(The following article from the Chicago Tribune was supplied for the record, subsequent to the hearing:)

[Reprinted from the Chicago Tribune, May 10, 1964]

UNITED STATES SMASHES FAKE SAVINGS BOND GANG

NAB EIGHT IN RAIDS; HUNT THREE MORE

Agents of the Secret Service and Federal Bureau of Investigation arrested eight men in simultaneous early morning raids yesterday in their homes to break up a counterfeiting ring that specialized in fake U.S. savings bonds and travelers checks.

The ring, which had been under surveillance since the summer of 1962, was the first ever to deal in bogus Federal savings bonds, said Maurice G. Martineau, acting special agent in charge of the Chicago office of the Secret Service.

FOUR HUNDRED FIFTY THOUSAND DOLLARS IN SECURITIES

Martineau said the gang had printed $250,000 in $100 series E bonds in a Melrose Park trailer park. Later, he said, it printed $200,000 in fake Bank of America travelers checks.

Arrested by Secret Service agents on charges of dealing in the bonds were Joseph Spagnoli, Jr., 31, of 5301 West Quincy Avenue; Arthur Rachel, 26, of 1922 North 17th Avenue, Melrose Park; Louis James Bartemio, 45, of 1314 North 19th Avenue, Melrose Park; Roy Arthur Nielson, 29, of 909 North Central Avenue, and Vito Jack Ceraulo, 29, of 501 North Central Avenue.

HUNT AT LEAST THREE OTHERS

Arrested by the FBI for allegedly dealing in the Bank of America securities were Anthony D'Antonio, 37, of 1499 North Cardinal Avenue, Melrose Park; Peter Cappelletti, 43, of 2450 North St. Louis Avenue, and Joseph John Campion, 27, of 2625 West Leland Avenue.

Federal agents yesterday were seeking at least three other alleged members of the counterfeit ring, including Vito Nitti, 47. Nitti, like D'Antonio, has a long criminal record. Nitti has been arrested and convicted of murder, crimes against children, possession of stolen property, and burglary.

Reports that Rachel, who has no professional training as a printer, was training himself to be a counterfeit printer brought him under Secret Service surveillance in the summer of 1962, Martineau said.

Rachel's engraving was described as "the best" by agents. His home contained a library on currency printing techniques. The serial numbers on the bonds were set so well by hand that it took laboratory tests to determine that they had not been set by an automatic serial numbering machine, Martineau said.

SPAGNOLI CALLED LEADER

Martineau said Spagnoli was the organizer and leader in the Melrose Park ring and called the case the hardest in his 20 years of service.

An alert Melrose Park bank teller, blunders, bad luck, and a quarrel among ringleaders lead to the downfall of the gang.

Campion was arrested in the Midwest Bank & Trust Co. on December 9 when a teller noticed that he was trying to cash bonds bearing the same purchaser's name, purchase date, and registration number, as bonds that another customer, who fled before arrest, was trying to cash at the same time.

THIRTY THOUSAND DOLLARS PASSED HERE

The same day, Martineau said, counterfeit bonds with a total face value of $30,000 were passed in eight banks and six savings and loan associations in metropolitan Chicago.

The gang again passed bonds on March 2 in Chicago, on March 6 and March 9, in Miami and St. Petersburg, Fla.

A quarrel between the ringleaders and the arrest of two passers, including Charles (Kris) Panteas, 27, of 2527 North Lawndale Avenue, March 9 in St. Petersburg, led the gang to destroy the remaining printed bonds, and dump its printing press in the Des Plaines River, Martineau said.

Mr. OLSEN. Congressman Pool always has a question regarding automatic data processing equipment, as to whether or not there are fewer employees or a reduction of employees since the advent of the automatic data processing equipment.

Mr. HEFFELFINGER. In our Bureau, Mr. Chairman, we installed automatic data processing in 1958, and since that time almost 1,000 employees less are used in prosecuting a workload which today is substantially what it was in 1958.

A very large measure of the reduced number of employees is attributable to the use of ADP.

Mr. OLSEN. I suppose you also have an additional advantage in that you process your information faster and more efficiently.

Mr. HEFFELFINGER. We process it faster, probably a little more effectively. We give a faster service to the public because we can update the holdings of savings bonds more rapidly than in the past.

Mr. OLSEN. Thank you very much, Mr. Heffelfinger. We appreciate your coming here and giving us your testimony in these hearings. Mr. HEFFELFINGER. Thank you, Mr. Chairman.

(Mr. Saunders' statement follows:)

PREPARED STATEMENT OF R. DUANE SAUNDERS, DIRECTOR, OFFICE OF DEBT ANALYSIS, OFFICE OF THE SECRETARY OF THE TREASURY

For the past 23 years the Treasury Department has conducted a monthly survey of the holdings of Federal securities by major institutional investors. The original request of March 1941 encompassed the major commercial banks, mutual savings banks, and insurance companies. In March 1950, an additional request was sent to over 200 large commercial banks to report, on a quarterly basis, the holdings of the corporate pension funds they administer. In the intervening years, the Treasury Department became increasingly aware of the need for expanding this survey to include other investor groups as they became more important holders of Government securities. The study of the Government securities market conducted by the Treasury and Federal Reserve System in 1959 further emphasized the need for detailed and timely information on the Government security holdings of corporations, State and local governments, and savings and loan associations in addition to the available information bearing on this important sector of investment activity. Accordingly, in January 1960, 500 large comporations and 500 large savings and loan associations were contacted and almost all agreed to submit monthly reports on their Government investments. In July 1960, 500 large State and municipal funds were added, and again the response was gratifyingly cooperative.

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At the present time the reports of almost 9,000 institutions, who hold twothirds of the publicly held marketable debt, are tabulated monthly. The ag gregate data derived from these voluntary and confidential reports provide invaluable assistance to the Treasury in interpreting current trends and in planning its frequent borrowing operations. The ownership survey also renders an important public service in adding to the store of information available to participants and observers in the financial community and in academic life. Although the annual cost of the survey is now in the neighborhood of $125,000, it probably results in interest savings far in excess of this amount. an analysis of survey ownership detail during a normal $10 billion refunding determined that Treasury was able to offer new securities at a rate of interest one basis point (one one-hundredth of 1 percent) lower than otherwise thought possible, the resulting annual interest savings would amount to eight times the annual survey cost. The large institutional investors who voluntarily participate in the Treasury survey apparently do not consider our request either time consuming or costly as we have received very few complaints over the years and enjoy an extremely low cancellation rate. We have never requested data concerning the costs involved from our reporters, however, staff estimates indicate that the average annual cost to each participant should not be in excess of $18 and is probably a good deal lower.

It is, of course, difficult to accurately assess the value of such a survey in monetary terms but we feel that the data derived from these reports far out

weigh the costs involved. For example, it was noted from survey data in the mid-1950's and late 1950's that the ownership pattern of longer term Treasury issues sold during World War II was markedly changing as these securities approached their first call date. Savings institutions which had originally purchased these issues in the war loan drives were disposing of them as their maturity shortened, and not reinvesting the proceeds in other Governments. In order to retain these longer term investors in public debt securities Treasury, in 1960, began a series of "senior" advance refundings-offering new, higher yielding, long-term securities to holders of issues in the intermediate maturity range. The response was excellent, and not only savings institutions, but other investors as well were encouraged to lengthen their Government security holdings.

Lacking this accurate and timely indicator the Treasury would be required to depend upon other less reliable sources for information concerning its primary customers. No other Government agency collects this detailed information, nor could any current report received by other agencies be revised enough to provide the data desired. Although other agencies reply upon the Treasury survey for data concerning particular institutional groups, we have never considered expanding the scope of our request to include additional, nonrelated information. The high degree of voluntary cooperation experienced in the past 23 years of the survey has, we feel, been primarily due to the simplicity of our request and the realization by the institutions of the importance attached to the information provided.

Mr. OLSEN. Our next witnesses are from the Federal Power Commission, the Honorable Joseph C. Swidler, Chairman, and staff. We welcome you and your staff. You may proceed as you wish. STATEMENT OF HON. JOSEPH C. SWIDLER, CHAIRMAN, FEDERAL POWER COMMISSION; ACCOMPANIED BY HARRY J. TRAINOR, EXECUTIVE DIRECTOR; RICHARD A. SOLOMON, GENERAL COUNSEL; AND S. DAVID FREEMAN, ASSISTANT TO THE CHAIRMAN

Mr. SWIDLER. I am very glad to have this opportunity, Mr. Chairman, to appear before your committee to summarize the Federal Power Commission's reporting and statistical programs, which are important elements in the discharge of our regulatory responsibilities over the electric power and natural gas industries.

We have prepared a detailed response to the items in which your comittee has expressed an interest, which I should like to submit for the record.

Mr. OLSEN. Without objection, it is so ordered, and it may be made a part of the record immediately following your oral statement. Mr. SWIDLER. Thank you.

I am sure that your committee recognizes that the paperwork requirements of various Federal agencies are quite different in their scope and importance. Some agencies have responsibilities which extend throughout industry generally and a number of agencies require reports from the public at large.

The Federal Power Commission's activities are confined to the electric power and natural gas industries, the first and sixth largest industries in the Nation; and its compulsory reports come from interstate natural gas companies, electric utilities, and licensees of hydroelectric projects.

The Commission's standard is to require only such reports and information as is needed to carry out its regulatory responsibilities. On the positive side, this means that we must develop essential information sources, and make effective use of the information we obtain. The

other side of the coin is that the Commission must be realistic and responsible, and seek no information not reasonably available and necessary. We think we have lived up to this standard.

It is important to keep in mind the different purposes and uses to which the information is put by the various Federal agencies. The Federal Power Commission is directed by Congress to regulate the natural gas and electric power industries so that the general public will be assured of adequate supplies of electricity and natural gas at reasonable prices. The Congress has declared in the Natural Gas and Federal Power Acts that these two industries are "affected with a public interest" and that Federal regulation of their interstate activities "is necessary in the public interest." The information concerning the costs, earnings, physical plant and operations of these two industries is basic to performing our regulatory responsibility.

The need for full information concerning the electric power and natural gas industries as a foundation for effective regulation was plainly recognized by Congress in enacting the Federal Power Act and Natural Gas Act. Both acts contain numerous sections spelling out the powers of the Commission to obtain information from the electric utilities and natural gas companies1 under regulation. Both the Gas Act and the Power Act provide in identical language that:

Every natural gas company (every licensee and every public utility) shall file with the Commission such annual and other periodic or specific reports as the Commission may by rules and regulations or order prescribe as necessary or appropriate to assist the Commission in the proper administration of this act.2

The Natural Gas Act then spells out in detail the information which the Commission is expected to obtain from the natural gas companies, which is similar to the comparable provision in the Federal Power Act.

SEC. 10. (a) *** The Commission may require that such reports shall include, among other things, full information as to assets and liabilities, capitalization, investment, and reduction thereof, gross receipts, interest due and paid, depreciation, amortization, and other reserves, cost of facilities, cost of maintenance and operation of facilities for the production, transportation, or sale of natural gas, cost of renewal and replacement of such facilities, transportation, delivery, use, and sale of natural gas. The Commission may require any such natural gas company to make adequate provision for currently determining such costs and other facts * *

Mr. OLSEN. Is my understanding correct that your authority for collecting information from electric power companies is broader than your authority for collecting the same from the natural gas companies?

Mr. SWIDLER. Yes, Mr. Chairman, it is. In the case of the electric power industry, our informational authority is broader than our regulatory responsibility. We were instructed by Congress to obtain information from all segments of the electric power industry, including the segments that we were not authorized to regulate.

Mr. OLSEN. From electric power companies?

Mr. SWIDLER. Yes, sir.

There is no provision in the Natural Gas Act comparable to section 311 of the Federal Power Act. Some of the provisions of the two

1 Secs. 301, 304, 307, 311, and 312 of the Federal Power Act. Secs. 8, 10, and 14 of the Natural Gas Act.

2 Sec. 304 (a) of the Power Act and sec. 10(a) of the Natural Gas Act.

statutes parallel each other, but there was no counterpart for section 311 of the Federal Power Act.

Mr. OLSEN. Have you made any recommendations for legislation to provide for authority in gathering information with respect to natural gas?

Mr. SWIDLER. Yes, Mr. Chairman. Since the 1940's the Commission has recommended in one form or another that parallel authority be granted in the natural gas industry, and such a bill is now pending. It is H.R. 5867, and the identical measure in the Senate is S. 1463. It would introduce into the Natural Gas Act provisions parallel to section 311 of the Federal Power Act.

Mr. OLSEN. Can you give me a specific example of where you gathered and received information under the Federal Power Act?

Mr. SWIDLER. The principal category that is included in the Power Act and excluded in the Gas Act is information with respect to retail operations and retail prices. For example, we publish annually statistics on the cost of electricity received by the consumers. There is no comparable information available in this country with respect to the amounts that are paid by consumers for natural gas. We have recently published special statistics on the cost of household heating with electricity. There is no comparable information for natural gas. Mr. OLSEN. You may proceed.

Mr. SWIDLER. The industry's reports to the Commission and the Commission's publications based thereon not only provide the information which is the staple of regulation but they also constitute an invaluable source of information to the general public concerning these industries. These reports, especially with respect to the electric power industry, provide the major impartial source of basic information which is relied upon by investment analysts, consumer groups, State commissions and, of course, the industries themselves. The Commission's reporting requirements thus serve the important function of providing essential information to the general public concerning two of the Nation's largest and most important industries.

In reviewing the Commission's reporting requirements, we should also keep in mind that we are regulating two of the fastest growing industries in this country. In the past decade the electric power industry has more than doubled its total revenues from approximately $6 billion in 1952 to approximately $13 billion in 1962. The growth of the natural gas industry has been just as spectacular. The total revenues of the natural gas industry have grown from less than $3 billion in 1952 to approximately $612 billion in 1962. Obviously this growth has resulted in many changes of which the Commission must keep abreast.

The Commission has made a concerted effort to perfect its reporting requirements so that these industries can be effectively regulated and continue to grow without an accompanying growth in the paperwork requirements. I am pleased to report that the volume of paperwork presently required on a regular basis of the industries we regulate has been reduced by about 35 percent since the Hoover Commission report was issued in 1955. The total number of repetitive reports we require remains the same, at 22, and the 8 new reports developed in the past 9 years have been offset by 8 which have been discontinued because of consolidation into new and improved report forms. The