The Washington Branch includes the Appeals Section, which independently analyzes, reviews, and recommends appropriate disposition of appeals to the General Counsel from regional directors' dismissal of charges of unfair labor practices; the Advise Section, which processes requests for advice from regional offices; and the Case Review Section, which conducts analyses and evaluation of all phases of field office case-handling activities and performs back-pay analyses.

The Field Branch directs and coordinates field office liaison, inspection, review, and advisory activities of the Division.

The Administrative Branch, which includes the Administrative Section, the Affidavit Compliance and Election Section, and the Procedures Section, directs and coordinates the administrative management operations of all regional and subregional offices and of the Washington office of the Division; handles compliance with section 9 (f), (g), and (h) of the act, and coordinates election activities in the field.

The new organization is reported to have afforded more effective supervision over and closer touch with field offices.

A new office, designated as the 12th regional office, Tampa, Fla., went into operation on January 2, 1957. This office was created for the purpose of providing better facilities and more accessible services in accordance with the heavy demands of the Florida area. Case filings and resultant investigations and hearings in this area have increased steadily to a point where coverage from the 10th regional office, Atlanta, Ga., is no longer adequate or economical. The staff of the new office will consist of approximately 20 employees who will be appointed, for the most part, by transfer from other field offices and the Washington office of the Board.

NATIONAL SCIENCE FOUNDATION

The Director reported that on April 3, 1956, the President established the National Committee for the Development of Scientists and Engineers, directing the National Science Foundation to provide necessary staff services. Foundation personnel assigned to this Committee and to the Interdepartmental Committee on Scientific Research and Development are shown separately on the chart.

PANAMA CANAL COMPANY

The Panama Canal Company reported a reduction of 874 employees during 1956. The Community Services Bureau and the Supply Bureau were consolidated into one unit and renamed the Supply and Employee Service Bureau. The new bureau absorbed the Service Center Division, and the Housing and Grounds Division, which was created through the consolidation of the Grounds Maintenance Division with the Housing Division.

It was also reported that organization changes within the Supply and Employee Service Bureau will be effected during the year through consolidation of divisions within the Bureau, and that reorganization of the New York office and other changes anticipated during the calendar year are expected to result in a more efficient operation.

SECURITIES AND EXCHANGE COMMISSION

In reporting on the work of the Securities and Exchange Commission during 1956, the Chairman stated that it was done against a background of expansion and activity in the capital markets and the national economy which is unprecedented in the Commission's experience. He stated that the Commission's primary concern is to afford to American investors, under these conditions and in these markets, the protection intended by the Federal securities laws, and that in so doing, the Commission not only aids the investor but contributes to the maintenance of public confidence in the integrity of the capital markets and thus to the capital formation which is so important to continued progress and prosperity.

In explanation of the operations of the SEC, the Chairman submitted the following detailed analysis:

During 1956, 930 registration statements were filed under the Securities Act covering offerings of new issues of corporate securities of over $13 billion. The volume of trading on the registered exchanges was approximately $36.8 billion and the value of all stocks listed on all exchanges reached approximately $260 billions at the end of July 1956, and was about $238 billion at the end of the year. The number of broker-dealers registered with the Commission also reached a new high of 4,695 as of December 31, 1956. These figures reflect a prosperous and expanding economy with an annual gross product of $412 billion-the highest in history. At the same time they are accompanied by conditions calling for increased vigilance on the part of the Commission to protect the public investor in the Nation's securities markets and a constant reexamination of procedures and policies to make certain that they are adequate to meet the existing conditions in those markets.

Enforcement activities such as broker-dealer inspections and investigations of fraud and market manipulations have been greatly expanded to meet abuses presently going on incident to the marketing of securities. The Commission's enforcement program, to assure fair disclosure of material facts in connection with the marketing of corporate securities and for the prevention, detection, and punishment of fraud in the sale of securities, has been intensively pursued in the interest of the investing public. Since many new broker-dealers have been attracted into the business, the Commission's broker-dealer inspection program has been stepped up. During the calendar year 1956, a total of 1,048 inspections were performed as compared with 846 in 1955. The number of enforcement proceedings taken has also increased, more injunctions having been obtained in the Federal courts in the last 6 months of 1956 than in the preceding 12-month period. With many new securities coming to market, it also has been necessary to give more careful scrutiny to issues of securities being offered in order to obtain disclosure of material facts for the investing public. Registration statements and fillings under the exemptive provisions for small issues are carefully examined and the Commission has not hesitated to take action by stop order or suspension where the required disclosure is not made, or where the law is not otherwise complied with. The number of such proceedings reached a new high in 1956. Increased attention has also been given to offerings made without registration upon some claim of exemption, to ascertain whether the

claim is in fact well founded, as well as to prevent fraud in these offerings.

To meet the greatly increased workload in accordance with the recommendation contained in the President's budget, the Congress granted the Commission an appropriation for an average employment of about 730, in fiscal year 1956, which represented a small increase from 1955, and, most significant, an end of successive annual curtailments of staff from a high over 1,700 in 1942 to an alltime low of 666 on June 30, 1955. For fiscal 1957, the Congress appropriated funds for an average employment of 794. In recognition of the need for increasing vigilance in the administration of the Federal securities laws, the President has recommended an increase of 159 positions for fiscal 1958.

Approximately one-third of the estimated cost of operating the Commission for fiscal 1958 will be offset by the statutory fees and other revenue that is to be collected by the Commission but which is not available for expenditure and is deposited into the Treasury as miscellaneous receipts, thus reducing the net cost to the taxpayers.

During 1956, the Commission continued to devote great effort to its program of revising rules and forms to keep abreast of constantly changing techniques and conditions in the dynamic securities markets. This was part of an overall program of rules and form revisions undertaken by the Commission in 1953. Now, for the first time, the Commission's promulgated changes in its forms S-1, 10, 8-B, 8-C, and regulation X-14, have coordinated and made uniform, so far as possible, the information required in the basic registration forms for new issues under the Securities Act and for issues to be listed and traded on national securities exchanges under the Exchange Act, and for proxy statements under the Exchange Act. The object of this program has been the simplification of forms to eliminate duplicate filings arising under different provisions of the Federal securities laws, and relieve persons subject to these laws of unnecessary burdens and costs without the sacrifice of any safeguards necessary for the protection of investors.

The Commission's continuing interest in assisting small business resulted in a study of the exemptive regulation under which small issues of $300,000 or less are conditionally exempted from the registration requirements. After thorough consideration, the revised exemptive regulation was issued in July 1956, which both clarifies the applicable requirements and includes increased protection for the investing public against misuse of the exemption. A Branch of Small Issues was established in the Commission to insure more effective administration of the regulation. The exemptive regulations will receive continuing study in the year ahead to further effective investor protection without burdening the financing of small business, all within the framework of the statutory purpose.

In recent years, proxy contests for the control of American corporations have assumed increasing importance and have received the careful attention of the Commission. The revision of the Commission's proxy rules, providing specifically for problems arising in proxy contests, became effective January 30, 1956. The new rules have worked well and have made a marked contribution to an informed exercise of the stockholders' voting franchise in the context of bitterly fought contests for control.

Basically, the Federal securities laws seek to obtain from investors fair disclosure and honest markets, and the Commission does not pass upon the merits of securities or approve or disapprove offerings. It is for the investor, and not the Government, to make investment decisions. The Commission has repeatedly urged investors to avail themselves of the protection afforded by the Federal securities laws and also to beware of the unknown but persuasive salesman who offers his equally unknown securities over the long-distance telephone. The lure of quick profits in a rising market has made many investors increasingly vulnerable to this approach. Much progress has been made during the year, and more is expected in the year ahead, in stamping out the fraudulent sale of securities, but it remains true that an investor can best protect himself by declining to purchase any security offered by a total stranger over the telephone.

The chairman concluded the report by stating that in view of the Commission, the outlook for 1957 will call for increasing vigilance in the administration of the Federal securities laws in the public interest and for the protection of investors.

In his report to the committee, prepared by the Office of the Executive Director describing the realinements of functions and personnel made in the calendar year 1956, and stating the required information as to personnel assignments, the chairman submitted the following: Realinements of functions and personnel

The Commission operates under a continuing policy of review of its organization and functions in order that its responsibilities may be discharged as efficiently and economically as possible. Under this policy, in 1956 management studies were made of all of the Commission's major divisions in Washington, and the New York regional office. The realinements of the following functions and personnel pursuant to this self-evaluation program were designed to permit the Commission to better cope with its greatly increased workload:

Division of Corporate Regulation.--The Division of Corporate Regulation formerly had 3 operating units, 2 of which handled the Division's work under the Public Utility Holding Company Act of 1935. The work is now concentrated in 1 Branch of Public Utility Regulation. The other operating unit, the Branch of Investment Companies, continues to handle the Division's work under the Investment Company Act of 1940. An Office of Special Studies and Administration was created to replace the Branch of Special Studies, thus concentrating in 1 branch the general analytical, financial, economic, and administrative functions of the Division. The newly created Office of Chief Counsel is responsible for legal advice to the Division as well as for the Division's work under chapter X of the Bankruptcy Act. This realinement of functions and personnel became effective June 1, 1956.

Division of administrative management. The Division of Administrative Management formerly consisted of the Branches of Personnel, Budget, and Finance, Records, and Service. Effective June 1, 1956, the 2 latter branches were combined into 1 Branch of Records and Service.

Division of Trading and Exchanges.-Effective June 25, 1956, the functions and personnel of the Division of Trading and Exchanges were realined to a minor extent. The Section of Enforcement was reconstituted and given immediate supervision over 3 component

units each performing related functions. Similarly, the Section of Economic Research was reconstituted to provide for 3 units each responsible for a broad area of the Commission's statistical program. Office of the General Counsel.-The table of organization of the Office of the General Counsel formerly provided for a General Counsel, an Associate General Counsel, and an Assistant General Counsel. Effective June 27, 1956, two additional Assistant General Counsel positions were created. The Associate General Counsel position, which had been vacant, was filled by promotion, as were the resulting three Assistant General Counsel positions. These changes gave recognition to the duties and responsibilities theretofore discharged by members of the General Counsel's staff and provided for an Assistant General Counsel with primary responsibility over each of the following major areas of work: contested trial court litigation, appellate court litigation, and legislative matters.

Division of Corporation Finance.-The functions and personnel of the Division of Corporation Finance were realined to provide for 3 Assistant Directors in charge of the examination of registration statements under the Securities Act of 1933 and related matters, each having under his supervision 2 Branches of Corporate Examination and Analysis; an Assistant Director in charge of a Branch of Small Issues and a Branch of Administrative Proceedings and Investigation; a Chief Counsel of the Division in charge of a Branch of Interpretations and Review and a Branch of Forms, Rules, Regulations, and Legislative Matters; a chief accountant of the Division; an Office of Engineering; and an Office of Filings and Reports. These changes, as modified August 15, 1956, were effective July 2, 1956.

New York regional office. The personnel and functions of the New York regional office were realined effective September 5, 1956. This action was designed to promote efficiency of operations by establishment of three coordinate branches, each responsible for the performance of an important phase of the Commission's task of protecting investors. The New York regional office now consists of a Branch of Investigations, comprising a Section of Securities Act Investigations, a Section of Securities Exchange Act Investigations, a Section of Broker-Dealer Inspections, and a Section of Market Surveillance; a Branch of Enforcement; and a Branch of Operations, comprising a Section of Small Issues, a Section of Public Information and Interpretations, and a Section of Reorganization.

SELECTIVE SERVICE SYSTEM

Included in the 1957 listing are 304 commissioned officers of the United States Army, Navy, Marines, and Air Force on reimbursable basis; 1,618 part-time employees are also included in the total, which is a material decrease in the number reported as of January 1956. The total of 7,243 does not include 41,414 uncompensated employees serving as local board members, appeal board members, advisers to registrants, et cetera, without whom the System could not operate.

The Director also reported that decentralization continues to provide an increase in the number of local boards but the personnel utilized in their operation has been kept to a minimum.