Mr. AYRES. Captain, frankly I have no conception of what would be a reasonable annual long-distance telephone bill. It does seem to me, however, with the leased line you have to New York, with unlimited radio facilities, and with the telegraph and airmail available, there is a tendency to use this expensive form of communication too freely. I am inclined to feel that with the right sort of pressure brought to bear, this item of expense might be very considerably lessened. Captain MCCLINTIC. That subject has been one of intensive study by the Director of Naval Communications for a great many years, Mr. Chairman. I am not personally familiar with the study, but he assures me that great economy is effected by the use of these leased wires. Mr. AYRES. I take it that is true, but it is the leased wires and other communication facilities available to you that raise the doubt in my mind as to the need to have such a large long-distance telephone bill. Captain MCCLINTIC. I do not think that we do have large longdistance telephone bills; certainly not in this area where we have leased wires. I would like to add, before leaving this particular subhead, that when this estimate was submitted to the Bureau of the Budget, it was intended at the time to close the naval air station at Lakehurst, N.J. Subsequently, the Secretary decided to keep that station open to a limited extent for limited flight training, and that will require the continuation of the teletype and radio services for that tation. The Director of Naval Communications estimates that an additional $2,600 will be needed for those services. Mr. AYRES. For which these estimates include no provisions. Captain MCCLINTIC. That is correct, sir; the $2,600 is not included in the estimate and should be added thereto. EXPENSES OF COURTSMARTIAL, ETC. Mr. AYRES. The next project relates to prisons, prisoners, courtmartials, and so forth, which you may explain. Captain MCCLINTIC. Expenses of courtsmartial, courts of inquiry, boards of investigation, examining boards, clerical assistance, purchase of law and reference books, witnesses' fees and traveling expenses, cost of suits, payment of claims for damages as provided in the act making appropriations for the naval services for the fiscal year 1920, approved July 11, 1919 (U.S.C.. title 34, sec. 600); expenses of prisoners and prisons; necessary expenses for interned persons and prisoners of war under the jurisdiction of the Navy Department, including funeral expenses for such interned persons or prisoners of war as may die while under such jurisdiction. Expenditures, 1933. Estimate, 1935.......... $79, 584 85,000 80,000 Expenditures under this subhead cover in general the cost of activities in the field administered by the Judge Advocate General. The expenditures vary considerably and are to a large degree not subject to curtailment by departmental action. For instance, the expenses of prisoners, which include discharge gratuity and clothing, toilet articles, and so forth, naturally depend upon the number of prisoners and the number of discharges. The cost of courtsmartial, courts of inquiry, and boards of investigation varies, dependent upon the number and nature requiring the transportation and fees of witnesses, and so forth. The cost of heating depends upon the severity of the winter. By far the largest expenditures are on account of prisoners and prisons. 1 Due to the closing of the naval prison, Parris Island, and to concentration of prisoners at other prisons as well as to reduction in the number of prisoners, expenditures under this subhead have declined. In order to be able to take care of possible extraordinary expenditures the allocation for 1934 has been kept slightly above expenditures for 1933. The following general breakdown of the expenditures for 1933, allocation for 1934, and the estimate for 1935, is furnished for information: 1. Items for which funds are required Overhead of prisons (includes cost of fuel, power, water, and upkeep)... ties, clothing, and toilet articles)... The following data relative to the average prison population in the naval prisons for the fiscal years 1930 to 1933 is furnished for information: The above does not include naval prisoners confined on receiving ships, of which there were 66 on November 11, 1933. The number of prisoners confined in naval prisons on November 1, 1933, was 256. REDUCTION IN NUMBER OF PRISONERS Mr. AYRES. What is the explanation of the large drop from the 1933 average of 431 to 256 on November 1, 1933? Captain MCCLINTIC. Of course the Navy is getting better, Mr. Chairman. I know of no other reason. We have a greater percentage of long-service men, with consequent decrease in delinquents. Mr. AYRES. Referring to the breakdown of this project, subheads (b) and (e), I wish you would insert a statement comparing the computation of the amounts for 1934 and 1935. Captain MCCLINTIC. I will supply that for the record. Of course, the figures for 1934 and 1935 in subparagraphs (b) and (c) of the breakdown are only estimates and are based generally upon past experience. For the year 1934, a total of $85,000 has been allotted to the subhead, and in the light of past experience, not of course confined entirely to the experience of 1933, it seems that $18,000 to (b) and $8,000 to (c) is reasonable. For the year 1935 the Bureau of the Budget has allowed only $80,000 for the subhead and the estimate for (b) has accordingly been reduced to $16,500. Future experience alone can demonstrate the accuracy of the estimates. LIVING QUARTERS FOR CIVILIANS ABROAD Mr. AYRES. Project 7 covers the allowances for living quarters for civilians abroad. Please proceed with your explanation of this item, Captain. Captain MCCLINTIC. Not to exceed $4,675 in the aggregate or $450 to any one person for allowances for living quarters, including heat, fuel, and light, as authorized by the act approved June 26, 1930 (U.S.C., Supp. VI, title 5, sec. 118a). Expenditures 1933, $6,982; allocated 1934, $4,200 (less 15 percent equals $3,570); estimate 1935, $4,675 (less 10 percent equals $4,207.50). Prior to January 1, 1933, maximum allowances under this subhead were established by Standardized Regulations issued by the Bureau of the Budget. Allowances for this Department's employees were established by the Department, usually below the maximum. On January 1, 1933, the maximum allowances of the Standardized Regulations were reduced by direction of the President not to exceed one half of the former maximum, which, per individual varied from $900 to $400 per year, depending upon the marital status of the employee as well as the location of his post of employment. In the 1934 naval appropriation bill the aggregate allowed was $4,200, with a limitation of not over $450 to any one person. When the bill was approved on March 3, 1933, these allowances were not affected by the existing Economy Act. As a result of the approval of the act of March 20, 1933 (Credit Act) and the 15 percent reduction, established by Executive order. the 15 percent reduction became applicable to those allowances, according to decision of the Comptroller General. Consequently the actual payments now being made are only 85 percent of $4.200, or $3.570. As a result of all the foregoing reductions, the actual amounts received by the civil employees now receiving this allowance have been reduced as indicated: Prior to January 1, 1933, $7,530; January 1. 1933, $4,675; July 1, 1933, $3,570. As the maximum allowances as established by the standardized regulations, as amended, total $4,675 on 100-percent basis for naval employees entitled to the allowances, that amount, reduced to a 90 percent basis, becomes $4,207.50. A list of civilian employees who are drawing allowances under this subhead, including the name, designation, station, salary, present and proposed allowances, follow: The table gives the present allowance on an 85, 90, and 100 percent basis. The proposed allowance is given on 100 percent basis only, totaling $4,675; 90 percent of that amount is $4.207.50. SELECTION OF EMPLOYEES Mr. AYRES. How are these folks selected for appointment, Captain? Captain MCCLINTIC. They are selected by the Appointment Division in the Secretary's Office. I am not familiar with the proceedings. Lieutenant Commander DAVIS. Most of them have Civil Service ratings, but not all of them have it. They are appointed through the Secretary's Appointment Division, on recommendation as to their qualifications. Captain MCCLINTIC. Personally I do not have anything to do with it. Mr. AYRES. That does not come within your jurisdiction? Mr. CURTIS. Some of them are appointed from Civil Service rolls. but some are not in cases where the Civil Service cannot supply certificates for appointment in foreign countries. Mr. AYRES. Would you say that their compensation approximates wages paid in the States to Federal employees filling positions approximately comparable? Mr. CURTIS. Yes, sir; I think their rate of pay is in accordance with the classification rates in this country. MAINTENANCE OF OFFICES OF ATTACHÉS ABROAD Mr. AYRES. The next item is for the maintenance of attachés, including the collection of information at home and abroad, to which you propose to allocate $110,954. You may proceed with your justification of this item, Captain. Captain MCCLINTIC. Maintenance of attachés abroad, including office rental and pay of employees; the collection and classification of information: Expenditures, 1933, $117,100 less impounded savings. --- $112, 694 106, 420 110, 954 This subhead covers the cost of the collection of information at home and abroad under the office of Naval Intelligence. The principal charges are for the maintenance of the offices of the naval attachés abroad. Allowances for living quarters, and so forth, of the civilian employees of these offices are covered by subhead 7. The expenditures during 1933 were generally favored by advantageous rates of exchange. During the latter part of the year this advantage largely diminished and rates of exchange, particularly in gold-standard countries, became unfavorable. The situation is far from favorable now. As it is impossible to predict the rates of exchange in the future, the estimates are based upon what used to be considered normal rates when the United States was on the gold standard. The 15 and 10 percent reductions made in the allocation for 1934 and the estimates for 1935 are not those percentages of the whole amounts, of course, but of that part of the amounts which is being or will be used for pay of employees paid by this subhead. The amount actually allocated in 1934 under the cash withdrawal limitations is $106,420. In order to make this figure comparable to the 1933 and 1935 figure it has been increased by the estimated. 15 percent savings, making $112.470. With the allocation of $106,420 it has been necessary to close the office in Central America and at The Hague and 2 assistant attachés, 1 in Paris and 1 in Rome, are serving without allowances. These two officers have independent means. This establishes a bad precedent, indicating that wealth, rather than ability, is a necessary qualification for the positions. It is, however, necessary under the present limitation; otherwise the officers would have to be recalled. The practice should not be continued and funds to permit payment of allowances to them are requested. Mr. AYRES. Do you mean by "requested" that the estimates include provision for those two assistant attachés? Captain MCCLINTIC. The original estimate submitted to the Bureau of the Budget, which was $117,000, included enough to provide allowances for those two people. However, the Budget Bureau reduced the amount to $115,000 on a 100 percent basis and later to $110,954 on a 90 percent basis, which does not cover quite all of the allowances, but we will probably be able to get by with it some way. RATES OF EXCHANGE Mr. AYRES. Referring to the rates of exchange. I understand that through the efforts of the State Department an arrangement was made some months ago to make payments in gold to our Foreign |