WAR EXPENDITURE

Dominion, Volume 11, Issue 178, 17 April 1918, Page 6

WAR EXPENDITURE

DEFENCE ADMINISTRATION. COMMISSION SITS IN THE CITY OPERATIONS BY SUPPLIES BOARD The Defence Expenditure Commission opened its sittings in Wellington yesterday. The Commission consisted of Sir Eobert Anderso:i (chairman), Mr. P. Barr and Mr. Charles llhodes. ' Evidence was given b, A. If. Adams chief executive ofiiccr of the Munitions and Supplies Department. Mr. Adams spoke of the circumstances which brought I tne Department into existence, and gave his views of the working of the Department. He said that the Ministerial head lot , the Department was the Hon. A. I Myers, and that ho had associated with ■ him the Stipplies Board of Advice, ennjeisling of Messrs. A. H. Miles, Alex i Macintosh, and Geo. Wilson. He said : that all executive power rested with tho ; Minister, and the function of the board ; wcro purely advisory. In tho earlier days lof the war tho system was such that ! claims were not met in a reasonable time, jand these delays had the effect of increasing prices quoted to the Department. I "When the position was realised by I those in authority, steps to improve matters were immefliately taken as follow:— ;(a) Tho work of buying tho stores only ;was undertaken by the Minister in ■Charge of Munitions and Supplies, (l>) Staff changes were made at the Defence Stores, which enabled a large number of ; old claims to be steadily pawed for payment, (c) More suitable accommodation ■ for the storing and distribution of goods .was afforded. By this means deliveries from merchants, and requisitions from camps were more expeditiously dealt with, 1 "Thin it <same about that early in October, 1915, the Ministei- in Charge was faced with the problem of creating an offlco for buying stores which the military system of purchasing had failed to secure. The principal shortages at the time of buying office was established were in: boots, uniform, clothing, and I woollen articles which were short I tendered for in August, 1915. The shortages of personal equipment early in August, 1015, were—sooo cholera belts,'2o-1(1 jerseys, 5500 underpants, 5180 undershirts, 4415 working shirts, 8200 pairs socks, 3500 pairs canvas shoes, 000 denim suits. ' I "Tho important shortages were made good without military training operations being interfered with, but the I heavy task of providing equipment for j the 30,000 trained men to "be sent abroad during (he year lillG was quite another niattor,. More especially so when—loaded on to tlieso heavy requirements—it was j the desiro of <_he military authorities to create a substantial reserve of equipment. That was to say, it was considered prudent to carry a comfortable 6toe): in tho most important lines in addition to supplying the regular quantities needed for monthly issue. "Sometimes money was saved (through buying apart from the persons who tendered. On a line of 10,000 blankets ,£333 was saved in thin way. Business experts, of course, advised as to the buying. In October, 1915, a conference with woollen millowncrs was 'held in Wellington, and goods to tho value of <£55'1,295 wcro arranged for, and most of the mills covered their requirements bcforo the rise in the market price of wool, which followed shortly after tho conference. A Deal in Oats. . "In connection with tho purchase of supplies," Mr. Adams continued, "there is one case, namely, a demand for forage, which stands out as an example illustrating the buying methods adopted to the advantage, of (he "country by the Minister in charge and those associated with him. Early in the year 1917 it transpired that; tho military authorities found it necessary to purchase a full cargo of oats for Egypt. The communication was received by Headquarters and passed on to the Minister in charge and his .advisers for attention. As an illustration of secrecy by -all branches, nnd business management, it may be. stated that 1-10,000 packs of hinh-grado onte were purchased by the Minister's representatives through brokers at an average cost of under 2s. !)d. per bushel, f.o.b.e.i. At the time operations commenced the market, price' for the quality of grain 'required was fluctuating between 2s. 7d. nnd i<. Bd.' per bushel, f.o.b.s.i. Had negotiations not been discreetly handled prices would have risen tlurinp our operations to 3s. "(1., perhaps 3s.- 9d., per bushel. Tlieso being the market piiicps ruling after the work of the brokers ceased." "As regards the general rules of policy observed in b'nyin?. the main factor has been that of purchasing in the most economical market consistent with quality. Where goods required , are. in the orlinary course of trade, manufactured in New Zealand, such goods have not been procured from abroad unless our manufacturers could not supply when wanted. Whore, however, goods are needed of a nature usually imported into the Dominion, then steps avs taken (where lan,'<? quantities are rpqiiired) to purchase sue , ' goods from the nrimav.v source of supply in tho United Kingdom if possible. In | this connection it is as well to oomment! that the most important manufacturers ' in the United Kingdom have their per- i manently appointed New Zealand representatives. These agents therefore obtain a commission on all New Zealand business done by their principals, whether orders ro through such agents or are placed direct with tho principals. In such cases Ihe practice followed has been to request such agenU to obtain a direct quotation. In a large number of miscellaneous commodities, sucli as many lines of drugs, no permanent New Zealand agent represents English manufacturers. Where, goods of this and a like nature are needed, purchases have been made, to advantage on behalf of the Department by the High Commissioner's office in London. Goods jo aruanged ,for have recently in most cases been shipped to the Dominion by returning transports, but this arrangement was difficult to achieve. In a recent case, goods which would have cost about .£IO,OOO in NewZealand were secured and so consigned at a total cost to'tho War Expenses Account of .£BOOO, thus saving ,£2000."

Bia Savings in Shipping. "Advantage of Centralising Buying Operations.—Summarised, the advantages obtained by the Government in establishing the portfolio of Minister in Chiu'Eß of Munitions and Supplies have been:—(a) To create one, buying office, instead of permitting the. conlinuaiicu of five buying brunches, which, prior lo August, 1015, were in operation separately and distinct from one another. I(y this means many purchases which would otherwise have been conducted senaratek by eacli brauuk have been consolidated by the buying office, and through such consolidation economy in prices and more advantageous terms genei'uHv have beer, obtained, (b) To separate work (oiicerning the reception, custody, and distribution of goods from the functions and responsibilities connected with their acauisition. Under this urocedure our experience has been that the military authorities have found more time to look ahead and anticipate their requirements, which fact has largely helped us to make satisfactory purchases to meet their needs. The military authorities have also been able to devote more timo to the reception, examination, and distribution of goods, (c) To clearly define duties and responsibilities, thus conserving secrecy, and rendei'ini; it casiyv to trace leakages (if any) of inforiration relative to our buying operations, (d) To establish a system of placing orders for supplies, whereby Hip work of Hie iVudil I>llice has been simplified, and payment to vendors thereby facilitated; uud (o) to effort economy in administration by reducing, the sum total of salaries paid for work connected with the purchasing of supplies." As to making full use of cargo space on transports, one vessel had without impairing her efficiency as a transport loaded up with about 700(1 bales of wool, nnd thus effected a saving of over A' 30,000, In another instance it was in contemplation to dispatch the ship with about 240 mounted men, at an estimated cost for the' trip of approximately

•£25,600. The troops were conveyed to their destination by a shipping cuoinany under contract for about .£SOOO. Tims not only was an unnecess.u'y expenditure avoided, but tlio vessel rendered most useful, service for the next few months • in assisting to avert a serious industrial i catastrophe. Goods to the value of over ,£1,000,000 had been arranged lor under the control of the Minister since the inception of the- Department. At the present time attention was being given to requirements tor the year 1918. The estimated ] (Mist of these goods was .£1,300,000, and I of this amount orders to tho value of i'KS,3GO had been plnced. This represents 2,555,076 articles; tire business hud been spread as follows:—Auckland, •£125,903; Wellington, Canterbury, .£108,5:5; Otago, J!135,08G. The Commission Inquires About Boots. The chairman: I'or what period have you supplies in hand of articles you lel'er tor Mr. Adams: \Ye have a comfortable, stock of these lines. For how long ahead?—" You would need to ask Major M'Cristell." You buy, and jour responsibility ends there?—" Yes.", Supposing the Army was to find euddenljv.that thty were short of stun', does any responsibility rest on you f—"Not j I unless, wo get a request for it." In some piacss whure the British Army was operating' it was found that they had too Httlo or 100 much. I was wondering if you came into that.—"Tho responsibility of making up the estimates rests entirely with Mr. M'Cristell. Sometimes if the board notices that a requisition appears small or large inquiries are made, not with authority, but with a tiesire to assist." Do you happen to know anything alwutt the boots they -tnt abroad:—"AVe hear , that they are satisfactory on the whole." The chairman said that he meant that boots which had been good in camp had failed in the wet trenches.—"That does not come within tur sphere. There again it is the duly of the military officer to specify just what he wants." Had, tho woollen mills not covered themselves when they did, on whom would the loss oave fallen?—"On the mills." As to defaulting contractors, please explain some if the incidents.—"Well, incident No. 1, as to overcoating material. Our arrangement v.as to have one. of a •certain weight delivered. We found that ! in one or two rases the weight was short. The matter was gone into carefully, and as a result it was recommended that it had not been done deliberately, but .through an attempt made to get as near as thoy could to the specifications." An honest attempt?—" Yes; and in recognition of their failure we deducted tne sum of ,1-:. per coat." Three shillings out of how much'?— "Out of M 2s. 53d." Witness added that also there had been a difficulty over pantaloons, and that eventually n contract had been cancelled and illOO had heon paid in to recompense tho Department. In another case a contractor was lined ,£SO paid .£2OOO damages, and rectified garments. Another man was fined ;tlo. | A £2000 Encouragement. The chairman: Tho action of fining ono man J3OO should have'encouraged the others. Witness: Yes. . The chairman: Major M'Cristell works in conjunction with you?--"Yes." How do you get on with him?—" All right." Ho has impressed us mast favourably. As to the securing of 110,000 sacks of high grade oats, 1 nivsumo that the farmers were quite delighted when they found that they had assisted in this patriotic endeavour.—"They wore not very pleased about it, but those who wcro holding the onts were not fanners." Aβ to publishing results of tenders, will you.explain pararaph 27?— Witness said that publishing all names and prices was found to lie bad because men did not care to appear as unsuccessful tenderers. .Now even the name was omitted if objection was raised. Witness said also that they did not always disclose (he quantity of goods they desired to buy, because if they did big operators at once got to work lo buy up big lines. Have you had any case of fraud or embezzlement since you have been in office? -"No." Witness said that it was suggested that there should be. as a corollory to the board in Wellington, a representative in each district. Something would probably be done soon in this direction. . The chairman: J. am glad l to hear it. We thought that, that was something which needed to be done. A. 'H. Miles, a member of the. board above referred to, wa? called, and was asked: Do you think that with advantage you could extend your work to supervision of the sea transport? Mr. Miles said that some such syfitem should have, been adopted earlier. Witness also referred to the good work of the Defence officers associated with the board—Major M'Cristell and Major Ostler. It it were in the power of the board lo reward them by more than words the power would be exercised.