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Mr. UMSTEAD. When you use the Army transports, as indicated by the captain, do you pay for the service ?

Admiral 'CONARD. We do not.

Mr. UMSTEAD. Then, such space as may be available in the Army transports may be used without cost by the Navy Department?

Admiral CONARD. That is correct.

Mr. UMSTEAD. Of course, I take it you cannot use that space except in such cases as where it is not needed by the War Department itself?

Admiral COXARD. Yes, sir.
Mr. UMSTEAD. How many naval transports are now on active duty!

Admiral CONARD. Two: That is, two passenger transports anól two cargo-carrying transports.

Mr. UMSTEAD. The passenger transports also carry freight?
Admiral CONARD. Yes, sir; they do.
Mr. C'MSTEAD. But the freight transports do not carry passengers!

Admiral CoxARD. Not usually, but sometimes they do. Their passenger facilities are decidedly limited.

Mr. UMSTEAD. Which gives you two for the sole purpose of transporting freight, and also enables you to transport a considerable amount of freight on the passenger transports?

Captain WATROUS. That is quite limited on the passenger-carrying vessels.

Mr. UMSTEAD. I believe the officers and men entitled to this service are regulated by statute?

Captain WATROUS. That is correct.

Mr. UMSTEAD. The weights, however, to which each officer is entitled are determined by the regulations of the Navy Department !

Admiral CONARD. Acting in conjunction with the War Department. They have a common system of prescribing those regulations.

Mr. UMSTEAD. And it is graduated according to rank?
Admiral COXARD. Yes, sir; it is.
Mr. UMSTEAD. From the petty officer on up? ?
Admiral COXARD. To admiral.

Mr. UMSTEAD. All of the classifications of those entitled to the service under the act!

Admiral COXARD. Yes, sir.

TRANSPORTATION OF EQUIPAGE AND SUPPLIES

The transportation of equipage for ships and stations is likewise increased by two factors.

The first consideration is the increase due to the quantities of material to be shipped because of the greater tonnage of vessels and numbers of aircraft in service. This is an increase of 5 percent over the 1938 appropriation.

The second is the cost of shipments to be made in 1939 which could not be made in 1937, and cannot be made in 1938, due to lack of funis This is the same bringing forward item that we have been considering before.

Mr. Thom. You do not mean by that that you had shipments to make in 1937 that you deferred until 1939!

Admiral CONARD. No, sir; but we deferred from the end of 1937 to the beginning of 1938 everything we possibly could hold out. That, of course, went out of the funds for 1938. Then at the end of 1938 we expect to have to repeat the same process, carrying it forward into 1939.

EQUIPAGE AND SUPPLIES FOR SHIPS AND MISCELLANEOUS ACTIVITIES

Project 6. Funds under this project are included in objects 12, Ships' equipage,” and 30, “Equipment of vessels," for which no increases are requested in 1939, and in 15, “Maintenance and operation of the fleet, for which an increase of $127,565 is required. This increase is based on the following factors: 1. The original outfits of consumable supplies for the 28 ships to be

commissioned consist of the complete equipment of mess and galley
gear, stationery, and other supplies needed to place the ships in
operating status. This requires about twice the annual operating
(osts for the same supplies (p. M-5).

$59, 792 2. Ships to be commissioned in 1939 are 28 in number, and will require $31,648 for their maintenance (p. M-44)

31, 648 3. In 1938. 13 ressels scheduled for commissioning in 1937 will be

placed in commission. The commissioning outfits of these ships
will cost $36,125, which will result in a delay in supplying other
items to vessels from 1938 to 1939 (p. M-45)--

36, 125 Total

127, 56.5 From this total of $127,565 is subtracted $56,676 representing, (a) Maintenance of 13 ships to be decommissioned in 1939.

9, 076 (0) ('ommissioning outfits of 23 ships in 1938 (p. 1-13).

47, 600 Total

56, 676 These non recurring items reduce the amount of the 1939 increase to $70,889 mer the 1938 appropriation.

Mr. U'YSTEAD. Admiral, if I understand it, the items referred to in this project have to do with the things which your Bureau will have to supply to the new ships to be commissioned during the year 1939 in excess of the amount estimated for the same purpose in 1938?

Admiral CONARD. That is right. Mr. U' MsTEAD. Except as to necessary equipment which the Bureau of Supplies and Accounts has to maintain on vessels in the fleet to do its work, what is included in these items?

(aptain WATROTS. Supply of all typewriters for ships and stationery for the ships' officers listed in the appropriation bill which have no connection with work under the cognizance of the Bureau of Supplies and Accounts.

CHANGE OF LANGUAGE

Mr. U'STEAD. On page 71 of the committee print you are asking for a change of language which will permit you to have $500,000 of the appropriation, “Maintenance, Bureau of Supplies and 'Accounts," immediately available. I believe your explanation of that appears on page M-2-3 in folder 8.

Admiral COXARD. That is right.

Funds available in 1937 were insufficient by $106,100 to carry out the functions to be performed under this appropriation as has been shown in the detailed justification of the estimate: the funds appro

priated for the current year are insufficient by approximately $500,000 to carry out the current activity for the year, plus the burden of the charges deferred from 1937. Funds to meet these charges have been included in the 1939 estimates as “nonrecurring" items. To permit bringing the work up to date as soon as possible and to prevent a cessation of operations during the last part of the fiscal year, or the incurring of a deficiency, it is desired that additional funds be available. There has accordingly been inserted the following language to remedy the situation : of which amount $500,000 shall be available immediately.

Mr. UMSTEAD. Admiral, on the top of page 72 of the committee print of the bill you are also asking for a change of language with respect to the application of the appropriation dealing with the replacement of table linen, dishes, glassware, silver, and kitchen utensils.

Admiral CONARD. Yes, sir. The prohibition contained in annual Naval Appropriation Acts from 1934 to 1938, inclusive, forbidding the supply or replenishment of table linen, dishes, glassware, silver, and cooking utensils for use in the residences or quarters of officers on shore, has caused considerable hardship in the cases of officers and aviation cadets' messes at fleet air bases and when temporarily established ashore at naval air stations.

The restriction on the employment of enlisted men and civilian employees in officers' messes, first appearing in the Appropriation Act for 1934, has been successively amended in subsequent acts, until it now permits such employment in the messes named above. So similar amendment, however, has been made with regard to the supply of mess equipment, although it appears to have been the intent of Congress to legalize the establishment of such messes, as evidenced by an allowance of mess attendants to them.

The situation in an officers' or aviation cadets mess ashore at a fleet air base or naval air station is markedly different from that obtaining in privately assigned quarters ashore, and is altogether analogous to that existing aboard ship, where mess equipment is furnished by the Government, for reasons to well recognized to require setting them forth herein.

It is, therefore, recommended that on page 891 of the Navy Department estimates the following wording be inserted after the word “That” in the first proviso of the appropriation “Maintenance, Bureau of Supplies and Accounts:” , except for messes temporarily set upon shore for officers attached to seagoing vessels, to aviation units based on seagoing vessels, to the fleet air bases, or to landing forces and expeditions, Sush amendment would relieve the hardship and expense to which bachelor officers, and to a greater degree, aviation cadets, are now subjected. The value of an initial supply of mess outfits to the officers' messes ashore for officers attached to seagoing vessels, to aris. tion units based on seagoing vessels including officers messes at the fleet air bases, and to landing forces and expeditions, and aviation cadets undergoing flight training, is estimated at not in excess of $15,000. These outfits could be furnished largely from authorized purchase account items of this class of material turned into store by decommissioned vessels of the 1938 and 1939 programs.

NAVAL SUPPLY ACCOUNT FUND

PURPOSE OF THE NAVAL SUPPLY ACCOUNT

Admiral Conard. The naval supply account fund is a reimburseble fund created to provide stocks of necessary material to meet ne current and prospective needs of the Naval Establishment, ashore nd afloat for construction of vessels in navy yards and for the opration of the fleet. It finances all general requirements of material; vermits long-range planning of procurement and seasonal and slackeason purchasing in large enough volume to secure minimum prices. "he stocks under the naval supply account are located at yards and tations in the continental United States; in the island possessions nd on board tenders; supply ships, cruisers, battleships, and airraft tenders. This account eliminates the necessity of separate arallel stocks of the same material carried under each different ppropriation. Issues when made are charged to the proper appropriation with credit to the fund.

The efficiency and economy resulting from this method of pooling tock balances have proved to be very great in naval experience. Before the institution of this system, constantly growing balances of stores under each using appropriation were the rule. Following the adoption of the naval supply account fund, each appropriation includes amounts to cover the actual value of stores used each year only, with no allowance for accumulations of stock balances.

Should the policy ever be adopted of eliminating stock for use under a particular appropriation from the naval supply account, as, for example, fuel oil, it would be necessary, when the change was made, to provide an additional amount of money in the appropriation “Fuel and transportation” to cover the value of the stock balance so transferred.

Balance sheet, naval supply account fund, June 30, 1937

ASSETS Cash working capital balance

$3,187,737.18 Accounts receivable -

1,369, 461.56 Inventories: Finished goods in store

$60,995,586.51 Manufacturing work in progress

3,373,375.71 Stock in transit

2,232,541.01

66,601,503.23 Total assets...

71,158,701.97

LIABILITIES Net value of material included in inventory Dot yet paid for...

$985, 126.12 Reserve of net profits earned in commissary stores.

239,209.19

1,224,335.31 Value of fund, June 30, 1937..

69,934,366.66 61, 818, 782 N

Analysis of operations, naval supply account fund, fiscal year 1937

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Cash balance, June 30, 1937.--
Decrease in working capital..
Inventories:

On Hand July 1, 1936..
Purchase payments during year.

$94, 825, 422. 48 Payments for material taken up last year.

906, 846. 58 Balance

93, 918, 575. 90 Material (net) taken up not yet paid for. 902, 420. 49 Total..

94, 820, 996. 39
Adjustments on purchases discounts,
liquidated damages, etc...

1, 821, 552. 83
Manufacturing labor.
Inventory adjustment.
Adjustment of prices:
On material sold.

$188, 805. 81
Due to overabsorbed transportation
costs..

40, 871. 80
Due to reappraisals and unit prices - 1111, 949. 83
Purchases taken up from other accounts.
Ration records, increase in suspense account

Total. * Credit.

96, 642, 549 ?? 13, 087, 533 AM

78, 739.4

117, 727. 1, 205, 395. un

33, 216 3i

172, 983, 943 31

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