properly bought on credit, whether by the desertion of the debtor or by his discharge and virtual repudiation of the debt, will be deducted from the share of the profits of the company or other organization to which the defaulter belongs. Losses by fire or other casualty, death of the debtor, depreciation of value of the fixtures, and deterioration of articles kept for sale, and the accidental breakage of fixtures or other property will be borne by all the participating organizations in common, and should be deducted from the gross receipts before dividing the profits. Credit accounts should be treated as bills receiv. able until they are settled or found to be a loss, but bills receivable should not be included in the gross amount from which profits are resolved. The amount of cash on hand on the dates specified, after all matured debts are paid, and after setting aside as a reserve fund a sum sufficient to meet anticipated debts for a period not less than one month, constitutes the sum subject to distribution.

17. Reports.-The report required by paragraph 351, Army Regulations, showing the financial condition of the exchange, will be made on the blank forms supplied by The Military Secretary of the Army, and will be rendered not later than January 10th and July 10th of each year. The semiannual report will also contain the names and compensation of the civilian employees; the number and extra pay of enlisted attendants, if any; the adequacy and condition of the quarters and the rental therefor, if any.

Whenever the business of a post exchange is from any cause closed a final report of the financial operations of the exchange for the portion of the half year not covered by previous reports will be rendered to the military secretary of the department by the exchange officer. A similar report will also be rendered when an exchange officer is relieved, and will be accompanied by the certificate of his successor that all the property, including the books and other records, as well as the funds of the establishment, have been duly transferred to him.

18 Exchange membership.—Members of the exchange must be organizations, companies, and detachments. By "detachments" is meant an organization consisting of a number of enlisted men not belonging or attached to a company, such as the Hospital Corps, Signal Corps, or band. Individual enlisted men, such as post or regimental noncommissioned officers or

individual members of the Hospital or Signal Corps, can not become members of the exchange unless three or more of them are associated in a mess. When an exchange is first established the exchange council will fix the amount of assessment or contribution that shall entitle an organization to membership, which will be a proportionate part of the expense attending the fitting up and stocking the establishment. Whenever a company or detachment applies for membership in an exchange already organized, a careful estimate of the market value of the property will be made by a disinterested officer-preferably a field officer-who, whenever practicable, will be assisted in the performance of the duty by a representative of each party in interest; these appraisers will be designated by the post commander. The estimate must be approved by the commanding officer, or submitted on appeal to the department commander, whose decision will be final. The amount to be paid by the incoming organizations may usually be determined by dividing the amount of appraisal by the total number of men composing the organizations that are already members of the exchange, which will give the per capita, and this multiplied by the number of men of an incoming organization will give its entrance fee. The sum thus paid into the funds of the exchange should be regarded the same as funds resulting from any other sale, and go to increase its cash account or working capital. It should not be divided among the members, excepting as it may become divisible at a subsequent declaration of dividends. A company joining the exchange when unable to pay its assessment in cash may be charged with it, and such charge may be liquidated from the company's share of the profits of the exchange. An organization joining should pass to the exchange some written evidence of its debt and obligation to pay the amount assessed, and such paper should be carried on the books of the exchange as a "bill receivable" and be regarded as an asset, which should be reduced in value from time to time as the profits are divided. When an organization, by reason of change of station or for other cause, desires to withdraw from an exchange, the value of its shares being determined, that sum will be withdrawn from the gross funds of the exchange and paid over to the withdrawing organization. Credit checks for all debts due the exchange from enlisted men of the organization will be turned over as so much

cash to the withdrawing organization, and such checks pertaining to men still belonging to the organization may be used in part payment of entrance assessment into another exchange, in which case they will become debts due the new exchange and will be collected or disposed of as prescribed in paragraph 14.

Any amount due, but, for lack of available funds, not paid to a company when retiring from the exchange, should be paid out of the first profits accruing to the institution; the amount so due and unpaid should be carried on the books of the exchange as a "bill payable," and be regarded as a liability until liquidated.

19. Final disposition of business.-When notice is received that the entire garrison of a post is to be withdrawn and the post discontinued, the exchange stock will be reduced to the lowest extent possible and, so far as may be, converted into cash. Prior to the departure of the troops the property of the exchange will be sold and the proceeds, together with the cash, equitably distributed, under the direction of the council, among the organizations that are members. The exchange officer will make a final report of the matter through military channels to the military secretary of the department.

WASHINGTON, July 11, 1905.

No. 110. General Orders, No. 59, War Department, April 12, 1905, is rescinded and the following substituted therefor:

For administrative purposes in the transaction of current business pertaining to ordinary routine, the following telephonic communication is authorized to be established at each military post, the whole number of telephones not to exceed 12:

To the office of commanding officer.

To the office of quartermaster..

To the office of commissary.

Telephonic installation for rifle ranges, fire control purposes, War College, and service schools are not included in the above allotment, they being provided for separately, according to the necessities of the occasion.

No post telephonic system will be connected directly with any commercial system of telephones, save under approval by the War Department, and under written terms which shall conserve the interests of the United States.

Post telephonic systems are to be maintained and operated by the members of the garrison as a rule, such systems to be inspected by a competent noncommissioned officer of the Signal Corps, or other available expert, at least twice each year. [1031120, M. S. O.]

BY ORDER OF THE ACTING SECRETARY OF WAR:

ADNA R. CHAFFEE, Lieutenant General, Chief of Staff.