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Farm Security Administration

FSA-Farm Security Administration-C. B. Baldwin, Administrator. Address, Washington, D. C. The Farm Security Administration was created by the Secretary of Agriculture, September 1, 1937, as successor to the Resettlement Administration. The purpose is to enable farm families on or near relief to become permanently self-supporting. The work is divided into three phases:

military and industrial defense expansions. Loans, grants, temporary housing, and help in moving families and finding new farms is made available to farmers in each area where displacement has occurred.

1. A rehabilitation program under which (a) farmers unable to obtain adequate credit from any other source may receive small loans which will enable them to continue farming on the basis of a sound plan of farm and home management; (b) farmers overburdened with debt may find a machinery for negotiating voluntary adjustment with their creditors; (c) farmers handicapped by an uneconomic scheme of operations may obtain the assistance of farm management experts in planning a better system of farming; (d) farm families in extreme distress but without prospects of making a crop (as in drought or flood areas) may receive small grants for the purchase of food and clothing; and (e) groups of low-income farmers may obtain loans for the cooperative- purchase or rental of necessary community services, such as heavy machinery and purebred sires, which no one of them could afford alone. This rehabilitation program, although largely self-liquidating, is financed principally through loans from the Reconstruction Finance Corporation.

2. A farm purchase program under which tenant families may receive a loan for purchase and improvement of farms of their own. This program was authorized by the Bankhead-Jones Farm Tenant Act of July 22, 1937, and became part of the activities of the Farm Security Administration by order of the Secretary.

3. Completion of 164 homestead projects where low-income farm and city families will have an opportunity to live under better conditions.

Creation and maintenance of sanitary camps for migratory agricultural workers. The completed program will include 41 stationary and 23 mobile camps, located in ten states-California, Oregon, Washington, Idaho, Arizona, Texas, Florida, Missouri, Colorado, and Arkansas-providing facilities for 14,886 families at any one time. Special work of FSA in connection with National Defense includes:

(a) Relocation of farm families displaced by

(b) Building of defense housing. In cooperation with the Division of Defense Housing Coordination. which determines need, designates sites and types of shelter, FSA builds temporary and permanent housing for defense workers. Funds for the temporary program are provided by the Urgent Deficiency Appropriation Act, for the permanent by the Lanham Act. Family trailers, dormitories for single persons, and prefabricated houses are used.

(c) Cooperation with other agencies of the Department of Agriculture in the food for defense effort. To augment defense food production, FSA makes supplemental loans to regular FSA borrowers for special purchases of livestock, feed, and equipment.

Since 1934, rehabilitation loans have been made to nearly 900,000 families. These loans have totaled $570,000,000. The interest rate is 5 percent and the period of the loan is ordinarily from three to ten years. From its beginning in 1934 through June 30, 1941, the grant program has helped 575,000 farm families. During the same period $2,000,490 has been lent to cooperative associations of farmers.

Under the provisions of the Bankhead-Jones Act, nearly 21,000 farm tenant families received loans for the purchase and improvement of farms of their own during the four years the program has been operating. These loans averaged $5,648 for the average farm of 133 acres, including necessary improvements and construction. As in the case of the rehabilitation loans, credit is accompanied by advice on farm and home management and family record-keeping.

The tenant purchase loans are secured by mortgages held by the Government. Repayment will extend over a period of 40 years at 3 percent interest. Annual payments are made under a Variable Payment Plan which allows the farmer to pay more in good crop years and less when his income is low. Annual payments must average 4.3 percent of the loan.

Farm Credit Administration Operations

Source: Farm Credit Administration; loans and discounts outstanding in thousands of dollars Fed. interme.

Farm mortgage cred. bk. loans
to & disc. for

loans by

Loans to



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Export-Import Bank of Washington

EIB-Export-Import Bank of Washington. Warren The Export-Import Bank of Washington was created by Executive order (Feb. 2, 1934). By Public Act No. 1, 74th Congress, approved Jan. 31, 1935, as amended, the Bank was continued as an agency of the United States until Jan. 22, 1947, or such earlier date as the President may fix by Executive order.

The purpose is to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States and any of its territories and insular possessions and any foreign country or its agencies or nationals. It is authorized to do a general banking business,


Lee Pierson, President. Address, Washington, D. C. to deal in bills of exchange, notes, drafts, and other evidences of indebtedness, and, with the approval of the Secretary of the Treasury, to borrow money and rediscount these evidences of debt; to deal in securities, including obligations of the United States or any State; to accept bills or drafts drawn upon it; issue letters of credit: purchase and sell coin, bullion, and exchange: lend money and perform the necessary functions permitted by law in conducting such business. Its capital stock of $175.000.000 is divided into $1.000,000 par value of common stock and $174,000,000 par value of preferred stock.

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Surplus Marketing Administration

SMA-Surplus Marketing Administration, Roy F. Hendrickson, Administrator. Address: Washington, D. C.


The President's Reorganization Order No. 3, which became effective June 30, 1940, established the Surplus Marketing Administration to minister marketing agreement and surplus removal programs. Marketing agreement programs, first available in 1933 under the original Agricultural Adjustment Act, are now authorized by the Agricultural Marketing Agreement Act of 1937. Basic authorization for the various surplus removal grams is provided by related legislation.

children in 67,000 schools got free school lunches, made up largely of surplus commodities.

The Food Stamp Plan moves agricultural products from the farm through regular channels of trade to relief families who need these foods. In areas where the Stamp Plan is in operation, families receiving public aid are given new food purchasing power in the form of blue food order stamps. The families use these stamps at grocery stores to pro-obtain any of the foods designated as being in

Because of its long record of experience in buying farm commodities, SMA was designated as the purchasing agent of the Government under the food-for-defense program that was initiated in March, 1941, with passage of the Lend-Lease Act. Meats, dairy products, poultry products. fruits, vegetables, and other farm commodities bought under this program may be used for (1) domestic distribution to public aid families and for free school lunches, (2) to meet requirements for the Red Cross for shipment to war refugee areas, (3) for transfer to other countries under terms of the Lend-Lease Act, or (4) for stabilization reserves. Marketing agreement programs make it possible for producers, cooperating with each other and with the Government, to secure greater stability in the marketing of their products. This serves as a protection not only for producers, but also for consumers. At the end of the 1940-41 fiscal year, more than 45 marketing agreements were in effect for milk and dairy products and for other farm products such as fruits, vegetables, nuts, and hops. Domestic surplus removal and distribution programs which are carried out by the Administration serve a dual purpose. They help farmers by removing part of the agricultural surpluses which depress producer prices. This contributes directly to farm income, and indirectly to the economic welfare of all. At the same time, the surplus commodities are made available to millions of lowincome families who otherwise could not get them. Surplus removal programs include purchases for direct distribution through the States to needy families and for use in school lunch programs, and the food and cotton stamp plan programs. During the 1940-41 fiscal year, an average of 8,700,000 persons received surplus food each month under the direct distribution program, and nearly 5,000,000 |

surplus. The blue stamps give the relief families a 50 percent increase in the amount they have to spend for food. This enables them to get fruits. vegetables, dairy and poultry products, and meats -the health giving foods in which low income diets are deficient.

To assure that the free blue stamps will represent an increase in food buying power, families on relief, who wish to take part in the program, are required to buy orange colored food stamps at a minimum rate of $1.00 a week for each member of the family. This approximates their regular food expenditures. With each $1.00 worth of orange stamps bought they receive in addition 50 cents worth of free blue stamps. The orange stamps are good in grocery stores for any food, and are used to continue regular food purchases.

Grocers may redeem both the orange and the blue stamps at their bank or through the local office of the Surplus Marketing Administration.

The list of foods which may be obtained with the free blue stamps changes from time to time in accordance with changes in growing seasons and market conditions. The list in effect on June 30, 1941, the end of the fiscal year, included the following foods: fresh grapefruit, apples, oranges, cabbage, snap beans, Irish potatoes, raisins, pork lard, all pork (except that cooked or packed in metal or glass containers), corn meal, shell eggs. dried prunes, hominy grits, dry beans, wheat flour, and whole wheat (Graham) flour.

Between the time the Food Stamp Plan was started in Rochester, N. Y., May 16, 1939 and June 30, 1941, it was extended to 363 cities or areas. During the month of June, 1941, the blue food order stamps added nearly $10,000,000 worth of farm products to the diets of almost 4,000,000 members of families eligible to receive public assistance.

Federal Deposit Insurance Corporation

FDIC-Federal Deposit Insurance Corporation-Leo T. Crowley, chairman. Address, Washington, D. C. District offices are maintained in Boston, New York, Columbus, O., Richmond, Va., Atlanta, Ga., St. Louis, Madison, Wisc., Chicago, St. Paul, Minn., Kansas City, Mo., Dallas, Tex., and San Francisco.

The chief function of the Federal Deposit Insurance Corporation is to insure the deposits of all banks entitled, under the Banking Acts of 1933 and 1935, to benefits of insurance. In carrying out this function the Corporation may pay deposits in insured banks which fail, may act as receiver for closed banks, and may extend loans to facilitate mergers of insured banks which will avert losses to the Corporation. The maximum amount of insured deposit of any depositor is $5,000.

The Corporation also supervises and conducts regular examinations of insured State banks not members of the Federal Reserve System and exercises some supervisory control over all insured banks.

The capital stock of the Corporation subscribed according to the requirement of the law, is: By the Treasury of the United States. $150,000,000; by the Federal Reserve Banks, $139,299,556.99. Each Federal Reserve Bank subscribed to stock equal in amount to one-half the surplus of such bank as of Jan. 1, 1933. The capital stock is without nominal or par value, has no vote and is not entitled to dividends.

On June 30, 1941, the surplus of the Corporation amounted to $234,072,503.76, having increased during the year 1940 by $43,274,109.20, and during the first six months of 1941 by $27,387,229.53. As of June 30, 1941, total capital and surplus amounted to $523.372,060.75.

Of the 14,355 operating commercial banks in the United States and its possessions on June 30, 1941. deposits in 13,426 were insured by the Corporation. In addition, deposits in 53 of the 550 mutual savings banks were insured by the Corporation. Of

the commercial banks, 6,553, by virtue of their status as national banks or as State banks members of the Federal Reserve System, were automatically insured, and 6,873 were banks not members of the Federal Reserve System. The insured commercial banks on December 31, 1940, held deposits of approximately $63,000,000,000, of which deposit insurance was protecting about 45 per cent. Of 60,000,000 depositors, more than 98 per cent were fully protected.

In 1940, the funds of 256,415 depositors in 43 insolvent banks were protected by FDIC, either by paying them off or by making loans to facilitate the absorption of banks by sound insured institutions. During the six months ended June 30, 1941, FDIC acted to protect depositors in 8 insured banks closed or receiving aid from the Corporation because of insolvency. Of the 33,972 depositors in these banks, all but 39 were fully protected from loss by insurance or otherwise. Total deposits in these banks amounted to $10,654,000, of which $10,522,000, or 98.8 per cent, were protected against loss.

For the entire period from January 1, 1934, to June 30, 1941, FDIC acted to protect 1,167,349 depositors of 363 insolvent banks. Total deposits in these banks were $449,286,000, all but 2.2 per cent of which was made available promptly. Less than one-fourth of one per cent of the depositors held accounts in excess of $5,000 which were not fully protected.

Disbursements by FDIC for the protection of depositors in insolvent insured banks through June 30, 1941, amounted to $239,367,104.46, of which it is estimated more than 75 per cent will be recovered.

Fair Labor Standards Act of 1938

WAGE AND HOUR DIVISION: Regional offices are maintained in Boston, New York, Philadelphia, Cleveland, Chicago, Richmond, Atlanta, Birmingham, Dallas, Minneapolis, Nashville, Kansas City, and San Francisco.

CHILDREN'S BUREAU: Katharine F. Lenroot, Chief.

The Fair Labor Standards Act of 1938, popularly known as the Wage and Hour Law, has as its principal objective the elimination of "labor conditions detrimental to the maintenance of the minimum standards of living necessary for health, efficiency, and well-being of workers" and the elimination of "oppressive" child labor in the United States by fixing minimum wage and maximum hours for employees engaged in interstate commerce or producing goods for interstate commerce, and by establishing minimum-age standards for employment of minors in or about establishments whose goods are shipped or delivered for shipment in interstate commerce. It is the declared policy of the Act to correct and eliminate these conditions without substantially curtailing employment or earning power.

The Fair Labor Standards Act was passed by Congress June 14, 1938, and approved by the President June 25, to become effective in 120 days. It created a Wage and Hour Division in the Department of Labor, headed by an Administrator, as the agency for the administration and enforcement of the wage and hour provisions. signed the administration of the child labor provision to the Chief of the Children's Bureau in the Department of Labor.

It as

The United States Supreme Court unanimously held (Feb. 3, 1941) that the Fair Labor Standards Act of 1938 was a valid regulation by Congress inder the Commerce Clause of the Constitution, ind that the procedure of the Wage and Hour Division in appointing industry committees and 'ssuing industrial minimum wage orders on their recommendations is in accordance with the Statute. Controversy over the effect of the 40-hour week with its penalty of time and a half for additional hours, on the National Defense effort developed in 1941. However, William S. Knudsen, DirectorGeneral of the Office of Production Management. publicly favored its retention.

Pending the fixing of a minimum wage for each industry through the industry committee process. the statutory minimum wage rate must be paid all workers covered by the Act. From October 24, 1939, to October 24, 1945, the Act fixes 30 cents an hour as the minimum wage. From October 24, 1938, to October 24, 1939, the statutory minimum On October 24, 1945. wage was 25 cents an hour.

40 cents an hour becomes the minimum wage for all industries covered unless it be shown for an industry by a preponderance of evidence before an industry committee and the Administrator that such a wage would substantially curtail employment in that industry.

The standard work week was established at 44 hours from October 24, 1938, to October 24, 1939, and at 42 hours from October 24, 1939, to October 24, 1940, when the standard work week became 40 hours. All persons covered by the Act (except railroad employees and persons whose work affects the safety of interstate bus and truck operations) who are employed a greater number of hours per week than the standard must be paid for the excess hours at a rate not less than one and In inone-half times their regular rate of pay. dustries found by the Administrator to be of a seasonal nature owing to climate or other natural conditions, employees may work up to 12 hours a day or 56 a week (for not more than 14 weeks a year) before overtime payment is required. relaxation of the overtime provisions is also made in the case of certain collective bargaining agreements with representatives of employees certified as bona fide by the National Labor Relations Board, and in the case of certain agricultural processing and handling operations.


In the fiscal year ended June 30, 1941, 48.449 inspections for compliance with the Act were made by the Wage and Hour Division, eleven times as many inspections as were made in the two previous fiscal years combined. These inspections revealed 31,493 employers in violation of the Act. 18,975 of the violations being of so serious a nature as to require the restitution of $10,916,527 to 354,271 employees.

During the same period 1,691 civil suits for injunctions to restrain violations of the Act and 60 criminal prosecutions were instituted. In criminal cases tried during the year, $99,767 was paid in fines. The Division was successful in all but half a dozen of its litigation cases.

To reach as rapidly as is economically feasible

the objective of a universal wage of 40 cents an hour, the Administrator is required to appoint and convene a committee for each industry subject to the Act. It is the duty of these committees to recommend, with due regard to economic and competitive conditions, the highest minimum wage up to 40 cents an hour which will not substantially curtail employment in the industry. The membership of each committee is equally divided among members representing employers and employees in the industry and the public. After a public hearing on a recommended minimum wage, the Administrator may issue a Wage Order establishing the recommended rate for the industry; he may require the committee to reconsider its recommendation, or he may dissolve the committee and appoint a new one to consider a minimum wage for that industry. In no case may the Administrator issue a wage order which does not give effect to the wage recommendation of a committee. An amendment to the Act enacted by the 76th Congress exempts Puerto Rican industries from wage orders issued for continental United States, and provides that wage rates lower than the statutory minimum may be established in Puerto Rico only upon the recommendations of industry committeees expressly appointed for the island.

Minimum wages at less than the statutory minimum wage may be fixed by the Administrator for learners, apprentices and handicapped workers.

The Act exempts from the wage and hour provisions all employees employed in an executive. administrative, professional, or local retail capacity or as outside salesmen (as those terms are defined by the Administrator); employees engaged in retail or service establishments, the greater part of whose selling or servicing is in intrastate commerce; employees of interstate air lines; employees in the sea food and fisheries industries; agricultural employees; employees of local weekly or semi-weekly newspapers of less than 3,000 circulation; employees of street railways and local bus lines; employees in the area of production (as defined by the Administrator) engaged in handling, packing, storing, ginning, compressing, pasteurizing, drying, preparing in their raw or natural state, or canning, agricultural or horticultural commodities or in making dairy products; and switchboard operators of telephone exchanges having fewer than 500 stations.

The immediate effect of the Fair Labor Standards Act was to raise to 25 cents an hour the pay of an estimated 300,000 employees of American industry. At the same time it was estimated that it shortened the working hours of 1,300,000 workers. When the second step of the Act was reached October 24, 1939, it was estimated that 690,000 employees received pay increases to 30 cents an hour, and 2,382,000 had their work week shortened to 42 hours. The 40-hour week which went into effect October 24, 1940, shortened the hours of approximately 2,000,000 workers.


More than a million workers, a large portion of them women, received wage rate increases as a result of these wage orders: For cotton, silk, and rayon textiles, 372 cents an hour. For woolen textiles, 36 cents. For garments, including knitted apparel, 40 cents. For full-fashioned hosiery, 40: for seamless hosiery, 36. For hats, 40, except straw and harvest hats for which the rate is 35, millinery, 40. For shoes, 40. For trunkline railroads. 36; shortline railroads. 33. For leather, 40. For pulp and primary paper, 40. For carpets and rugs of wool and wool-yarn, 40; of other fibers, 35. For luggage and leather goods, 35. For converted paper products, 40, 38, and 36, depending upon product. For embroideries. 372. For portable lamps and shades, 40. For enameled utensils, 40. For drugs, medicine and toilet preparations, 40. For rubber products, 40. For gray iron jobbing foundry products, 40. For clay products, 34. For jewelry. 40. For wood furniture, 40. For lumber and timber products, 35. For gloves, 35; work gloves. 322. For handkerchiefs, 3212.

Section 12 of the Act, which is administered by the Children's Bureau, prohibits producers, manufacturers and dealers from shipping or delivering for shipment in interstate or foreign commerce, goods produced in establishments situated in the United States in or about which within thirty days prior to removal of such goods, child labor has been employed contrary to the minimum age provisions of the Act or regulations issued thereunder.

The Act sets a basic minimum age of 16 years for general employment and provides that a minimum age of 18 shall apply to occupations found and declared by the Chief of the Children's Bureau to be particularly hazardous for minors between 16 and 18 years of age.

As of Aug. 1, 1941, the following occupations have been found and declared to be particularly hazardous: occupations in or about plants manufacturing explosives or articles containing explosive components; occupations in or about any coal mine; occupations in logging, and occupations in the operation of any sawmill, lath mill, shingle mill, or cooperage-stock mill; occupations involved in the operation of power-driven woodworking machines; and the occupations of motor vehicle driver and helper.

Federal Trade

The Act also provides for the employment of 14 and 15-year-old children in occupations other than mining and manufacturing under rules and regulations issued by the Chief of the Children's Bureau, which limit the employment to periods which will not interfere with schooling and to conditions which will not interfere with health and well being.

The only exemptions from the application of the child-labor provisions of the Act relate to the employment of a minor in agriculture while not legally required to attend school, to the employtheatrical productions, and to the employment of ment of a minor as an actor in motion pictures or a minor under 16 working for his parent or a person standing in place of his parent, in an occupation other than manufacturing or mining.


FTC-Federal Trade Commission-William A. Ayres, Chairman; Garland S. Ferguson, Ewin L. Davis, Charles H. March, Robert E. Freer. Address, Washington, D. C. Branch offices are maintained in New York City, Chicago, San Francisco, Seattle and New Orleans..

The Federal Trade Commission was created as an independent agency by the Federal Trade Commission Act of Sept. 26, 1914. This law was amended by the Wheeler-Lea Act of March 21, 1938, which broadened the scope of its jurisdiction and made more effective the enforcement of its provisions. Declaring unfair methods of competition and unfair or deceptive acts or practices in interstate commerce to be unlawful, the act empowers and directs the Commission to prevent persons, partnerships or corporations (except banks, common carriers, air carriers or meat packers, which are subject to regulation by other acts) from using unfair methods of competition and unfair or deceptive acts or practices in interstate commerce. The Clayton Act, the Export Trade Act. the Robinson-Patman Act and the Wool Products Labelling Act of 1939, effective July 15, 1941, delegated further powers and functions to the Commission. The general purpose of the Commission is to prevent the use of unfair practices so as to promote free and fair competition in interstate trade, to prevent the use of unfair and deceptive acts and practices therein and to investigate and report on various aspects of domestic industry and foreign trade. Special attention is given the use of false and misleading advertising generally and particularly with regard to their use in the sale of food, drugs and cosmetics.

By direction of the President, the Congress, at

States, or upon its own initiative, the Commisthe request of the Attorney General of the United sion conducts investigations of a special or general character.

Recent investigations include the automobile, and agricultural implements, industries; agricultural income, distribution cost accounting for manufacturing and wholesaling and a series of industrial and financial corporation reports, while others presently in progress include those having to do with distribution methods and costs.

Other activities of the Commission having to do with national defense and the present emergency include the following:

The Commission is represented by its Chairman on the Price Administration Committee of the Office of Price Administration and Civilian Supply, and is cooperating and assisting in this phase of the work of the National Defense Program in the interest of the consumer and general public.

Chairman on the Economic Defense Board, conThe Commission is further represented by its cerned with developing and coordinating policies, plans and programs to protect and strengthen the international economic relations of the United States in the interest of national defense.

The Commission has consulted with the Army and Navy Munitions Board in the preparation of plans for wartime control of prices, costs and profits.

Address, Washington, D. C.

The Act directs the Commission to determine the actual legitimate cost of original projects, additions and betterments thereto and to determine their fair value as of the date of license or determination.

Federal Power Commission FPC-Federal Power Commission-Leland Olds, chairman. The Federal Power Commission was created | involved. under the Federal Water Power Act of 1920, reorganized in 1930 and its powers enlarged under the Public Utility Act of 1935, which gives it jurisdiction not only over water power projects on navigable streams or affecting the interests of interstate commerce, or upon public lands as previously provided but also over the interstate movements of electrical energy. The 1920 act provided for the improvement of navigation through the development of water power on streams subject to Federal jurisdiction or on public lands by private and governmental agencies acting under licenses issued by the Commission. One provision of the Act reserved to the United States, under what is commonly known as the recapture provision, or to any state or municipality designated by the Commission, the right to take over any licensed project at the expiration of the license period upon the payment to the licensee of the net investment, not to exceed the then fair value of the project

mission of electric energy in interstate commerce,
The Commission has jurisdiction over the trans-
the sale of electric energy at wholesale in inter-
state commerce, the exportation of electric energy
to foreign countries and over all public utilities
mission or sale of such energy.
owning or operating facilities used for the trans-

eral Power Act in general (except that there are
The Natural Gas Act of 1938 parallels the Fed-
no license provisions in the Natural Gas Act) and
confers upon the Commission regulatory authority.
similar in scope to that conferred in the latter
Act, over the transportation and sale for resale in
interstate commerce of natural gas.

United States Information Service

USIS-United States Information Service, Miss Harriet Root, Chief, Washington, D. C.; Mrs. Edythe Chriss Roberts, New York Branch, Room 1112, 512 Fifth Avenue.

The United States Information Service, now a Division of the Office of Government Reports, Executive Office of the President, was established in 1934 in response to the need for a central office through which questions on the Federal Government might clear.

The Service furnishes to the public, on request, factual information on the structure, functions, and operations of Federal departments and agencies, and serves as a central office to direct general inquiries into proper channels.

In addition, the Service assists all Government departments in serving the public through the direct routing of inquiries and general public business.

The Service directs persons desiring appointments or interviews to offices where these may be arranged.

For both the public and the Federal offices the Service compiles current directories and reference material not otherwise available and maintains files of Government documents and publications. The United States Government Manual and the Digest of the Purposes of Federal Agencies are publications of the United States Information Service. The Manual is an authoritative reference book designed to inform every citizen on the organization and functions of Federal departments and agencies. The Digest outlines briefly some of the information in the Manual.

Securities and Exchange Commission

SEC-Securities and Exchange Commission-Edward C. Eicher, Chairman; Robert E. Healy, Ganson Purcell, Edmund Burke, Jr., Sumner T. Pike, Commissioners. Address: Washington, D. C. Regional Offices are maintained in New York City, Boston, Chicago, San Francisco, Denver, Atlanta, Fort Worth, Seattle, and Cleveland. Branch offices are maintained in some of the Administrative zones.

The Securities and Exchange Commission was organized July 6, 1934. The Commission is composed of five members, not more than three of whom may be members of the same political party. They are appointed by the President with the advice and consent of the Senate for a term of five

years. One of the five commissioners is annually elected chairman.

The laws administered by the Commission and its functions under each are:

Securities Act of 1933-The supervision of the registration of security issues and the suppression of fraudulent practices in the sale of new securities.

Securities Exchange Act of 1934-The supervision and regulation of transactions and trading in outstanding securities, both on stock exchanges and in the over-the-counter markets.

Public Utility Holding Company Act of 1935The regulation of the financial practices of holding company systems controlling gas and electric utilities.

Chapter X, National Bankruptcy Act-The preparation of advisory reports on plans, and participation as a party, in corporate reorganizations.

Trust Indenture Act of 1939-The supervision of indentures used in the public offering of new security issues.

Investment Company Act of 1940-Investment Advisers Act of 1940-the registration and regulation of investment companies and investment advisers.

None of the foregoing statutes administered by the Commission guarantees investors against loss.

During the year the Commission adopted a mile under the Holding Company Act requiring competitive bidding in the sale of securities of registered gas and electric public utility holding companies and their subsidiaries. The rule was recommended by the Commission's staff after a number of years of study of methods to insure the reasonableness of fees and commissions and the fairness of terms and conditions in the sale of utility securities.

The proposals were the result of almost a year's study of the securities laws by members of the Commission's staff and representatives of the securities industry, which also involved extensive conferences between the Commission and the industry.

Facilities for the registration of securities under the Securities Act of 1933 and the qualification of identures under the Trust Indenture Act of 1939 were set up in the Commission's Cleveland and San Francisco Regional Offices during the past year. The Commission also amended its rules to permit the delivery of registration statements and indenture applications to any of its regional offices for forwarding to Washington. Most of the Commission's regional offices are equipped to give a certain measure of legal assistance on registration problems.

The Securities Act of 1933 is designed to compel full and fair disclosure to investors of material facts regarding securities publicly offered for sale, and to prevent fraud in sales of securities, when offered or sold in interstate commerce or through the mails. The Act requires that, with certain exceptions, every issue of securities to be offered for sale to the public through such means must be registered with the Commission by the filing of a registration statement.

There were 337 registration statements filed under the Securities Act of 1933 during the fiscal year ended June 30, 1941. Registration statements covering securities amounting to approximately $2.610,684,000 became fully effective during that period. The number of registration statements effective at the end of the 1941 fiscal year was 3,823, while the number of stop and consent refusal orders in effect was 175. The Commission examined 1,048 offering sheets relating to oil royalties, involving an aggregate offering price of approximately $23.600,000.

An important feature of the Securities Act is the protection which it affords investors against such outright fraud as bucket shops and "sell and switch" devices. There have been 693 swindlers convicted to date as a result of anti-fraud actions by the Commission. In addition, approximately 850 individuals and firms have been enjoined by Federal judges from violating the law, and at the close of the fiscal year, 351 additional individuals had been indicted for stock fraud and were awaiting trial.

The purposes of the Securities Exchange Act of 1934 are in general threefold. First, it is designed to correct unfair practices in the securities markets and to this end stock exchanges are placed under the jurisdiction of the Commission; manipulation of the prices of securities are proCommission's regulations. Next, the Act aims to hibited; and trading in securities is subject to the make available currently to the public sufficient information concerning the management and financial condition of corporations whose securities are traded on national securities exchanges to enable the investor to act intelligently in making or retaining his investments and in exercising his rights as a security holder. For this purpose, a registration statement disclosing full information is required for each security listed on an exchange. This information is open to the public and must be kept up-to-date through the filing of annual reports. To guard against the misuse of inside information, the Act requires officers, directors, and large stockholders of listed corporations to report all transactions in securities of their respective companies. From Jan. 1, 1936, to June 30, 1941, officers, directors and large stockholders of listed corporations filed reports with the Commission covering 205,000 transactions, involving the purchase or sale of 126,000,000 shares of stock of their respective companies.

The Act also provides a system of regulation of over-the-counter brokers and dealers through voluntary associations under the supervision of the Commission. Individual brokers and dealers, however, are required to register with the Commission, and at the close of the fiscal year there were 6,065 so registered. The National Association of Securities Dealers, Inc., with around 3,000 members, is registered with the Commission as a national association of brokers and dealers.

The third purpose of the Act is to regulate the use of the national credit to finance trading in securities. This is accomplished by the regulation of margin requirements and is administered by the Board of Governors of the Federal Reserve System.

There were 2,350 issuers having securities registered on national securities exchanges as of June 30, 1941. There were 2,694 stock issues and 1,342 bond issues registered on national securities exchanges, while 1,077 stock issues and 252 bond issues were admitted to unlisted trading privileges. Sales of stocks and bonds on all registered national securities exchanges amounted to $7,200,969,000 during the year ended June 30, 1941.

The Public Utility Holding Company Act of 1935 is designed to eliminate abuses and to provide a greater degree of protection for investors and consumers in the financing and operation of public utility holding companies. Holding companies are required to register with the Commission and, subject to certain exceptions provided in the Act, registered companies cannot issue or sell securities or acquire securities or utility assets without the approval of the Commission. The Act calls for the simplification of the corporate structures of reistered utility holding companies and the confinement of their business to economically integrated units. The Commission has no power to regulate the rates of public utilities.

At the close of the 1941 fiscal year, there were 53 public utility holding company systems registered with the Commission, comprising 147 registered holding companies and including 1,457 individual holding, sub-holding and operating companies. The total consolidated assets of these companies approximated $15,000,000,000. Nearly $4,000,000,000 of utility securities have been issued since the Act became effective.

Chapter X of the National Bankruptcy Act makes it the duty of the Commission to act as a participant in reorganizations at the request or with the approval of the court in order to provide independent expert assistance to the courts. The Chapter also empowers the Commission to prepare advisory reports on reorganizations for the benefit of the courts and investors. In cases when the scheduled liabilites of the debtor corporation undergoing reorganization are over $3,000,000, the court automatically refers the proposed reorganization plan to the Commission for an advisory report. This report is an independent analysis designed to provide the court with a non-partisan survey of the plan, appraising its fairness and soundness and revealing any weaknesses inequities.


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