we can not take care of at St. Elizabeths, unless you want to build tremendously, and even then, I think, it is rather doubtful. This would make the beds in the hospitals throughout the country available, and we would pay for them at the cost of maintenance.

The CHAIRMAN. Is there any authority now for the Secretary of War to transfer insane patients to any hospital?

Dr. WHITE. No; there is only one institution in the United States, and that is St. Elizabeths, that can take a man fram the Army on the order of the Secretary of War, and that puts altogether too much on one institution.

NUMBER OF PATIENTS TO BE ACCOMMODATED.

The CHAIRMAN. You estimate that there will probably be about 7,000 insane patients?

Dr. WHITE. I can not tell you. We are going to have a number. At the minimum estimate we are entitled to two thousand per year per million men in the Army. I think that is a moderate estimate. The CHAIRMAN. Two hundred thousand dollars will provide accommodations for how many?

Dr. WHITE. I think $200,000-it depends somewhat on the cost at the time of erection and where we have to build-will provide accommodations for about 900 beds. Of course I am speaking now of present conditions, and when we start to erect these buildings the price of lumber and labor may have greatly changed.

The CHAIRMAN. All you contemplate is to provide for about 1,000? Dr. WHITE. Yes, sir; that is what I am doing now.

The CHAIRMAN. Will there be facilities there for a larger number? Dr. WHITE. I think, so far as the amount of land is concerned, if you give us the land on the water front, there is ample for indefinite expansion.

The CHAIRMAN. I am not certain that Congress is in a position to give you that land on the water front for permanent buildings for the insane. Do you want to cultivate it?

Dr. WHITE. Yes, sir; because it would be cheaper to put the buildings on the land on the hill and use the water-front land for the farm. The CHAIRMAN. You want to use that land for the farm?

Dr. WHITE. Yes, sir. If we were to put the buildings down there, it would cost materially more.

The CHAIRMAN. I thought that you meant to put the buildings down there?

Dr. WHITE. You asked me how much I could expand. If we do away with the farm entirely and use the water-front land, we could expand thousands, but if we did that we would have to build a separate heating plant and go into the thing on a large scale. If we put these buildings on the hill, we will have to use land that is now farmed. It would be better to put them there, because they would be built more cheaply and could be easily connected with the existing lighting and heating system, and then simply transfer the farming operations down on the water front.

The CHAIRMAN. I thought that the War Department had agreed to give you that land?

Dr. WHITE. They never made any agreement. The thing has been left in the air each time. The only agreement they made was that

when the lease expired they would consider the matter. I think it would be a calamity after the lease expires in December to rent the land to some farmer to raise corn on for $600 a year, when it could be of so much benefit to the Government at this time. Here is a little suggestion of where we would build the buildings. If we should go beyond these structures [indicating], we would have to use land that is now farmed.

The CHAIRMAN. Where is this other land?

Dr. WHITE. On the river front. The river front, that is the filled-in flats, do not show on this picture. Last year, just closed, we had the largest admission rate ever had in the history of the hospital, including the Spanish War. 897 admissions, 75 a month. We have 3,250 patients, and we are full. If you are going to increase the military force by approximately a million

The CHAIRMAN (interposing). Not increase the force by a million, but increase the number to a million, an increase of about 650,000. Dr. WHITE. Yes, sir. That is the beginning. We are the only institution that can take care of the insane from the Army at the present time.

FURNISHING AND EQUIPPING BUILDINGS.

(See p. 114.)

The CHAIRMAN. Does this include the cost of the buildings and furnishing and equipping them?

Dr. WHITE. We were in hopes that we could provide the ordinary furnishings, such as the beds. It includes all the plumbing, fixtures, and all that sort of thing. I do not know whether we can do that or not it depends on what the cost is when we put the buildings up. Those things are not very expensive, and as it stands now they could be built for this price, including the equipment but whether it can be done at the end of six months or not, I do not know. I do not want to build these structures until they are necessary. My idea is not to go ahead, except. perhaps, one at a time, and try to keep pace with what is expected of us.

Here [indicating] is a canvass of the situation in the public hospitals of the United States. Practically 1,200 beds would be immediately available for the insane, provided that law passes. A great many States can increase their capacity materially. Most of these beds are in institutions already crowded, and they are simply saying that they can take them and will crowd them in.

Authority is granted to the Secretary of War to transfer to the various public hospitals for the care of the insane of the country that have facilities for and will receive them, patients of every class entitled to treatment in said St. Elizabeths Hospital and that are admitted on an order of the Secretary of War. The Secretary of War is authorized to transfer to the nearest available public hospital for the care of the insane any insane patient who is in need of treatment from any military hospital, preference being given to the hospital nearest to the place of patient's enlistment.

The superintendent of said public hospital shall possess the right to retain the aforementioned class of patients in his hospital in the same manner and to the same extent as now possessed by the superintendent of St. Elizabeths Hospital.

The superintendent of St. Elizabeths Hospital, with the approval of the Secretary of the Interior, shall transfer to the various public hospitals, out of the various appropriations made by the Congress of the United States for the support and treatment of the patients in St. Elizabeths Hospital, a sum sufficient to pay for the support and treament of patients sent to the public hospitals

as above, based upon the per capita cost as per statements on file in the office of the Secretary of the Interior, said payment not to exceed at any time the exact cost of support and treatment of these patients.

RECLAIMED LAND.

The Secretary of War is authorized to grant a revocable permit to the hospital for the use of such portions of land as are at present not under lease, and suci, other portions thereof where lease may expire, of that portion of land lying along Anacostia Flats which has been reclaimed by the engineers of the War Department and is valuable for farming property adjacent to the hospital.

TUESDAY, JULY 17, 1917.

POSTAL SERVICE.

STATEMENTS OF MR. WILLIAM C. FITCH, SUPERINTENDENT DIVISION OF STAMPS; MR. WILLIAM J. BARROWS, CHIEF CLERK; AND MR. JOHN W. JOHNSTON, SUPERINTENDENT DIVISION OF REGISTERED MAILS.

STAMPS POSTAGE AND SPECIAL DELIVERY.

The CHAIRMAN. For manufacture of adhesive postage stamps, special-delivery stamps, books of stamps, and for coiling of stamps, $60.000.

Mr. FITCH. We can reduce that to $22.000.

The CHAIRMAN. Is that an actual deficit?

Mr. FITCH. It is the actual deficit in round numbers. It is a trifle under that.

STAMPED ENVELOPS AND NEWSPAPER WRAPPERS.

The CHAIRMAN. For manufacture of stamped envelopes and newspaper wrappers, $225.000.

Mr. FITCH. You can reduce that to $220,000.

The CHAIRMAN. How does this arise?

Mr. FITCH. From two causes. The cost prices were increased during the year.

The CHAIRMAN. Were you not operating under a contract?

Mr. Frren. Yes; but the contract prices were changed. The paper was changed and the contract prices were changed during the year. We were operating under a four-year contract, but the contractor was up against the proposition of getting material because paper had increased very largely in price and he was about to fail. The department, acting upon the decision of the comptroller and under a provision of the contract, changed the paper and increased the prices for the envelopes paid the contractor.

The CHAIRMAN. That was after Congress refused to permit them to modify the contract?

Mr. FITCH. No, sir; it was before that.

Mr. BARROWs. The case was brought to the attention of Senator Bankhead and Mr. Moon at the time. This was before the bill was introduced modifying the contract. This was decided upon before

that.

The CHAIRMAN. You then applied to Congress before it was decided, and after it was decided upon and Congress did not pass the bill, you went ahead and did it, anyway?

Mr. BARROWS. No, sir; this was before that.

This was under a

specification in the contract and this was the only contract which contained such a specification, and it was done under a decision of the Comptroller of the Treasury.

The CHAIRMAN. Have you got his opinion?

Mr. BARROWS. Not with us.

The CHAIRMAN. Send a copy of it up here, please.

Mr. BARROWS. All right, sir.

Hon. Jonx J. FITZGERALD,

THIRD ASSISTANT POSTMASTER GENERAL,

POST OFFICE DEPARTMENT,

Washington, July 18, 1917.

Chairman Committee on Appropriations,

House of Representatives.

MY DEAR MR. FITZGERALD: In response to your request at the hearing yesterday. I give below a copy of the decision of the Comptroller of the Treasury, dated December 22, 1916, relating to stamped envelopes:

"I have your letter of the 14th instant requesting my decision of question therein stated, as follows:

"Complaint having arisen as to the present cut and quality of stamped envelopes supplied by this department to post offices for sale to the public, it is deemed advisable to introduce certain modifications of the designs and also to supply envelopes manufactured of a better quality of paper. The growing commercial use of what are known as window envelopes and the insistent public demand for a stamped envelope of similar construction have also made it appear desirable to issue a stamped window envelope.

"The present contract for the manufacture of stamped envelopes covers a period of four years, terminating June 30, 1919. The contract is with the Middle West Supply Co., 120 Broadway, New York, N. Y., and Dayton, Ohio. Under the terms of this contract a possible modification of the quality or design of envelopes is provided for under the following clause of the specifications: ***13. The right is reserved by the Postmaster General to require at any time during the contract term, in lieu of or in addition to the stamped envelopes and newspaper wrappers described in these specifications, envelopes or wrappers of other sizes, styles, cuts, qualities, or colors, upon condition that he shall pay to the contractor prices greater or less than those stated in the contract, the difference in price to be proportionate in each instance to the increase or decrease in the cost of manufacture, as determined by mutual agreement."

*The above is based upon the following provision of the Statutes (R. S. 3917):

"The Postmaster General may, from time to time, adopt such improvements in postage stamps and stamped envelopes as he may deem advisable; and when any such improvement is adopted it shall be subject to all the provisions herein respecting postage stamps or stamped envelopes."

"The changes contemplated cover an additional extra-quality envelope cut less deep in the back, a grade of envelope between that covered by the contract and the extra-quality envelope just mentioned, and a window-stamned envelope, In addition to the grades now covered by the contract, which latter may also be modified in size, depth of cut in the back, and quality.

"An opinion is desired as to whether, under the contract with the Middle West Supply Co., which is herewith inclosed, the Postmaster General has authority to call for stamped envelopes as above described “in lieu of or in addition to the stamped envelopes described in the original specifications; and if so, what would be the rule by which the parties to the contract would be governed with respect to the variation in the price of the envelopes to be ordered from the prices named in the contract.'

"By contract of March 11, 1915, the Middle West Supply Co. undertook to furnish the Post Office Department with such quantities of stamped envelopes

and newspaper wrappers of specified sizes, quality, color, etc., as might be ordered during the four years beginning July 1, 1915, and ending June 30, 1919, all such envelopes and newspaper wrappers to be in accordance with requirements set forth in detail in attached specifications and at prices not now in question.

Referring to clause 13 of the specifications, quoted in your letter, I do not think there can be any doubt of the authority of the Postmaster General to require the contractor to furnish any kind or style of envelope and wrapper that the Postmaster General may deem to the best interests of the Government to require. The only question is whether in paying for envelopes and wrappers of different kinds the price to be paid is to be the price fixed by the contract plus or minus any difference in cost of manufacture between the original contract article and the article thus ordered.

"It may have been the intent of the parties that only the reasonable difference in cost of manufacture between the original contract article and any modification thereof that might be ordered would be paid for the substituted article, but the language used does not justify the conclusion that the parties have carried such an intent into the contract. The words used are susceptible of another and more reasonable construction.

"In my opinion, you will be justified in ordering stamped envelopes different from those specifically provided for in the contract, conditioned upon an agreement as to the price to be paid. Such price will be greater than the contract price for the contract envelopes, not only because of the better grade of paper and more expensive form being required by you, but also on account of the present cost of the better grade of paper. The increase in the cost of manufacture, to which the increase in price is to be proportioned, has reference to the cost of manufacture at this time as compared to a smaller cost at the time the contract began, and the percentage of profit to be allowed on any new grade and form of envelope should not exceed the percentage of profit, if any, accruing at the time the contract began.

"It is understood, of course, that the exercise of the discretion of the Postmaster General is conclusive upon the question of whether or not new grades and forms of envelopes shall be ordered.

"You are advised that in my opinion the Postmaster General has authority to call for stamped envelopes as described in lieu of or in addition to the stamped envelopes described in the original specifications, under the rule as to variation in price pursuant to the paragraph providing therefor, as hereinbefore stated."

Respectfully,

A. M. DOCKERY, Third Assistant Postmaster General.

The CHAIRMAN. What is the use of making these four-year contracts if you do not live up to them?

Mr. FITCH. We do, Mr. Chairman, as a rule.

The CHAIRMAN. You do as a rule, but there never has been a case before where anybody had a chance but make a big profit. As soon as there was a chance for the Government not to be the loser

Mr. FITCH (interposing). The Government did not lose because the selling price was increased proportionately.

The CHAIRMAN. Then the public got mulcted.

Mr. FITCH. No; by reason of the large quantity manufactured we could sell the envelopes at much cheaper rates than the unstamped envelopes could be sold, so everybody, really, was the gainer in this case, if such a thing can be.

The CHAIRMAN. You do not mean to tell me that you can buy stamped envelopes cheaper than you can buy unstamped envelopes? Mr. FITCH. Leaving out the value of the stamp, that is true.

The CHAIRMAN. But I may prefer to have envelopes on which to put adhesive stamps.

Mr. FITCH. Then you would have to pay more for the envelopes than for the stamped envelopes.