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. No 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. 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, Such 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 aria. 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 he current and prospective needs of the Naval Establishment, ashore and afloat for construction of vessels in navy yards and for the opration of the fleet. It finances all general requirements of material; permits long-range planning of procurement and seasonal and slackeason purchasing in large enough volume to secure minimum prices. The stocks under the naval supply account are located at yards and tations in the continental United States; in the island possessions and on board tenders; supply ships, cruisers, battleships, and airraft tenders. This account eliminates the necessity of separate parallel stocks of the same material carried under each different appropriation. Issues when made are charged to the proper appropriation with credit to the fund. The efficiency and economy resulting from this method of pooling stock 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 Analysis of operations, naval supply account fund, fiscal year 1937 DETAILS OF ASSET AND LIABILITY ACCOUNTS Reserve of profits earned in commissary stores, July 1, 1936...... Decrease in account. Value of fund, June 30, 1937 RECONCILIATION OF CURRENT VALUE OF FUND WITH TOTAL APPROPRIATED Appropriated through June 30, 1937... Decreases: Deficiencies charged to the fund. By survey and price adjustment.. By transfer to other Government de- By issue for Japanese relief, earthquake, Underabsorbed f. o. b. transportation costs... Increases: Discounts, unpaid liquidated damages Net reduction in fund.......... Value of fund, June 30, 1937--- $560, 047, 615. 40 1 Credit. REQUEST FOR FUNDS TO REPLACE FUNDS TRANSFERRED TO OTHER APPROPRIATIONS A request for an increment to the naval supply account fund is included in the estimate to replace in part funds transferred to other appropriations by Congress during the years 1930 to 1935. This ad 36929-38-20 dition to the fund is to permit increase of present inadequate stocks; replacement of present stocks at prevailing higher prices; to provide stocks of supplies for operating new vessels; to enlarge provision stocks to care for the subsistence of the increased number of men in the service; for increased stock of lubricating oil and gasoline necessary for the operation of the increased number of aircraft; to permit a continuation of the policy of seasonal and slack season purchases, with the resulting economy; and to provide an adequate cash working balance. NECESSITY FOR INCREASE TO FUND During the period 1930 to 1935 the working capital of the fund was reduced through the appropriation by Congress of $25,079,694 for transfer to other appropriations. During this period, stocks were curtailed and the necessity for an adequate stock was subordinated to the more immediate national necessity of reducing cash withdrawals from the Treasury. Replacement of a part of the working capital diverted from the fund is now necessary if the present system of financing the purchase and issue of naval stores is to continue, for the reasons set forth: (a) Rehabilitation of stocks which had been reduced to a point where they become inadequate. (b) The Labor Department reports a 34 percent increase in prices, 1933 to 1937. Due to this increase in commodity prices the same quantity of stock now requires a larger sum to finance same. Replacement of present stocks will be at higher prices. (c) The acceleration of shipbuilding program requires a greater investment in material. (d) To provide for stocks for operating new vessels. The costs of the new vessels are much greater than the cost of the vessels they replace. The stocks necessary for the operation and maintenance of vessels vary with the increased original cost. Increased steaming radius and increased speed require increased oil stocks. Larger crews require increased provision stocks. Larger plants to maintain require increased stocks of general stores. (e) To provide the additional stock of provisions necessary to meet the increase in number of enlisted men from 78,260 in 1934 to 108,500 for 1939. (f) To provide supplies, lubricating oil, and gasoline necessary for the operation of the increasing number of aircraft. (g) To continue financing slow-moving material for which there is the military necessity of providing for emergency needs in event of damage to vessels. (h) To permit continuation of the seasonal and slack-season purchase of stock. This necessitates an adequate stock, but results in lower prices with consequent lower cost to appropriations for material. (i) To provide a cash balance to cover the lag in effecting bookkeeping credits which can only be made at the end of accounting periods. Credits and disbursements are irregular in reaching the Treasury. Lack of sufficient capital is a serious drawback leading to additional costs with the corresponding necessity for additional appropriation authorizations. It results in: (a) Inadequate stocks of materials. (b) Hand-to-mouth emergency buying. (c) Stock depletion with consequent labor loss due to interruption to material supply. (d) Delay in ship-construction program for new vessels and interruption to regular orderly construction procedure due to delayed obtention of materials (e) Delay in completion of emergency repairs to vessels, with consequent separation of vessels from fleet for longer periods. |