Admiral PEOPLES. Yes; they would be averaged, Mr. Chairman. But take shoes, for instance, where there is not much of a stock carried on hand; there is not much to average there, because the increased price would be your new purchase price. There have been some increases. DIFFERENCE IN VALUE OF STOCKS ON HAND JUNE 30, 1933 AND JUNE 30, 1934 Mr. CARY. I notice there is more than a million dollars difference between the value of stocks on hand in the clothing and small stores account on July 1, 1933, and June 30, 1934. About $309,000 seems to be accounted for by issues, and so forth, without reimbursement. What is the reason for the balance of the difference? Admiral PEOPLES. The stocks have been running down, Mr. Chairman. They have been running down due to the fact that the manufacturer has not kept pace with them. That is one factor. A part of it is due to the increased number of issues for the increased numbers of enlisted men. Mr. MCLEOD. You have no contingent fund, then, to replace when you have additional enlistments? Mr. REED. The fund is reimbursed from "Pay, subsistence, and transportation." There is an item in there for the value of the first outfit. Admiral PEOPLES. Yes; the money is appropriated for the actual value of the outfit. That comes out of the appropriation "Pay, subsistence, and transportation", and the cost of it is transferred to the credit of the fund. That is perfectly true. Mr. MCLEOD. In the face of increased prices and increased costs of these various items that must be purchased out of this $5,000,000 fund, is there then sufficient money in this fund to take care of all your purchases for the coming year? Admiral PEOPLES. There is, sir. Mr. CARY. You may proceed, Admiral. Admiral PEOPLES. On June 30, 1934, the value of uniform clothing and bedding available for issue to the enlisted personnel of the Navy amounted to $4,738,018.34. In addition, an emergency stock is maintained for outfitting 65,000 men to the value of $2,837,525.86. Of this amount textiles and trimmings to the value of $1,236,649.61 are carried in lieu of the manufactured articles, by order of the Secretary of the Navy dated January 16, 1931. Where practicable, it is planned to replace gradually the manufactured articles carried in the emergency stock with stocks of textiles and trimmings. This will result in reduction of the value of the emergency stock and reduction in losses and obsolescence of finished articles. The clothing and small stores fund bears the cost of gratuitous issues of uniform clothing to Naval Reserves which amounted to $175,644.78 for the fiscal year 1934, and in addition paid for the Naval Reserve Force for officers' uniform gratuity the sum of $16,860. INCREASE IN COST OF OUTFITS ON FIRST ENLISTMENT Mr. MCLEOD. Getting back to the appropriation for the coming year for outfits on first enlistment, to which you referred when we were discussing the clothing and small stores fund, how did you arrive at the amount of $2,280,000? Was it at so much per man? Admiral PEOPLES. At so much per man. Mr. MCLEOD. In last year's bill, how much did you provide per man, compared to this appropriation per man? Mr. REED. $88.40 last year, and $92.30 in the 1936 appropriation. Mr. MCLEOD. $92.30 for the coming year? Mr. REED. For the coming year. Mr. MCLEOD. Against what? Mr. REED. $88.40. Mr. MCLEOD. And how much was it for the previous year, if you know? Mr. REED. We had the same figure in 1934. Mr. MCLEOD. What is the increase from $88.40 to $92.30 due to? Mr. REED. Increases in prices of materials, on certain items. Mr. MCLEOD. Is that increase in the price of materials, Admiral, due to the codes? Admiral PEOPLES. It may be partially due to the Textile Code. The principal item of increase, though, was on shoes, and I am not aware of any code covering the shoe manufacturers. There may be. The Navy had a very low price on shoes, something like $1.90 a pair, and the next contract, as I recall, went up to about $3.10 a pair. It is partially due to the codes, to the Textile Code, for one reason. Mr. MCLEOD. And any other codes that might be in effect regarding the manufacture of the other items or supplies needed for the enlisted men? Is that the fact? Admiral PEOPLES. I think that the codes have increased the prices, Mr. McLeod, wherever they have been adopted. Mr. MCLEOD. Admiral, in connection with these individual prices for regulation clothing contained on sheet S-23, those are all bid prices, are they not? For instance, I refer particularly to the item of undershirts, heavy, $1. That is an annual bid proposition, is it, for undershirts? Admiral PEOPLES. It is not an annual bid proposition. The purchases are made from time to time during the year. Toward the close of the calendar year, an examination is made by items of the costs of the articles on hand and the costs of purchases, and so forth, and the prices are averaged, and to that there is added just enough to cover whatever losses there may be by survey, the cost of inspection and packing, and so forth; not a profit as such, just merely losses, to keep the fund going, full reimbursement to the fund. Mr. MCLEOD. For instance, last year, when you bought undershirts what did you pay for them? Admiral PEOPLES. I do not have that figure before me at the moment. Mr. MCLEOD. Do you have the figure for the year before? Admiral PEOPLES. I think that they were published in the hearings last year. Mr. REED. Those do not represent the contract prices, but we fix the prices once or twice a year, based on the value of the stocks on hand and the contracts that we have before us. Mr. MCLEOD. The question that I am interested in is a particular item like that of the undershirts bought last year. Did you pay more for undershirts this year than you did last year? Admiral PEOPLES. I will get an itemized list for you. Mr. MCLEOD. In other words, you contract for a supply of shirts for the coming year, to be supplied by certain companies, and the price that you will pay for them is $1 per shirt? Is that it? Admiral PEOPLES. No. This is the price that the enlisted man pays. Mr. MCLEOD. And there is no profit in that for the Government? Admiral PEOPLES. No. Mr. MCLEOD. That is supposed to be your cost? Mr. REED. We allow a slight margin, so as to take care of any loss and deterioration and also to absorb the cost of inspection and packing. Admiral PEOPLES. For a loss by survey. If a steam pipe breaks and spoils the clothing in a storeroom, that is a loss to the fund, and the value of that must be taken care of, the fund being a revolving fund. COST OF CLOTHING AND SMALL-STORES ITEMS PURCHASED 1928-1934 Mr. MCLEOD. To save time, could you supply that statement for the record, for this year and last year? Admiral PEOPLES. We would be glad to give the committee that information for each item on that list for the last 4 or 5 years, if you wish. It would be a very simple matter to do it. Mr. MCLEOD. I wish that you could. Mr. REED. Do you want the purchase price? Mr. MCLEOD. The cost to the Government, say, since 1929, which was the top year, up to the present time, which would be a period of 4 years. Admiral PEOPLES. Exactly. Mr. MCLEOD. And those would be the items contained on page S-23 of the justifications. Mr. REED. S-25 and 26. Mr. MCLEOD. That is the same. Mr. REED. Yes, sir. Mr. MCLEOD. That is all. |