DAMAGE BY FLOOD.

By each large rise or flood of the Ohio River the buildings and grounds at Newport Barracks, Kentucky, are partly submerged.

It is therefore recommended that steps be taken toward the purchase of higher land in that vicinity, and that the building of proper quarters for troops thereon be provided for by Congress.

TRANSPORTATION.

This branch is in charge of Lieut. Col. C. G. Sawtelle, deputy quartermaster-general, U. S. A.

The sum of $2,900,000 was appropriated for transportation of the Army in the act approved March 3, 1885 (24 Stat., 359), making appropriations for the support of the Army for the fiscal year ending June 30, 1886.

Transportation was provided by the Quartermaster's Department during the year by rail, water, wagon, and stage for 236,180 persons (including 200,662 persons transported or ferried by Government vessels), 160,191.63 tons of freight, and 7,907 horses and mules, costing, as reported, $1,579,453.58, of which $266,401.38 has been paid for the transportation of persons, and $975,793.93 for the transportation of live-stock and freight, leaving $337,258.27 due on outstanding accounts at the close of fiscal year.

In addition to the foregoing, the total cost incurred for tolls, payment of employés, enlisted men on extra duty, purchasing, maintaining and operating vessels, purchase of draft animals, purchase and repair of harness, for water-supply, sewerage, construction and repair of wharves and bridges, &c., amounted to $1,501,125.58, which makes the entire cost of the service under Army transportation $3,080,579.16, of which $458,836.74 remained unpaid at the close of the fiscal year.

MOVEMENT OF TROOPS.

The larger movements of troops were as follows:

Second Cavalry: Two companies from Department of California to Department of Arizona; three companies from Department of Texas to Department of the Missouri.

Sixth Infantry: Headquarters from Department of the Platte to De partment of the Missouri.

Eighth Infantry: Seven companies from Department of California to Department of Arizona.

The exchange of stations of the First and Eighth and the Second and Fourth Infantry was deferred by order of the Secretary of War until after the close of the fiscal year, for lack of funds.

RAILWAY SERVICE.

Transportation was supplied by rail by the Department for 28,917 persons, 7,466 animals, and 71,626 tons of material, at a cost (1) by pay ments out of the appropriation transportation of the Army, $940,494.40, of which $212,412.64 is for transportation of persons, $456,556.20 for transportation of live stock and freight, and $271,525.56 for payment of outstanding accounts; (2) by credit in the Treasury on account of indebtedness of bonded Pacific railroads, $488,761.06, of which $153,830.34 was for transportation of persons, and $334,930.72 for transportation of

live-stock and freight; (3) by payment of land-grant railroads out of special appropriation for the purpose, the sum of $125,000.

Total cost to the United States for railroad transportation furnished by the Quartermaster's Department during the year was $1,554,255.46.

BONDED PACIFIC RAILROADS.

The accounts of the bonded Pacific railroads are adjusted under the following statutes: act March 3, 1873, act May 7, 1878, act March 3, 1879.

Settlements for service on the unsubsidized portions of the Union Pacific Railway, including the Kansas Division (formerly the Kansas Pacific), and the Denver Pacific Railroad and Telegraph Company; the Central Branch Union Pacific Railroad, and the Sioux City and Pacific Railroad, continue to be made the same as during the past fiscal year.

Settlements for services over the unsubsidized portions of the Central Pacific Railroad have heretofore been held subject to the provisions of Treasury circular letter dated January 12, 1884, under which the amounts were certified by the accounting officers and reported to the Secretary of the Treasury, subject to the disposition of Congress.

No action having been taken by Congress in reference to the disposition of the amounts embraced in the settlements held in abeyance, a motion was made by the company before the accounting officers of the Treasury by which, in effect, the revocation of the order of January 12, 1884, and the revival of the enforcement of that of June 27, 1883, was requested.

The Second Comptroller, in a decision thereon, dated August 28, 1885, which was approved by the Secretary of the Treasury, and published in Treasury circular No. 136, dated September 11, 1885, directs the revocation of Department circular No. 83, of June 27, 1883, and circular letter of January 12, 1884, and that all compensation now due or which may hereafter become due the Central Pacific Railroad for services rendered the Government be withheld, and applied, one-half upon interest account and the other half credited to the sinking fund, as required by the act of May 7, 1878; also, that hereafter the accounts of the company be adjusted by the accounting officers, the Secretary of the Treasury retaining the whole amount, applying the same in the manner as provided by that act.

It is understood that, on application of the company, the Secretary of the Treasury consented to suspend action under that part of his order directing the withholdment and application of compensation due or to become due the company, upon the condition that the matter in issue be presented to the proper courts for judicial decision. In conformity thereto a petition of the Central Pacific Railroad against the United States, No. 14,711, was filed in the United States Court of Claims, November 24, 1885, to recover compensation for services performed for the United States in transportation over those portions of the road as above mentioned, in the building of which it had not been aided by the Government, and therefore not embraced in the above-named act.

The United States demurred on the ground that the whole of said compensation is required to be retained under the provisions of the second section of the act, May 7, 1878, chapter 96, Thurman act, 20 Statutes, page 58.

The decision of the court was that the provisions of the act applied only to services over the aided portions of the road, and the demurrer was overruled.

An appeal was taken to the Supreme Court of the United States (October term, 1885), and decision rendered May 10, 1886, sustaining the railroad company in its construction of the second section of act of May 7, 1878, that cash payment for services over the unsubsidized roads should be made by the United States.

The Secretary of the Treasury, in circular of June 4, 1886, invited attention to decision referred to, and directed that thereafter the accounts and claims of the company for such services shall be settled, adjusted, and paid in conformity to such decision, and that all Depart ment circulars heretofore issued upon the subject are modified accord ingly.

On the suggestion of the honorable the Secretary of the Treasury, and by direction of the honorable the Secretary of War, the Quartermas ter-General, on June 7, 1886, submitted the estimates of appropriations required to execute the decision of the Supreme Court, aggregating $906,314.42. (See House Ex. Doc. 270, Forty-ninth Congress, first session.)

The appropriation was, however, refused by Congress. (See House Report No. 3109, Forty-ninth Congress, first session.)

In view of the circumstances here reported, and the fact that the estimates upon which the regular appropriations of the Quartermaster's Department entitled "Transportation of the Army" were based, carefully excluded any provision for payment of money to the bonded Pacific railroads, for the reason that the laws as interpreted by the accounting officers of the Treasury and the Department of Justice, at the time of the preparation of the estimates, prohibited any payment to these companies, it is thought that the Army transportation appropriation should not be used in payment of any accounts of these companies, but that a special appropriation from Congress for the purpose should be secured.

As a matter of fact, the appropriation for transportation of the Army will be hardly sufficient to meet the usual demands of the service, as contemplated in the preparation of the estimates of the amount needed for the purpose.

INDEBTED RAILROADS.

There are four railroads indebted to the United States for railway material purchased under executive order at the close of the war, viz, the Edgefield and Kentucky, the McMinnville and Manchester, the Mobile and Ohio, and the Memphis, Clarksville and Louisville Railroads.

As stated in my last annual report, these roads are apparently delinquent in the settlement of their indebtedness, and some action by Congress appears to be necessary to either relieve the debtors or provide some method of procedure for the collection of the same.

WATER TRANSPORTATION.

During the fiscal year there were moved by water transportation 2,210 persons, 345 animals, and 18,864,350 pounds of material, not including 200,662 persons and 10,892,887 pounds of freight transported or ferried on United States vessels controlled or operated by the Quartermaster's Department. The aggregate cost of this service was $159,369.26.

The total cost of repairing, running, and maintaining the vessels owned by this Department, including the wages of the crews during the fiscal year, as reported to this office, is $85,206.64, less than last year by $24,004.68.

According to reports received from officers of the Quartermaster's Department there have been 19 vessels of different kinds employed at various times during the year at an expense of $29,502.05.

WAGON TRANSPORTATION.

By wagon carriage the Department transported, as reported, 147,364,736 pounds of military supplies during the year at a cost to the appropriation "Transportation of the Army" of $496,930.47. The sum of $49,528.79 was still due on outstanding accounts June 30, 1886. Eightyone contracts for wagon transportation were filed during the year.

STAGE TRANSPORTATION.

Four thousand three hundred and ninety-one persons and 9,180 pounds of stores and extra baggage were transported by stage during the year, at a cost of $51,461.24. Of this sum, $6,722.81 was due on outstanding accounts June 30, 1886.

The Department has been constrained during the year to make unusual and extraordinary expenditures from the appropriation, among which the following are mentioned:

The increased transportation expenses in the Department of Arizona and the District of New Mexico, owing to Indian troubles in that section, an excess of $118,285.60 over the preceding fiscal year; the large amounts paid for transportation of horses and for the purchase and transportation of mules caused by the Indian troubles; the replacement of stock worn out in the Oklahama operations and other movements on the border during the preceding fiscal year; and the necessary construction of a steam-propeller for service in San Francisco Harbor, to take the place of the worn-out steamer General McPherson, which has been in service twenty years.

The strictest economy in transportation expenditures has been enjoined and required of all officers of the Department during the year, to the extent of denying many seeming necessities of the service and deferring desirable movements of troops.

Of the $125,000 appropriated for payment from Army transportation over certain land-grant railroads during the fiscal year, the sum of $18,395.54 was paid out on settlements of the accounting officers of the Treasury, leaving a balance of $76,604.46 to pay outstanding claims. The additional sum of $63,942.50 was also paid from similar appropriations of previous fiscal years, making a total of $112,338.04 paid for such services during the fiscal year.

TRANSPORTATION ACCOUNTS AND CLAIMS.

Three thousand one hundred and eighty transportation accounts and claims, amounting to $1,163,786.27, received action during the year; of these, 3,148, amounting to $1,154,173.72, were referred to the proper bureau or office for settlement; sixteen, amounting to $3,206.26, were unfavorably reported upon and rejection recommended; and sixteen, amounting to $6,409.29, were suspended for additional evidence. Fiftytwo, amounting to $7,167.72, were, at the close of the year, awaiting ac

REGULAR AND MISCELLANEOUS SUPPLIES.

ANIMALS.

Twelve hundred and fifty-one cavalry and artillery horses were procured by purchase during the fiscal year, costing $176,667.65, an average cost of $141.24 per head.

For the Army trains and special service 18 draught-horses were purchased at an average cost of $205.85 per head, and 563 mules at an average cost of $154.99 per head.

The sale of 780 cavalry and artillery horses, 28 draught-horses, and 329 mules is reported for the sum of $51,006.82, all of which was deposited in the Treasury to the credit of miscellaneous receipts, excepting such small sums as were received for sales to officers.

There were 227 cavalry and artillery horses, S team-horses, and 300 mules lost, stolen, and died during the fiscal year, leaving on hand on the 30th June, 1886, 8,609 cavalry and artillery horses, 454 team-horses, 5,493 mules, and 6 oxen.

WAGONS AND AMBULANCES.

During the fiscal year there were purchased 100 six-mule army wagons at a cost of $7,500, and 9 bodies for two or four horse or mule wagons at a cost of $168.75.

VETERINARY SUPPLIES.

During the fiscal year veterinary supplies were purchased from the Medical Department to the value of $2,266.95, against the cost of $13,332.28 for similar supplies for the fiscal year 1884-'85, and $9,072.28 for the fiscal year 1883-'84.

This saving has been effected by the operation of General Orders No. 64, A. G. O., 1884, which greatly reduced the number and quality of veterinary supplies for Army uses. This revised list has been found to be sufficient to meet the needs of the service.

ILLUMINATING SUPPLIES.

During the fiscal year there were purchased 417 pendant lamps, 802 bracket lamps, 51 street lamps, 1,853 lanterns (oil and candle combined), and the necessary chimneys, wicks, and various extra parts, at a cost of $13,925.33.

Seven hundred and sixty gallons of gasoline were purchased at a cost of $497.20, and also 319,990 gallons of mineral oil, in 5-gallon cans, at a cost of $49,470.51, making the aggregate expenditure on account of illuminating supplies $63,893.04, less than the cost last year by $5,723.91.

MISCELLANEOUS CLAIMS AND ACCOUNTS.

One thousand five hundred and fifty-two miscellaneous claims and accounts, amounting to $532,160.85, received action during the year, and 10,669 claims and 249 accounts, amounting in the aggregate to 88,516,715.59, remain on file awaiting action.

CLAIMS UNDER ACT OF JULY 4, 1864.

This branch is in charge of Lieut. Col. B. C. Card, deputy quartermaster-general, U. S. A.