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Total stores, balances, by classes, June 30, 1937—Continued

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10 Boilers and engines (boat, power) etc.
11 Pumps and their parts.
12 Boat and ship fittings..
13 Engine-room and fire-room fittings, supplies and tools.

Oils (illuminating and lubricating), greases, etc.
15 Electric cables and wire (insulated).
16 Radio and sound-signal apparatus, etc...
17 Electric apparatus and all accessories, etc.-
18 Instruments of precision and all accessories, etc.
19 Blocks, rigging, and all accessories, outfits and parts.
20 Submarine-material..
21 Cordage, hemp, jute, oakum, twine, etc..
22 Rope, wire; and wire, bare, including manufactured articles.
23 Boat and ship utensils..

Duck, canvas, tentage, including manufactured articles. 25 Tobacco products, cigars, cigarettes, etc. 26 Furniture.. 27 Dry goods, bedding, curtains, cushions, etc. 28 Blank forms. 29 Toilet articles and all accessories, outfits and parts.. 30 Bathroom and toilet-fixtures and all accessories, etc. 31 Lighting apparatus (nonelectric) and all accessories, etc. 32 Fire-surfacing and heat-insulating material.. 33 Gaskets, hose, packing, rubber (sheet and strip), etc. 34 Leather belting, harness, saddlery, etc. 35 Books, blueprints, charts, drawings, libraries, etc. 36 Musical instruments, music, and all accessories and parts. 37

Athletic equipment, recreational apparatus, etc... 38 Brooms, brushes. 39 Lumber, timber (barrels, boxes, cases, crates), wooden, etc. 40 Tools, machine (bending rolls, drop hammers, drills), etc.. 41 Tools, hand. 42 Hardware (builders, general). 43 Bolts, nuts, rivets, screws, washers 44 Pipe, tubes, tubing (nonflexible) 45 Pipe fittings 46 Metalin bars (flat hexagon, octagon, round, square), etc. 47 Metal in plates and sheets. 48 | Metal shapes (angles, channels, half rounds).

Aircraft aeronautic apparatus and all accessories.
50 Foundry apparatus and all accessories, outfits, supplies.
51 Acids, cheniicals, drugs, gases, soaps, etc..
52 Paints, paint ingredients.
53 Stationery: Bags, paper, books, blank, boxes, paper, etc.
54 Office equipment, adding machines, cash registers, file cases, etc..
55 Textile clothing, knitted goods...
56 Food: Groceries, ice, provisions, subsistence
57 Hospital, laboratory and surgical apparatus, etc.
58 Railway, dock and yard equipment, etc.
59 Building material, asphalt, brick, cement, etc..

Boilers and engines (power plant, ship)
Gyro compasses and all accessories, outfits and paris

Articles of special value, bullion, jewelry, etc. 63 Tableware (barracks, crews' mess, hotel, etc) 64 Bake shop and kitchen apparatus and utensils 65

Ovens, ranges, stores, etc. 66 · Machinery and equipment. 67 Forage. 68 Livestock

Vehicles (animal and hand drawn), etc. 70' Agricultural implements and all accessories and parts

Badges, insignia, medals, etc.. 72 Boots, shoes, leather and rubber clothing. 73 Caps, hats, gloves, men's and women's furnishings

Individual equipment (field and landing forces 126 U.S. S. Cachalot (SS170) 131 U. S. 8. Cuttlefish (SS171). 141

U. 9, S. Brooklun (CL40)

1 113 U.S.S. Clark (DD361).. 146

U.S. S. Warp (C17). 147 U. S, S. Helena (CL50).. 148 U.S. S. Sampson (1)1394), U.S, S. Daris (ID395), and I.S.S. Jouett (DD396). 149

U.S. S. Benham (DD397), U.S.S. Ell (DDN), and '. S. S. Lang (DD399) 151 U.S.S. NcCall (DD400) and ('. SS. Maury (11 401) 152 U.S.S. Mayrant (DD 402) and V.S.S. Trippe (DD)403) 153 · U.S. S. Rhind (DD404). 154 U.S. S. Rouan (DD405) and I'. SS. Sack (D1) 406) 155 U.S. S. Sterre! (D407) 156

U.S. S. Wilson (D1488) 157 U.S. S. Salmon (85182). L.S.S. Seal (S$183), and U.S. Skipjack (SS184). 158 U.S. S. Snapper (S8185) and U.S.S. Stingray (SS186) 1.59 U.S. 8. Sturgeon (88187). 160 U, S. S. St. Louis (CL49). 161 | U.S.S, O'Brien (DD415) and U.S.S. Walke (D D416)

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Total stores, balances, by classes, June 30, 1937Continued

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322 U.S. S. Cassin (DD372) and U.S. S. Shaw (DD373). 324 U.S.S. Tucker (DD374) and U.S. S. Downes (DD375). 326 U.S.S. Cushing (DD376) and U.S. S. Perkins (DD377) 328 U. 8. 8. Smith (DD378) and U.S. S. Preston (DD379). 230 U.S. 8. Yorktown (CV5) 231 U.S.S. Enterprise (CV6). 350 N. I. R. A. material procured for immediate issue. 1588 Special material, Naval Academy, Annapolis, Md. 1617 Replacement of naval vessels (construction and machinery) 2017 Special material, Bureau of Yards and Docks. 2015 .do. # ! Special material, Bureau of Ordnance ! Spec. al material, Bureau of Construction and Repair

do.. Special material, Bureau of Engineering.

do....

do.
Special material, Bureau of Aeronautics.
Stores on hand afloat:

Supply officer
Gunnery officer
Commissary store.
ships store
Property Accounting Division and submarine bases

Total in store...
Stores in transit
Manufacturing (process).

Total
Naval petroleum reserve account.
Marine Corps stores..
Medical stores..

Grand total.

7, 720.09 124, 563. 61 45, 066.59 45, 771.61 46, 006.59

2, 549.23 15, 465. 51 5, 611.34

2, 959.71 64,384. 14 59, 889. 56

2, 669.61 36, 974.60 1,188.32

489. 67 7, 305.84 5, 972. 44 15, 238. 32

42 151, 882.97 237, 780. 34

257. 50

7,378, 958. 11

206, 969.36 516, 993. 70 746, 397. 56

60, 995, 586. 51 2, 232, 541. 01 3, 373, 375. 71

66, 601, 503. 23

VALUE OF STOCKS ON HAND

Commander MAYO. Our stock of general stores, which covers 74 classes, from cordage on through wool clothing—and by clothing I mean in this case textiles that are not covered by the naval clothing and small stores fund—and winter and submarine clothing, also nuts. bolts, and every item that is used for the maintenance of a ship or for the work to be done in the navy yards, is about $58,000,000 worth.

Mr. UMSTEAD. You mean that is the total amount of stocks which you have to keep on hand throughout the naval service!

Commander Mayo. Yes, sir.

Mr. UMSTEAD. Then, other than the $58,000,000 to which you just referred, what is the fund used for?

Commander Mayo. We also have some work in progress, manufacturing work, that is included in this $58,000,000.

Mr. UMSTEAD. Over and above the $58,000,000 which you say covers stocks you have to keep on hand, and the work in progress for which you are obligated, what are the other requirements on your fund !

Commander Mayo. We could deduct from that figure about $1,000,000 worth of stock which is in transit between stations.

Mr. UMSTEAD. Is that included in your $58,000,000!
Commander Mayo. Yes, sir; that is included in the $58.000.000.

Mr. UMSTEAD. I am trying to get you to tell me what there is over and above the $58,000,000.

Commander Mayo. The only thing there is over and above the $58,000,000 is the provisions and the fuel which I have referred to.

Mr. UMSTEAD. Both of which together amount to $6,500.01), roughly speaking.

Captain WATROUS. Making a total of $66.601,503.

Commander MAYO. We also have in that total about $7.500.000 worth of what we call emergency material. These are stores necessary to meet casualties to vessels that would take them out of the fleet. For instance, a vessel may lose a propeller in its first 6 months of commission or it may not lose one for 10 or 20 years. We hare to have that propeller in stock or when the casualty happens the very is disabled and out of the fleet during the considerable time necessary to have one manufactured.

AMOUNT OF FUND NECESSARY

Mr. UMSTEAD. You are asking for a total of $77,000,000 to handle a total load of approximately $65.000.000.

Commander Mayo. Our issues during the year from the naral -ply account amounted to $121,000,000.

Mr. UMSTEAD. Your capital during that year was approximately $70,000,000.

Admiral Coxard. Approximately $69.000,000.
Commander Mayo. Yes; approximately.

Mr. L'MSTEAD. And you contend that a capital of $70,000,000 is not sufficient to carry on a business of $121,000,000 ?

Commander Mayo. That is correct.

Admiral COXARD. The capital represents, for the most part, an actual investment in stock. This is not a working capital in the sense of free money to turn over stock. It is physically in stock. The poin

hat we have in mind is that that physical stock is too small for the eeds of the Navy and should be increased.

Mr. U'MSTEAD. Admiral, I believe we went into this matter in coniderable detail in the hearings last year. Admiral CONARD. Yes, sir; we did.

SAVINGS FROM CASH DISCOUNTS

Mr. U'MSTEAD. Have you anything further you wouid like to say bout this request?

Acimiral CONARD. Only to make clear that there is an existing necesity for the naval service for a balance of stock on hand which is adeluate to meet the demands of the service during any given fiscal rear.

Commander Mayo. Along the lines of your question last year, I notice you brought up the point, which I think is in your mind this ninute, of the cost of this additional capital. You used the figure of 3 percent. The cost of the $7,000,000 which we are requesting at a presumable 3-percent carrying charge would be $210,000 per annum. Last year we took cash discounts which amounted to $442,000, which is twice the cost of this money. If we have not enough money to meet our bills, we will lose twice as much as the cost of the carrying charge for the $7,000,000 that we are requesting. Mr. PLUMLEY. You mean

Commander Mayo. We will lose $442,000 if we cannot discount our bills. There is one other point which is very important about this.

Mr. C'MSTEAD. How much did you make in discounts during the past year?

Commander Mayo. $442,000, cash discounts. Mr. UMSTEAD. That was the entire amount of cash discounts that you received during the past year?

Commander Mayo. That is correct.
Mr. Thom. What was the total amount of purchases ?
('ommander Mayo. Our receipts were $125,000,000.

Mr. l'MSTEAD. With a $70,000,000 capital, you had a $442,000 saving from cash discounts!

(Commander Mayo. Yes; that is correct.

Mr. UMSTEAD. Now you are asking for $7,000,000 additional capital!

Commander MAYO. That is correst, sir.

Mr. UMSTEAD. You stated a few moments ago, as I understood it, that the cost at 3 percent on $7,000,000 capital would be $210,000.

Commander Mayo. Exactly.
Mr. C'MSTEAD. And with that $7,000,000, you would save $442,000?

Commander Mayo. I said we would be able to continue to realize those discounts. If we cannot continue taking the discounts, we will love that money.

Mr. UMSTEAD. Let us stop right where we are a second. The $7.000.000 that you are asking is about a one-tenth increase?

Commander Mayo. That is correct.
Mr. L'Y STEAD. In the capital fund?
Commander Mayo. That is correct.

Mr. UMSTEAD. One-tenth of what you saved last year by discounts would be $14,200, would it not?

Commander Mayo. Yes, sir.

Mr. UMSTEAD. Then the truth is that bearing the same ratio that has been explained by you in the present operation of the fund, the increased capital of $7,000,000 could not hope to save more than $44,200 ?

Commander Mayo. I do not agree with you, sir, for the reason that we are getting to the point where we have no cash balance. We had reached a point at one time during the past year when we had to scurry around to get credits because we were in the “red” on the books of the Treasury. We hurried some delayed credits through and got by. Our obligations for outstanding contracts and requisitions on June 30 were $44,528,742.49.

Mr. UMSTEAD. On June 30 you showed a cash balance of $3,187,737.

Commander MAYO. That is correct. I have the later figure here. The October 31 cash balance was $2,363,769, equivalent to our average issues for a 7-day period.

Mr. UMSTEAD. If the mathematics of the figures quoted by yo'l, Admiral, are correct, then it is unfair to say that you can take $7,000,000 additional and save $442,000 with it by discounts.

Admiral CONARD. What I meant to infer was that we will lose $442,000 if we cannot take discounts, which we cannot do unless we have money to meet bills at the time they become due.

Mr. UMSTEAD. Now, you did save $442.000 with $70,000,000 ?
Admiral CONARD. We did last year.
Mr. UMSTEAD. Yes.

INCREASED PRICES OF COMMODITIES

Commander Mayo. It is very pertinent to point out at this time that the Department of Labor price index between 1936 and 1937. as of June 30, has gone up 10.1 percent. Their index on June 30, 1936, was 79.2, and the index on June 30, 1937, was 87.2, an increase in price of 10.1 percent. If we do not carry any more stock than we carried last year it is going to cost us almost all of that $7,000,000 to keep that same stock. If we do keep the very same stock load we will not be able to meet our bills without the additional capital. We have gotten down to practically the vanishing point on cash.

I want to point out, sir, that we purchase our dry provisions once a year at the time when the crop of the particular item is being harvested. By so doing we save the inclusion in the price of storage and transportation charges to a commercial storage point. This saving is reflected in the ration cost and the Congress has to appropriate less funds than would otherwise be the case if the naval supply account fund were not available to carry the stock. The naval supply account permits the carrying of stocks so that wijeni purchases of general stores of all kinds are made they can be consolidated to obtain the better prices incident to large quantity purchases. In addition we can accept deliveries of 90 or 120 days which makes the business attractive to the manufacturer since he can fit it into his stock periods, thereby cutting his overhead losses and holding his organization together. We frequently obtain prices which are below cost with full overhead figured in. These economies affect the appropriations of all the bureaus. They get more material for the same money than would otherwise be the case.

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