Gen. SHARPE. No, sir. I am trying to explain that in the usual cases those are the methods we follow, but the Secretary has made an exception in cases where we purchase lumber and things like that. Col. Littell simply accepts their figures as advisory, and if he can obtain the lumber at a less price, he gets it.

Mr. Chairman, before I go on may I make a statement referring back to a matter we discussed some time ago. The instructions when we started in on the war were to regard the interests of the allies, their military and also their civil requirements, our own requirements, and those of our citizens, and I would like to express my own personal opinion that if it had not been for the assistance rendered by the Council of National Defense and their patriotic efforts, I do not believe it would have been possible to have made the enormous purchases we have made and are going to make without disturbing the market prices. We have had the assistance of some of the most competent men in this country in making these purchases, and I think it has been a splendid exhibition of patriotism on their part in the way in which they have been willing to give up their own private interests and come on here and handle these matters.

The CHAIRMAN. Based on your experience as the head of the Quartermaster Department, what is your opinion as to whether the purchases have been made under these arrangements advantageously or more advantageously or less advantageously?

Gen. SHARPE. I think more advantageously under this condition than if we had bought solely with the idea of obtaining the supplies. As illustrating that, Mr. Chairman, when we have to meet certain demands, so far as supplies are concerned, our sole idea is to get those supplies together and make the purchases. We try to make the purchases to the best advantage to the Government, but we are actuated by the desire to get the supplies so as to be enabled to equip the troops at the very earliest possible moment, and that frequently disturbs the prices in the market; and, in buying in the large quantities we have had to buy, I believe we would have disturbed the market very considerably if we had not had these competent business men to assist us in making these purchases. The amount of knowledge that they have brought to these matters from their experience is something amazing to me; their familiarity with all the details of the business and their willingness to help in every possible way, and their ability to bring in men whom we could not reach in any other way than through them. We have got the best. talent that is available at the call of the Council of National Defense. That is my personal view of it. I know we are all trying to get at an understanding as to how the thing is done, and I thought probably you would like to hear my views on the matter.

WAGONS, CARTS, DRAYS, ETC.

Mr. SHERLEY. The next item is for the purchase of wagons, carts, drays, and such animal-drawn, passenger-carrying vehicles, including parts and material for repair and maintenance of same. How much did you allot out of existing appropriations for that purpose? Capt. FAIR. We estimated previously $6,483,135.

Mr. SHERLEY. You are now asking for $4,281,809. What did you expect to obtain with that previous allotment and what sized army would that have equipped?

Capt. FAIR. That estimate was made on the Regular Army, the National Guard, and the National Army. The new estimate includes an allowance for the increase from about 1,500,000 to 2,033,000 men. It also includes additional wagon equipment recommended by the General Staff as being necessary which was not included in the former estimate.

Mr. SHERLEY. How many wagons, parts, etc.. did you expect to get with that $6,483,000?

Capt. FAIR. The total requirements in escort wagons were 62,976. That includes a 50 per cent reserve stock for wear and tear and supply parts. The total number actually required was 41,934.

Mr. SHERLEY. You did not answer my question. In the $3,000.000,000 lump-sum estimate which was sent to Congress. Col. Baker recommended an expenditure under this head of $4,461,364, figuring on 1,920 ambulances at $275 apiece, 20,470 escort wagons at $176.52 apiece, and repair of wagons, $320,000. Now, that total figure is very close to the amount that was allotted out of the appropriation, and I wondered what you had expected to get with that allotment.

Capt. FAIR. Just what was stated there. That was made before I came into this branch. What we expect to get here is the allotment of wagons required for the organization now adopted. That was to get the wagons we thought necessary at that time.

Capt. DALY. We can tell, if you care to have it, what we expect to get for all this money. That is what has been appropriated and what is estimated.

NOTE.--From funds previously appropriated, viz, $6,483,135, purchases are being made of

1,920 ambulances, at $275__. 33,000 escort wagons, at $176.52. Extra parts for escort wagons.

$528, 000 5,825, 160 75,500

6, 428, 660

Mr. SHERLEY. I Would like to have that; but presumably, in arriving at what you are now asking, $4,281,000, you had in mind getting a certain quantity of material in addition to what you will get out of the moneys heretofore appropriated. I do not care how you divide it up, just so we know the facts.

Capt. FAIR. The way we arrived at the additional amount necessary was to take the total number of wagons necessary for the total organization, with the new forces added, and then subtract from the total amount necessary the amount already allotted.

Mr. SHERLEY. Did you state the total number necessary for this new army?

Capt. FAIR. 54,178 escort wagons, 5,095 water wagons, 3,369 ambulance wagons, 1,000 medical carts, 5,000 small-arms ammunition wagons, all of which are new items.

Mr. SHERLEY. That represents whose determination?

Capt. FAIR. The determination of the committee of the General Staff, approved by the Chief of Staff and the War College.

Mr. SHERLEY. And that now is your entire scheme for this army of 2,033,000 men?

Capt. FAIR. Yes, sir; as far as we know now. They are changing the organization on us from day to day as they learn more about actual conditions. This is based on the latest data we have from the

officers who are considering the organization necessary to carry on the war over there.

The CHAIRMAN. Does that take into consideration, Captain, the fact that they are contemplating the construction of a great many railroads to facilitate transportation, and would this wagon transportation be in addition to the other methods of transportation provided?

Capt. FAIR. Yes, sir.

The CHAIRMAN. Suppose we put a large force of men in France and have a certain amount of railroad over there from the main supply depots up to certain points, is it then necessary to have large wagon trains?

Gen. SHARPE. Yes, sir.

The CHAIRMAN. You can not run your supplies by rail very close up to where your men will be?

Gen. SHARPE. There is always a break between the rail head and the troops, a distance which is covered by the motors. Then in addition to that they have got to have these wagon trains, which all the different armies agree must be horse drawn or animal drawn.

The CHAIRMAN. Can you state why it is that the horse-drawn vehicle is necessary rather than the motor vehicle?

Gen. SHARPE. The roads are of such a character that the motors are not able to get over them. They are all broken up by the shells and things like that, and the mules or the pack animals can drag them through.

The CHAIRMAN. So that no matter what the character of the operation may be, very extensive transportation by animal vehicles is absolutely necessary?

Gen. SHARPE. Yes, sir. There is a point coming up, Mr. Chairman, which has got to be decided by the General Staff very shortly. An indication came up to me yesterday which showed that the supply of wood to make the wagon wheels for our requirements and for the Ordnance Department is deficient. I instructed our branch to take it up with the ordnance people with a view to having the matter considered by the General Staff. In view of the deficiencies in this wood, unquestionably the ordnance would have to have that for their guns and their limbers, and we would probably be forced to make use of motors and motor trucks to some extent instead of using the animal-drawn regimental trains. Capt. Channing told me that he had seen them. Have you heard from them, Capt. Fair? Capt. FAIR. I saw Maj. Ames about that this morning. A good deal of the wood stock for building wagons and wheels is still in the trees, and while the Quartermaster Department has arranged to have that stock taken out of the trees, it seems that we have arranged to get about all that hard-wood stock there is. It may be we can not build this number of wagons if we have to turn over some of the wood stock to the ordnance for making artillery wheels.

Mr. SHERLEY. How much of this nearly $6,500,000 which has already been allotted have you obligated or made contracts under? Capt. DALY. We have contracted for 44.850 escort wagons and other dorse-drawn vehicles, and of that number 1,845 have actually been delivered, leaving 43,005 to be delivered.

Mr. SHERLEY. When are deliveries to be had?
Capt. DALY. They are to be made constantly.

Mr. SHERLEY. What length of time will elapse before you get all of them?

Capt. FAIR. We speeded up on the contracts and we expect to have them delivered by February, 1918.

Mr. SHERLEY. What are you going to be able to do in the way of additional deliveries?

Capt. FAIR. We are arranging now so that the men who are making the wagons will establish kilns for the drying of the necessary wood, and we are trying to arrange it so we can have them do that work by putting an added cost on each wagon, rather than that the Government should start out and establish the kiln itself. That is being negotiated at the present time, and by February we ought to be ready to make some more wagons to supply the deficiency which we have. Mr. SHERLEY. At what price have you let these contracts? Capt. FAIR. $182.50 each.

Mr. SHERLEY. For what?

Capt. FAIR. For the escort wagons complete.

Mr. SHERLEY. It was estimated that you were going to buy those escort wagons at $76.52. In point of fact, you are paying how much? Capt. FAIR. $182.52.

Mr. SHERLEY. That is more than twice as much.

Capt. FAIR. Yes.

Mr. SHERLEY. Why?

Capt. FAIR. They could not be obtained for any less money on account of the higher cost of materials and everything connected with the construction of the wagons.

Mr. SHERLEY. But that is a tremendous increase. How did you arrive at that price?

Capt. FAIR. It was arrived at by the committee of the Council of National Defense after the consideration of the average prices. That old estimate was made before the bids came in.

Mr. SHERLEY. But that old estimate evidently was made at least on the prices which you had theretofore obtained.

Capt. FAIR. On last year's price.

Mr. SHERLEY. How did you come to get this new figure? It was on March 20 that Col. Baker made that estimate.

Capt. FAIR. I do not know where he got his figures for the estimate. I suppose he got them from peace-time prices which had been paid, and this price was obtained by consultation with the advisory committee of the Council of National Defense.

Capt. DALY. I think that price is an error, Mr. Sherley, because I know that in February or March, 1915, the price of the escort wagon complete was $102.23, including the sheet and covers and equipment.

NOTE. The cost of an escort wagon complete, fiscal year 1916, $128.97; cost of an escort wagon complete, fiscal year 1917 to March 1, 1917, $176.52.

Capt. FAIR. I do not know whether that price is for the wagon complete or not. This is based on the wagon complete with toolboxes, tools, wagon cover, and everything pertaining to the wagon. Mr. SHERLEY. What do you mean by an escort wagon?

Capt. FAIR. An escort wagon is the name of the Army wagon that is used for all purposes of hauling in the Army.

Gen. SHARPE. It is a four-mule-team wagon.

Mr. SHERLEY. Evidently that calculation was wrong, because I find that dividing 20,470 wagons into $3,613,364 gives roughly $186 as the cost of an escort wagon.

Capt. FAIR. Yes, sir.

Mr. SHERLEY. So that this print is evidently wrong. Do you recall what you used to pay for them in peace times?

Capt. FAIR. No, sir. I think Capt. Daly will probably be able to tell you that.

Capt. DALY. The last price I recall was $102.23; but that may not be right. I will insert the correct price.

Mr. SHERLEY. How many different concerns have these forty thousand and odd wagons been ordered from?

Capt. FAIR. They started out with the concerns belonging to the National Wagon Manufacturers' Association, 12 firms, and then they have taken on since that time 8 or 9 additional small firms that did not belong to the national association.

Mr. SHERLEY. Was the same price given for all of them?
Capt. FAIR. Yes, sir.

Mr. SHERLEY. Was that price fixed and these people told they would be paid that much, or were they asked for tenders?

Capt. FAIR. They agreed to enter into a contract to make the agons at that price. They were not asked for tenders. Mr. SHERLEY. Why not?

Capt. FAIR. Because that price has been determined by this committee of the Council of National Defense as a reasonable price to pay, and it was so considered. The necessity for getting the wood stock and all that had to be attended to by this committee, and the men who had a reserve wood stock and were holding it for a higher price had to be encouraged to take orders for the wagons so we could get the advantage of the wood stock that had been held in reserve. The CHAIRMAN. You fixed a basic price?

Capt. FAIR. Yes, sir.

The CHAIRMAN. Now, that eliminates from all calculation the ability of one manufacturer to turn out his output more cheaply than another one. Now, in arriving at what is a reasonable price, is that question of the ability of the manufacturer to produce taken into account?

Capt. FAIR. Yes; it was discussed.

The CHAIRMAN. And then do they take the ability of the man whose production cost is highest or lowest?

Capt. FAIR. They take the average.

Mr. SHERLEY. Have you had any shortage in anything other than spokes or the wood for the wagons?

Capt. FAIR. It is only the hardwood, the oak wood, that goes into the making of the bed. The baseboards of the bed are oak. There is a shortage there.

Mr. SHERLEY. Are you limiting it to oak; is that the only hardwood?

Capt. FAIR. That has proved to be the best.

Mr. SHERLEY. It is, of course, the best; but I did not know, in view of the shortage, but what you were taking other hardwood, like birch or hickory or any other hardwood.