We think of the Navy as a highly developed fighting machine, manned by personnel trained to the minute in the operation of its units and in serving its weapons.
We recall with ever increasing pride the glorious deeds of the Navy in aiding to establish the independence of our nation and in upholding and enforcing its untarnished principles throughout its 150 years of life. And we feel today a sense of security in the knowledge that our Navy leads in the modern developments that make for the highest battle efficiency.
It has probably not occurred to many that these developments have largely been conceived by individuals within the Navy itself. Nor is it probable that many realize that in order to finance these developments, to operate, maintain, and man the completed ships and units, and to finance the operation of the supporting construction, repair and supply establishments, it has been necessary to set up within the Navy itself a great business organization for the transaction of its own business affairs. This organization has also been conceived and brought to a state of modern efficiency by a few minds within the Navy.
The business organization of the Navy is centralized in the Bureau of Supplies and Accounts, which is one of the eight principal administrative bureaus of the Navy Department under the Secretary of the Navy.
Prior to 1842, the management and business affairs of the Navy were conducted by the Board of Navy Commissioners organized by the Act of February 7, 1815. This board was abolished by the Act of August 31, 1842, and five bureaus were established, one of which was the Bureau of Provisions and Clothing. This bureau provided the Navy with provisions and Clothing and small stores. The other four bureaus provided for their own material needs. The number of navy bureaus was increased to eight by the Act of July 5, 1862 and by the Act of July 19, 1892, the name of the Bureau of Provisions and Clothing was changed to the Bureau of Supplies and Accounts. This change recognized a condition that had existed for some time. The bureau, from having had its functions limited to matters of money, provisions and clothing and small stores, gradually had had entrusted to it practically all the bookkeeping work and a very great part of the supply work of the entire naval establishment.
At the head of the Bureau of Supplies and Accounts is an officer of the supply corps of the Navy, who holds during the tenure of his office a commission as Paymaster General and Chief of the Bureau of Supplies and Accounts with the rank of rear admiral.
The Bureau of Supplies and Accounts maintains a centralized control for the naval establishment over the procurement of all materials (except for the Marine Corps), including the purchase of provisions, clothing, and fuel. It makes all contracts for these general supplies. It stores and distributes them. It supplies the fiscal officers of the Navy with money for disbursement. It receives and accounts for monies on account of the sale of naval property or for services rendered by the naval establishment. It keeps the accounts of all material, supplies, real estate, and of the Navy’s money. It keeps records of the cost of manufacture and of the construction and repair of ships and of material. It furnishes to other branches of the Navy, and to Congress and to the Bureau of the Budget, statistical reports in regard to all the above matters. It controls the movement of freight and the transportation of supplies. It controls the management of the supply depots and the supply departments at navy yards and naval stations; the operation of the fuel plants of the Navy and the operation of the Naval Clothing Factory. It supervises the activities of the officers of the Supply Corps afloat and ashore.
The organization of the bureau is based on the “Manager System” and consists of four groups, known as the administrative group, the supply group, the finance group, and the accounting group. For the more expedient accomplishment of its functions, each group is organized into one or more divisions.
The functional duties assigned to the Bureau of Supplies and Accounts are performed by the personnel of the supply corps of the Navy, a group of approximately 580 commissioned officers, who form a separate corps within the Navy.
Each of the four groups comprising the organization of the. Bureau of Supplies and Accounts is managed by a senior officer of the supply corps. These group managers usually have the rank of captain. Approximately twenty additional officers of the supply corps, ranging in rank from lieutenant to commander, are assigned duty in the bureau. The senior officers of this group are in charge of divisions and the juniors act as their assistants.
The other 550 odd officers of the supply corps a.re scattered on ships of the Navy all over the world and at the various navy yards and naval stations. Wherever they are, these officers are directly responsible for the proper conduct of the Navy’s business affairs.
An officer of the supply corps is assigned to conduct the supply department at each navy yard and naval station and the various supply depots established for the sole purpose of supplying the fleet. He has charge of all that relates to the procurement and final issue of materials. Usually a senior officer is assigned this duty and he has as assistants an appropriate number of junior officers and the necessary civilian technical, clerical, and storehouse personnel. He usually maintains three material accounts the first of which—the naval supply account—was established for the purchase and maintenance of stocks of supplies and materials, including provisions and fuel, in common use by the Navy. This account is maintained by a revolving fund which is reimbursed as final issues are made and charged to appropriations. The second account, known as the appropriation purchase account, is an account in which are purchased and carried technical materials such as ordnance, aeronautical and radio material, and special materials purchased for the use of but one bureau. The third account, the clothing and small stores account, is an account in which are purchased and carried the clothing and clothing equipage issued to the enlisted force. Like the naval supply account, the clothing and small stores account is reimbursed as issues are made. A fourth account, the reserve material account, is maintained at some of the supply depots and navy yards. This account was established for the purpose of building up a war reserve of special materials, the fabrication of which requires a long period of time. At present this account is inactive, having only a nominal stock balance.
The average value of these accounts is nearly $700,000,000 and when it is realized that in them are carried upwards of 100,000 distinct items of stock it becomes apparent that the supply corps officer in charge of a supply establishment is confronted with warehousing problems approached only by those of the largest commercial distributing houses. The officer of the supply corps at the head of the supply group in the Bureau of Supplies and Accounts purchases the greater part of the materials for the naval establishment. It is needless to state that it is cheaper to buy in bulk than it is to buy in small lots. Hence a consolidated purchasing and contract system was created in the bureau for the centralized procurement of materials in bulk.
Each navy yard and naval station sends in periodically an estimate of its requirements based upon the quantity of stock it has determined to carry as a maximum. In the stock division of the supply group these requests are checked against excess stock reports of the various yards and stations, revised, and arranged into schedules for advertisement. Requests are then sent to the Navy’s mailing list by the purchase division. This list contains the names of over 18,000 qualified bidders. By the term “qualified we mean a responsible bidder, who dependably controls a dependable source of supply. He may be a manufacturer; he may be a warehouse man only, or he may have neither a factory nor a warehouse, but he has positive arrangements with one or both that enable him to fulfill a contract with the Navy in case his bid is accepted. The Navy endeavors to eliminate entirely the gambler on futures”; the man who has neither factory, warehouse, nor stock, but who expects to get the material from someone else if he gets the order. Bids are received in sealed envelopes, opened and read in public at a specified time, and the purchase is awarded to the lowest responsible bidder, who guarantees to deliver material in strict conformance with the specifications. It is this principle of wide advertisement, public opening of bids, and public award that has established in the business world the Navy’s reputation for business integrity and efficiency. The awards are covered by bureau contracts or orders, specifying delivery at stated times to the various yards and stations, and these activities are furnished with copies of the contract papers. All material purchased is inspected by navy inspectors, either at the point of shipment or at the point of delivery, and when received and accepted it is taken up on the books of the receiving supply officer of the yard or station.
The Bureau of Supplies and Accounts also maintains purchasing offices at New York, San Francisco, and Shanghai, China. The supply officer of each shore establishment purchases supplies not covered by contracts made in the bureau or at one of the two coastal purchasing offices and makes emergency purchases. Afloat, the supply officer of the ship performs the functions of purchase.
As a rule, the purchasing officer does not make payments for the purchases. An officer of the supply corps is assigned to the disbursing division of the finance group of the Bureau of Supplies and Accounts, who pays for the purchases made by the purchase division of the supply group. A supply corps officer is assigned as the disbursing officer of each navy yard and naval station, who, in addition to paying for materials and services, pays the wages of the civilian employees; the salaries of the officer and enlisted personnel attached to the station; makes other incidental disbursements and collects and accounts for monies due the United States from individuals and corporations.
Afloat, the supply officer of the ship is the disbursing officer. He pays for purchases of materials and services and the salaries of the officer and enlisted personnel. On the larger ships, a junior officer of the supply corps is assigned as assistant for disbursing. He makes all payments and carries the accounts of the officers and men, relieving the senior of financial responsibility and leaving him free to manage the business of supplying the material needs of the ship and the food and clothing necessary for the comfort of the crew, which on a battleship approximates in numbers a fully recruited regiment. The senior supply officer manages the commissary force of stewards and cooks, the bakeshop, and the galley, or ship’s kitchen, the equipment of which rivals the well-ordered and completely equipped kitchens of our largest modern hotels. He maintains the stock of provisions and cold storage products; keeps on hand and issues clothing to the crew, and runs a ship’s store, a canteen, from which the men can purchase such necessities and luxuries as can be carried on shipboard. He maintains a stock, comprising thousands of items, of general supplies and equipage required for the maintenance and operation of the ship. He keeps records of receipts and issues of all these stores and renders an accounting thereof to the Bureau of Supplies and Accounts. Frequently, in the midst of these duties, he attends the ship’s drills, for in addition to being the ship’s business officer the supply officer has military duties and is assigned a battle station.
At each shore training station for enlisted personnel, officers of the supply corps are assigned for the performance of supply, commissary, and disbursing duties, the routine of which is similar to those on shipboard.
An officer of the supply corps is assigned as the accounting officer at each navy yard, at the principal naval stations, and at each of the manufacturing activities operated by the Navy. His functions are distinctly statistical. He prepares the pay rolls of the civilian employees. He keeps the record of the cost of the maintenance and operation of the plant, of the cost of articles manufactured, and of the cost of repair and construction work done. He lodges these costs against the proper naval appropriations, renders appropriate returns to the Bureau of Supplies and Accounts and to other bureaus concerned, and keeps the yard, station or factory department heads advised of the state of their working allotments and of the costs of the various jobs in progress. He keeps the inventory and depreciation records of the plant structures, equipment, appliances, and tools. He compiles the final bookkeeping reports concerned with the materials in the custody of the supply officer.
Officers of the supply corps are assigned as cost inspectors (accounting officers) at private shipbuilding plants and at certain other manufacturing activities where work is being done for the Navy. These officers make a selective and corrective check of the records and reports of cost at those places in order to safeguard the interests of the government. During the late war when much the major contract work for the Navy was performed on a cost-plus basis, over 250 officers of the supply corps were engaged in the field on cost inspection work. Many of those officers were expert accountants, enrolled as reserve officers of the supply corps.
The officer of the supply corps at the head of the accounting group in the Bureau of Supplies and Accounts supervises all accounting activities. His office audits all accounting returns from ships, yards, stations and naval factories, except the final audit of fiscal returns which is made in the general accounting office under the Comptroller General of the United States.
It must by now be apparent that the business of the Navy requires a diversified knowledge on the part of its business officers; that they must in fact be specialists. There are, however, additional assignments for which these officers must be qualified. Some of these assignments pertain exclusively to financial administration, others to administrative work pertaining to supply and inspection, and still other assignments are advisory in character. Some of these are mentioned hereunder.
An officer of the supply corps is assigned to the staff of the naval governor of the Virgin Islands. He advises the governor in matters of supply and finance. Officers of the supply corps act as cashier of the government banks of Guam; and Tutuila, American Samoa. One acts as island treasurer, American Samoa. Two senior officers are assigned as general inspectors of the supply corps; one for east coast activities and the other is assigned to the west coast. These officers make frequent inspections of the supply departments of the shore activities and, occasionally, make inspections of the supply departments of ships.
On the staff of the commander-in-chief of each fleet a senior officer of the supply corps serves as aide and fleet paymaster. He is the financial officer of the fleet and advisor to the commander- in-chief in all matters pertaining to money and ship’s accounts. He procures monies by transfer from the Treasury Department, or, on a foreign station, by the negotiation of bills of exchange. He transfers these monies to the supply officers of the ships of the fleet as required for disbursement. He makes purchases of materials and services for the fleet, and makes frequent inspections of the money accounts and the administration and condition of the supply departments of ships of the fleet.
In each fleet there is another senior officer of the supply corps assigned as fleet supply officer. His function is to plan for supplies to be delivered to the fleet in sufficient quantities in ample time and with certainty wherever it may be operating. He advises the commander of the fleet train as to the movements of the supply and fuel under his command, and on other matters pertaining to the logistics of supply.
The question might well be asked—where does the Navy get these business specialists? Where are they trained? These questions lead us into the history of this important staff corps of the Navy.
The pursers of the Navy of the Continental Congress, in the early days of this Republic, sprang from the merchant service of the time, fully equipped for their duties as they were then understood. Those duties were as simple at that time, however, compared with the duties of the supply officer of a modern battleship, as the conduct of business in the late eighteenth century was, compared with the complexity of business methods and practices of today.
As early as 1812, statutory enactment provided “that the pursers in the Navy of the United States shall be appointed by the President of the United States, by and with the advice and consent of the Senate.” The terms of the act indicate that this was only legal recognition of a practice already prescriptively established. The name “pursers” was changed to that of “paymasters” by the naval act of June 22, i860.
The title “paymaster” and the designation “pay corps” as the name of the present supply corps, persisted until the days of the recent war. In both cases these developed into misnomers, however, as the duties of paymasters became more varied and the activities of the corps, along with the activities of the old Bureau of Provisions and Clothing, came to embrace all the functions of supply. In 1918, therefore, the naval titles of the respective corresponding ranks of commissioned “pay” officers were designated for use followed by the words, pay corps. The name of the corps was changed to “supply corps” in 1920, and those words now follow the naval title and with it make up the official title of an officer of the corps as, for example, “lieutenant, supply corps, United States Navy.”
Officers of the supply corps are not ordinarily graduates of the Naval Academy at Annapolis. While at the present time the corps is largely recruited from Naval Academy graduates, who are, upon entering the corps, given intensive training in supply corps duties; its older members have, as a rule, been commissioned from civil life. Many are graduates of the great universities of the country and a large proportion have served apprenticeships in business in civil life. Approximately one-half of the corps as now constituted are men who have worked their way up from the enlisted ranks. Many of these promotions were made during the recent war and principally from the grade of pay clerk, a group of warrant officers, appointed to act as assistants to supply officers.
Candidates for commissions in the supply corps are required to be between the ages of twenty-one and twenty-six years. They must be of a high order of intelligence, business ability, and adaptability, and must have, in general, the elements of character associated at all times with officers of a military service. They must pass a rigid professional examination, in competition with each other, and must be physically sound.
The Bureau of Supplies and Accounts has maintained for its junior officers a school of application in which they were instructed in the principles of business administration, of finance, of economics, and of accounting. In addition, groups of selected officers are given a course of business administration at one of our principal universities. Still others are given courses at the Army Quartermaster Subsistence School at Chicago, at the Philadelphia Textile School, at the Army Industrial School, Washington, D. C., and at the Naval War College, Newport, Rhode Island.
During the last few years the Navy has made tremendous strides in business efficiency, demonstrating the value of the intensive training accorded its business officers.
The business efficiency of the Navy is recognized not only by many of the business men of the nation, who have come in contact with navy business, but as well, by the navies of other nations. Since the recent war, the British Navy has remodeled its supply system to conform to the supply system of our Navy. Similar action has been taken by Brazil and Peru, and consideration is being given the matter by Italy and Spain.
We have seen how officers of the supply corps of the Navy sprang from the merchant marine of early days, nor has this group of officers lost contact with that worthy service.
The Navy operates a limited number of cargo vessels in which is carried the bulk of its overseas shipments. A sufficient number of fuel and supply ships are operated to meet the Navy’s peacetime requirements, but in the event of war, recourse must be had to the merchant marine to supply the additional ships needed to transport these supplies, and, if the base of operations is overseas, as was the case in the recent war, additional merchant ships would be required to transport, under the management and protection of the Navy, the troops, equipment, and supplies of the Army.
When it is conceived that a battleship, cruising at ordinary speed, consumes over 100 tons of supplies, including fuel, every twenty-four hours; that her crew eats five tons of provisions and requires a half a ton of other supplies every day, it becomes apparent that any expedition in which the full force of the Navy is engaged would require a supply train of great proportions.
The process of taking over a merchant ship by the Navy is of vital interest to the supply corps. One of its officers would board that ship at the earliest moment practicable for the purpose of inventorying her supplies and equipage. From a predetermined list of material found to be necessary for the operation of a ship of that type over a given period, he would then prepare his requisitions on the nearest supply depot, and, in a very few hours that officer would be functioning as the supply officer of the Navy’s latest ship.