Mr. VINSON. But the contract provides that that company shall have the right to purchase the buildings and the machinery that the Navy built in their yards?

Secretary WILBUR. Yes.

Mr. VINSON. And that an appraised value shall be put upon those buildings. The department comes along after the war and puts this appraised value on them. Of course, we would like to know how much you built there, and how much of a reduction there is on account of depreciation which was allowed on each one of these contracts, because we have a rule for depreciation of machinery and for depreciation of property fixed by the income tax law, and it should have been in accordance with the principle laid down for depreciation, I presume. In this particular case, suppose there was invested $1,000,000 there. Then somebody settles for $500,000. There is $500,000 for depreciation and deterioration. I am inclined to think when you get this bill up there will be a great many questions asked as to how much we invested in each one of these yards, what the appraised settlement was, and how much each company would have paid with a 44 per cent discount.

Secretary WILBUR. That would mean, in effect, a reopening of the entire transaction. These settlements were all made by a previous administration.

Mr. VINSON. That is true.

Mr. ANDREW. That is an accomplished fact. The settlement has been made, and the obligations have been received, and we can not go back on that now.

Mr. VINSON. I understand we have accepted their notes, and we have adjudicated the appraised value at the same figure. The very question I asked will be a question which will arise in the House, how much, in the original instance, did the Government invest in this plant, and for how much the settlement was made.

Secretary WILBUR. Mr. Nagel has just handed me a memorandum. He was one of those who negotiated the contract, and his memorandum states that probably the amount fixed did not exceed 50 per cent of the cost.

The CHAIRMAN. Let me see if I have this right. It is proposed by the bill to cover all these cases so that in the future you may settle them as you see fit.

Secretary WILBUR. That is in the bill now.

The CHAIRMAN. But it is proposed to amend it, is it not?

Secretary WILBUR. No; not in that regard. The only question is as to the rate of interest.

The CHAIRMAN. You would insert that in the second section, making it 44 per cent?

Mr. VINSON. It is not the rate of interest; it is the rate of discount. It seems to me it should be specified that the rate of interest or the rate of discount shall not exceed 42 per cent, or shall be 42 per cent Secretary WILBUR. You can strike out, after the word "and" in line 5 on page 2, the words "the highest rate being paid at the time of settlement on any bonds of the United States," and insert "44 per cent per annum."

Mr. VINSON. That is your recommendation?
Secretary WILBUR. Yes, sir.

Mr. MCCLINTIC. Are you going to specify whether it is simple or compound interest? That question will arise.

Secretary WILBUR. I think you are right about that. The method of computing the present value is thoroughly established. My impression was that it was simple interest.

Mr. MCCLINTIC. Then you had better put that in there.

Mr. VINSON. Why not express it in this way: "Such interest to be computed at an interest discount of 44 per cent." You will have to put somewhere here interest discount.

Mr. ANDREW. It is not necessary, because it says "reduced by the interest thereon"; that is in line 3.

The CHAIRMAN. If you make it read "from the date of settlement to the date of maturity, with such interest to be computed at 44 per cent per annum, simple interest, is not that about as plain

as is necessary?

Mr. ANDREW. You have a computation here. Is that computation which reduces the payment by about $98,000 computed at simple interest?

Secretary WILBUR. I do not know. That was computed in the Bureau of Supplies and Accounts. I supposed it was simple interest. I am relying on my schoolboy knowledge as to the computation of present value.

Mr. ANDREW. What you want is to have the rate computed in the way in which it is customary to compute it?

Secretary WILBUR. Yes.

Mr. ANDREW. Could we not agree to this statement, leaving it open to decide afterwards whether we would use the words "simple interest" or "compound interest," and if it is compound interest, whether it is to be computed annually or semiannually.

Mr. MCCLINTIC. Why not put in the words "simple interest," and then you are through with it?

Mr. MAGEE. Do you know how it was computed, Mr. Seiberling? Mr. SEIBERLING. No; I do not.

Mr. UPDIKE. It seems to me it would be better to say "to be computed at simple interest at the rate of 44 per cent per annum." Mr. VINSON. I move that the bill as amended be favorably reported. The motion was agreed to.

(Thereupon the committee proceeded to the consideration of other business.)

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[No. 128]

GRANTING SIX MONTHS' PAY TO FRANK A. GRAB, FATHER OF ALFRED NEWTON GRAB, DECEASED SEAMAN, UNITED STATES NAVY, IN ACTIVE SERVICE (H. R. 15182)

MM-Grab, Alfred N/L13-2(9) (261215)L.

NAVY DEPARTMENT, Washington, February 7, 1927.

The CHAIRMAN COMMITTEE ON NAVAL AFFAIRS,

House of Representatives, Washington, D. C.

MY DEAR MR. CHAIRMAN: Replying further to the committee's letter of December 15, 1926, transmitting the bill H. R. 15182, granting six months' pay to Frank A. Grab, father of Alfred Newton Grab, deceased seaman, United States Navy, in active service, and requesting the views and recommendations of the Navy Department thereon, I have the honor to advise you as follows:

The purpose of this proposed bill is to authorize to be appropriated, out of any money in the Treasury not otherwise appropriated, such sum as may be necessary to pay Frank A. Grab, the father of Alfred Newton Grab, deceased seaman, United States Navy, who was killed in line of duty on February 7, 1922, at Guantanamo Bay, Cuba, an amount equal to six months' pay, at the rate said Alfred Newton Grab was receiving at the date of his death.

The records of the Navy Department show that Alfred Newton Grab enlisted in the Navy on August 22, 1919, to serve for a period of two years, and was honorably discharged from the naval service on June 9, 1921. During his term of enlistment he maintained a clear record. On August 9, 1921, Grab reenlisted in the Navy to serve for a period of two years and served until February 7, 1922, when he died as a result of fracture of the skull due to a fall from the boat deck to a coal lighter alongside the U. S. S. Savannah.

At the time of Grab's reenlistment he named his father, Frank A. Grab, of Boston, Mass., as his next of kin, but the beneficiary slip executed at the time stated that he was not married and had no dependent relatives.

Bill H. R. 15182 will, if enacted into law, result in an additional cost to the Government of $324.

The bill H. R. 15182 was referred to the Bureau of the Budget with the above information as to cost and a statement that the Navy Department contemplated making a favorable recommendation thereon. Under date of February 2, 1927, the Director of the Bureau of the Budget advised the Navy Department that this report would not be in conflict with the financial program of the President.

In view of the foregoing, the Navy Department recommends that this bill be enacted.

Sincerely yours,

CURTIS D. WILBUR,

Secretary of the Navy.

20038-27-No. 128

(719)

A BILL Granting six months' pay to Frank A. Grab, father of Alfred Newton Grab, deceased seaman United States Navy, in active service

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, There is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, such sum as may be necessary to pay to Frank A. Grab, father of Alfred Newton Grab, deceased seaman, United States Navy, who was killed in line of duty on February 7, 1922, at Guantanamo Bay, Cuba, an amount equal to six months' pay, at the rate said Alfred Newton Grab was receiving at the date of his death.

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