higher prices than now prevail, it was the intention of Congress that you should reappraise it, and not dispose of it to the Navy at $8.26 per ton, when you have contracts on your books at the very moment for coal of the same grade at $6.25 per ton.

Admiral COONTZ. Should we keep that old coal?

Mr. KELLEY. Oh, no. The Secretary is authorized to reappraise the coal at current market prices and issue it to the Navy at that price instead of at those higher prices. You are using up your appropriation unnecessarily by paying $2 per ton more than current prices.

Admiral POTTER. It was reappraised last summer at $7.50 per ton. and since that time it has dropped again.

Mr. KELLEY. Why not reappraise it again? There is no limitation upon the number of appraisals, is there?

Admiral POTTER. No, sir: I think not.

Mr. REED. We have taken the attitude when we reappraise material on hand at current market prices that we should follow the practice of averaging the prices, as we have averaged them in the past, and as we buy cheaper than we paid for the stock on hand it would be averaged at a lower price. These prices that we are dealing with are east coast prices, and our transportation to the west coast has been costing a good deal, as high as $14 per ton having been paid, although recently we have gotten some very favorable charters.

Mr. KELLEY. With the oil-burning ships on the west coast and coal-burning ships on the east coast, there should not be much transportation of coal from one coast to the other.

Admiral POTTER. Commander Cobey, who made the contracts, can state that.

The CHAIRMAN. Before he does that I should like to make this observation, that every business institution in the United States that had large stocks of supplies of all kinds at war prices had to inventory those stocks down to the present prices. That does not mean that they are going to hold them; they will use them. You have in the Navy about $400,000,000, or something like that, of supplies on hand. Those supplies ought to be worked down and worked down at any price, whatever the price may be, justified by the conditions, instead of coming to the Treasury of the United States to take the money out of the pockets of the taxpayers by endeavoring to use stocks which you have on hand purchased at war prices.

Admiral POTTER. Of the 30,000 items of naval supplies, we have worked down over 25,000 since last March. Mr. Chairman, will you permit Commander Cobey to answer that question?

The CHAIRMAN. Certainly.

Commander COBEY. $6.25 is the average price on this coast, but there is coal consumed by naval vessels on the Atlantic, on the Pacific coast, passing though the canal, and on the Asiatic station-a great many coal burners, many of which are small vessels. It costs us an average of $8.26 the world over. It costs us from $4 up to transport the coal a long distance. That is what makes the average $8.26.

Mr. KELLEY. I understand that Admiral Coontz redistributed the fleet with a view to making these economies as far as possible by putting the coal burners on the Atlantic coast and the oil burners on the Pacific coast?

Admiral COONTZ. It is a very good scheme to save money, to base oil burners close to oil and the coal burners closer to the coal.

FUEL-OIL STOCKS, COSTS, AND ISSUE PRICES.

Mr. KELLEY. Is not the same thing true as to the oil supply?
Admiral CooNTZ. Yes, sir.

Mr. KELLEY. How much oil have you on hand?

Admiral PorTTER. 1,800,697 barrels on October 1.

Mr. KELLEY. About 2,000,000 barrels in round numbers.

Admiral POTTER. Yes, sir; roughly.

Mr. KELLEY. What is your best oil contract now for Pacific coast. deliveries?

Admiral POTTER. $1.48; that is the lowest.

Mr. KELLEY. That would be in San Francisco Bay?

Admiral POTTER. Just above that, what they call Richmond.

Mr. KELLEY. When we made the appropriation last summer do you remember what we figured the price of oil per barrel? My recollection is $3.76.

Admiral POTTER. $3.85.

The CHAIRMAN. Against $1.48 that you are paying.

Mr. KELLEY. On the Pacific coast?

The CHAIRMAN. Yes, sir.

Mr. KELLEY. There were contracts for Pacific coast delivery higher than that. What was the number of barrels under contract for Pacific coast delivery?

Admiral PoTTER. Nine hundred thousand barrels.

Mr. KELLEY. For all the oil you wanted?

Admiral POTTER. At $1.48; yes, sir.

Mr. KELLEY. Coming to the other coast, what is the situation on this coast? You have sort of a white elephant on your hands on the Atlantic coast.

Admiral POTTER. You are referring to the New England Oil Co.! Mr. KELLEY. Yes, sir.

Admiral POTTER. It is now $3.057.

Mr. KELLEY. There are some trimmings that go in?

Admiral POTTER. No, sir; that is the whole thing. You remember the advance of $3,500,000 to finance their plant. In consequence we paid $3.057 and deduct $1.66 per barrel.

Mr. KELLEY. And you are getting your money back in oil?
Admiral POTTER. Yes, sir; as the deliveries are made.

Mr. KELLEY. At what price?

Admiral PoTTER. $3.057.

Mr. KELLEY. That was a bad contract as things have turned out. Admiral POTTER. I am not prepared to say that it was not a good thing to do. During the one preceding year we got oil cheaper than we otherwise would have done, by making a long-term contract. I am not certain that it was a bad thing to do under the circumstances. Mr. KELLEY. Do you get all of your oil on the east coast through that company?

Admiral POTTER. We have other contracts, but just now we are taking all the oil from the company with whom we have this particular contract.

Mr. KELLEY. In order to get the money back?

Admiral POTTER. Yes, sir; precisely. We also have a contract with the Texas Co. at $2.47.

Mr. KELLEY. For delivery where?

Admiral POTTER. At Port Arthur: and we have a contract with the Gulf Refining Co. also at $2.45. We have not drawn very much oil under either.

Mr. KELLEY. How long will this other contract run?

Admiral POTTER. The contract with the New England Oil Co. ? Mr. KELLEY. Yes, sir.

Admiral POTTER. That will run out about the 1st of April.

Mr. KELLEY. Taking the Pacific coast and Atlantic coast contracts, what do you figure your price for oil will be this coming year? Admiral POTTER. $2.74.

Mr. KELLEY. You figured in the estimate on $3.85. Based on your present consumption, what will be your total consumption of oil?

Admiral POTTER. Thus far, for the first three months-July, August, and September-we have issued oil in barrels, 2,225,414. Mr. KELLEY. That would be nearly 9,000,000 barrels.

Admiral POTTER. Yes, sir.

Mr. KELLEY. If you save a dollar a barrel or $1.12 a barrel on almost 9,000,000 barrels, based on the estimates, you will have a leeway of $10,000,000?

Admiral COONTZ. I should like to state, Mr. Kelley, that the amount spent the first quarter was no criterion of what may be spent later. As soon as the bill was passed the most stringent orders went out to every ship and every squadron so that the 8,000,000 barrels would be reduced by possibly several million before the end of the year.

Mr. KELLEY. The estimate was based on a very much higher figure than you are obliged to pay?

Admiral CoONTZ. Yes, sir.

Mr. KELLEY. And so the money will go very much further than you anticipated?

Admiral CooNTZ. Yes, sir.

GASOLINE CONSUMPTION AND ISSUE PRICES.

Mr. KELLEY. Now, about gasoline?

Admiral POTTER. We have issued in the last quarter 1,093.483 gallons at an average of 22.6 cents.

Mr. KELLEY. What was the estimate per gallon?

Admiral POTTER. Twenty-seven cents.

Mr. KELLEY. There is a saving of 4.5 cents per gallon. How much will that amount to in saving on gasoline between the estimate and the actual price paid for the quarter that you were talking about? Admiral POTTER. About $55,000.

Mr. KELLEY. That will be about $220,000 for the year on gasoline? Admiral PoTTER. Yes, sir. You will remember that what we asked for was not what we got in the appropriation.

Mr. KELLEY. No. Do your records show where this gasoline is used?

Admiral POTTER. Yes, sir. I have not brought the individual ships, but I have the classes.

Mr. KELLEY. Have you the record as to the submarine chasers; they are very voracious gasoline consumers?

Admiral POTTER. Yes, sir. We have an estimate. The estimate is 488,000 gallons, at a value of $122,240.

Mr. KELLEY. You mean that you have used that much?

Admiral POTTER. The first quarter. That is an estimate. It is very difficult to learn what those small ships have actually done. That estimate has a fairly strong foundation, however, since it is based on what was done in the preceding year.

Mr. KELLEY.. At that rate it costs $500,000 to run the submarine chasers a year?

Admiral POTTER. $448,000, if we average it at that rate.

GASOLINE STOCKS AND COST PRICES.

Mr. KELLEY. Have you a stock of gasoline on hand?
Admiral POTTER. Yes, sir.

Mr. KELLEY. Do you buy it from month to month?

Admiral POTTER. No, sir. It is pretty dangerous to keep, and so we do not carry it. We had 589,229 gallons on October 1.

Mr. KELLEY. Is 22.6 cents the wholesale price of gasoline now? Admiral POTTER. No, sir; that is the average price at which we issue. From 16 cents, boat deliveries, to 24 cents in drums. Mr. KELLEY. How do you buy it?

Admiral POTTER. We buy it both ways.

Mr. KELLEY. Any greater quantities in boat deliveries?

Admiral POTTER. Just about the same as between tank cars and drums.

Mr. KELLEY. It would average how much?

Admiral POTTER. Nineteen cents.

Mr. KELLEY. Half way between 16 and 22 cents?

Admiral POTTER. Yes, sir.

Mr. KELLEY. The same situation would apply there as to coal in adjusting figures?

Admiral COONTZ. Yes, sir. Of course, it would be the same thing to the Government in the long run.

Mr. KELLEY. The Secretary of the Navy has full authority not only in the matter of fuel but in the cost of other supplies to adjust prices to meet current prices.

Admiral POTTER. You understand, they were adjusted in June?

COAL CONSUMPTION.

Mr. KELLEY. Yes, sir. Just a few more words about the use of the oil and fuel. Do you remember, Admiral, what number of tons of coal you estimated you would need for the coming year?

Admiral CooNTZ. No, sir.

Admiral POTTER. The original estimate was 894,500 tons at $7.65. Mr. KELLEY. How much coal have you used during the first three months?

Admiral PоTTER. 163,314 tons.

Mr. KELLEY. Where is that coal used?

Admiral PoTTER. In connection with the vessels of the fleet.

Mr. KELLEY. Will you increase the consumption of coal during the balance of the year or will it be less?

Admiral COONTZ. It will be less, sir.

Mr. KELLEY. You will not use anything like the 800,000 tons you estimated for?

Admiral COONTZ. No, sir.

Mr. KELLEY. How much do you estimate now?

Admiral COONTZ. The revised estimate is 577,000 tons.

Mr. KELLEY. That is about what you think you will use?

Admiral CooNTZ. I take it, it will be that or less. The ships are all, as I said, on allowances of fuel, greatly restricting their cruising. Mr. KELLEY. In case the committee decides not to increase your fuel allowance, of course, you will apportion the money left to the ships and get along with that?

Admiral COONTZ. I take it the Secretary will so arrange. The money would not be exceeded. I should like for him to speak for himself on that. In this connection, you notice that the original estimate was $37,000,000 and it was reduced to $30,000,000. That is what we are still holding down on.

CONSUMPTION OF FUEL OIL BY DESTROYERS.

Mr. KELLEY. I remember that very well.

What is the estimate for the oil for the destroyers, the total estimate for the destroyers, based on the steaming supplied to you by the Chief of Operations?

Mr. REED. About 2,100,000 barrels.

Mr. KELLEY. Was that the estimate?

Mr. REED. Yes, sir.

Mr. KELLEY. For three months that would be 500,000. How much oil have you used on the destroyers during the first three months? Admiral POTTER. 1,208,333 barrels.

Mr. KELLEY. There must be some mistake about that. That would be at the rate of 5,000,000 barrels of oil for the destroyers alone; at $3 a barrel, that would eat up nearly the whole appropriation. Admiral POTTER. 1,208,333 barrels.

Mr. KELLEY. At that rate, during the year, it would be almost 5.000.000 barrels. Have you the amount used on the destroyers in reserve?

Mr. REED. That includes both the destroyers in reserve and in commission.

Admiral POTTER. We have various other auxiliaries.

Admiral COONTZ. I would like to state that there were two reasons for that large amount. One was the search we made in the Pacific for the missing ship, which we never found, with all of her men. The second was that the ships were up at Newport during the summer having maneuvers. As soon as it came to our notice that there was to be any such extensive amount we sent them down to Charleston, S. C., and placed them on allowance.

Mr. KELLEY. That brings us right back to the chairman's original proposition, that the only safe way to do unless you wish to wake up and find that it is too late-the thing is done-is to allocate a certain amount of oil to these ships. Here you have pretty nearly the whole appropriation, $14,000,000 or $15.000.000, if you go on at the same rate, used up on destroyers alone.