THE SAVINGS OF THE DEPARTMENT ARE PAYING FOR THE NEW NAVY.

It is gratifying to be able to report that, as will be seen from the following table, notwithstanding the large expenditures for the new navy in the last three years, the reduction in other directions has made the total expenditures of the Department less for these years than for the three years ending June 30, 1884, the ordinary expenses of the Department having been reduced over 20 per cent.

[The year 1884-'85 was omitted from the table as not having been wholly in either administration.]

Total expenditures of the Department for three years ending June 30, 1884, compared with the three years ending June 30, 1888, items being taken from reports of Fourth Auditor of the Treasury and distributed under the various objects of expenditure:

ITEMS FIXED BY STATUTE OR FOR OTHER REASONS BEYOND THE CONTROL of the
SECRETARY, INCLUDING ALSO EXPENDITURES FOR INCREASE OF THE NAVY.

ORDINARY BUREAU EXPENSES IN WHICH SAVINGS HAVE BEEN MADE.

129, 613. 31

27,757,866.35

COAST AND HARBOR DEFENSE VESSELS.

By act approved March 3, 1887, the following appropriation was made:

For floating batteries or rams or other naval structures to be used for coast and harbor defenses, one million dollars. The final cost of said floating batteries, rams or other naval structures, exclusive of armament, shall not exceed two million dollars. In the last Annual Report of the Department the considerations were stated leading to the conclusion that it would be unwise for the Department to follow the course of the European powers in building unprotected torpedo-boats; and in the present uncertainty regarding the practicability of submarine boats, and while waiting the practical trial of the dynamite gunboat, it has been deemed wise for the Department to build one light-draught, heavily armored, harbor-defense floating battery or ram, for which designs have been prepared by the Bureau of Construction and Steam Engineering, in consultation with the Chief of the Bureau of Ordnance. The advertisements for this vessel call for the submission of bids in the month of February next. The characteristics will be found stated in the table of armored vessels before mentioned.

BUSINESS METHODS OF THE DEPARTMENT.

In each of the Annual Reports of this Department for the last three years attention has been called to its unbusiness-like methods and to the efforts being made to simplify, systematize, and improve them. In the report for 1885 the following statement appears:

The open purchases of the Navy Department for the year ending June 30, 1885, amounted to $841,285.84, while the purchases by contract amounted to only a little over $1,000,000. A large proportion of the open purchases consisted of articles of either comparatively small value or more or less difficult of classification; but $138,000 of the amount was spent by the seven bureaus, each acting independently of the other, for coal bought, not in one lot, but at 166 several open purchases (this does not include coal bought by ships on foreign stations); 299 different open purchases of stationery were made by eight different bureaus; $121,315.66 was spent for lumber and hardware by six bureaus in 499 separate open purchases. Seven bureaus spent $46,000 for oils and paints in 269 separate purchases; 117 different open purchases of iron and steel were made at an expense of $41,524.48; $68,881.59 was spent for hemp and cordage in 45 different open purchases. Eight bureaus supply stationery to ships; three bureaus supply ships with lamps and lanterns. To the same ship one bureau supplies electric lights and the light for general illuminating purposes; another supplies electric search-lights, and a third oil and light for the engine and fire

rooms.

Under this system of purchasing, where each Bureau acted independently of the others in its purchases, and purchased in small quantities and without competition, there had grown up around the Department irresponsible men, not regular dealers in the articles required, into whose hands the orders would fall. The Department was thereby de. prived of the security in making its purchases which would result from dealing directly with responsible and well-established business houses.

In the year 1884 90 per cent. of the open purchases of the Navy Department, amounting to about $1,100,000, fell into the hands of six individuals or firms, most of them having no other business but filling the orders of the Department.

In an effort to remedy this abuse orders were made consolidating the business of conducting the purchases of the Department in the Bureau of Provisions and Clothing, with the Paymaster-General of the Navy as the responsible head. The wants of each bureau in the way of supplies are submitted to the Paymaster-General, by whom they are consolidated in classes, and purchased by contract after advertisement.

During the years of 1884 and 1885 over 50 per cent. in value of the supplies of the Department were obtained by open purchases without competition. During the last year the proportion of such purchases was less than 11 per cent., and in the course of the next fiscal year it is believed that the open purchases can be reduced to about 5 per cent. The naval brokers have for the most part disappeared and regular responsible dealers are becoming more and more contractors for these supplies. For a time it seemed impossible to dislodge them. They would underbid regular dealers, notably for the supply of coal. It was quite evident they had some advantage which did not appear. Careful investigation showed the quality of the coal delivered to be as contracted for. The receiver of the coal was changed at the Brooklyn navy-yard and the weights taken by another civil employé, and nothing suspicious was developed. Finally a naval officer was detailed, without previous notice, to weigh personally a barge-load, and it was found 16 tons short. The gentleman disappeared as a bidder for the Department from that time. There was no evidence of fraud on his part, but inferences can readily be drawn.

PROPERTY ACCOUNTS.

The system of property accounts for the Navy referred to in the last annual report has been in successful operation since July 1. The experience of the first quarter shows that it is simple and that there is no difficulty in keeping pace with current work at the largest stations. The basis of the system is a classified schedule, in which naval supplies of every description are arranged in seventy-one classes. The books at every station lead up to a balance-sheet for each Bureau, which shows for the quarter:

1. The value of supplies on hand under each class at the beginning.

2. The additional receipts.

3. The expenditures, whether for use, condemned, or transferred. 4. The value remaining on hand.

The proportion between supply and demand can thus be seen at a glance, the balance-sheet affording a graphic chart of the volume and current of business. If more detailed information be desired, it can

readily be had from the books. Quantities on hand are reported in a separate monthly return, in which items are given as far as practicable. The quarterly balance sheets wiH be condensed in the PaymasterGeneral's Office by bureaus and stations in such manner as to afford at the end of the year an epitome of receipts and expenditures in every class of naval supplies at every station; balances on hand at the end of the year may be compared with those at the beginning, and any increase or decrease of stock will be unerringly shown. A check upon undue accumulation of supplies will thus be afforded.

Under the new system adopted greatly increased labor and responsibility have been devolved upon the Bureau of Provisions and Clothing, and the business has been conducted with increased faithfulness and ability by Paymaster-General Fulton and his assistants. The Department is indebted in this connection to the two Boards of which Commodore George Brown and Capt. Richard Meade were the respective chairmen for their intelligent and patient labor upon the details of the work.

At first, as was natural, much opposition was felt in the service to these changes in the methods of transacting business.

It is more agreeable and simpler to be able to buy privately and as articles are required, and as the Government pays, the faults of the system are not felt by the service. As time elapses, however, the new system finds more and more friends, and it is hoped will be permanent.

DISBURSEMENTS ON FOREIGN STATIONS.

The disbursements of the Navy Department are, to some extent, required to be made abroad for vessels on foreign stations, and as bills on London are most favorably negotiated in foreign ports, it has been the custom of the Department to have a financial agency in London.

Up to April, 1885, the contract which the Department had had with Messrs. Seligman Brothers, London, called for the payment of 1 per cent. commission for paying drafts, and 5 per cent. interest on advances made by said firm to the Government, and 4 per cent. interest to be paid to the Government on daily balances of its money. The spectacle of the Government of the United States paying 5 per cent. interest for money in London where private individuals were paying an average of not over 2 per cent., was somewhat relieved by the fact that it was a small sum annually.

A change was however made in this contract April 24, 1885, reducing the commissions to one-half of 1 per cent., and further providing that on daily balances the Government should receive the rate of interest paid by the London joint stock banks, and for advances should pay the rate of the Bank of England. As money was lying idle in the United States Treasury, it has been the intention of the Department to borrow no money in London but keep sufficient there at all times to meet accruing obligations.

The attention of pay officers abroad has been called to the subject of their drafts, and under the instructions of the Department greatly improved rates have been secured.

By careful attention to these matters by the Paymaster-General the Department is able to report that on the items of commission, interest, and exchange, whereas a net loss of $103,493.53 was made in the two years and ten months ending April 24, 1885, for the three years ending June 30, 1888, a net gain of $703.22 was made, as follows:

Comparative statement of gains and losses from commissions, interest, and exchange, from June 30, 1882, to April 24, 1585, and June 30, 1885, to June 30, 1888.

Net loss of Government in two years and ten months to April 24, 1885, $103,493.53.

$1,426. 23 388.94

3, 247. 35

5,062. 52

Net gain from same sources in the three years ending June 30, 1888, $703.22.

NAVAL PROGRESS DURING THE YEAR.

The necessity for increased numbers of fast protected cruisers, whether for purposes of protecting or destroying commerce, or for service with a fleet as scouts, has been emphasized during the naval maneuvers of the year, and is fully recognized by all naval powers.

The fastest, largest, and most powerful protected cruisers yet laid down are the Blake and Blenheim (English), of 9,000 tons displacement, 20,000 indicated horse-power, trial speed 22 knots, and continuous seaspeed 20 knots, with a coal supply sufficient to steam 3,000 miles at that speed. The armaments* of these vessels will consist of two 9.2-inch B. L. and ten 6-inch R. F. G. The vessels have heavy protective decks, ranging from 4 to 6 inches in maximum thickness.

The fastest protected cruiser built during the year is the Piemonte. This vessel has a displacement somewhat over 2,500 tons, carries six 6-inch B. L. and six 36-pounder R. F. G.,* has a protective deck of 31 inches maximum thickness, and is expected to develop nearly 12,000 indicated horse-power and 211⁄2 knots speed. The Piemonte has been bought from Sir William Armstrong & Co. by the Italian Government.