and attention that this committee and the Senate committee have paid to it. I hope the conferees will give particular attention to that.

The CHAIRMAN. Are there any other Senate amendments, Mr. Secretary, that you would like to speak of?

Secretary NEWBERRY. Yes.

The CHAIRMAN. The bill went through about as we reported it. Very few amendments were put on the bill.

Secretary NEWBERRY. A very important amendment is the amendment of a powder provision, which strikes out the word "emergency" and puts in the word "war." That would absolutely prevent the department from buying any powder except in time of war, as I am informed that the only powder manufactured is manufactured by a combination of powder industries. As the bill passed the House it left it to some one to determine when an emergency arose. never tell when an emergency will arise. If you had to wait for the hour of war before you could buy powder, the Government would be in a hazardous position. You understand powder requires six months to dry after it is made. Our little plant makes only about a quarter of what the navy uses, so that the condition would be most acute and disastrous if the bill were allowed to remain as it is now.

You can

Mr. LOUD. If the contracting for powder could be made to cover a longer period of time, would it not be possible to make a great and material saving by obtaining a less price, having this in mind, that no outside factory would bid on an order knowing that at the end of the year they would be liable to lose all the plant that they have had put in for the construction or production of naval powder, and consequently if they bid at all they must have a large and excessive price to cover the contingency of losing the plant, and then we would fall back into the hands of the trust, who are equipped for it? No independent plant could bid.

Secretary NEWBERRY. The best information I have is that the price. fixed by the Army and Navy Board for powder was not an excessive price, but only allowed a moderate profit. The prices that the Government showed to be the cost of the production of powder, I think, omit a great many essential things. I think they omit all experimental work and all of the money that has been expended in learning how to make powder, all of which in private enterprise has to be capitalized on the cost of the plant. I am not an expert on powder manufacture and I am not qualified to give an opinion that is worth very much.

Mr. LOUD. It is only the system of contracting that I had in mind. Secretary NEWBERRY. In regard to making a contract for a long period of years, or for a period long enough to warrant a man in establishing a factory, the hazard the Government would take in that is that the progress in the art of manufacturing powder might be so great that the Government would be a great loser by it.

Mr. LOUD. The Government would have to protect itself on that point. In private life we know the effect of a short and of a long contract. A man who knew he would have to equip his factory for a short contract would not equip it, but if he had a long contract he would.

Secretary NEWBERRY. If our appropriations are only made for one year it would be actually at the option of Congress to appropriate

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this year or next year. No man would go and erect a factory in the hope of getting a contract under those circumstances. The appropriations must come from Congress, and nobody can promise him that he will get any money except for that year.

Mr. LOUD. I thought if the condition could be in any way changed, whereby the Government could save a lot of money, it should be done. Secretary NEWBERRY. I think the progress of the art of powder making is such that it would be hazardous for the Government to make a contract for a long period of years, as there are constantly discoveries of new methods and improved powders, and they might discover entirely new explosives, and the Government might not want to buy an ounce of the old stuff. In my judgment the Government's interests are best protected by the present contracts and by the careful examination of the cost in private plants. We ought to have private plants to insure the Government a supply in an hour of

emergency.

Mr. LOUD. The same problem enters into the transportation of coal, in letting trip charters as against a more lengthy charter.

Mr. DAWSON. Is it not a little bit remarkable that this joint Army and Navy Board keeps no record of the data upon which they base their conclusions? Congress asks for information, and they simply give their conclusions. They seem to keep no records.

Secretary NEWBERRY. I do not think that is so strange, because the information given by the private manufacturers must necessarily be confidential as to their cost, because it is giving up a man's information concerning his private business. If we have got reliable men on the Army and Navy Board, as we certainly have, the best in the employ of the Government, we must take their judgment and believe that they are honest men and believe that they have information which justified their finding. It could not be expected that you, as a manufacturer, would give all the information concerning the cost of manufacture free to the public-information that cost you hun'dreds or thousands, and possibly millions, of dollars to acquire.

Mr. DAWSON. That is true; but their findings would have greater weight, I think, with Congress if they submitted with them some facts by which they reached their determination.

The CHAIRMAN. We base our cost of powder not on what it costs the private manufacturers, but on what it costs the Government.

Secretary NEWBERRY. I think you would get the same information if we could have a careful and accurate audit of the manufacture of whatever amount of powder we produce to-day, and take into consideration what it costs the Government to make that powder to-day-not the labor or material only that goes into it, but also the money that has been spent to get this information. It is a valuable lot of information, and it has cost a great deal of money to get it; so that it is not fair to say that so much of this and that and the other material goes into it, and so much labor, and that the total is the cost of the powder. We have spent a great deal of money in experimental work here and abroad, and that must be counted into the expense in order to find out exactly what the cost of this powder is. I do not think our powder cost is at all accurate. It is simply labor and material, and power, probably. We want to know also what has gone into experimental research to develop this thing. If you found that

out you would find out whether we pay an exorbitant price or not, without compelling the manufacturer to give up information as to the cost, which is so valuable to him.

Mr. LOUD. The matter of the change of the formula and that sort of thing would not seem so formidable as might appear, because that right to change would be reserved to the Government, and if the changes were such that the contractor was not satisfied he would then have his redress. The detail does not seem so formidable to me as might appear on the face of it.

Secretary NEWBERRY. That could be answered only by a private investor, whether or not he was willing to hazard his money in a contract of that kind. I would not do it myself.

Mr. LOUD. If we had a longer contract, perhaps we would make a more reasonable contract than we can by single years.

That is all. Mr. DAWSON. I would like to get back to this consolidation matter for just one or two questions. I want to ask you, Mr. Secretary, if you think the principle that underlies the consolidation that has been effected in the individual bureaus could be applied probably in greater or less degree to the department itself?

Secretary NEWBERRY. As I have said before, I think a reassignment of work in the department could be made to the advantage of the government business. I do not think it is necessary now to consider the abolition of any bureau. The manufacturing and material side of the navy is pretty well cared for under this arrangement, and the time of the Secretary of the Navy should be immediately given to improving and making more permanent and systematic the gathering of information concerning the great object for which the navy is organized, and that is the handling and preparation of its war material and effort. That now is done by the General Board, and it is fairly well done, and I think it can probably be still better done by strengthening the General Board, its personnel, and in some ways extending its activities, without taking from the Secretary the slightest bit of his authority, or without having the General Board take up in too much detail the operations of the department. That is not what it is for. It is for the great military features of the administration of the navy, and the Secretary should rely upon it altogether, so far as he can. He has now the bureaus which attend to the manufacturing, and he has the General Board which can give him the information which he needs on the military requirements.

The CHAIRMAN. Is there anything further, Mr. Secretary?

Mr. DAWSON. You have taken an important step here, and one which I think will be generally commended. Have you any recommendations to make to this committee as to the next step which ought to be taken in this programme which you have mapped out and initiated?

Secretary NEWBERRY. The very next step due is to develop the usefulness of the General Board.

Mr. DAWSON. I mean, do you think any steps are necessary? The CHAIRMAN. Any legislation by the committee to help you out in any way at the present time?

Secretary NEWBERRY. The legislation which was recommended to the Senate by the Senate Naval Committee is all that I think necessary at this time. It went out on a point of order.

Mr. DAWSON. That was to appoint a commission to investigate and report at the next session of Congress?

Secretary NEWBERRY. No; it directed the Secretary to consolidate work at the yards, and provided for one account from which all labor and materials could be paid for without increasing the appropriation or changing the form of the bill. It was recommended simply because it would simplify all the bookkeeping. It is not essential, but it is desirable.

Mr. DAWSON. Your plan contemplates that at the next session of Congress some little legislation will be necessary?

Secretary NEWBERRY. Yes, I think it will. What legislation will be needed in regard to the department here in Washington is a matter that must develop itself within a very few months.

Mr. DAWSON. Will there be any man or set of men in the department that will be making observations for the guidance of Congress when it sits here a year from now on this particular subject?

Secretary NEWBERRY. The President has appointed a commission. I do not know whether it is intended that that commission shall continue into another administration or not. If it does, that commission would be observing, and would make some report to somebody at some time.

MEMORANDUM FOR THE SECRETARY OF THE NAVY.

NAVY DEPARTMENT,

BUREAU OF SUPPLIES AND ACCOUNTS,
Washington, D. C., February 18, 1909.

Referring to the department's memorandum on the subject of the naval appropriation bill, the Paymaster-General begs to report as follows:

In H. R. 26394, as debated in the Senate:

Page 6, line 9, after the words "Navy Department," the Congressional Record, page 2426, top of the second column, shows the following amendment agreed to: "excepting the regular forces in the Navy Department at navy-yards and stations, which are now under the civil service regulations."

As all employees in the navy-yards, including those paid from "civil establishment" and lump appropriations, are, under the provisions of executive order issued May 6, 1896, in the classified service, this amendment would operate to absolutely nullify the entire set of amendments with regard to clerks in the appropriation bill, and, as the proposition has stood the fire of both the House and the Senate, it is earnestly requested that the department take such measures that this amendment may go out in conference. The bureau deems this of the utmost importance.

Page 29 of the bill, "Public works, navy-yard, Mare Island, Cal., " lines 10 and 11. new elevators in buildings 69 and 71, $5,000.

The original estimate was for two freight elevators at $5,000 each, and it passed the House providing for "elevators" but only allowing $5,000. As it stands, it is a question whether the department can put up one elevator for $5,000, which is the estimated cost, or whether it must put up more than one. The sum should either be increased to $10,000 or the “s” in elevators be erased, permitting the erection of one elevator this year (see memorandum of the Chief of the Bureau of Yards and Docks). Lines 16, 17, and 18; line 16, the words," ordnance stores."

What was intended there is a storehouse for ordnance stores, and it is recommended that the words "storehouse for" be inserted. This storehouse, and especially the improvements in building 69 ($4,000), are very important to the general storekeeper's department at Mare Island. In the recent reassignment of buildings there has been a protest from the general storekeeper that his department was not fairly considered; but, if this building is erected, it will probably give his department all the storage space necessary for a number of years.

Page 30, lines 9 and 10, navy-yard, Puget Sound, Wash.

In view of the growing improvement of that yard, the bureau would call particular attention to the provision for a general storehouse to cost $260,000, for which $100,000 was appropriated. Both this and the new buildings at Mare Island were Senate amendments.

Page 32, line 3.

The italicised provision, regarding consolidation and the establishment of a "manufacturing and repair account," went out on a point of order made by Senator Tillman absolutely without discussion, and the bureau deems it a matter of the first importance that this provision should be, if possible, restored to the bill. But, in view of the fact that it was passed by neither House, it would suggest that it might be incorporated in an urgent or general deficiency bill, if one is passed before the close of the session. All of the above matters received the approval of the department.

Respectfully,

E. B. ROGERS, Paymaster-General, U. S. Navy.