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Mr. UMSTEAD. And at the end of the number of years necessary to complete their 30 years' service in the Navy and in the Reserve they would have $15 per month added ? .

Captain WILKINSON. $15.75.

Mr. UMSTEAD. Then, as a matter of fact, the only difference between the old provision and the present provision is simply the 4-year period that they are required to stay in the Navy longer than formerly before they can transfer to the Reserve ?

Captain WILKINSON. Yes; there is that difference and also there is a marked reduction of the pay during their period in the Naval Reserve. Mr. UMSTEAD. A 20-percent reduction ?

Captain WILKINSON. A 20-percent reduction on the basis of their total pay, but actually a 331/3-percent reduction of the pay they receive.

Mr. UMSTEAD. Why?

Captain WILKINSON. That is, they get 40 percent instead of 60 percent as they do now. So they get two-thirds of the pay that they would be getting if they went out under the pre-1925 pay status.

Mr. UMSTEAD. I believe this matter was studied by the Bureau of Navigation back in 1927, and the ultimate cost was then predicted to be $35,000,000. That figure was not expected to be realized until many years in the future, and contemplated, I believe, continuation of the 16-year transfer privilege. The estimated cost for 1940 was then estimated at $19,459,207, and it appears from these estimates before us that we shall be well beyond that figure in 1939 if the greater portion of the estimate for retired pay is caused by transferred men going into retired status as indicated by your answer a few moments ago of 90 percent. How do you reconcile those figures with your present estimate, Captain ?

Captain WilKINSON. The present estimate is entirely consistent with those figures, when they are considered to be the transferred men only, exclusive of the retired list, because we now have $15,000,000 for the present request as opposed to the estimate there of $19,000,000 in 1940.

Mr. UMSTEAD. In the Bureau's last annual report some idea may be had of the appeal this transfer privilege has to enlisted men in the Navy, and it naturally would have. It shows about an 83-percent reenlistment rate for 1936 and 81 percent for 1937. It also shows that during 1937, 44 percent of the men in the Navy were serving under reenlistments, which means that a very large portion of that number, of course, expect to use the transfer privilege. This would indicate, I think, a serious question as to your figure of $5,000,000 ultimately being reached in 1955.

Unless your conclusion is based upon a very careful study of this question, I suggest that it would be well for you to give some further time and attention to this subject.

It has been stated here that you are now obtaining in the Navy a higher class of enlisted personnel. That brings up the question as to whether or not enlistment in the Navy at the present time is sufficiently attractive to induce young men to enter the Navy without the early retirement feature of the present retirement law.

FACTORS INFLUENCING ENLISTMENT IN NAVY Captain Wilkinson. The question of the attraction to enlistment is, f course, an uncertain quantity. It is a compound of financial benits and the interest in the naval life and the status of industrial conitions outside. For first enlistments interest in naval life and opporinity for employment outside are probably the controlling factors. for reenlistments, however, retaining valuable men in the Navy, the nancial considerations and ultimate retirement features carry acreasing weight.

For instance, we have felt that the reenlistment money granted for many years for men reenlisting was a direct attraction toward reenlistient. There are also these fieet reserve privileges. There is always he question of whether or not the opportunities for employment in he outside world are great or small at the time of discharge. At the resent time our reenlistment figures since the beginning of the fiscal lear are running only 70 percent. What effect would be occasioned on oth original enlistments and on reenlistments by discontinuance of he Fleet Reserve transfer privileges is conjectural, but I believe it could be relatively small as to original enlistments and quite large is to reenlistments.

As to the revision of the figures I have quoted; the original estinate, carefully prepared a brief time since in the Bureau of Navigaion, indicated 1,300 men at a cost of $3,000,000. To give a margin on that I have as a rough estimate changed it, as stated this morning, o something over $1,500,000, but I will insert a further study in nore detail in the record for substantiation of that.

(Captain Wilkinson later supplied the following matter:) With a treaty Navy personnel of 118,000 men, the enlistment of one-fourth of that number, 29,500, will expire annually. Assuming a 75-percent reenlistment, 25 percent, or 7,375, will not reenlist, and, to maintain the Navy strength, that number of first enlistments will be required. In addition, to make up for annual losses other than expiration of eniistment, approximately 3,600 additional first enlistments will be needed.

Thus in round numbers 11,000 new men will be needed, to replace those going put during their careers, rather than at the end. At the top, there will be another group, approximately 1,500, passing to the Fleet Naval Reserve, or, if they have elected to serve their full 30 years to obtain higher retirement pay, to the retired list. In all, therefore, 12,500 men would be needed annually on the average.

Considering this as an entering group, and following it throughout its naral career, an estimate of the number passing to the Fleet Naval Reserve annually may be approximated. In such an estimate the best guide is neceskarily the experience to date with men entering since 1925, since only those men are subject to the new provisions of the law. The Bureau's records show that of such men, in each enlistment group there are the following percentages of original entrants : In first enlistment, 0 4 years' service

93. 06 In sprond enlistment, 4-8 years' service

40. 41 In third enlistment, 8-12 years' service

24. 96 The second enlistment group shows 43 percent of the first group; the third, R2 percent of the second. Extending this trend, and recognizing the attraction toward reenlistment of the nearing transfer privileges, it is reasonable to assume that 72 percent of the third enlistment men would be found in a fourth enlistment, 12-16 years, and 80 percent of this latter group in a fifth, 16-20 Sears. (Compounding these percentages, the final surviving group completing 20 year's service is 14.4 percent of the original entering of 12,500, or 1,800.

Of these 1,800, it is assumed that the relatively low reserve pay will cause many more men to remain on active duty at full pay than at present, when the reserve pay is half again higher than it will then be. It is assumed

therefore that half of these 1,800 remain on active duty, while half, or 900, transfer.

Of these 900, mortality tables show 800 will live throughout the next 10 years. Each annual group will then, through the 10 years on the reserve list, average 850, or there would be 8,500 thereon. Discounting losses for discharge for physical disability, as required by the law, about 8,000 would remain in a pay status.

As previously cited, the maximum pay in this status is $756 per year, which would total approximately $6,000,000. Allowing for men transferred at lower rates of pay, the figure of $5,000,000 can be estimated.

EFFECT OF PREVAILING SYSTEM UPON NUMBER OF NAVAL RESERVES AND EFFICIENCY

OF THE FLEET

Mr. UMSTEAD. Captain, it is true, is it not, that men who serve an enlistment, or one or more enlistments in the Navy and who pass from that service back into civil life, constitute a very important part of the so-called Naval Reserve in the country, whether ther" actually enter the Reserve force or not?

Captain WILKINSON. They form an entirely intangible part, Mr. Chairman, but, of course, we feel that the natural patriotism of the American who has served in the Navy would bring him back to the colors if and when necessary. There may be some disgruntled men, but, in the main, we hope and believe that former Navy men, most of them, would come back.

Mr. UMSTEAD. Then, if that be a correct assumption, the systeni now prevailing has a tendency to decrease the number of available naval reservists, rather than to increase it, does it not?

Captain WILKINSON. Yes; but at the same time it increases the efficiency of the fleet, because we are enabled to keep in the fleet trained men for a very much longer period of time. You will appreciate, of course, that the British first enlistment is for 12 years

Mr. UMSTEAD. But it is also true that the largest percentage of your retirements is between the 20- and 30-year period of service is it not?

Captain Wilkinson. Not at present. At present the majority who are leaving the service on a pay status are leaving after the sixteent! year rather than after 20 years. Of course, the large majority of those who leave the service do not leave on a pay status, that is the majority leave before 16 years.

Mr. UMSTEAD. Most of those who stay in the service as long at 12 years complete the 20-year period, do they not?

Captain WILKINSON. I should say not, sir. A great number, 1 think, will go out after 16 years of service. Mr. UMSTEAD. No substantial percentage of them? Captain WILKINSON. I think so.

Mr. UMSTEAD. No substantial number go out between the sixteent1 and twentieth years, do they, Captain?

Captain WILKINSON. A great number, since they are all men wh were in the Navy prior to 1925 and hence eligible for transfer on pay status after 16 years' service.

CHANGE OF TERMS UNDER WHICH TRANSFERS ARE MADE FROM XAVY TO SATI

RESERVES

Mr. Tuom. Did I understand you to say the other day that this terms on which a man transfers from the Navy to the Naval Resers after 20 years of service had also been changed !

Captain WILKINSON. Yes.
Mr. Thom. In what respect?
Captain WILKINSON. Any man entering after the date of the act

February 28, 1925 enjoys less privileges of transfer than those ho entered before. He may not transfer after 16 years of service, it must wait until 20 years, and when he transfers after 20 years of rvice he gets only 40 percent of his total pay instead of 60 percent his total pay. Mr. Thom. Is that the chief and only change? Captain WILKINSON. And, further, he is subject to discharge if he velops before 30 years a physical disability which would prevent is performing duty in time of war. At the present time a man so hysically disabled and retired short of 30 years' service would be tired, would continue on a pay status, and would still receive the Iditional monthly allowance when he finally arrived at the 30 years. hat is the only other change. Mr. Thom. As I understand it under the new provisions of the law hen he retires after 20 years' service he would only get 40 percent f his base pay plus $15.75. Captain WILKINSON. Forty percent of the base pay right away, nd at the end of 10 more years the $15.75 allowance, and the permaent additions, which is the money he had received previously as dditional for reenlistment. On retirement, provided he had not een discharged for physical disability meantime, he would thus nally get approximately equal pay to those men who transferred nder the old provisions of the law. The controlling law is given in ection 23 of the Naval Reserve Act of February 28, 1925.

TUESDAY, DECEMBER 14, 1937.

REPAIR AND UPKEEP OF THE FLEET

BUREAU OF ORDNANCE

STATEMENT OF REAR ADMIRAL W. L. FURLONG, CHIEF, AND

COMMANDER B. S. GANTZ, FINANCE SECTION

GENERAL STATEMENT

will, sir.

Mr. UMSTEAD. Gentlemen, we shall begin this morning with the Bureau of Ordnance. We have present Admiral Furlong, the Chief of the Bureau.

Admiral, you may proceed to make your general statement, if you Admiral FURLONG. Wery well, sir. The Bureau of Ordnance, under the direction of the Secretary of the Navy, is charged with and responsible for the design, manufacture, procurement, maintenance, issue, and efficiency of all offensive and defensive armament–including armor, torpedoes, mines, depth charges, pyrotechnics, bombs, ammunition, war explosives, war chemirals-and, except as specifically assigned to other cognizance, optical and other devices and material for the control of guns, torpedoes, and bombs.

It is charged with the upkeep and operation of the following nava ordnance establishments and with their repairs, except as excluded in article 484 of the Navy Regulations: (a) Naval gun factories, 161 naval ordance plants, (c) naval torpedo stations, (d) naval proving grounds, (e) naval powder factories, (f) naval ammunition depots (9) naval magazines on shore, and (h) naval mine depots.

PURPOSE OF THE APPROPRIATION “ORDNANCE AND ORDNANCE STORES

This is the maintenance appropriation of the Bureau of Ordnance providing funds for all of its activities, except new construction modernization of vessels, and the salaries of civilian employees within the Bureau, which are provided for by special appropriations

In general, this appropriation is used for the purpose, manufacture maintenance, overhaul, and repair of ordnance material afloat and ashore, and for the maintenance and operation of naval ammunition depots, torpedo stations, mine depots, proving grounds, powder fac tory, gun factory, and ordnance plans.

ESTIMATES, 1939

The estimates for 1939 and the allocation of the appropriation for 1938 are in certain cases based upon the obligations and expenditures for 1937, which are the latest figures available, and, therefore, pro vide the most reliable index of estimated future expenditures. The 1939 estimates also take into consideration:

(a) Operating force plan: That part of the operating force plar which determines the numbers and types of ships and aircraft to be in commission during the fiscal year forms the basis of estimate for ships' quarterly allotments and target practice requirements for both ships and aircraft.

(6) Material maintenance and improvement program: The pro gram promulgated by the Chief of Naval Operations and approve by the Secretary of the Navy sets forth material improvements and alterations to naval vessels to be undertaken during the fiscal rear That part of the program which affects ordnance material is includes in these estimates.

(c) Plant appliances, machinery, and machine tools : The Nava Gun Factory and the Naval Torpedo Station, Newport, are working three shifts, which results in unusual wear and tear on machine took The estimates include a normal replacement of worn out equipment

(d) Availability of ships at navy yards: Availability of shins a navy yards promulgated by the Chief of Naval Operations for the basis of estimates for the overhaul of ordnance outfits of ship during regular overhaul periods.

(e) Modernization of mines and torpedoes: The Bureau of On nance has undertaken a program of modernization of torpedoes an mines where it is in the interest of economy to do so, performing certain amount of modernization each year.

(1) Ammunition shortages: The estimates include funds for a pou tial filling of ammunition shortages.

(g) Research, experiment, and development: Only by constant n search and experiment can the best in ordnance equipment, lo offensive and defensive, be developed for new construction, and

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