arrested. The policy of assigning Coast Guard officers and enlisted men to the aeronautic school of the Navy has been continued. At the present time the personnel of the Coast Guard includes 3 commissioned officers who were qualified as "naval aviators," 7 enlisted men were qualified as "airmen," and 1 commissioned and 2 warrant officers were qualified and are serving as "naval inspectors" for the construction of aircraft. In addition to these, 3 commissioned officers are under instruction as "student naval aviators" and 5 enlisted men as airmen. It is hoped when the Coast Guard resumes its peace status at the close of the war that sufficient appropriations will be provided for the complete and effective establishment of an air service in connection with rescue and salvage operations.

Improvements have been made at the Coast Guard depot, Arundel Cove, Md., to increase the efficiency of the repair plant. A small railway capable of hauling out boats 60 feet long has been installed. The introduction of electricity for all power and lighting purposes has been completed and has effected a considerable saving in the cost of operation. New and much needed tools have been added to the machine-shop equipment. The building for the construction of boats has been enlarged and new machinery installed, but already the facilities of this new boat shop have been utilized to the maximum, and it will be necessary to further enlarge the boat-building plant so as to construct all service boats at the depot. New types of 36foot power lifeboats and 26-foot motor surfboats were completed at the depot, and both are undergoing tests to determine their adaptability for all conditions of the service.

A new harbor cutter was commenced and completed during the year and assigned to patrol and anchorage duty in New York Harbor. A new vessel to replace the old Manhattan is now under construction at Balboa, Canal Zone, by the mechanical division of the Panama Canal organization.

While engaged in patrol duty on the morning of June 13, 1917, the McCulloch, as a result of a collision with the steamship Governor off the coast of California, sank in water too deep to permit of salvage operations. One of the crew was asleep in his berth near the place where the cutter was struck by the bow of the steamer and was so badly crushed by the impact that he died of the effects of the injury after being placed in the hospital on shore. All the other members of the ship's company made their escape in good order. The loss of a cutter at this time was most unfortunate, as she had been but recently thoroughly overhauled, and despite the fact that she had seen service for over 18 years was a very efficient craft for her size and type. The board of inquiry appointed to in

vestigate the circumstances of the collision has not yet made its report.

The new station at Siuslaw River, Oreg., is nearing completion; and the new station at Bolinas Bay, Cal., near Duxbury Reef, is well under way. A suitable site has been obtained for a new station at Barrataria Bay, La., and plans for its construction are now nearing completion. The dwellings at stations Nos. 157 (Smith Island, Va.), 186 (Hatteras Inlet, N. C.), and 190 (Cape Lookout, N. C.) have been rebuilt. The buildings at stations Nos. 218 and 219 (San Luis and Velasco, Tex.) to replace those destroyed in a hurricane have been rebuilt on steel piling and sufficiently elevated to be clear of high water during the hurricane season. A new dwelling has been erected at station No. 276 (Point Betsie, Mich.). A storehouse for spare boats has been constructed at Ediz Hook, Wash. Contracts have been awarded or work begun in connection with the following projects: New dwellings at stations Nos. 1 (Quoddy Head, Me.), 184 (Creeds Hill, N. C.), 324 (Golden Gate, Cal.); new wharf and boathouse at No. 212 (Santa Rosa, Fla.); improvement in launching facilities at No. 54 (Narragansett Pier, R. I.), 233 (Charlotte, N. Y.), 287 (St. Joseph, Mich.), 274 (South Manitou Island, Mich.), and 300 (Baileys Harbor, Wis.); repairs to wharves at the Coast Guard Academy, New London, Conn., and Woods Hole, Mass.

Recommendations.

Wharf and storehouse at Sault Ste. Marie, Mich.-All of the waterborne traffic between Lake Superior and the other Great Lakes must pass through the system of locks and waterways of the St. Marys River. The river is about 60 miles long and contains approximately 45 miles of dredged channels. There are three locks on the American side and one on the Canadian side at Sault Ste. Marie, and a fourth American lock is under construction.

Owing to ice conditions navigation is closed on this river from about December 10 to April 10 each year, leaving only eight months of open navigation for an average season. During the season of 1916 a total of 91,888,219 tons of freight passed through the locks. This was a record season, the total tonnage exceeding that of 1915 by about 20,000,000 tons, and that of the previous record season (1913) by some 12,000,000 tons. In transporting 91,888,219 tons of freight a total of 19,864 vessels and 1,252 barges passed through the locks. The heaviest traffic occurred during the month of July, when a total of 3,264 vessels and barges passed through this waterway-an average of 105 for each day.

In order to regulate this traffic, prevent congestion, reduce danger of collisions and other marine casualties, and protect the dredged

channels from blockades and unnecessary erosion, special rules have been promulgated for the movement and anchorage of vessels in St. Marys River, and the Coast Guard is intrusted by law with the duty of enforcing those special rules. The present equipment for this duty consists of a steam tug (the Mackinac), four power launches, and six lookout stations. The personnel comprises 4 commissioned officers, 1 warrant officer, and 52 petty officers and other enlisted men.

Provision must necessarily be made for wharfage to accommodate the tug and launches during the active season and for placing them in winter quarters during the closed season; also for housing necessary supplies throughout the year. Up to the present wharfage has been rented for the tug, and the launches have dropped into any convenient vacant berth. For winter quarters the larger launches are usually placed in one of the locks and are blocked up and covered over when the locks are emptied. The smaller ones are hauled out into sheds. No regular provision has been made for housing stores. The wharf now rented for the Mackinac is in bad condition, having been partially wrecked last July by the explosion of fireworks condemned and dumped in that vicinity. The property is for sale and there is little likelihood of permanent repairs being made at an early date. The whole situation as to wharfage and storage is unsatisfactory and inefficient.

To remedy these conditions two courses are open-either improve a site now under the control of the Army engineers or purchase a site especially for Coast Guard purposes.

The site controlled by the Army is at the east end of the north pier, Sault Ste. Marie locks. It is built up of rock and earth excavated from the third and fourth locks and is a naked and unimproved rock dump. To utilize this site will involve grading, walling, and construction aggregating about $30,000, and when finished it can be reached only by boat or by crossing three locks. When the fourth lock is completed it will be necessary to cross that also. During the running of heavy ice boating is out of the question, and trucking is impossible at all times. The site is not, therefore, a desirable one, and future developments in the way of lock construction might make it necessary to relinquish the place altogether.

The proposition to acquire a site for Coast Guard purposes appears to be the practical solution of the problem. A suitable piece of water-front property at Sault Ste. Marie is for sale at a reasonable figure (about $10,000). It already has a small wharf, which can be extended to meet the needs of the patrol, and there is ample space for necessary storage warehouse, boathouse, and office. It is conveniently located, abutting on the principal water-front street and

readily accessible by land or water. It is sufficiently removed from the locks to be out of the way of heavy traffic. This site can be acquired and all necessary improvements made at a total cost not greater than that required for improvements alone at the north-pier site, and in addition there would be no question of forced removal in the future.

The necessity for a wharf and buildings is constantly increasing. The patrol of the river has been performed by the Coast Guard since 1896, and the personnel and equipment necessary for the efficient performance of the duty has gradually increased to meet the demands of the service. Traffic will undoubtedly continue to increase, so that there is every reason to expect the importance of the patrol to be augmented from year to year.

In view of the facts and conditions above set forth, I earnestly recommend that authority be obtained to purchase a site and equip a station that will meet the requirements of the patrol and be commensurate with its dignity and importance.

Clerical force.-The Coast Guard act provides longevity pay and retirement for the entire warrant and enlisted personnel. Longevity pay and retirement for 30 years' service depend upon length of service not only in the Coast Guard, but also in the Army, Navy, and Marine Corps; retirement for disability depends upon whether such disability is incident to service. Both these features of the law necessitate keeping an accurate record of the service and medical history of 5,167 officers and men. This requires a very considerable amount of clerical work in the personnel section which was not necessary in either the former Revenue-Cutter Service or Life-Saving Service. In the former Life-Saving Service there were 6 rates of pay among the superintendents, keepers, and surfmen; under the Coast Guard act these men were transferred from the Life-Saving Service to the Coast Guard with upward of 59 rates of pay. There was but one appropriation for the maintenance of the former Revenue-Cutter Service and three appropriations for the maintenance of the former Life-Saving Service. The appropriation for the maintenance of the Coast Guard is in one sum, but this sum includes 12 subheads, and for administrative purposes the accounts of the Coast Guard are kept in accordance with these subheads. The great increase in the number of rates of pay and in the number of accounts involves a considerable increase in the work of the accounting section. This increased labor, falling chiefly upon the sections of personnel and accounts, has been relieved by the detail of a clerk from another office and a number of enlisted men (ship's writers) of the Coast Guard.

Four clerks are needed to replace those persons now on duty in these two sections by detail. The extension of the system of coastal communication, its maintenance, and the handling of the adminis

trative business in connection therewith requires the services of two clerks, which should be provided to replace the two enlisted men (ship's writers) who have thus far performed this duty, so they may be returned to their regular duties on board ship. A clerk for each of the divisions of engineering and inspection should also be provided for, as the clerical work in these two divisions has up to this time been performed by enlisted men. The above indicated increases are necessary to keep the administrative affairs of the Coast Guard current.

LOANS AND CURRENCY.

The following is the report of the Division of Loans and Currency for the fiscal year ended June 30, 1917:

Interest-bearing debt of the United States-Changes during year.

1 This amount represents receipts on account of principal of Liberty loan bonds to June 30.