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October, 1910 norance of the subject and violates the very elements of accurate cost keeping. Perhaps, however, the most remarkable feature of this order is that the secre- tary of the navy confesses that he has no intention of obtaining the actual cost of the work in navy yards. This con- fession appears in one of the opening paragraphs of the order and is as fol- lows: By the system it is not the intention to obtain the actual cost of work from a commercial standpoint, but to more accurately distribute the expenditures to the proper appropriations as defined by law. For the purpose of obtaining the industrial cost of production it is essential to eliminate therefrom all expenditures of a military nature at navy yards. With this end in view, the following headings will be used for military expenditures: "Cost of Valuation" Repairs." introduction of this and -"'Maintenance and The law, as quoted above, requires that the costs of navy yard work shall Mr. is not carrying out these mandatory re- The law does not empower the secretary, his aides, include the indirect costs. quirements of Congress. or even the president, to make any classification of expenses as military or otherwise. The device is invented as a screen to protect the incompetents and place hunters. We give below a few of the more important indirect costs that are not included in the cost of work according to Mr. Meyer's "sys- tem." 1.) Officers' there are now a large number of officers and at the large yards the salaries of officers amount to from $130,000 to $200,- 000 a year. salaries--At all yards 2 The cost of clerical work. 3. The cost of draftsmen. 4. The cost of civilian assistants, sub- inspectors, expert aides, chemists, watch- mien, messengers, etc. 5. Leave and holiday. Besides the usual holidays, 15 days' leave is granted to all employes who have worked a year. 9 on account of 6. Payments made death or disability of employes. 7. Expense of receiving, testing and handling stores. No store-hand expense is charged. 8. Depreciation of plant 9. Fire insurance. 3 10. Interest on money invested. | : ll. Taxes. a1 12. Repairs made to buildings, rail- Peery Meyer, TAE. MARINE. KEVIEW ways or plant machinery when such re- pairs exceed $100. 13. Cost of inspection department, What explanation can be offered for not including these expenses in the cost of work? The navy department surely will not venture to contend that these are not indirect costs, in view of the universal practice to so consider them. There is but one reason for excluding these expenses from the cost of work and this reason is that the navy depart- ment does not dare let the country know the actual cost of work in the navy yards. If the real costs are ever known, the downfall of the present system of iS. aS certain as naval administration death. The cost keeping instructions them- selves are ludicrous. We have not space to comment on these, but we advise our readers to obtain a copy and see for of _the millions spent by the navy are kept. For plant, etc., which cost less than $100 are themselves how the accounts example, repairs to buildings, charged to the expense account, while if over $100 are not charged to the it is desired that the ex- pense accounts be high, account... tf the work is divided into a large number of small items, each less than $100, while if it is desired that the overhead charges be low, these items are bunched in one large item and charged elsewhere. This jug- gling of accounts is going on in every navy yard and will be recognized by those who have had dealings with goy- ernment departments as another phase of the system of evasion followed in certain departmental transactions. Prac- tically all branches of the service oper- ate under a law which requires that all work costing over a certain figure must be advertised and let to the lowest re- sponsible bidder and the way it is evaded is by cutting up a job into the necessary number of units or sections, each of -which will come within the legal "limit. In this way almost any job, especially repairs, can, be placed wherever desired. The thahdling stores is charged to appropriation, "Provisions, Navy," used for thei same job'#s charged to "Contingent, °Supplies and Accounts." Actually the cost of handling a load of pig iron from store house 'to foundry labor for riaval while the material one term 403 is charged to the appropriation for pro- viding provisions for feeding the en- listed men on the ships. Since instructions have been issued hardly a day passes that additions and modifications are not made to them. these. wonderful The accounts are in a hopeless tangle and no one who is in Mr. Meyer's confidence knows how to straighten out the tangle. | The statements which have been made by THe Marine Review can be verified by the navy department's own files. When the time for a real investigation comes we are prepared to prove our case. Will it ever come? In Darkest Washington For nearly three years THE Martine REVIEW has persistently opposed and criticized the methods, or lack of method, in the administration of the navy department.and has devoted much time to quiet investigation of yards and bureaus and our pages are rich in evidence of the extravagance and incompetence developed thereby. That others are beginning to take note of the situation witness the fol- lowing abstract of an utterance by the Toward Good Shop Management:" American Machinist on "Progress It is gratifying to note the advance that has been made in recent years in shop management. We shall not quib- ble as to whether we should use the "scientific management" "good management" as long as all are work- ing to the same end, that is, the best work for the purpose in the quickest time at the lowest cost, with good eee to those who produce these re- It has also been well demonstrated that management and shop direction must be in the hands of those who have 'been educated for the work and who have had years of experience in the line. Year by year management becomes more nearly a science. This /is almost. axiomatic and it would ap- pear needless for us to invite attention to this, were it not that we had to técord one important exception to the record of progress of good manage- ment. fees Ae The naval authorities, 'ay the admin- istration of navy yards, have violated the very elements of good manage- ment. Men,.,whose lives have,, been spent at sea under naval discipline, who had no experience in industrial management and who _ have little or no knowledge of shop conditions or shop methods, are placed 'not only in control of the administration of the industrial works, but also in immedi- ate charge of important shops. It