Mr. LAWTON. Will it affect the adoption of this resolution? Would this have the effect of preventing the removal of the docks? That is the first thing that comes up, because it is in the Secretary's report. Mr. BUTLER. I think it is provided by law that the plant shall remain.

Mr. ESTOPINAL. I don't think there is any danger of removing the docks.

Mr. BUTLER. It would require an act of Congress.

Mr. LAWTON. Here's the report of the former committee. What will the committee do with this report? Will it conflict with this? The CHAIRMAN. No; it won't conflict at all.

Mr. LAWTON. There will be two distinct propositions, then. Then the adoption of this would not have the effect of removing the docks. The CHAIRMAN. It can not be removed until we authorize the Secretary of the Navy to remove it.

Mr. TRUFANT. I just want to add one word, gentlemen. The crucial point is the money that the Government has expended for a purpose that may all be done away with in one night. It is not only the question of this $15,000,000 which is expended at the mouth of the Mississippi River and the $3,000,000 on the navy yard. In 1881 we assembled at St. Louis; every State in the Mississippi Valley was there; Senator Gibson, who represented Louisiana here was the father of the Mississippi River Commission. We assembled here in Washington, also before Congress, in 1883. I haven't the figures in hand to say how much money has been expended to improve the navigation on the Mississippi River, but that wants to be taken into consideration, and the reason for improving it. What we presented to Congress at that time was this proposition: The exportable surplus of the country is well on the west side of the Mississippi River. The prices obtained for the exportable surplus for any crop fixes the price for the whole crop. If you appropriate money to deepen and straighten the channels of the Mississippi River so that the West can ship our corn and wheat to the seaboard we get more for the entire crop. Now, take it the other way, close these channels at the mouth of the Mississippi River. The railroads are all philanthropies. Of course they are not going to charge you any more because the mouth of the Mississippi River is clogged up.

Mr. BUTLER. We demand proof on that.

Mr. TRUFANT. But if it were forced naturally to go across to the eastern seaboard for five years at greater cost, can you figure what 5 or 10 per cent increase in freight means on wheat and corn? Mr. BUTLER. How about to Galveston?

Mr. TRUFANT. Galveston, if you realize it, can not take care of a modern ship, neither can Pensacola or Mobile, and it never will provide more than a 28-foot channel.

The CHAIRMAN. Thirty feet?

Mr. TRUFANT. Thirty feet, I accept the correction; but the shipbuilding of to-day will give us a displacement of twenty-five to twenty-eight thousand tons, and requires a 30 or a 35 foot channel. It is the controlling influence of those passes on the freight rates to be paid on this commerce of the Mississippi Valley that you want to discuss.

Whereupon the committee adjourned subject to the call of the chairman.

[No. 15.]

THE COMMITTEE ON NAVAL AFFAIRS, Tuesday, March 12, 1912. The committee this day met, Hon. Lemuel P. Padgett (chairman) presiding.

ADDITIONAL STATEMENT OF REAR ADMIRAL N. C. TWINING, UNITED STATES NAVY, CHIEF BUREAU OF ORDNANCE.

The CHAIRMAN. There is a matter supplemental to something which has been stated heretofore that Admiral Twining wants to explain further. Admiral Twining, we will be glad to hear you.

Admiral TWINING. The matter on which I wanted to say a few words to the committee is that which is referred to in the letter from the Secretary of the Navy dated January 31. 1912, addressed to the chairman of this committee on the subject of annual and continuing appropriations. The theory which we have always followed in the Navy Department in regard to appropriations and the theory which has been justified by the action of the Treasury Department, which warrants the appropriations to the Navy Department, is that an appropriation made for the maintenance of the Navy, for keeping it up, making repairs, and caring for all the ordinary authorized current expenditures, was essentially an annual appropriation and was expendable only during the year for which it was made. The law (18 Stat. L., 110, sec. 5) allows a period of two years after the expiration of the first year in which to settle up the accounts before the balance is turned into the surplus fund of the Treasury, but no obligation can be incurred except during the first fiscal year.

There is another class of appropriations which are made by Congress for specific purposes, such, for instance, as for the construction of a building or the manufacture of a given number of guns, or carrying out a definite program of alterations or improvements in ships. It has always been held, at least for a number of years past, that these appropriations are continuing and specific, that the sums appropriated need not be expended during the fiscal year which is covered by the bill, but that they are available until used. This view of the matter has heretofore been supported by the fact that such appropriations have been digested and warranted by the Treasury Department as being without year.

A case arose last autumn in which there were certain sums due to projectile contractors on contracts which had been made under the appropriation "Ordnance and ordnance stores" of 1909. Owing to various causes, for which neither the Government nor the contractors were at fault, it was not possible to complete these contracts and make deliveries under them in such time that payments could be completely made before the expiration of the three-year period for which the money was available. The balances were therefore covered into

the Treasury on the 30th of June, 1911, and it was not possible to make any further payments under these contracts to the projectile manufacturers.

On the 7th of August, 1911, I addressed a letter to the Navy Department, in which I showed that bills or obligations amounting to about $635,000 were still payable under those contracts, and I asked the department if it would be proper to pay those bills out of the appropriation "Ammunition for ships of the Navy," which was an appropriation without year and one that had been so digested and warranted by the Treasury Department, and under which there were funds available.

The CHAIRMAN. Please put a copy of that letter in the hearings. Admiral TWINING. Yes, sir. (See Appendix A.)

Under date of August 16, 1911, the department, by indorsement on the letter mentioned, authorized the procedure which had been recommended by me, but stated that certain reserved payments on bills that had been already paid out of the original appropriation could not be paid out of the appropriation "Ammunition for ships of the Navy." In explanation of that, I would say that when any bill is paid under a contract with the Navy Department a certain percentage, usually 10 per cent, is reserved until the entire contract is completed. That is for the purpose of covering any liquidated damages which might arise during the course of the contract.

The CHAIRMAN. It was held that they could not be paid?

Admiral TWINING. That the sums reserved could not be paid. The 90 per cent of the bills having been already paid out of the original appropriation, it was held that the remaining 10 per cent could be paid only from that appropriation, and that appropriation having lapsed, there was no means of paying that money without asking Congress for a deficiency. I felt that a certain amount of injustice was being done to the contractors in withholding these reservations. if there was any possible way in which they could be paid, and, accordingly, on the 23d of October I addressed another letter to the Navy Department, asking for a further consideration of this point. A copy of this letter is appended, marked “Appendix B."

Mr. TURNBULL. I would also suggest that you file a copy of the decision of the comptroller in reference to the matter so that we can see what it was.

Admiral TWINING. I will be glad to do that.

The sum involved in this case was $25,596, being an amount of 10 per cent reservation on five bills for projectiles furnished under the contract drawn under the appropriation "Ordnance and ordnance stores," of 1909.

The Navy Department, not feeling it was competent to make a final ruling on this point, referred the matter to the Comptroller of the Treasury. The comptroller, under date of November 13, 1911, rendered a decision, a copy of which is submitted herewith (see Appendix C), in which he ruled that these reservations could not be paid from the appropriation "Ammunition for ships of the Navy"; the arguments used by him indicated that the appropriation "Ammunition for ships of the Navy," was considered by him to be not a continuing appropriation, but an annual appropriation.

The CHAIRMAN. Does he set out in this decision a ruling as to the various items that are annual? In a letter of the Secretary he men

tions various items. For instance, "Ammunition for ships of the Navy, Bureau of Ordnance," "New batteries for ships of the Navy, Bureau of Ordnance," "Fire control for ships of the Navy, Bureau of Ordnance"-all of these coming under the scope of the ruling that he made, as I understand.

Admiral TWINING. That letter of the department is written in consequence of a second ruling of the comptroller. In the ruling I have just referred to, November 13, 1911, he did not specifically refer to those other appropriations, but the language of the letter was such as to throw doubt on their status, and further correspondence was necessary to place the Navy Department in a position of certainty as to whether it had the right to expend money from these and certain other appropriations.

The CHAIRMAN. In view of a certain ruling?

Admiral TWINING. I submit a copy herewith of the comptroller's ruling of January 11, 1912, which is the one which treats of the various other appropriations referred to in the letter of the Navy Department.

The decision of the comptroller of January 11, 1912, referred to is appended, marked "Appendix D."

The net result of the ruling of the Treasury Department is that a number of appropriations under which the Bureau of Ordnance has been working are no longer available. It has been necessary, therefore, to stop certain work. As this work had already been submitted to Congress and had been approved by it and the appropriations made for it, it appeared to me and to the Secretary of the Navy that it was proper to ask Congress to so legislate that we could have the money which had already been appropriated, and which, on account of this administrative ruling, was no longer available.

The CHAIRMAN. Have you applied to the Appropriation Committee for a deficiency appropriation to cover the past amounts?

Admiral TWINING. Yes, sir; at least, I have laid the matter before the Navy Department, and I presume that it has or that it will, at the proper time, refer it to the Appropriations Committee.

The CHAIRMAN. Now, if you get an appropriation in the deficiency bill to cover those items of the past, will it be recurring necessarily in the future, or will the two-year leeway limit that you have now, knowing of this ruling, be sufficient to cover future contingencies?

Admiral TWINING. The only case in which a deficiency actually exists is under the appropriation "Ordnance and ordnance stores," 1909, where the balance unexpended on the 30th of June, 1911, was covered into the surplus fund of the Treasury on that date, leaving certain obligations still outstanding against the appropriation; so it has been necessary, in view of the comptroller's ruling that these bills can not be paid from a current appropriation, to ask for a deficiency. That is the only case in which this matter could be or will be affected in that way.

The CHAIRMAN. What I am speaking of, knowing the ruling of the comptroller, that he has ruled as he has and you having two years in which to settle up obligated amounts, will it be likely to occur hereafter that you will be unable during that two years to handle the matter and will you again be placed in the same position you are now, in the event that no legislation takes place, making them continuing appropriations?