Preheat the oven to 350 degrees F (175 degrees C). Grease and lightly flour two 8- or 9-inch round cake pans or one 9x13-inch cake pan.

Reserve 1/4 cup maraschino cherry juice. Coarsely chop cherries to make 1/2 cup. Set aside.

Sift cake flour, baking powder, and 1/4 teaspoon salt and set aside.

Beat shortening in a large bowl with an electric mixer on medium-high speed for 30 seconds. Add white sugar and beat until well combined. Add egg whites, one at a time, beating well after each.

Combine 2/3 cup milk and reserved 1/4 cup cherry juice. Add the flour and milk mixture alternately to the shortening mixture, beating on low speed after each addition until just combined. Stir in the chopped cherries and nuts. Pour batter into prepared pans.

Bake in the preheated oven until cake springs back when lightly touched with a finger or a tester comes out clean, 20 to 25 minutes for round cakes (or 30 to 35 minutes for a 9x13 inch pan). Cool cakes in pans on a wire rack for 10 minutes, then invert onto a wire rack to cool completely.

To make frosting: Beat butter in a large bowl until fluffy. Gradually add 3 cups sifted confectioners' sugar; beat well. Slowly beat in 1/3 cup milk, vanilla, and remaining 1/4 teaspoon salt. Gradually beat in the remaining 3 cups sifted confectioners' sugar. Beat in additional milk (1 to 2 tablespoons) if needed, to make the frosting spreading consistency. If desired, tint the frosting pink by adding 6 drops red food coloring.

Once the cake is completely cool, frost with butter frosting and decorate with maraschino cherries with stems.