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Combined fleet maneuvers were canceled. This I consider a loss to the fleet and to the Navy, but it was done with the instant need for economy in view even at the cost of naval efficiency. All full power trials ordinarily held by all vessels at least once a year, as a test of their engineering installations were canceled. The Atlantic and Pacific fleets moved to their target practice grounds at my orders, as I considered that target practice must be carried on at any cost. These fleets are now holding these gunnery practices. However, with the greatest reluctance I ordered that both fleets hold not a single maneuver except directly in connection with target practice.

Orders have been issued which reduce the steaming of the destroyers at Charleston, S. C., and at San Diego, Calif., in reduced commission to the insignificant total of eight hours per month.

With great regret the Navy Department has been forced to decline the requests of many seaport cities, seconded by Members of Congress, that certain war vessels be allowed to visit their ports on some special occasion and work with the local authorities in making the occasion a more brilliant success. The Navy Department likes to do this, as it not only gives the crews a respite and holiday in the midst of their gunnery and engineering work, but also affords an excellent opportunity for all American citizens to become acquainted with the Navy and so foster better understanding. I wish that Members of Congress, when opportunity offers, would visit the fleet or individual units of the Navy and see them under working conditions.

Many activities outside of the fleet activities must be carried on, however, in spite of scarcity of funds. As you gentlemen know, we have for the protection of American interests and the furtherance of the national policy, special squadrons in Asiatic waters, in the Latin American waters, and in the Near East region. Many special cruises are made at the request of the State and other departments, such as carrying American representatives, carrying ministers, and trips such as bringing home the unknown American in November last. Our foreign possessions require special trips to be made by naval transports when mercantile transportation is not available. Emergency conditions arise, such as that which occurred at the mysterious disappearance of the U. S. S. Conestoga in Pacific waters, where every available destroyer was compelled to be sent on search. I cite these various phases of the situation to show how many activities all involving expenditures the Navy is required to carry on, regardless of war or preparation for war. In view of all these conditions, I hope you will realize that the Navy Department has done its best to carry out the spirit of the restrictions placed upon this appropriation by Congress.

* The whole general situation regarding the year's schedule for both fleets and all other craft was discussed and was approved by me as being in the best interests of the Navy and of the Government.

You have before you other deficiency items. In the matter of fuel I simply felt it my duty to here acquaint you with all the facts in the case, not only as this is the most pressing and important matter now, but because the estimates of this item for 1923 will be before this committee soon. Our estimates for 1923 are based on "no deficiencies." Therefore it is most desirable that the appro

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priation be adequate. We must cut our cloth to whatever allowance Congress makes.

In this connection, I desire to present for the committee's consideration the following documents, A, B, C, D, and E, being the orders and papers prepared by my direction in furtherance of economy of naval funds. The attention of the committee is invited to an extract from "Acts and resolutions, relating chiefly to the Navy. Navy Department, and Marine Corps," passed at the first session of the Sixty-sixth Congress, 1919. Under fuel and transportation, Bureau of Supplies and Accounts, it is provided “That the United States Shipping Board shall not require payment from the Navy Department for the charter hire of vessels furnished or to be furnished from July 1, 1918, to June 30, 1920, inclusive, for the use of that department when such vessels are owned by the United States Government * * *." Please note that this deprives the Navy Department of assistance rendered by the Shipping Board during the current fiscal year, requiring additional amounts to come out of our appropriation.

I also lay before you a statement in the nature of a balance sheet concerning fuel expenditures and fuel needs for the fiscal year 1922.

That balance sheet I should like to go over very briefly. It is accompanied by individual statements explaining each item. It is practically similar to an ordinary business balance sheet showing, first, the appropriation of $17,500,000, and then in detail by expenditures to November 30, coal and fuel oil, so much, gasoline, upkeep and operation of fuel depots and plants, charter hire for transportation of coal, charter híre of Shipping Board tankers, water, ice, miscellaneous items, and Alaskan coal development, for which we have spent up to date only $200,000.

uly 1, 19harter hire ore quire payment That the Team

COAL DEVELOPMENT IN ALASKA.

The CHAIRMAN. What progress is being made in the coal development in Alaska ?

Secretary DENBY. We are making some progress, but personally I do not think that we should go into that at all; I think that belongs to the Interior Department.

The CHAIRMAN. I agree with you.

Secretary DENBY. I do not see any particular reason why the Nary should be up there at all.

The CHAIRMAN. You are drilling coal, not mining it?

Secretary DENBY. Just drilling, investigating, and studying the whole situation. It is one of those things that I see no reason why the Navy should have been in. The Interior Department is quite capable of continuing that.

The CHAIRMAN. You are not authorized to mine coal ?

Secretary DENBY. No; I do not think we are. Purely development work.

The CHAIRMAN. You are just ascertaining whether the coal is there, the kind, and so forth?

Secretary DENBY. Studying the coal beds. I do not see any resson on earth why the Navy should keep up that work. I should not recommend the continuance under the Navy. The Interior Department can do it just as well as we can. There is a fuel consumption of $14,000,000 and a balance on November 30 of $3,454,000, which

is carried forward, and then the next item shows the consumption in December, and that is covered by Statement B, carried on down to December 31 showing then left a balance of $1,603,000 available. We still had and possibly at this moment have a little bit left in the appropriation, but it is very little. I am very anxious not to incur a deficiency, and we might have this supplemental legislation to prevent it. The balance January 1, 1922, was $1,603,000. Then we have estimated expenditures from January to June for coal of $2,419,000, fuel oil, $8,009,000, motor gasoline, $465,000, this is all by tons and barrels, and so forth. I will not stop now to go into that. Maintenance of coaling bunker depots and floating equipment, $496,957, tug hire, $96,000; water, $185,500; ice, $20,000; miscellaneous (electric current, storage, compressed air, steam, etc.), $117,000; Alaskan coal development, which we can stop, $500,000 more for the remaining six months, showing a total of $12,312,299.52, which deducted from the balance on January 1, $1,603,000, leaves an indicated deficit of $10,709,120.75. That is the figure that we wish to lay before you.

The CHAIRMAN. Does that take out the $500,000?

Secretary DENBY. No, sir; that leaves it in, but it seems to me that it more properly belongs to another department of the Government and I am perfectly willing to see it come out. I am not intimately enough acquainted with what is actually being done to know whether we can get out and save the entire amount.

The CHAIRMAN. I understand from an examination of other gentlemen connected with the Alaska Railroad that your people have simply been drilling?

Secretary DENBY. Yes, sir. It is probable that we could lay off very quickly and save all of the half million dollars, but I can not say. You probably know more about that than I do.

The wording of the law is: * * * for use in the discretion of the Secretary of the Navy in mining coal or contracting for the same in Alaska, the transportation of the same and the construction of coal bunkers and the necessary docks for use in supplying ships therewith; and the Secretary of the Navy is hereby authorized to select from the public coal lands in Alaska such areas as may be necessary for use by him for the purposes stated herein.

The Secretary of the Navy has limited the activities of the Navy under this provision of the law to the development of coal beds in the Matanuska region of Alaska and to a contract for the testing of 600 tons of coal from the Bering River fields. No mining of coal has been undertaken except in the “drifting" in connection with development. The remaining development consists in prospecting and in diamond drilling.

It is not the intention of the Navy Department to undertake mining in Alaska. 'The reason for the development of coal fields for the Navy in Alaska is to determine if sufficient Navy steaming coal is available from the coal fields of Alaska to supply the needs of the fleet in case of necessity. Under other circumstances the use of Navy steaming coal from the fields of Alaska, should such be available, would be contingent upon the cost of laying down Alaska coal in Pacific ports at a cost equal to or less than the cost of Navy steaming coal brought from the Atlantic coast of the United States.

Assuming the price differential to be favorable to the Navy steaming coal from the Alaskan beds, two alternatives are open to the

coaline, wounning conhecessiti? fields be it

Navy Department first, to enter into contract with the Department of the Interior for the mining of this coal, stipulating a minimum delivery required under emergency conditions; second, contracting with private enterprises for the mining of the coal in Alaska for a minimum output, the whole of the output to be deliverable to the Navy on demand; in the absence of demand to be sold in the open market.

The Department of the Interior have not stated their consent in connection with the contract mentioned in the first alternative, nor have any steps as yet been taken by the Navy Department to enter into contracts with private parties for the mining of coal in Alaska.

The drifting and diamond drilling development under naval supervision it is expected will have been completed to a sufficient extent in April, 1922, to permit a decision on the part of the Navy Department as to the quality of the coal in connection with its use in the Navy, and also as to the quantity of coal in sight in the Matanuska region.

. The coal test of the Bering River fields mentioned above, if successful, will determine one more field in which there is Navy steaming coal which can be drawn upon for naval purposes. The actual costs to lay down in Pacific ports to determine if this coal is to be used in time of no emergency is not yet developed sufficiently to permit positive statement.

During the present fiscal year $298,602 have been spent in this work and it is expected that $70,000 more will be required to complete the development in accordance with the plan just outlined.

Here are the copies of the orders that we issued compelling economies, and certain other papers with reference to this balance sheet, which I have submitted. I will not go into the details concerning those; they are very clearly set forth.

The CHAIRMAN. I do not think it is necessary. I think we can get the details from the men who have them. (The statements submitted by Secretary Denby follow:)

FEBRUARY 20, 1922 Memorandum for the Secretary of the Navy. Subject: Statement relative to “Fuel and Transportation, 1922." Appropriation.......

$17.500.000.00 By expenditure to Nov. 30:

$2, 182, 500.00 Fuel oil..........

9,570, 766.00 Gasoline..........:

422, 266.72 Upkeep and operation of fuel depots and plants. 557, 808.08 Charter hire for transportation of coal...

178, 670.00 Charter hire of Shipping Board tankers.

667,000.00

150,000.00 Ice....................

10, 300.00 Miscellaneous items...

100,000.00 Alaskan coal development..

200,000.00

114, 045, 310.80 By balance, Nov. 30, 1921. ........

3, 454, 689 20

17,500,000.00 To balance Dec. 1, 1921 .....

3, 454, 689 30

...........

..

Coal.............

.....

Water .......

1 See Statement A.

By expenditures during December, 1921:

Coal......
Fuel oil.....
Gasoline........
Upkeep and operation of fuel depots and plants.
Charter hire for transportation of coal..........
Charter hire of Shipping Board tankers.
Water.......
Ice........
Miscellaneous items.............
Alaskan coal development.........

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...................

17, 917.08

2, 863. 10 3 26, 030.75 83, 333. 33

By balance Dec. 31, 1921.

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To balance Jan. 1, 1922....
To indicated deficit. .......

1, 603, 178. 77 10, 709, 120.75

Total..........

12, 312, 299. 52

By estimated expenditures, January-June, 1922:
Coal, 278,228 tons.......

. 4 $2,419, 411. 65 Fuel oil, 4,171,930 barrels...........

48.009870.06 Motor gasoline, 1,939,000 gallons...

465, 360.00 Maintenance of coaling bunker depots and floating equipment..........

496, 957.81 Tug hire......

96, 000.00 Water, 625,000 tons...........

187,500.00 Ice, 1,667 tons.....

20,000.00 Miscellaneous (electric current, storage, compressed air, steam, etc.)....

117,200.00 Alaskan coal development.......

500,000.00

- 5 12, 312 299. 52

STATEMENT A. To: The Chief of Naval Operations. Subject: Status of appropriation “Fuel and transportation, 1922,” as of November 30,

1921.

1. Pursuant to your oral request, the following revised statement of expenditures and obligations under the appropriation “Fuel and transportation, 1922,” as of November 30, 1921, is submitted. The basis upon which the expenditures for November have been estimated is explained in detail following the statement: Estimated condition of appropriation Fuel and transportation, 1922,as of November

30, 1921.

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1 See Statement B. 2 See Statement c. 3 See Statement D. 1 See Statement E. 5 See Statement F.

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