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Col. LORD. Mr. Chairman, the proviso in the exchange paragraph of this bill is at the top of page 64. That paragraph was drawn and submitted by the Quartermaster General's Office before the declaration of war, and it was intended to relieve the pressure on our military attachés abroad who are all acting quartermasters and disburse quartermaster funds. Under the system that prevails now they all have credit in the United States Treasury and a Treasury checkbook. They have no credit in any other depository. To pay their interpreter, to pay their rental, and to pay their other necessary expenses they must sell Treasury checks.

When a Treasury check is sold it is necessary to get a statement from the bank that there has been sold, for example, a $5,000 Treasury check, and if it is in francs the rate of 5.70, or whatever the rate is, and have the bank certify to it, which certificate is filed with their money account. The officer must then account for the disbursement of that $5,000 worth of francs and disburse it at the rate of purchase. Then, as sometimes happens, after the larger portion of the francs bought at 5.70 has been disbursed it is found necessary to buy more francs, which are bought perhaps at a different rate of exchange, then the officer has francs at two varying rates of exchange, and the officer must close out the first purchase at the rate of 5.70, and if the second rate was at 5.60 it is necessary to take up the other francs at the next rate and carry them on; and during the month if there should be a dozen or more variations in rate the amount of bookkeeping involved in a small disbursement is something startling. The Navy Department is using the Mint Circular, which is published by the United States Mint every quarter. That was provided for originally solely to cover custom valuations, and it is really the bullion rate as established by the Treasury Department. The Navy Department is using that system, and presumably the Auditor for the Navy Department passes it. The Auditor for the War Department, however, will not accept that method of exchange accounting. If he did, then for three months we would have a fixed rate, which would avoid much of that intricate bookkeeping:

The CHAIRMAN. Is there a difference of opinion between the two auditors?

Col. LORD. One auditor passes it and the other does not. The Auditor for the War Department thinks he has no authority to

The CHAIRMAN. Why do you not get the comptroller to pass on it?

Col. LORD. We did not care to interfere with the Navy Department's method of doing business.

The CHAIRMAN. You are afraid the comptroller might obstruct them?

Col. LORD. It might obstruct them and not help us, as he is the comptroller for both of the departments. The objections raised by the chairman yesterday, as reported, are well taken as regards the situation now, on account of the declaration of war and the amount of money which will be involved. Under date of May 29 there was presented to the Secretary of War by the Quartermaster General and referred to two military committees a substitute for this paragraph which places the matter entirely in the hands of the Secretary of the

pass it.

Treasury.

The CHAIRMAN. The suggestion you refer to is as follows: Provided, That all foreign money received by officers and agents disbursing funds pertaining to the War Department shall be charged to, paid out, and accounted for by such officers and agents at the legal valuation fixed by the Secretary of the Treasury.

Does that mean anything different!

Col. LORD. The legislation that appears in the bill would take it out of the hands of the Secretary of the Treasury and establish a fixed rate of conversion for three months. If there should be a disaster on the western front which would send down the value of the franc, there would be no authority for changing the rate of exchange within the three-month limit, because it would be established by law and legislation would be required to change it within that time.

TheCHAIRMAN. How does that differ from the authority now in existence!

Col. Lord. I know of no authority of law governing the rate of exchange at the present time. Our disbursing officers abroad account for funds under the varying rates. Under the system that England has established there is a monthly rate. Study is made of the rates of exchange during the month, and on the last day of the month the service in France is given the rate that will obtain for the succeeding month, subject to change if there should be some extraordinary variation.

The CHAIRMAN. Do they take the Bank of England rates?

Col. LORD. How they establish it I do not know, but it is established in England by studying the rates obtaining during the preceding month. The loans made by this Government have pratically stabilized the rate of exchange in France, and the rate has been 5.70, I think, for six months without variation. Yesterday you brought up the question of the enlisted men and how a fixed conversion rate would affect them. The men stand no chance to lose. It is the Government only that stands a chance to lose, and we can protect the Government. Not much is involved, however, as the difference in the rate is very small, and there probably will be little variation. If this substitute is adopted the Secretary of the Treasury would notify the service in France that the rate for August will be, e. g., 5.70. If I am a disbursing quartermaster in France and sell a Treasury check for $100,000 and the actual rate is 5.70, I get 570,000 francs, and I pay the officers and men at that rate, filing with my accounts a statement from the bank that rate at which the check is sold is 5.70.

Mr. SHERLEY. On what rate do you pay the men?

Col. Lord. We will pay the men on the rate established by the Secretary of the Treasury. After we have bought our francs at 5.70, there might be a disaster on the front which would bring the frane down to 5.80. If the enlisted men should decline to accept their pay at the rate established by the Secretary of the Treasury, objecting to the conversion of their $33 a month into francs at the rate of 5.70, they can, if they so prefer, receive a Treasury check in lieu thereof. In that case, if the man wants a Treasury check in preference to the francs, we pay him by Treasury check.

The CHAIRMAN, Could he exchange that Treasury draft, then, to advantage?

Col. LORD. Our quartermasters over there are having no difficulty whatever in selling Treasury checks at 5.70, because the current of trade is this way and they furnish a desirable medium of exchange. In addition to that, the Guaranty Trust Co. of New York, the National City Bank, the American Express Co., the Adams Express Co., and others, are instituting branches all over France, and are prepared to handle Treasury checks and any other money accounts that the officers and men have.

Mr. SHERLEY. If you offered to pay the man at the rate of 5.70, and the current rate was 5.80, and he said, “No, I will take a Treasury check," unless he could get 5.80 for that check, he would be just as bad off!

Col. LORD. Certainly, but he has the alternative. It is very remote that there will be much, if any, variation, because if there should be any heavy casualty or defeat, our rate will also be affected.

The CHAIRMAN. In what way does this proposition, Colonel, differ from the original proposal?

Col. LORD. There is no difference except that this gives the Secretary of the Treasury the right to establish it for a month, and if the rate is not equitable, he can change it at any time, whereas the provision in the preliminary print of the bill fixes it for three months, and only Congress can change it.

The CHAIRMAN. Did the Military Committee consider this question!

Col. LORD. It was referred to them on May 29.

Gen. SHARPE. It has not yet been taken up by them, Mr. Chairman.

Col. LORD. It has not been published in any bill, but it is before the committee. This matter has been discussed, Mr. Chairman, with the Treasury people and we have had correspondence with them. Other things are involved. The question of financing our quartermasters in France has been a serious problem, and we have taken it up with the Treasury Department, and the Secretary of the Treasury, in referring to this matter, has promised us that he will assist us in any way possible in establishing this rate pending any necessary legislation, so that I know they are very friendly to the legislation.

REGULAR SUPPLIES, QUARTERMASTER CORPS.

(See p. 406.) The CHAIRMAN. In reference to the estimates we were discussing this morning for regular supplies, Quartermaster Corps, outside of the amount for camps and cantonments, they are based, are they, upon an army of 2,000,000 months' reserve stock

men for one year, and in addition a six Gen. SHARPE. Yes,

of fuel, forage, and other supplies? The CHAIRMAN. Is

sir. Gen. SHARPE. Yes, that a reserve for 1,000,000 men?

sir; for 1,000,000 men.

FORAGE FOR ANIMALS.

The CHAIRMAN. Yor for forage for animals have a very large item here of $30,537,283.47

As a result of the change in the plans, you

are not intending to obtain as many animals as originally contemplated.

Gen. SHARPE. Capt. Fair will explain that to you, Mr. Chairman. We are really buying quite as many animals as we intended, because of the increased amount of transportation to the organization.

The CHAIRMAN. The original estimate for animals was about $75,000,000!

Gen. SHARPE. Yes, sir.

The CHAIRMAN. And because of the proposal not to use mounted troops, the appropriation, with the acquiescence of the department, was reduced to $25,000,000. Upon what basis is this $30,000,000 figured?

Capt. Fair. It was a question of being able to feed the animals after we got them over there until we developed the service, so the French found that out of the organizations that have been depleted and were out of service they had

some animals that they could spare us, so we arranged to buy the animals from France for the expeditionary force, so we could take over the feeding of those animals with our transportation and relieve the tension on the French transportation. At the time it was reduced the total numher of troops called in did not include these additional forces we were ordered to estimate on, and this additional estimate for forage is to cover the number, of animals that will be necessary for those forces.

The CHAIRMAN. I understand that; but is that based upon the number originally estimated as necessary or upon the modified number?

Capt. Fair. It is based upon the latest opinion of the War College on what animals are necessary.

The CHAIRMAN. What is that?

Capt. FAIR. That excludes all Cavalry and very largely increases the Artillery and the mules for mule transports.

The CHAIRMAN. It eliminates the Cavalry.
Capt. Fair. All the Cavalry; yes, sir.

REMOUNT DEPOTS, EQUIPMENT OF.

The CHAIRMAN. You are asking for the equipment of 32 remount depots, $250,000.

Capt. Fair. Yes; it has been demonstrated that animals can not be bought throughout the country and shipped direct to troops and issued to them from the train without suffering great losses. The Quartermaster General established last year in the Southern Department auxiliary remount depots for the receipt of animals from the purchasing board. There the animals are conditioned and fed and cured of the influenza, which they get. It is impossible to take an animal and ship him on a stock car without 95 per cent of them getting the influenza. This is to provide a place to take care of the sick animals in connection with the service at the division camps and cantonments. The difference in loss of animals issued direct to the troops and those handled through auxiliary remount depots is from 8 to 10 per cent.

The statistics show that the losses in the auxiliary remount depots amount to about 2 per cent, whereas of the animals issued direct to troops it amounts to from 10 to 15 per cent. We are now buying

animals for the Regular Army and shipping them to the regular regiments, which are supposed to take better care of their animals, and incomplete reports show that they are losing from 3} to 5 per cent. It would be a saving to provide these animal depots.

EMBARKATION CAMPS, HEAT, LIGHT, REFRIGERATORS, LAUNDRIES, ETC.

The CHAIRMAN. General, you have several large items in connection with embarkation camps-one is for electric lighting, heating, refrigerators, laundries, and bakeries, $12,000,000. Have we established any embarkation camps now? Gen. SHARPE. We have started two, sir. The CHAIRMAN. Will these two camps cost $12,000,000 ? Gen. SHARPE. Yes, sir.

The CHAIRMAN. For the heating and lighting and refrigerators, or is this for the structures in addition to that?

Capt. Daly. Mr. Chairman, those items are for all the camps, including the remount depots and embarkation camps.

The CHAIRMAN. No; you have an item for heating and lighting in the other estimates; $700,000 for the National Army cantonments. This is an additional amount of money required, amounting to $12,000,000.

Capt. Daly. That includes first $6,500,000 for refrigerating and ice plant for the troops in France.

The CHAIRMAN. No; that is separate. That is in addition to this $12,000,000.

Capt. Daly. There are three of them.
The CHAIRMAN. I thought there were two?

Capt. Daly. There is a third estimated for, the location of which is not known. The items are just as stated there, and the designations, power plants, electric lights, laundries, bakeries, etc.

Capt. MARSHALL. Certainly, for heating and refrigeration and in all probability the laundry, if we can get the machinery.

The CHAIRMAN. Out of this appropriation ?
Capt. MARSHALL. Yes, sir.

Capt. DALY. The storehouses will be rented or constructed-probably constructed. Except the engineers, the Quartermaster has to furnish the storehouses for all the others.

The CHAIRMAN. This is not a construction item?

Capt. Daly. This is for the equipment of the port of embarkation camp, and involves a good deal of heating and lighting.

The CHAIRMAN. For the original camps and cantonments, we provided money for the heating, lighting, and refrigeration. Then you have submitted additional money required because of the extensions resulting from the modified plan. This $12,000,000 is for embarkation?

Capt. DALY. Ports of embarkation.

The CHAIRMAN. Will it take $12,000,000 for the heating, lighting, and refrigeration at these points?

Capt. DALY. And the Quartermaster Corps camp in addition. That is only an item of $250,000.

Mr. SHERLEY. The $12,062,000 is for the three camps which you have already mentioned ?

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