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Mr. CARY. They are protected from insolvency by the Comptroller of the Currency.

Senator MAGNUSON. They have all kinds of restrictions, but a State bank is another story.

Mr. CARY. We are moving in the direction of trying to have all the information available about these banks to the public, whether they be national or State.

Senator ALLOTT. Could we go to page 6, Mr. Chairman.?

SUMMARY OF ADDITIONAL POSITIONS

Senator MAGNUSON. Let me just briefly review this. Generally the program which you have talked about above; that is, 47 for the regional offices, 7 for the Division of Trading and Markets, and 2 for the Office of Program Planning. The remaining four positions represent one hearing examiner for administrative hearings, and three positions for administrative services resulting from the Commission's accelerated enforcement and inspection programs. Mr. CARY. That is right.

ADDITIONAL FUNDS FOR SPACE

Senator MAGNUSON. All right. Then the next item is the space situation.

Mr. CARY. Right.

Senator MAGNUSON. An increase of $95,500 rental. We will take a look at that and talk to the GSA.

Now page 6.

Mr. CARY. Right. We come to computer.

Senator MAGNUSON. May I say here for your benefit and four or five other agencies, we are bringing the study up to date on new quarters for agencies. Although Mr. Boutin didn't commit himself to it, but because we do have the building program, there are some priorities in it, I really think that within the next fiscal year probably or no later than the second one, we will come up with a building for the agencies that are now really housed in bad housing, which includes yours.

Mr. CARY. Right. We are delighted to hear that.

Senator MAGNUSON. I have been pushing it, Senator Allott and I and Senator Monroney for a long time.

Mr. CARY. I know you have.

Senator MAGNUSON. There were some priorities, but I think we are in line. I think the feasibility and the economy involved is well proven by the reports. It is just a question now of how fast we move on the public building program.

Mr. CARY. We are delighted to hear that because we have taken action trying to see whether we could rent a building or what have you, because we are in a tarpaper shack.

Senator MAGNUSON. All right, now go to page 6. I just wanted to say that.

Senator ALLOTT. Where is your building?

Mr. CARY. Our building is at 425 Second Street. It is behind the Labor Building up here near the railroad station.

FUNDS FOR RENTAL OF A COMPUTER

The final item I wish to discuss is the additional amount of $53,000 for rental of a computer to be installed next January or February. On an annual basis, the equipment will cost approximately $142,000 and will be rented on a lease-purchase agreement with option to purchase within 2 years from date of installation. The annual cost of this equipment would be offset by an annual savings of like amount in personal services pertaining to 25 to 30 positions. The use of a computer will eliminate duplication of data, reduce timelags in name searching and will provide a cross indexing to show associations and relationships of persons, firms, files, and actions. It will be particularly useful in our investigations and enforcement program.

In calendar year 1963, representatives of the National Archives and Records Service of the GSA conducted a survey of data retrieval needs of the Commission.

The survey team recommended the installation of a computer and supporting equipment for the prime purpose of providing more detailed data pertaining to names of individuals and corporations on an expedited basis. Thus, such data would be centralized in lieu of the existing manual maintenance of about 20 separate indexes, which are finding aids and reference media to the Commission's files. The report of the survey team states also that the growth rate in filings and changes in Commission rules and legislation will increase the cost of the existing manual data retrieval system by $94,000 in fiscal 1970.

In addition to the GSA survey, the "Report of the Special Study of Securities Markets" recommended in particular that the Commission place greater emphasis on the compilation, analyses, and publication of data pertaining to the trading markets. Toward this end, essential economic, statistical, and market analyses would be performed on the computer.

Mr. Chairman, that is the end of my statement.

PERSONNEL SITUATION

Senator MAGNUSON. If you can show us where you are going to reduce 25 positions we will look with some sympathy on the computer. But our experience around here has been that they get the money for the computer and there is no drop in personnel whatsoever. Senator ALLOTT. That is uniform.

Senator MONRONEY. They have to feed the computer.

Senator MAGNUSON. We even had one here the other day they wanted money to improve the memory of the computer, and there are just as many positions it seems like. One of the justifications for computers is to get rid of some people that are working.

Senator ALLOTT. That is what you call scientific

Senator MAGNUSON. But it never seems to happen with these agencies.

Mr. DONATY. Mr. Chairman, we have spent considerable time in the last 18 months with the GSA representatives and representatives of our divisions as to application of the computer. For the last 6 months, we have been working as to specific procedures, and we are not just jumping into this area without looking first. We have been very candid to make sure that there is a definite application and there is a definite advantage for use of a computer.

JUSTIFICATION FOR COMPUTER

Senator MAGNUSON. I would think that you people, if a computer is justified or valuable and can do the jobs that we hear it does, you people would need it more than anybody else.

Mr. CARY. That is right.

Senator MAGNUSON. Because you are dealing in the very things. that computers are supposed to take care of.

Mr. CARY. That is right.

Senator MAGNUSON. But we never find any decrease in employment after we put them in.

Mr. CARY. We are not going at this hastily. We have really made a very careful study.

Mr. DONATY. We have taken a very, very hard look at this situation.

Senator MAGNUSON. We are trying to keep the employment levelwe started it 3 years ago and the agencies have done a pretty good job and have reached a plateau. Of course the Administration is filling in now wanting it done even more. We think it is a good idea.

PRICE OF COMPUTER

Senator ALLOTT. What would the total purchase price of this computer be?

Mr. DONATY. Between $500,000 and $600,000, sir.

Senator ALLOTT. And if you purchased it, that would involve an annual maintenance, not operation, an annual maintenance of what? Mr. DONATY. We figured roughly about $30,000 a year. Now actually in the purchase of a computer, you should take into consideration three factors. No. 1, that it is almost 99.9 percent positive that your system is going to be successful and advantageous. No. 2, that the cost of rental will equal or exceed, usually within 6 years, the cost of purchase plus maintenance costs. In other words, the comparative cost analysis. And No. 3, that your system will encompass practically all projected items that you may anticipate.

Senator MAGNUSON. That is why you used the figure 1970 in here because you are figuring the 6-year period, isn't it, the savings?

Mr. DONATY. Yes, sir. Well, again what we did we took the trend in the last 5 years and projected it for the ensuing 5 years. After all, in this particular situation this is a lease purchase.

Senator MAGNUSON. All right. Now it is understood that when the House gets through with the bill, if there are any items that you folks want to discuss, we will have another meeting.

Mr. CARY. All right, sir.

It saves

Senator MAGNUSON. And then we can be more specific. everybody's time to have these general discussions prior to this. We are going to try and get this bill done this year by July 1, and not hang around here as we did last year until the middle of December when you get your appropriations.

Mr. CARY We appreciate that.

Senator MAGNUSON. We don't like that either. And so we will do that. Then we will recess until tomorrow at 8:30.

31-706-64-—pt. 1——39

CURRENT STATUS OF JURISDICTION OVER BANK-COMMINGLED FUNDS

Senator ALLOTT. Mr. Chairman, on that there is this one question which Mr. Cary referred to which we may want to discuss a little, and perhaps we can do this partially by letter: the status of this National Bank Comptroller-SEC matter that we discussed last year.

Mr. CARY. In the last hearing, yes, before you, I remember very specifically. I would be very glad to handle it in any way you wish us to, Senator.

Senator ALLOTT. Suppose you let me have a letter as to the present status of this, and then when it comes up I can ask that you either come up it just depends on what the House does whether we will have you up again or not, but I would like to leave it open that we could have them up for this one matter, Mr. Chairman.

Mr. CARY. Right, and you wish us to send you a letter on the present status of that?

Senator ALLOTT. Yes.

Mr. CARY. We shall do so.

COMMITTEE RECESS

Senator MAGNUSON. The committee will recess.

will meet with the Selective Service System.

Thank you very much, gentlemen.

Mr. CARY. Thank you very much.

Tomorrow we

(Whereupon, at 10:05 a.m., Wednesday, May 6, 1964, the committee recessed, to reconvene at 8:30 a.m., Thursday, May 7, 1964.)

INDEPENDENT OFFICES APPROPRIATIONS FOR 1965

THURSDAY, MAY 7, 1964

U.S. SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS,

Washington, D.C. The subcommittee met, pursuant to recess at 8:30 a.m. in room S-128, U.S. Capitol Building, Hon. Warren G. Magnuson presiding. Present: Senators Magnuson and Allott.

SELECTIVE SERVICE SYSTEM

STATEMENT OF LT. GEN. LEWIS B. HERSHEY, DIRECTOR OF SELECTIVE SERVICE; ACCOMPANIED BY COL. WILLIAM S. ILIFF, JR., ASSISTANT TO THE DIRECTOR; COL. BERNARD T. FRANCK III, CHIEF LEGISLATIVE AND LIAISON OFFICER; EDMUND FUCHS, CHIEF, MILITARY SELECTION RESEARCH LABORATORY, ARMY PERSONNEL RESEARCH OFFICE

APPROPRIATION, FISCAL YEAR, 1964; ESTIMATES, FISCAL YEAR 1965 Senator MAGNUSON. The committee will come to order. This morning we have the Selective Service System.

Last year's appropriation was $37,840,000 and this year the budget estimate is $43,020,000, or plus $5,080,000. General Hershey, your general statement and summary justification will be placed in the record at this time.

(The information referred to follows:)

SELECTIVE SERVICE SYSTEM

GENERAL STATEMENT (FISCAL YEAR 1965)

There is presented herewith justification for the request of $43,020,000 with which to operate the Selective Service System, the National Advisory Committee on the Selection of Physicians, Dentists, and Allied Specialists, and the National Selective Service Appeal Board during the fiscal year 1965.

The Selective Service System is organized to carry out the primary functions of registration, classification, selection, and presentation for induction in the Armed Forces of the men necessary for maintenance of those forces at the determined strength and by means of deferment, urges men into those occupations and activities necessary to the maintenance of the national health, safety, or interest. It also determines the availability of men for a selective callup from the Standby Reserve. The collateral functions of administration, planning, training, and records management are also performed by this agency.

The use by the Selective Service System of the services of over 48,000 uncompensated officials is unique in Government. These patriotic citizens give the strength to the Selective Service System.

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