COMMITTEE ON APPROPRIATIONS

EDWARD T. TAYLOR, Colorado, Chairman

MARCELLUS C. SHEILD, Clerk

SUBCOMMITTEE ON NAVY DEPARTMENT

MESSRS. UMSTEAD (chairman), THOM, SCRUGHAM, FERNANDEZ, CASEY, DITTER, and PLUMLEY

1-24-38

NAVY DEPARTMENT APPROPRIATION BILL FOR 1939

HEARINGS CONDUCTED BY THE SUBCOMMITTEE, MESSRS. WILLIAM B. UMSTEAD (CHAIRMAN), WILLIAM R. THOM, JAMES G. SCRUGHAM, JOACHIM 0. FERNANDEZ, JOSEPH E. CASEY, J. WILLIAM DITTER, AND CHARLES A. PLUMLEY, OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, IN CHARGE OF THE NAVY DEPARTMENT APPROPRIATION BILL FOR THE FISCAL YEAR 1939, ON THE DAYS FOLLOWING, NAMELY:

WEDNESDAY, DECEMBER 8, 1937.

Mr. UMSTEAD. Gentlemen, we have met to conduct the hearings on the appropriation bill for the Navy Department and the naval service for the fiscal year 1939. We are delighted to have with us this morning Mr. Edison, the Assistant Secretary of the Navy.

Mr. Secretary, if you are ready to proceed, we shall be glad to hear from you at this time.

STATEMENT OF HON. CHARLES EDISON, ASSISTANT SECRETARY OF THE NAVY, ACCOMPANIED BY LEWIS COMPTON, SPECIAL ASSISTANT TO THE SECRETARY OF THE NAVY

Mr. EDISON. Mr. Chairman and members of the committee, the budget officer's statement gives an outline of what is contained in the 1939 estimates as submitted to your committee.

The Chief of Naval Operations will give you the Navy Department's estimate of the present world situation. To this estimate I heartily subscribe.

I wish to invite attention particularly to the necessity of continuing the orderly replacement of over-age combatant ships and auxiliaries. Additional authorization for building auxiliary vessels will be requested at the coming session of Congress. Detailed justifications of this replacement program will be presented by the Chief of Naval Operations.

CONDITION OF THE FLEET AND NAVAL SHORE ESTABLISHMENT

During the course of the year, I have had occasion to inspect the fleet and the shore stations of the Navy. The fleet is in a high state of efficiency as regards morale and training. The shipbuilding program is proceeding as rapidly as practicable. The increment of 22 vessels, including two battleships, requested for commencement in 1939 is amply justified by the present unsettled world conditions.

The start that has been made in the replacement of vessels of the auxiliary class should be continued, as there now exists a deficiency

in numbers, and most of the auxiliaries are deficient in speed, obsolete in design, and are deteriorating due to age.

Every effort is being made to expedite the naval shipbuilding program. During the past year, steps have been taken to reduce the number of changes of design, to decentralize material procurement, to expedite the completion of ship plans, and to obtain clarification of the provisions of the Walsh-Healey and other acts in order to permit expeditious procurement and manufacture.

DECENTRALIZATION OF MATERIAL PROCUREMENT

Mr. UMSTEAD. Mr. Secretary, you state that steps have been taken during the past year to decentralize the procurement of material. I was under the impression that we had intentionally centralized procurement in the Navy, in the interest of efficiency and economy. Just what do you mean by the decentralization of the procurement of material?

Mr. EDISON. What I mean by that is that there are many special items that can be taken care of quickly at the yards and under the direction of the manager that do not have to be centralized through Admiral Peoples' office, and the Bureau of Supplies and Accounts, and that can much better be taken care of locally; we have been trying to segregate those items in order to expedite procurement.

Mr. UMSTEAD. Do you have any limit upon the amount which officers at outlying stations may expend without purchasing through the Procurement Division?

Mr. EDISON. So far we have made no changes in the existing regulations or rules. We have been making more studies as to what could be done in that direction. It has been more in the line of expediting the approvals in Washington rather than any change actually made, so that they can buy directly.

Mr. UMSTEAD. Then am I to understand that the effect of what you have done has been merely to speed up transactions, and that a real change in the system has not occurred?

Mr. EDISON. Not as yet. We are not prepared to make any radical change, because we have not studied the situation sufficiently. But there is too much delay in procuring small items and supplies of one sort and another, and more attention should be paid to the local managers' requests, so that when they reach Washington they go through more quickly.

I believe that eventually we will be in a position to recommend that certain standards or certain limits be set up which will give the local managers and commandants greater latitude in what they can purchase directly.

CLARIFICATION OF WALSH-HEALEY ACT

Mr. UMSTEAD. You also stated that you had endeavored to obtain clarification of the provisions of the Walsh-Healey Act. Just what clarification, and by whom, do you refer to there, Mr. Secretary?

Mr. EDISON. When I first arrived here, on January 15 of last year, the Walsh-Healey Act was a relatively new act. I mean the administration of it had not yet been perfected. There were a great many questions that came up as to what could or could not be done under

the Walsh-Healey Act. Through cooperation with the Labor Department we have tried to obtain definite statements as to what are the meanings, not only of the language of the act, but of the rulings made under the act. Certain general rulings necessarily had to be made in the beginning in order to get the machinery going, which caused hardship to the Navy, particularly in the acquirement of certain types of materials that we need. We have had very real cooperation from the Labor Department in trying to iron out those difficulties, and I think now the act is working fairly smoothly, because we know just what is meant by the language that they use and how they will interpret that language in the administration of the act.

Mr. UMSTEAD. Of course the Navy Department is complying with the regulations of the Labor Department under the Walsh-Healey Act?

Mr. EDISON. Oh, certainly.

Mr. PLUMLEY. Mr. Secretary, reverting to what you had to say about steps having been taken to decentralize material procurement, I should like to ask if any orders or official memoranda have gone out to these heads of departments or managers limiting or extending their authority definitely, so that they know with what authority they may proceed?

Mr. EDISON. None to my knowledge, officially. The matter is still in the investigation stage, you might say.

Mr. PLUMLEY. But it is an attempt to cut out a lot of red tape? Mr. EDISON. My own experience in the past in industrial life has been that a great many hardships and unnecessary expenses are placed on any organization when you try to centralize items which should not be centralized. There are certain things in which great advantage can be obtained from centralizing and buying in very large quantities. There are other things-for example, repair parts to machinery, something that is special and local to the particular yard interested-that could much better be handled and much more expeditiously handled locally. They have certain latitude permitted them now, and nothing has yet been done that materially changes the existing standards on that sort of thing. But I do believe that something can be done which will cause considerable economies, and that is being rigorously investigated.

Mr. PLUMLEY. I wanted to know just how far it had gone.
Mr. UMSTEAD. You may proceed, Mr. Secretary.

STUDY AND REVIEW OF ACTS AFFECTING WORK OF THE NAVY DEPARTMENT

Mr. EDISON. I have had an examination made of a number of acts that tend to restrict the freedom of action of the Navy in doing business, you might say. I have here a compendium of the different acts that have been passed; some of them very old, and most of them, of course, with regard to personnel. I just got together this study to see in what way we could review these acts, to see whether there were any changes in them that should be made that would bring them up to date and give a little more latitude in cases that impair efficient and orderly progress of work in the Navy.

The policy of maintaining a shore establishment sufficient to maintain the existing fleet and the laying down of every other vessel in a Government yard in accordance with the Vinson-Trammell Act has been continued.

MACHINE TOOL REPLACEMENT

The program of machine tool replacement in industrial yards is being continued at a rate somewhat less than the recommendation of a special board convened for this purpose. A survey made in 1930 showed the average age of tools in the yards to be 19 years, which is considerably greater than good practice demands. To maintain the average age constant at 19 years would require an annual expenditure of $1,550,000, which would have included replacements and additions. The actual annual expenditures from 1930 through 1937 have averaged $1,195,000, as a result of which it appears that the average age is increased to something above 19 years rather than decreasing to the goal of 15 years which was set as a desirable standard.

The funds just mentioned are those appropriated to the Bureaus of Construction and Repair and Engineering.

A reasonable standard apepars to be to furnish machine tools so that only one shift is required in time of peace to provide for peacetime requirements. With this standard we would be prepared to more than double our production on a three-shift basis. At the present time, every yard has one or more shops which must work more than one shift under present peacetime demands. A recent survey shows that there now exists a need for some $16,000,000 worth of new tools. Budgetary requirements have, however, limited the amount requested for 1939 to $1,500,000, divided equally between Engineering and Construction and Repair.

Replacement of machine tools at ordnance and aviation plants are provided for in the specific appropriations of those bureaus and are not included in the survey mentioned heretofore. The only source of supply for torpedoes is the naval torpedo station at Newport. The facilities there, working on a three-shift basis, are unable to produce torpedoes rapidly enough to keep pace with the present building program and to supply replacements for torpedoes lost in target practice. We are proposing in these estimates to open the naval torpedo station at Alexandria and provide additional facilities in the way of machine tools and plant appliances to augment the production of torpedoes for the Navy. The present situation in regard to the production of torpedoes is a highly dangerous one from the standpoint of national defense.

I cannot emphasize that too strongly.

GUN MANUFACTURE

The manufacture of guns is concentrated at the Naval Gun Factory and Army ordnance arsenals. In wartime the Army would require all their facilities, which the Navy, in effect, maintains in peacetime, and we would actually have less capacity for producing guns for the Navy on the outbreak of war than we have at the present time. Commercial sources of gun manufacture should be fostered and encouraged.

CHANGES REQUESTED IN LANGUAGE OF BILL

The Navy Department is submitting proposals for two changes in language in the appropriation act to liberalize restrictions now imposed upon manufacture and procurement.