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properly “ear marked " for the purposes intended. For a long time the Navy Department carried out this involved and laborious routine in common with other departments of the government. Delays in payments were frequent, as it was necessary to secure the funds for each voucher by means of requisitions, via the Secretary of the Navy and Secretary of the Treasury, culminating in warrants on the treasury under which the money was placed to the disbursing officer's account.

A necessary modification had been made, however, in the cases of naval vessels. It is evident that ships in all parts of the world could not procure funds in the manner above described, and consequently a practice had grown up of making payments of all kinds from “ Pay of the Navy” and afterwards adjusting between that and the appropriations actually concerned.

In 1878 a modification of the law was obtained as follows:

That the Secretary of the Navy be, and he is hereby, authorized to issue his requisitions for advances to disbursing officers and agents of the navy under a "General Account of Advances " not to exceed the total appropriation for the navy, the amount so advanced to be exclusively used to pay current obligations upon proper vouchers and that “ Pay of the Navy" shall hereafter be used only for its legitimate purpose, as provided by law. (20 Stat. 167.)

From then on supply officers of vessels and on foreign stations obtained funds under “General Account of Advances.” The appropriations chargeable with expenditures were shown on statements accompanying “ Accounts Current,” and the treasury made the necessary adjustments when the accounts were received. This practice was confined, however, almost entirely to ships and foreign stations, although it became customary to place in the hands of the disbursing officers in the United States small amounts under“ General Account of Advances” to be used by them in emergency cases. When so used, however, the disbursing officer promptly forwarded a requisition for funds under the appropriation concerned to cover the payment in question, thus maintaining a complete balance under each appropriation of receipts and expenditures.

In 1907 authority was obtained from the Treasury Department to utilize the law of June 19, 1878 (quoted above), for all payments made by the navy. The system of withdrawing money from the treasury under the names of the multitude of appropriations was completely discarded, and thereafter each disbursing

officer was, and is now, supplied with funds entirely under “General Account of Advances.” The plan adopted for home stations is simple and efficient. Each disbursing officer is charged with a fixed sum, the amount of which is based on his probable needs. He reports his expenditures periodically (daily, weekly or monthly, according to the size of the office) and is reimbursed with the amounts actually expended, so that an even flow of funds is maintained to his credit, to offset the expenditures actually made. The charges to the various appropriations are made in the Bureau of Supplies and Accounts and in the Treasury Department in accordance with the vouchers submitted by the disbursing officers, “ General Account of Advances ” being credited at the same time that each appropriation is charged.

A similar method of procedure has been adopted for stores. Formerly all materials were bought under the individual appropriations and held in store in separate lots until used. Where the need arose to use for the purposes of one appropriation stores which had been purchased under another appropriation, it was necessary to effect a transfer between the two appropriations concerned, involving much bookkeeping and paper work. Various regulations were adopted relative to the common use of stock which had been procured in previous fiscal years, but the system was one which led to endless confusion and argument. Congress was induced to appropriate money for the establishment of a “ Naval Supply Fund” to be used for purchasing stores for general use. When these stores were used, the values were credited to the fund, and corresponding charges were made to the appropriations under which the materials were utilized. A “revolving fund” was thus maintained. The principle was recognized as being sound and efficient, but the amount of the fund, $2,700,000 was insufficient. Finally the matter was settled by turning all balances of stock into the common fund (excepting certain technical and special articles) and establishing a section of the “ General Account of Advances ” known as the “Naval Supply Account.” At present stock is purchased and held under “General Account of Advances, Naval Supply Account” until used, whereupon the values are credited to this intermediate account, and the appropriation charged.

This brief description has been given in order to indicate our present status and to show the improvements which we have

already made. It is believed that had we not been able to carry on our business in the straightforward and direct methods described, we would have had immense difficulty in meeting the emergency caused by the war. The procuring of money and stores under a multitude of appropriations, the maintaining of stocks in separate lots, and the constant transferring from one to another which would have been necessary would have led to endless confusion. Doubtless the Gordian knot would have been cut in some fashion, and business would have proceeded, but never in the smooth and orderly way of which we have reason to feel proud. Nor could the same efficient results have been obtained.

Thus the navy, by successive steps, has made considerable progress in the direction of simplicity and consolidation of its fiscal methods, and it is believed that the great advantages derived thereby are evident without extended argument in explanation. There remains, however, one great obstacle to the perfection of thoroughly business-like methods, and that is the appropriation system itself. It will be observed that the progress thus far made, and described in the preceding paragraphs, has been mainly along the line of overcoming difficulties inherent in the appropriation problem. Funds and stores are secured through an intermediate account, and charged back to the appropriations when used, avoiding the delay and complication which would be involved in dealing with separate lots for each appropriation ab initio. But this by no means settles all the difficulties surrounding this subject. There still remains the considerable task of correctly assigning to each appropriation its proper total of charges due to work done and activities carried on. Were the appropriations laid out in a simple and easily comprehensible system, based on the objects of usual and actual expenditures, instead of being the result of traditional methods modified by additions and subtractions in recent years, the problem would be simpler. Nevertheless, the multiple appropriation system, even though improved as suggested, would continue to offer a bar to reasonable and proper accounting. Before illustrating this point, an attempt will be made to show the existing difficulties.

As has already been stated, each bureau of the Navy Department has a group of appropriations under its immediate cognizance, consisting generally in each case of a main or leading appropriation, supplemented by a number of more or less specific

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amounts appropriated for particular purposes. In addition, the bureaus are interested in other appropriations which might be indicated as for the navy as a whole, such as for the increase of the Navy, emergency fund, aviation, etc. In these latter cases, the amounts to be spent under each bureau are not stated, it being left to the Secretary to allot proper amounts to each bureau interested.

Under what has been called the “ leading appropriation ” of each bureau, practically any expenditure made by that bureau could be located. The supplemental appropriations are usually merely additional sums for specific objects, also covered generally by the leading appropriation. Under Treasury Department rulings, where there is an appropriation covering in specific terms a proposed expenditure, such expenditure cannot be charged to another appropriation, also covering in general terms the same object, although in the absence of the specific appropriation the general appropriation could have been used. It has not been found possible however to adhere strictly to this ruling, in the case of naval appropriations. Cases frequently arise in which expenditures might be located to one appropriation, but for various reasons are charged to another. In fact, it is so customary to distribute charges in accordance with the convenience of the bureau or bureaus concerned that such action has become a routine matter. Certain classes of expenditure are customarily charged to a given appropriation, another class to a second appropriation, and so on. While it is true that possibly a majority of all charges must by their nature each be charged to one, and only one, appropriation, there remains a respectable minority which can be located to this or that appropriation, and the decision as to where to locate the charge is made from motives of policy, or after consideration of the available balances under the appropriations concerned.

A few years ago the Navy Department issued a general order instituting a new system of official correspondence. To make clear the application of the new methods, sample letters with endorsements were incorporated in the order, and as it was desirable to use typical cases familiar to the service generally, the subject of the correspondence in one case was made to relate to a proposed extension of navy yard facilities, where the main question involved was what appropriation should be used. This

is found in the naval instructions of to-day, and illustrates pretty well our attitude of mind in regard to the distinctions between appropriations.

As a matter of fact, the question of which appropriation to use for a given piece of work is one that is constantly arising, and is not only a serious difficulty, but usually causes a vexatious loss of time. A recent example is as follows:

The supply officer at a navy yard having worked out, in conjunction with the Public Works Department, a plan for the installation of certain sand unloading machinery, correspondence took place, of which the following is an abstract:

(a) The public works officer states that his department has no funds available for the equipment. That it is portable equipment similar to other kinds, the property of the storehouse. Requests information as to whether supply officer concurs, as further action is dependent upon determining which bureau shall pay for the equipment.

(b) Supply officer considers the installation properly chargeable against a public works appropriation.

(c) Public works officer does not consider argument used by supply officer as sound; furthermore, as prospect of obtaining funds for project from Bureau of Yards and Docks is not bright, suggests that supply officer take such steps as are practicable towards purchasing the equipment.

(d) Commandant approves.

(e) Supply officer submits requisition under “Maintenance, Supplies and Accounts."

(f) Bureau of Ordnance returns requisition, as not chargeable to appropriation indicated. States that it appears to be chargeable to appropriation “Naval Gun Factory Tool and Machine Plants."

This correspondence consumed over two months. A perfectly conscientious effort was made by all concerned to properly locate this charge. It will be noted, however, that the problem was to determine the source from which the funds were to be obtained.

The proper head under which to record the expenditures when made, that is, the expense classification, was not even considered. The accounting system will handle that phase of the matter with ease, no matter what appropriation supplies the funds.

The naval accounting system has recognized that an accurate statement of purposes for which money has been expended is essential, the mere record of the amount expended from each appropriation being insufficient. Each expenditure is therefore located under one of the main“ titles” of the naval establishment, descriptive of the purpose for which the money was used. Thus,

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