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APPROPRIATION PURCHASES ACCOUNT

The appropriation purchases account is an account of supplies and materials in store purchased from appropriations of the several bureaus. These stores are generally required for immediate use, but are held in this account to maintain accountability until used. The strategic and critical materials, purchase of which was authorized by act of April 27, 1937 (Public, 54, 75th Cong.), will be held therein. It also carries equipage and supplies turned in from ships from time to time or when they go out of commission.

When material is used from this account no further appropriation charge is made, because the appropriation concerned has been charged for it.

In the appropriation purchases account there is carried ordnance material and aeronautical material so that the value of stores and materials available for general issue is relatively a small part of the total value of the materials carried in this account as is shown by the following: Balance appropriation purchases account June 30, 1937---- *$552, 316, 054.28 Ordnance material ashore--

380, 642, 939. 15 Ordnance material afloat_

36, 183, 191. 59 Aeronautical material.--

21, 945, 855. 98 Miscellaneous appropriation purchases account.

84, 243, 206. 11 Total.

523, 015, 192. 83 Manufacturing work in progress-

29, 300, 861. 45 Total.----

552, 316, 054. 28 * Ineludes manufacturing work in progress.

July 1, 1936, to June 30, 1937 On hand July 1, 1936_

$501, 148, 694. 21 Received: From purchase--

53, 196, 410. 69 From Marine Corps.

162, 373. 03 From manufacture

53, 286, 880.22 From other Government departments without reimbursement

143, 806. 07 Miscellaneous material received into store..

47, 041, 605. 07 By inventory

2, 907, 442. 23 New and reclaimed material.

156, 738, 517. 31

5, 731, 052. 65
8, 109, 567. 88

From naval supply account-----
From industrial recovery account.

Transfers between accounts..

13, 840, 620. 53

Total..

671, 727, 832. 05

Espended:

For use and to manufacturing account..
To ships, title C, and on miscellaneous invoices..
To other Government departments without reimbursement -
To equipage account.---
By survey and price adjustment-
By sale..

44, 098, 471. 75
9, 242, 260. 80

460, 121.49 84, 911, 333. 75 8, 868, 296. 23

77, 900, 11

Final expenditures and to manufacturing---

147, 658, 384. 13

3692938_15

July 1, 1936, to June 30, 1937–Continued
Expended—Continued.

To naval supply account.
To industrial recovery account.
To clothing account

$1,054, 000.97

242.12 12.00

Transfers between accounts. On hand June 30, 1937--

1, 054, 255. (9 523, 015, 19:23

Total.--

671, 727, 832.05 Mr. UMSTEAD. Admiral, as I understand it, the appropriation purchases account is a bookkeeping transaction primarily, and does not involve the appropriation of any sum of money to that particular account.

Admiral CONARD. Not directly to the account.

Mr. UMSTEAD. But the sums with which it deals, purely bookkeeping, come from other appropriation items throughout the naval service?

Admiral CONARD. Yes, sir. All stores purchased from any appropriation are carried in this appropriation purchases account. Mr. UMSTEAD. All right; you may proceed, Admiral.

NAVAL PETROLEUM RESERVE ACCOUNT Admiral CONARD. This is the account in which is carried the value of the reserve fuel oil which was obtained by the Navy in exchange for royalty oil from the naval petroleum reserve and purchased under various authorizations to fill the storage tanks built in exchange for royalty oil. Financial statement of naval petroleum reserve account (July 1, 1936, to June 30, 1937) : Balance July 1, 1936_

$4, 132, 165. 51 Balance June 30, 1937.

4, 132, 165. 51 There are at present 3,705,978 barrels of fuel oil in reserve storage at Pearl Harbor. Of this quantity 1,505,864 barrels were placed in storage through the arrangement made for the exchange of Navy crude oil for filled storages at Pearl Harbor. The tanks were not completely filled under this arrangement due to litigation. In 1929, action was taken under special authority from Congress-Naval Appropriation Acts 1930–31 “Reserve fuel oil” toward filling the storage by the purchase of an additional quantity of 2,200,000 barrels. Three contracts were entered into—two with the Richfield Oil Co. and one with the Texas Co. These contracts were as follows:

Fiscal year 1930, 754,347 barrels at $0.81625 per barrel.
Fiscal year 1930, 408,692 barrels at $0.83375 per barrel.
Fiscal year 1931, 1,037,073 barrels at $0.872 per barrel.

The oil placed in storage under the exchange agreement was at first carried at no price. As of July 1, 1923, a price of $1.75 per barrel was used as a carrying price for this oil on the books of S and A, this being a contract price at that time covering deliveries at Pearl Harbor. It was the practice to adjust these prices from time to time in accordance with prevailing contract prices. This was done from year to year. Finally, in 1926, the price was addjusted to $1.50 per barrel, based on contract price covering deliveries at Pearl Harbor. Since the oil could not be issued except under certain conditions provided by law, it was later decided that constant price adjustments served no purpose. Therefore, no adjustments 're made subsequent to 1926 until 1929. In 1929, the authorities at ·arl Harbor were authorized to use the $1.50 price in submitting ports on the reserve fuel oil. The average price of $1.115 at hich the oil is now carried is arrived at by using the $1.50 for the | originally placed in storage and averaging the price covered by ter contracts as above listed. The oil is carried in the "Naval petroleum reserve account." It ay be depleted only upon specific authorization from the President.

CLOTHING AND SMALL STORES FUND Mr. l'mstead. The next item is the "Clothing and small-stores ind." Admiral Conard. The clothing fund was established by the act

August 5, 1812, for the purchase and manufacture of uniforms ir enlisted men of the Navy. The act of February 14, 1879, estabshed a similar fund for the purchase of accessories such as brushes, edles, thread, tobacco, soap, and so forth, which were usually rmed "small stores.” The act of June 30, 1890, consolidated these ro funds, since which consolidation its title has been "The clothing ad small-stores fund." Issues from this fund, except outfits on nt enlistment, are charged against the personal accounts of the ficers or enlisted men receiving the clothing or small stores, and redited to this fund. Outfits on first enlistment are charged to the ppropriation “Pay, subsistence, and transportation" and credited > this fund. The outfits for nurses and naval reserves are issued ratuitously and are charged to this fund.

As of June 30, 1937

ASSETS

ash: l'nexpended balance under “Clothing and small-stores funda...

$5, 657, 761. 17 counts receivable : Cash and condemned sales...

$80, 799. 19 ('hecked but not expended.

32. 65

80, 831. 84 aventories : Goodis in store.

6, 886, 061. 90 Stock in transit

854, 147. 81 Manufacturing work in progress.

262, 354. 78

8, 002, 561. 49

Total

13, 741, 157. 50

CAPITAL AND LIABILITY

$13, 668, 522. 81

falne of clothing and small stores fund, July 1, 1936. kurived without reimbursement- -- $363, 787. 37 Lipenditures without reimbursement.-- 350, 526. 21

$13, 261. 16

letrare in fund due to stores operations.. Adjustment by General Accounting Office (credit)--

778. 91 Officers' uniform gratuity: Naral Reserve.--

67, 720.00 Issnes not settled on discharge. 59. 49

167, 000. 58

53, 739. 42

Value of clothing and small stores fund, June 30, 1937 Ktores on hand not paid for.

13, 614, 783. 39

126, 374. 11

13, 741, 157. 30

Credit.

Clothing and small-stores account, July 1, 1936, to June 30, 1937

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Reimbursable expenditures and to manufacturing---- - 7,554, 273, 19 Without reimbursement: Issues to Naval Reserve..

309, 557.68 Issues for tests.--

1, 623. 02 By survey and appraisal...

31, 036. 30 By inventory

1, 452, 49 By sale---

3, 836. 72

Final expenditures without reimbursement-
Transfers to naval supply account.--
On hand June 30, 1937-

3.30..526. 31

112. 173. ga 7, 740, 209.71

Total.

15, 757, 485.16

CLOTHING ISSUED TO NAVAL RESERVE

Mr. UMSTEAD. Admiral, I believe last year the estimates requested that the committee allow an increase of $250,000 in the Naval Reserve appropriation for the purchase instead of the free issue of clothing because, as it was stated to the committee, it was your opinion that the capital of the Clothing and Small Stores Fund had been re duced as far as it should be. Out of this fund, clothing and smal stores are issued, without reimbursement as you just stated, to the Naval Reserve. What has been the depletion of the capital during the year—the last year of which you have a record ?

Admiral COXARD. It decreased $51,000.
Mr. UMSTEAD. Which is not at all dangerous ?
Admiral CON ARD. No, sir.

Mr. UMSTEAD. What was the value of the supplies issued out this fund to the Reserve during the year when the fund was de pleted by $51,000?

Commander CARTER. A little over $377,000. Mr. UMSTEAD. How was the difference accounted for? Admiral KIMMEL. The difference came from the prices charged or the clothing issued from this fund to the enlisted men of the lavy. Mr. l'MSTEAD. Admiral, this fund is charged with the issues to en entering the Naval Reserve of the necessary uniforms and quipment? Admiral CONARD. It is.

Mr. L'MSTEAD. Then, in my judgment, it is a mistake to charge the ost of that clothing in the price of which the clothing for enlisted nen is sold to them. The issues made to the Naval Reserve should e reflected as a depletion of your capital assets in this fund.

Admiral CONARD. That is quite correct, and that is the way that re are now lining it up. In other words, we are reducing the issue rices of clothing to come more nearly in accord with the cost of roduction.

Mr. UMSTEAD. Of course, the amount charged to the enlisted peronnel should very properly, should it not, Admiral, include over and bove the cost a sufficient sum to take care of the cost of handling? Admiral CONARD. The overhead; yes, sir. Mr. UMSTEAD. The overhead expense of handling the stores and upplies? Admiral CONARD. Yes, sir. Mr. L'MSTEAD. But certainly it should not include any more than hould be properly charged to them as their part of the adminisrative cost of handling these supplies. They should not be charged with the cost of issue to the Reserve.

Admiral CONARD. That is true. I might say that there are some xpenses involved in connection with that Mr. l'MSTEAD. Necessarily.

Admiral Coward. I mean some expenses that are not paid for by this fund. So we do not try to pare too close to the actual cost rharged to the fund.

NAVAL WORKING FUND

Mr. l'YSTEAD. Next we have the naval working fund.

Admiral COXARD. The naval working fund was established by the Naval Act of May 28, 1924, to finance all transactions that did not involve charges to a naval appropriation. This provides better control over expenditures of naval funds and furnishes an account in which are recorded transactions concerning condemned and surplus sales, work for special depositors, and also work for other departments of the Government, State governments, or foreign governments.

The condition of the fund is shown by the following statement of perations during the fiscal year 1937.

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