The primary reasons why Commission seats were downsized was because of several factors;

1) With the weakening and downsizing of several smaller families (by the 1970s), they became almost "second-tier" entities who no longer had large memberships (if any recognizable rank-n-file remaining at all), or were running major racket operations that required regular interaction with the major NYC families. They also had little in the way of mutual interests regarding the issues that were often at hand and discussed at NYC Commission meetings. So there was no longer a reason for their regular attendance at such meetings. It became a formality that was antiquated. So they were told to stop attending. And any needs, problems, or requests they had, would now go through one of the Five Families to be heard before the Commission body.

2) By the late 1970s, into the 1980s, many of the International labor unions like the Teamsters Union, the Restaurant & Bartenders Union, the Laborers Union, International Longshoremen's Union, etc., had come under siege by the FBI and Federal Government, who wrested control of those Internationals from the Mafia, installing government appointed "overseers" as watchdogs.

After that happened, there was little need to constantly interact across state borders because there became less and less to discuss between the NYC and Chicago Families, and by extension, others crews throughout the USA that formally controlled "locals." In other words, the party was over for Cosa Nostra. So there became more risk, and less need, to meet up regularly. Essentially, Mafia Families across the country had formerly been "partners" in the sharing of labor union control in their respective cities across the USA. With the loss of the unions, there was no longer union "businesses" to share in and divvy up profits from.

3) Likewise, after the U.S. Justice Department stepped up its campaign to wrest control of Las Vegas Hotels & Casinos from the mob, and stopped their flow of their "cash skimming" rackets off casino tables, and basically kicked the Mafia out of Vegas and Reno, Nevada "the boys" had little reason to meet any longer. Between their loss of labor union control and then the casinos, what was there to discuss anymore? (the correct answer is nothing). So why are they gonna meet? To have a cup of express together? I don't think so.

4) Many of the "original" 26 Families sprinkled throughout the U.S. were staffed by bosses who were very closely connected to one another. Many were actually "compare" from the old country, and had been put into power by their mutual friends in NYC. But as the old timers died off, and others took their place, over families that later became wisps of their former selves. Their mutual connections, friendships and interests became was less and less, and by extension, there was a distancing of borgatas. So the largest and most powerful families like the Five Families in NYC and Chicago slowly consolidated the power between them. Both to better control the overall landscape, and to avid law enforcement scrutiny.

5) The November 14, 1957 "Apalachin Meeting" debacle. After that watershed event, Cosa Nostra attempted to start to retreat more back into the shadows. By the early 1960s, and with Joe Valachi spilling his guts in 63', the mob started running for cover. The FBI started installing hidden bugs all over the place. Nearly every federal agency there was, from the FBI, FBN, IRS, INS, etc., etc., started a coordinated campaign to destroy them. After Bobby Kennedy created Federal "Strike Forces" in many major cities, the wise guys really ran for cover. One of the countermeasures they implemented was for the Commission to meet less frequently, and with fewer bosses in attendance.

6) I'm sure there were a few other good reasons why the seats were reduced in size at the table, like the deduction of "interstate" bookmaking to try and stave off the FBI's jurisdiction over interstate criminal acts, not needing an interstate "wire" service between families to get race gambling results anymore, etc.

7) Another extremity important reason for the downsizing of the Commission was the destruction and demise of the mob's former worldwide heroin and narcotics smuggling networks. Remember, when Lucky Luciano was first deported to Italy he stated a stepped up campaign to expand Cosa Nostra's international heroin smuggling into the states from France and Italy. The mob had a ready made, country-wide, distribution network in place with families strategically situated in major cities from coast to coast. As the years went on, the FBN, and later, their successor, the DEA, started busting up and jailing many mafiosi. This forced the "ban" that we have all heard about against dealing drugs. So the need for Mafia Families to interact and ship heroin from between the families in various cities became a moot point. The tight connection and constant interactions between different crews became a thing of the past.

There were several other logical reasons why the Commission size was eventually reduced. Not the least of which was the overall strength and demise of many Families altogether. But collectively, all the points I enumerated above eventually led them to that decision.
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Augustus, Azguy, and Toodoped, I hope this post helps answer your original questions, and helps you and others better understand why "The Commission" was ultimately reduced in size.