other benefits.-In August, 1966, the Federal Reserve Board announced that effective September 1, 1967, all checks sent to Federal Reserve Banks which are not encoded in magnetic ink would be treated as noncash items. The effect will be to eliminate the float as to such items. Also, the Fed has announced the conduct of further studies into means for minimizing bank clearings, and for thus greatly reducing the float. Should these efforts prove unsuccessful and the Fed return to a 3-day maximum deferment time, the System could increase its earnings up to some $30 million a year, as pointed out in the report, with further additional earnings should circumstances indicate the necessity for making user charges on the member banks which benefit from the float.

(c) Hearings.-February 9, 1966. Transcript printed.

5. "The Coin Situation," House Report No. 1468, May 2, 1966, TwentyNinth Report by the Committee on Government Operations. (a) Summary of report.-This study followed two earlier studies, the first concerning the country's severe coin shortage, the other inquiring into the effectiveness of the Treasury's "crash" coin production program and the adequacy of its silver supply. The instant study followed the passage of the Coinage Act of 1965, which provided for the minting of silverless dimes and quarters, and the reduction of the silver content of half dollars from 90 to 40 percent.

This investigation enabled the subcommittee to pronounce the coin shortage as ended, except for half dollars which failed to circulate in any significant quantity, regardless of how many were produced. However, the subcommittee found little progress had been made toward developing criteria for anticipating coin requirements, and for phasing out the expensive crash coin production program.

To assure early return to normal coinage operations while providing coin for all purposes, the report recommended that the Treasury Department:

Develop reliable means and criteria of forecasting coin needs, and in that connection consider technological advances in commercial transactions which may lessen the need for coin;

Establish inventory requirements by denominations of coin for both the Treasury and the Federal Reserve System;

Measure the effect that existing or potential coin metal shortages might have on the metallic content of coin and determine the effect any possible change in metal content might have on the performance of coin-operated machines and devices;

Determine whether it is necessary to continue minting half dollars as essential coins of commerce, and if so, whether the silver content of the half dollar should be maintained at its present level, in the light of the Treasury's diminishing silver stock;

Initiate plans and advance preparations to assure an orderly and economic adjustment from coin production on a crash basis to more normal operations;

Develop guidelines for the determination of conditions which would indicate the advisability, or necessity, of an additional mint; Obtain the assistance of the Federal Reserve System, and such other governmental agencies and private sources as may be helpful in collecting and evaluating pertinent data relating to coin and coinage problems, including those outlined above;

Immediately request establishment of the Joint Commission on the Coinage, and the appointment of its public members by the President, as provided for by Public Law 89-81, and assist the Commission in its studies by making available to it data and studies concerning coin and coinage problems;

Revise Treasury Circular No. 55 to clarify the responsibility of the Federal Reserve System to distribute coin directly, on uniform bases, to both member and nonmember banks.

(b) Estimated monetary and other benefits.--Insufficient time has expired since issuance of the report to permit the monetary benefits to be calculated at this time. However, the mint is progressing to implement one of the principal recommendations; i.e., to speed the return to normal coin production schedules.

In November 1966, the mint reduced its coin production schedules from three shifts per day, 7 days a week, to three shifts in a 5-day week. In August 1966, it returned to dating coin as of the year of minting, and in January 1967 expects to use 1967 on all coin minted in that year. In December 1966, the Treasury, adopting a committee recommendation, amended its Circular No. 55 to assure that Federal Reserve banks made fair and equitable distribution of coin not only to member banks, but also to nonmember banks.

(c) Hearings.-February 8, 1966. Transcript printed.

6. "Coast Guard Examination of Foreign Passenger Vessels," House Report 1663, June 27, 1966. Thirty-Third Report by the Committee on Government Operations.

(a) Summary of report. Fire is the greatest hazard to life at sea. All U.S. passenger vessels built since 1936 are constructed of incom

bustible materials; and no U.S. passenger ship built before 1936 carries passengers in ocean traffic. However, at the same time that the United States took the wood out of new U.S. passenger ships, the Safety of Life at Sea Convention (SOLAS) of 1929 became effective, which permitted the carrying of passengers from our shores by foreign vessels, regardless of how much wood was built into them. Although SOLAS Conventions in 1948, and again in 1960, imposed higher fire safety requirements, even now foreign passenger vessels can be constructed with large quantities of combustible materials; and the United States must allow them to carry passengers out of U.S. ports, if the vessels are protected by approved sprinklers or fire detection systems. Foreign vessels built before 1952 can be of any degree of combustibility and still be permitted to operate in passenger trade from the United States. For instance, the Yarmouth Castle, which burned and sank in November 1965, with a loss of 90 lives, had well over 400 tons of wood in her superstructure. Yet under SOLAS Conventions she could operate regularly as a cruise vessel, despite this combustibility.

When that disaster happened, the vessel had aboard her a Coast Guard Certificate of Examination. The subcommittee checked on the Coast Guard's vessel examination procedures to see whether it was doing everything it could to assure the safety of American travelers and to prevent future tragedies of that kind from happening. The study disclosed that the Coast Guard has exercised to the maximum its examination authority over foreign passenger vessels, and through moral suasion often has been able to get foreign ships upgraded considerably beyond Convention safety requirements.

In its efforts toward greater safety of life and property at sea, the committee recommended (among other things) that the Coast Guard discontinue issuing its certificate of examination to foreign passenger vessels, thus obviating the possibility of passengers believing that the Coast Guard had approved the vessel's general safety; and that it devise an information sheet on passenger ships inspected or examined, United States and foreign, which in layman's language would clearly reflect the relative safety of each such vessel. The information sheet should describe any particulars in which a vessel failed to meet U.S. standards of construction and fitting out for passenger service, including the materials used therein; the installation and maintenance of firefighting and other equipment designed for the safety of passengers: and manning and operation of the vessel and its equipment; and copies should be made available for public distribution.

The report also recommended the development of a uniform checkoff list to aid inspectors in the examination of foreign passenger vessels, and the establishment, as policy, that if in the course of examination of a foreign passenger vessel any question arises as to whether the vessel can proceed to sea without danger to passengers and crew, all doubts should be resolved by preventing the vessel from carrying passengers out of U.S. ports until all safety deficiencies are

corrected.

No degree of excellence of Coast Guard examination efforts can eliminate the hazards of disastrous fire which repose in the combustible materials built into many of the foreign vessels it examines. Appropriate treaty amendments are necessary to remove such danger to U.S. passengers. The Coast Guard has taken the lead in pressing for

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higher Convention safety standards, including the elimination of grandfather clauses (which exempt older vessels from meeting treaty requirements), the bringing up of existing ships to SOLAS-60 standards, and the construction of new vessels with incombustible materials. A May 1966 special meeting of the Maritime Safety Committee of Inter-Governmental Maritime Consultative Organization (a preliminary step in Convention amendment) reported agreement on many U.S. proposals for increased vessel safety. Because the prescribed procedures for amending SOLAS-60 take a long time, the aforesaid committee recommended that nations not await the completion of the amendment processes before instituting the agreed-upon safety reforms.

As a result of this study, the committee recommended to the Coast Guard that it press for appropriate amendments of the SOLAS Convention which would (a) include basic standards for qualifications of classification societies and surveyors of vessels; (b) require that only such classification societies or surveyors as meet the basic standards be eligible for appointment to make the inspections that are required by the Convention; (c) require foreign governments to formally authorize their appointments of classification societies and surveyors: (d) require IMCO to maintain a list of classification societies and surveyors which meet the basic standards, as well as records of their authorization to act for member countries; (e) require IMCO to make available for inspection and circulation upon the request of any interested country marine casualty reports which disclose the identity of the ships involved; (f) provide minimum qualifications and training requirements for masters, officers, and crews of vessels, and (g) require that appropriate emergency radio equipment be housed in lifeboats on each side of a vessel; that a radioman be on duty at all times; and that a self-powered, buoyant device which when ejected from the vessel into the water automatically emits distress signals-be carried by each vessel.

The report also asked the Coast Guard to urge the countries whose vessels embark passengers from U.S. ports not to await the formal adoption of the IMCO Maritime Safety Committee's safety recommendations, but to put them into effect immediately: and that if the Maritime Safety Committee's recommendations for amendments to the SOLAS Convention to meet the principal objectives of the Coast Guard in advancing safety at sea are not adopted within 2 years, the Coast Guard should recommend denunciation of the Convention and the return to bilateral agreements under which examinations of foreign and U.S. passenger vessels would be made on a reciprocal basis, in which the Coast Guard could insist upon greater safety provisions.

The report also urged the Coast Guard to recommend denunciation of the Convention if it was not amended within 5 years to require fire resistant construction of all new passenger vessels and the existing vessels which required material alteration.

(b) Estimated monetary and other benefits. The paramount purpose of the Coast Guard's examination of foreign passenger vessels is to assure the safety of persons embarking from U.S. ports, and their property, to the fullest extent possible. Implementation by the Coast Guard of the report's recommendations will afford prospective passengers better information of the fire hazards (if any) they subject

themselves to by sailing in examined vessels, make for the greater fire safety of foreign vessels, and lessen the expenses incurred by the Coast Guard through fewer rescue operations. The direct costs to the Coast Guard for its rescue operations and investigation of the Yarmouth Castle disaster are estimated at $77,500.

Since issuance of the Committee Report there have been the following significant developments for the greater safety of passengers debarking on ocean voyages from U.S. ports:

By Public Law 89-777, approved November 6, 1966, the Congress established higher minimum safety standards which must be met within 2 years by all passenger ships, United States and foreign, which sail from U.S. ports. The new legislation also requires that the safety standards which a vessel meets must be stated in all advertising of the vessel in the United States, and the owners and operators of vessels are required to give evidence of their financial responsibility to meet any passenger claims which might arise as a result of injury, death, and sailing cancellations.

With respect to the international agreements regarding vessel safety, 45 governments meeting in London at the Third Extraordinary Session of the International Maritime Consultative Organization Assembly, in December 1966, adopted amendments to the 1960 Safety of Life at Sea Convention in the interest of greater safety. Of prime interest were the provisions which would eliminate the grandfather clauses which have permitted vessels built before the Conventions to engage in ocean passenger traffic. This would be done by requiring all passenger vessels to be brought to acceptable modern standards of fire safety.

It was also provided that any contracting government which did not adopt these amendments within 12 months after they entered into force would cease to be a party to the Convention. By separate resolutions the Assembly also approved various recommendations for increased fire safety measures and recommended that all contracting governments give them immediate effect.

(c) Hearings.-January 25, 1966. Transcript printed.