REDUCTION IN ESTIMATE BY BUDGET BUREAU

Mr. FRENCH. This allocation appears to have been made upon the basis of a million dollars more than appears in the Budget estimates. Could you tell the committee why the reduction is made? Admiral POTTER. The reduction was made by the Bureau of the Budget on the ground, I suppose, that we did not need the amount that we presented to them. We have not yet received from Operations the new plan of operations diminishing the mileage in proportion to what it must be diminished as a consequence of the action of the Bureau of the Budget.

Mr. FRENCH. Do you think it had any relationship to probable savings through economies that would be effected by improvements in the ships on the basis of the appropriation in the last bill?

Admiral POTTER. I do not remember that in my hearing before the Budget anything was said to me, or in my presence, that would indicate that they had such an idea. What developed after my hearing I do not know.

Mr. FRENCH. It would seem that on the basis of some of the improvements that feature also could have been taken into consideration and might have had some bearing.

Admiral POTTER. It may have been. No information has reached me that would indicate that any such saving could be made on account of any improvements.

EXPENDITURES FOR YEARS 1923, 1924, AND 1925

Mr. TABER. How do these figures balance up with the figures for 1924 as to quantity of supplies to be used? I do not mean as to dollars, but as to quantity.

Admiral POTTER. I have here, by quantities and value. a comparison between 1924 and estimates for 1926. The money value of expenditures for 1924 was $13,652,385.36.

Mr. FRENCH Would you, right at that point, give the total money values for several years, say, 1923, 1924, and 1925?

Admiral POTTER. Yes, sir; I will do so.

Mr. FRENCH. And then follow on with the answer to Mr. Taber's question?

(The table requested is as follows:)

tual expenditures, fiscal year 1924:

325,399.27 tons coal, at $8.3505.

6,192,902.16 barrels fuel oil, at $1.3992. 95,273.66 barrels Diesel oil, at $1.9728. 2,171,004 gallons gasoline, at $0.1637. Maintenance of fuel plants.

Leased fuel-oil storage

4,760,432.49 tons water, at $0.0446_

3,233.74 tons ice, at $12.155

1

4

14,803,754 kilowatt-hours electric current, at $0.0232 Miscellaneous...

Charges to meet unreported obligations.

Total.

5 estimate, revised as of June 14, 1924; 350,590 tons coal, at $7.4431_.

5,582,314 barrels fuel oil, at $1.6656. 96,825 barrels Diesel oil, at $2.0168. 2,650,000 gallons gasoline, at $0.19 Maintenance of fuel plants...

Leased fuel storage.

Water-3,260,000 tons, at $0.062
Ice-3,760 tons, at $12.50.

Electric current-12,400,000 kilowatt-hours, at $0.024.

Demurrage....

Tug hire.

Gasoline drums-5,000 at $8-
Additional charges for transporting oil

Miscellaneous...

$2, 717, 246.60 8, 665, 108. 70 187, 955. 88 355, 393. 35 857, 800. 49

22, 800. 00 212, 272. 96

39, 304. 89

342, 133. 30

216, 364. 82

36, 004. 37

13, 652, 385. 36

2, 609, 497. 69

9, 298, 282. 39 195, 280. 06 503, 500.00 676, 435.00

58, 807.00

202, 120.00

47,000.00

297, 600.00 10,000.00

20,000.00

40,000.00

528,000.00

170, 046. 67

Total

14, 656, 568,81

REDUCTION IN COST OF COAL AND AMOUNT USED

Imiral PorTER. The number of tons of coal consumed for 1924 325,399.

r. FRENCH. And your estimate for 1925 was 363,412.47?

Imiral POTTER. Yes, sir.

r. FRENCH: What are you estimating for 1926?

Imiral POTTER. Three hundred seventeen thousand one hundred twenty tons plus.

r. FRENCH. And you are reducing the amount for what reason? miral POTTER. There are fewer coal burners in commission, wer coal burners steaming, on account of repairs being made,

FRENCH. And you are also buying the coal at a lower price you estimated you would buy it for in the current year by y a dollar a ton? miral POTTER. Yes, sir.

FRENCH. Are you required, for this current year, to pay as as $9.82 for your coal, or was that too high an estimate? miral POTTER. I have the details here of what we actually Roughly speaking, the average price at the present moment

50.

TABER. Do you have to pay $8.50 a ton for coal? niral POTTER. That is the average, sir, all over the world. I it divided here. We deliver to the Atlantic and Gulf coasts, acific coast, the Asiatic Station, European waters, the Naval port Service, and the Special Service Squadron under all

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sorts of conditions. Then I have it divided up into each procedure at all the principal ports of the United States and each other principal port. So when we say the average, after all, it is a very unsatisfactory thing to say, as we have once or twice called to your attention. We talk about the average price for the Navy, and even wher we have weighed it so as to try to get it correct the average price does not show very much because of the varying conditions.

Mr. REED. On page 5, Mr. Chairman, you will find the table showing the current prices at different points on the east coast and on the west coast. Our Hampton Roads price, which is the bas price for us, is $4.58 at the present time.

In the

Admiral POTTER. That, of course, includes the freight. Canal Zone for 1926 we estimate that we will have to pay $12.18. Mr. FRENCH. What kind of coal is that?

Admiral POTTER. This is Georges Creek, West Virginia, and western Maryland coal, the best grade of bituminous steaming coal Mr. Chairman, may I mention that the figures do not include fuel for naval vessels assigned for the training of Naval Reserves. That appears separately under the appropriation Naval Reserve Force...

METHOD OF ARRIVING AT PRICE OF COAL

Mr. FRENCH. Admiral, will you say a word further, touching coal. about your manner of arriving at the price?

Admiral POTTER. Broadly speaking, we arrive at unit prices for coal by taking the Hampton Roads contract over the piers, nearly all our coal coming down over the Baltimore & Ohio Railroad, the Chesapeake & Ohio and the Virginian Railway, from southwest Virginia and from western Maryland. To that basic contract price, as at Hampton Roads, we have added 10 per cent for possible increases. based upon our thought that the prices are now so low that there may be an increase in some manner. To that we add the Navy handling charges; then the cost of transportation from Hampton Roads to whatever port it may be, which we have worked out in each case; and that represents the total.

1

To take a single concrete case, the Hampton Roads contract price for 1925 has been $4.58. If we wish to deliver the coal at Portsmouth in 1926, we make an allowance of 10 per cent increase on the $4.58: the handling charge is 55 cents; the cost of transportation is $1.35. making a total probable cost for delivery of coal at Portsmouth. N. H., in 1926 of $6.93 a ton.

Mr. FRENCH. Is there good competition in bidding upon coal! Admiral POTTER. Yes, sir; there is really v very good competition. Of course, the Navy has its so-called list of acceptable bidders, or acceptable mines, to be precise. Those acceptable mines number about 200. We get, I suppose, different 25 bidders on an average. depending upon the size of the probable contract. The competition seems to be real; it seems to be good.

TESTING OF COAL AT MINES

Mr. FRENCH. Who does your testing for these mines?

Admiral POTTER. The Bureau of Mines of the Interior Department does the testing at the mines, supplemented by tests made by officers of the Bureau of Engineering of the Navy.

Mr. FRENCH. The Navy has done it prior to the last year or so? Admiral POTTER. Yes, sir; and the Navy assists in it still. The Bureau of Mines gives us a report in great detail. They actually send their engineers to the mines; they make these tests; then they report to us in great detail with a lot of information about the mines.. Then when the goods are delivered, the inspections are made by officers of the Bureau of Engineering, sometimes assisted by a repre-sentative of the Bureau of Mines, if for any reason we want to check ap, or if the Bureau of Engineering of the Navy thinks it is valuable o have an additional assistant.

Mr. FRENCH. Is that plan satisfactory?

Admiral POTTER. It seems to me eminently satisfactory. Mr. FRENCH. Prior to the last year or so, I remember, officers of he Navy Department preferred to do their own inspecting, and I as rather surprised when the item came up in the Bureau of Mines earings, a week or so ago, to note that they were handling the work,. nd also with the assurance to me, on that committee, that it was one with the acquiescence and approval of the Navy Department.. Admiral POTTER. Yes, sir.

Mr. FRENCH. I am glad that it is working out so satisfactorily. Admiral POTTER. The Bureau of Engineering and ourselves egotiated about the matter, and we have very carefully drawn an arrangement with the Bureau of Mines.

CONTRACTS FOR COAL

Mr. FRENCH. What is the nature of the contract that you make coal?

Admiral POTTER. For the last two years we have in most instances en making contracts for a year.

Mr. FRENCH. For the delivery of coal at stated intervals throught the year?

Admiral POTTER. No, sir; for the delivery of coal as required, t to exceed a maximum.

Mr. FRENCH. Would there be any advantage in calling for bids a time when you thought the market was low?

Admiral POTTER. Yes, sir; there would, and we have done that thin limits of about three or four months in the spring. I think have put out bids as early as February and as late as the latter t of May or the 1st of June.

Mr. FRENCH. Anything beyond that you feel would be gambling a possible condition that might be more advantageous or less vantageous?

Admiral POTTER. Yes, sir; that is what we have thought; and - coal prices compare favorably with, or at least they have not en in excess of, those of other large purchasers.

Mr. FRENCH. Industrial concerns?

Admiral POTTER. Yes, sir; and other Government departments. fact, we usually get better prices on our coal. Of course, a great ny industrial concerns do not buy as good a bituminous coal as do.

Mr. FRENCH. Is it not true that your bituminous coal must be of best?

dmiral POTTER. Yes, sir.

Mr. REED. Mr. French, 'in connection with the terms of the contracts for the past two years, we have had to make them on the basis of a definite quantity with 10 per cent variation either way. Mr. FRENCH. That depending on the wages or cost in the mine! Mr. REED. No; I mean 10 per cent variation on the quantity. We used to make contracts for the delivery of any quantity that might be required.

ALASKA COAL

Mr. FRENCH. What about the Alaska coal? Are you getting any from Alaska?

Admiral POTTER. No, sir; none for the use of the Navy.

Mr. FRENCH. Am I correct in my understanding that the cost of getting the Alaskan coal, together with transportation, exceeds the cost at which you can get the same kind of coal in the States? Admiral POTTER. Yes, sir; very considerably, I should say. I do not think that the Navy has accepted that Alaskan coal as actually consumable coal for Navy purposes as yet.

Mr. FRENCH. Well, whether or not it ha has been accepted, it had been stated to me that the remark I just made represents the correct situation.

Admiral POTTER. Oh, yes, sir.

Mr. FRENCH. That is, that the cost is greater. I realize that the question is raised time and again, and I want to be able to meet it. Admiral РоTTER. You will remember that we had before us a year or two ago the question of Japanese coal. Japanese coal is not purchased for Far Eastern use, notwithstanding the fact that it is much cheaper, because its propulsive power is so much less, and also because of the greater damage it does to the motive power.

Mr. FRENCH. The Alaska coal to which I was referring, of course. is that which would be obtained from lands that we ourselves own: that is, the Matanuska field.

Admiral POTTER. We are getting East Coast coal delivered at Tiburon, California, at about $8.36 a ton now, which includes the cost of some high priced coal that we have there; and the Alaskan coal would cost about $10 a ton put down there, according to our information.

Mr. FRENCH. Where do you get this coal that you use?
Admiral POTTER. This is Hampton Roads coal.

Mr. REED. We have been getting very favorable transportation

rates on shipments to the west coast for the last year or so. Mr. FRENCH. Do you use any western coal at all?

Admiral POTTER. No, sir.

Mr. FRENCH. Where do you get the coal that you use in the

Orient?

:

Admiral POTTER. That is Hampton Roads coal.

Mr. FRENCH. Is it all from Hampton Roads?

Admiral POTTER: There may be a little Japanese coal left from the

war.

How about that, Mr. Edwards?

Lieutenant EDWARDS. There is a small amount of Canadian coal still at Cavite, and at Guam we have some Japanese coal.