Because of the reduction in the value of assets in the clothing and small-stores account, due to issues of outfits on first enlistment without reimbursement, reductions in prices as authorized and directed by the Congress, and other reasons as detailed to the committee, there would be no actual increase in the authorized capital of the clothing and small-stores fund. However, in order that there may be no doubt that such is the case a slight modification in the language of the legislation is proposed so as to specifically provide that the authorized capital of the fund is not increased. Two drafts of legislation are transmitted herewith, either of which will accomplish the object desired and either of which is equally acceptable to the Navy Department.

I am endeavoring to get an expression of opinion from the Comptroller General of the United States or his assistant as to the language of the proposed legislation, but in order to avoid delay the drafts are transmitted at this time. I shall inform you later as to the result of the conference with the Comptroller General or his respresentative.

Respectfully,

Hon. MARTIN B. MADDEN,

DAVID POTTER,

Paymaster General of the Navy.

Chairman Committee on Appropriations,

House of Representatives, Washington, D. C.

That the clothing and small stores fund is hereby increased, out of any funds in the Treasury not otherwise appropriated, in the sum of $40.328,740.42 to permit the reimbursement of the Treasury of the United States for the amount advanced in excess of the authorized capital of the clothing and small stores fund for war purchases of articles of uniform and equipment for the enlisted personnel of the Navy; and when such reimbursement has been effected, the authorized capital of the clothing and small stores fund shall be reduced by the amount of the increase herein authorized.

That the clothing and small stores fund is hereby increased, out of any funds in the Treasury not otherwise appropriated, by an amount equal to the dfference between the value of the stock on hand in the clothing and small stores account on June 30, 1920, and the value of the clothing and small stores fund on that date as shown by the annual report of the Bureau of Supplies and Accounts for the fiscal year 1920, to permit the reimbursement of the Treasury of the United States for the amount advanced in excess of the authorized capital of the clothing and small stores fund for war purchases of articles of uniform and equipment for the enlisted personnel of the Navy; and when such reimbursement has been effected, the authorized capital of the clothing and small stores fund shall be reduced by the amount of the increase herein authorized.

BUREAU OF NAVIGATION.

TRANSPORTATION AND RECRUITING, 1921.

The CHAIRMAN. For transportation and recruiting, you have a deficiency estimate for 1921 of $2,666,466.45, and for 1922 of $2,117,314.67. Will you be kind enough to go into the item for 1921 and give us the details of it?

Capt. WILLIAMS. With reference to the deficiency item for 1921, which is $2,666,466.45, the estimate originally submitted on this account was $5,860,000. This was found to be too small, and a subsequent estimate of $8,495,000 was submitted, or, at least, the bureau asked the department for that amount, and that estimate was cut first to $5,000,000 and then to $3,500,000, or that was the sum appropriated.

Mr. KELLEY. Which estimate are you talking about now?

Capt. WILLIAMS. For 1921. Later there was a deficiency appropriation of $1,500,000. The bureau reported that the sum I have stated would be insufficient. The Bureau of Supplies and Accounts reported a total expenditure for 1921 of $7,666,466.65, which shows the difference requested. Now, the amount appropriated was $3,500,000, and it was thoroughly understood at that time that it would be inadequate for transportation and the cash mileage for the number of men authorized by Congress at that time, or 120,000 men. In August, 1920, which comes within the scope of this appropriation. railroad fares were increased 20 per cent, and there was an additional surcharge of 50 per cent on Pullman fares. Now, the increased cost of mileage was due to a large extent to moving the large forces with ships to the Pacific coast, because those ships were largely manned by men living east of the Mississippi River. All of this serves to increase the average cost of the men discharged, and the cost of each man discharged has been increased from $38 in the fiscal year 1920 to about $63 for the fiscal year 1920–21.

COST OF TRANSPORTATION FOR DISCHARGED MEN.

Mr. KELLEY. I do not understand how that can be possible, because you did not say anything about that last year. You figured your appropriation for this purpose upon the basis of $38 last summer.

Capt. WILLIAMS. A new average was made up later. The $38 average did not include many men being shipped halfway across the continent.

Mr. KELLEY. You are figuring on an average of 1,300 miles for each man, at 5 cents per mile.

Capt. WILLIAMS. That is what it has turned out to be.

Mr. KELLEY. Why does it happen to be so much greater than the year before?

Capt. WILLIAMS. It is due to the presence of so many men on the Pacific coast and to the fact that most of those men were moved suddenly with the ships that were going, instead of having the ships manned by men who were enlisted on the Pacific coast.

Mr. KELLEY. That might happen once.

Capt. WILLIAMS. That is what did happen.

Mr. KELLEY. But that will not happen for the rest of the year. Capt. WILLIAMS. Perhaps not, but I think it is too fine a calculation to determine that there will be no change as long as we have ships on both coasts.

Mr. KELLEY. How much money is left in the fund?

Capt. WILLIAMS. There is nothing left in the appropriation for

1921.

Mr. KELLEY. I mean for this current year.

Capt. WILLIAMS. Nothing.

Mr. KELLEY. You are entirely out of money?

Capt. WILLIAMS. Yes, sir. The history of these estimates for transportation, as far back as I have traced them, or for several years, is that the estimates are singularly correct. Taking the number of men discharged and multiplying that number by the average payment for discharged men produces an estimate which in past years has proved to be singularly accurate.

Mr. KELLEY. The thing that bothers me is that when you were here not so very long ago you based your estimate on an average cost of $38, and $63 is a terrible increase over $38. We gave you what was figured out to be the amount required upon the basis of $38 per man, and now all of a sudden your experience is so vastly different from that that it is almost startling. The cost used to be $25 per man under the old railroad rates, but on account of the increase in railroad rates and Pullman fares the amount was increased to $38. Now you propose to double the cost.

Capt. WILLIAMS. There was a 20 per cent increase in railroad rates Mr. KELLEY. That brought it up to $38.

Capt. WILLIAMS. As a matter of fact, these averages are the merest guesswork.

Mr. KELLEY. I can well imagine that if you took a lot of boys out on the Pacific coast and discharged them at San Francisco, a great many of them might live on the Atlantic coast, and that might happen once, but it does not seem reasonable to suppose that such a thing would happen right along.

Capt. WILLIAMS. Perhaps not.

Mr. KELLEY. Is there not some way to reduce this cost?

Capt. WILLIAMS. No, sir; this expenditure has already taken place for 1921.

Mr. KELLEY. I was talking about the present year and you were talking about a deficiency for the former year. We were talking somewhat at cross purposes.

Capt. WILLIAMS. This expenditure has already been made, and it figures out $63.

Mr. KELLEY. Did you have any money left at the end of the fiscal year 1921?

Capt. WILLIAMS. No, sir; and we knew we would not have when we started. We estimated for $8,495,000.

Mr. KELLEY. You were given another $1,500,000 as a deficiency. Capt. WILLIAMS. We are counting that in. We knew that we would have to have that deficiency when the appropriation was made. Mr. KELLEY. That estimate was not figured upon the basis of $63 per man?

Capt. WILLIAMS. No, sir; that was figured upon the basis of $38 per man. Our estimate was first cut to $5,000,000 by the department and then to $3,500,000 by the committee.

Mr. KELLEY. If we had given you all that you thought you ought to have for 1921, on the basis of $38 per man, would you have had enough?

Capt. WILLIAMS. Perhaps so. I have not figured it up.
Mr. KELLEY. How do you get this $63 per man?

Capt. WILLIAMS. In the meanwhile every possible economy has been practiced and we have stopped shipping men who are to be shipped to the west coast, and are sending them by way of Panama. Mr. KELLEY. You say you wanted $8,495,000 upon the basis of a cost of $38 per man.

Capt. WILLIAMS. That was cut to $5,000,000 and then to $3,500,000. Mr. KELLEY. You had a deficiency of $1,500,000, which brought the appropriation up to $5,000,000, and that was on the basis of a cost of $38 per man. Now you come in for a deficiency of $2,666,

466.45, which represents your original calculation on the basis of $38 per man.

Capt. WILLIAMS. It is less than that by $1,000,000.

Mr. KELLEY. It is less than the original calculation on the basis of $38 per man?

Capt. WILLIAMS. Yes, sir.

Mr. KELLEY. How do you figure that it will cost $63? It seems to me that the deficiency would be many million dollars more than you have estimated here if you calculated it on the basis of $63 per man.

Capt. WILLIAMs. I think you put more faith in these averages than you ought to. If you take the movement of men under every possible condition, and produce an average from that, your average is not very good. Now, when you add to that an increase of 20 per cent in railroad rates and 50 per cent in Pullman fares——

Mr. KELLEY (interposing). But you must not add that twice. That was added when it was $25. We used to figure this item upon the basis of $25 per man, and it was raised to $38 per man on account of the increase in railroad and Pullman rates. It looks to me as though you had a mistake in your figures.

Capt. WILLIAMS. In the first place, I believe you think that $38 is a reliable average, but deficiencies were produced under that $38

average.

Mr. KELLEY. That was your figure. You stated that you figured your estimate of $8,495,000 upon that basis.

Capt. WILLIAMS. This average of $63 is an average which has been brought up very carefully, running along from day to day, with much more traffic data than we had before. As these averages are produced they become more reliable, but I do not think that in the long run they are reliable, because with hundreds of thousands of men going on trips of any length, under any sort of circumstances, the average means little or nothing.

Mr. KELLEY. In the main, where were the boys on the ships now in the Pacific enlisted?

Capt. WILLIAMS. A majority enlisted east of the Mississippi, but we took all that we could get from States near the Pacific coast.

Mr. KELLEY. Most of them are taken from the Pacific coast, are they not?

Commander PORTERFIELD. We enlist men according to the population of the different States, and nearly every man with the Pacific Fleet comes from east of the Mississippi.

Mr. KELLEY. What do you do with the men who enlist west of the Mississippi?

Commander PORTERFIELD. The population of the States west of the Mississippi is very much smaller than the population east of the Mississippi. There is not much population out there outside of California.

Mr. KELLEY. What proportion of the men in the Navy enlisted from west of the Mississippi?

Commander PORTERFIELD. I can not tell you offhand, but we enlist them in accordance with the population of the country.

Mr. KELLEY. Do you know what percentage of men with the Pacific Fleet came from east of the Mississippi?

Commander PORTERFIELD. No, sir. We find the average number of miles to be traveled by the men susceptible to discharge to be 1,300.

Mr. KELLEY. That condition is very different from what it will be in the future. You took those ships from the Atlantic ocean, when they had been recruited largely from this eastern territory, and took them around to the Pacific. You discharged men at San Francisco and, of course, you must pay their railroad fare from San Francisco to New York, or to the place of enlistment; but you are not doing that now, are you?

Commander PORTERFIELD. Yes, sir; the Pacific Fleet is largely manned by men recruited east of the Mississippi.

Mr. KELLEY. What do you know about that, or what is the actual fact about it?

Commander PORTERFIELD. The actual fact is that we have recruited those men largely from the Eastern States.

Mr. KELLEY. You assign them to ships nearest the place of recruiting, do you not?

Capt. WILLIAMS. I do not believe you would save any money if you recruited everyone of them at San Francisco.

Mr. KELLEY. You would make a saving in this fund.

Capt. WILLIAMS. You would here, but you would lose it on training.

Mr. KELLEY. We are talking about this particular item of transportation, and I imagine that the Secretary, wherever he could, would put men on ships nearest the place where they were trained. Capt. WILLIAMS. We do not move them when we get them there. Mr. KELLEY. You have had to move them to the Pacific Fleet? Capt. WILLIAMS. Yes, sir.

Mr. KELLEY. The enlisted men that Commander Porterfield was figuring on were enlisted on the Atlantic coast and taken over to the Pacific coast, and you are trying to establish an average that is based upon that condition, which was abnormal and not likely to occur again.

Capt. WILLIAMS. There is a condition that will exist as long as we have a fleet out there. Since the population is more dense on the Atlantic coast the enlistments from there are liable to be greater than from the Pacific coast. I think that condition will always exist as long as we have a fleet in the Pacific.

The CHAIRMAN. In other words, most of your men must come from east of the Mississippi?

Capt. WILLIAMS. Yes, sir. I think that most of the men in the Navy will come from the thickly populated States.

The CHAIRMAN. As I understand it, this average cost used to be $25 per man. Then there was an increase of 50 per cent, which brought it up to $38 per man, and then an increase of about 60 per cent more than that will be required to bring it up to $63. Therefore we have had increases of 50 and 60 per cent, aggregating 110 per cent, in the cost of transportation of the men who have been discharged from the service. I am rather anxious to see how you can reconcile that.

Capt. WILLIAMS. These figures of $25, $38.12, and $62.68 are arrived at by dividing the total sum expended at any given time in any given year by the number of men discharged, thus averaging the amount of money for transportation of those men to their homes. That is done under several circumstances, but principally under the