of Construction and Repair and the Bureau of Yards and Docks; and the terms of the lease would be prepared only after such consultation; so that at the present time it would be idle for us to say just what the terms of the lease would be. We have not yet sat down to work that out. They would be, obviously, certain to see that the Government's interest would be fully protected. Senator BROUSSARD. I wish to say that the water front at New Orleans is owned and controlled by the State. All that is controlled by the State of Louisiana instead of the city. The dock board there is an agency of the State and not of the city. Senator ODDIE. Will you tell us the character of the Government or naval ships that can dock at this dock? Admiral GREGORY. Yes; that dock can take all of the naval ships that we have at the present time, except its present capital ships; that is, the 18 battleships and the two airplane carriers. They are too large to go in the dock. When that dock was built, the largest capital ship at that time was of the Illinois class, and the battleship Illinois was the first battleship docked in that dock. Senator ODDIE. What was the tonnage of the Illinois? Admiral GREGORY. It was about 11,500 tons. Senator ODDIE. Will the proposed new cruisers be able to dock there? Admiral GREGORY. Yes. The CHAIRMAN. How does this compare with the one at Olongapo? Admiral GREGORY. The one at Olongapo is about 2,000 tons larger than this. The CHAIRMAN. Very much the same type of dock? Admiral GREGORY. The same type of dock. There is one other thought that comes to me, and I am presenting this simply for the information of the committee, without attempting in any way to take sides, but I would like to suggest this. It is obvious that in the preparation of the lease the Government would require that the lessee should insure the property. We do not now insure it, so that that would be a charge which he would have to provide for. Also I have gotten the impression that there is a possibility of the dock being moved to be adjacent to the Todd plant-that is, in the event that the Todd people obtain the lease—which would be a few hundred feet down the stream. That would mean that there would be the necessity of meeting the cost of new moorings, which would run into quite a big figure. It cost the United States Government in the neighborhood of $60,000 to provide the moorings that that dock now has. The CHAIRMAN. What do you mean by the moorings? The CHAIRMAN. Not the wharf itself? Admiral GREGORY. The chains, anchors, and dolphins. We have here two great big dolphins [indicatig on blue print], and then there are big structures that are like great big gangways, which are heavy steel struts that hold the dock in place, and yet they are arranged with swivels so that if the dock moves up or down stream there is no connection broken. 28613-29- -5 Then in addition to that are these chains running to dolphins, both upstream and down; and then on the outboard side are chains running to heavy anchors that are imbedded in the river bottom. The chains that are used have links that are 22 to 3 inches in thickness; so that the cost of mooring a dock is quite a big figure, and should any lessee propose to move that dock, that will cost him a lot of money. That, of course, he will have to pay for. Senator BROUSSARD. Suppose that he was building a new dock and taking it down there, he would have to provide moorings? Admiral GREGORY. Yes; but he would build a dock of much cheaper form. Senator BROUSSARD. He could take the moorings along with it when he moved it, could he not? Admiral GREGORY. If those chains could be taken up, if the anchors could be recovered, of course that would enable him to avoid the necessity of buying new ones, and in so far as those were available, he would use the present moorings; but it would be a very neat job indeed to put that dock in a different place, as the shipbuilding people would know. With regard to having a rate established by law, I would suggest that that is a matter which should be left to the Secretary of the Navy. If there is a general provision that any rate should be such as to be fair and equitable, why, well and good; but I think it would be undesirable to mention any percentage on investment or any definite figure of that kind, because of the many uncertainties which would have to be met, which are of a kind which would be a very big burden anyway. They would have to be taken into account in the leasing. Senator BROUSSARD. Admiral, I think the position of your department has been stated by yourself as to the competition with other people there. If the committee should come to the conclusion that they want to lease it, it certainly should be acceptable to the Department to see that a lease is on such terms as would put it on a competitive basis. Not knowing who is to be the next Secretary of the Navy or when there might be a vacancy, but knowing that the last two Secretaries have disagreed on this question, I think it would be very unwise to leave this question of the amount of rental, and so forth, to the Secretary of the Navy without some other expression on the part of Congress as to what they would like to see done. It is suggested by the Secretary that private interests should be protected. Admiral GREGORY. That is a matter of course; that would have to be decided by the committee. The only idea in my mind was that if it should be prescribed, for example, that the lease should not be less than a certain percentage of the first cost, that might be very inequitable. If, however, the committee goes so far as to approve only a general statement requiring that, that is something that the department would see to being carried out, whether it is in 'there or not. I feel confident that it would. The CHAIRMAN. Has anybody any questions to ask the Admiral? Senator ODDIE. Just to make it perfectly clear, then, referring to this six months' clause in the proposed lease, in the case of an emergency the question of the Government commandeering would nullify that; is that your understanding, Admiral? Admiral GREGORY. I think what it would do, Senator, would be this; in the event of an emergency, the Department would naturally take whatever steps were necessary for the best interests of the Navy, and then would settle with the private owner after that. They would have to come to some subsequent agreement. Senator ODDIE. The question would be as to the right to secure possession promptly. Admiral GREGORY. In the event of a real emergency, I think there is nothing that would interfere with the Government taking that dock. If it would be to the interest of the Government, they would take it. Mr. BARNES. And the yard and everything else with it. That dock is required to go through a period of self docking in order for us to paint and scrape and fix it in good shape. The last time it was self docked was in 1924, and we are now approaching the period when it must be self-docked again. The cost of that scraping and painting that is done is in the neighborhood of $25,000 or $30,000, and that is one of the things that we would have to require against the rental; or at least, if that is done by the lessee, it will be allowed to apply on the rental account. Senator BROUSSARD. Credited to him? Admiral GREGORY. What I mean is that he would do it, and then whatever the cost was would be considered as a part of the rental price. The CHAIRMAN. As long as there is a possibility of disposing of the dock, the Navy Department will not go ahead and overhaul it at the present time? Admiral GREGORY. If we found it necessary to do it we would go ahead and do it. The CHAIRMAN. If you are going to lease it, why go to that expense now? Admiral GREGORY. It has not come up yet, but we expect that it will come up during the coming summer. Senator BROUSSARD. Under the proposal, it makes no difference. The lessee gets credit for it. That is what I do not understand. If it was his own dock he would have to do it and he would have to pay for it. Admiral GREGORY. Yes, and he does pay for it. Senator BROUSSARD. He makes you pay for it. Admiral Gregory. The effect of it is that it makes the lessee pay for it. Senator BROUSSARD. If it is credited to him when he does it, you are paying for it. Admiral GREGORY. It is credited against the lease. Senator BROUSSARD. But that means that he does not pay for it. Admiral GREGORY. We do not have to charge it against our appropriation. Senator BROUSSARD. Oh, of course not. Mr. Chairman, I would like to have inserted in the record such comments as Mr. Jahncke may care to make with regard to the statements of Admiral Gregory. The CHAIRMAN. Very well. DECEMBER 22, 1928. Hon. EDWIN S. BROUSSARD, United States Senate, Washington, D. C. DEAR SENATORS I thought you would like to have before you an analysis made up on the basis of Admiral Gregory's testimony before the Senate Naval Affairs Committee last Wednesday as to the replacement cost which the Admiral stated would be incurred to replace today a duplicate of the Algiers dry dock. With this in view I have taken the cost of the replacement of the dry dock alone to be approximately $1,800,000. On the basis of this estimated cost I attach herewith statement setting forth fixed charges which must be incurred by private interests who have investments of a similar nature. It seems to me that with this information before you, you can appreciate what difficulties the Navy Department will be into if they attempt to arrive at a fair cost which would not be detrimental to private invested capital and at the same time bring proper returns on the present investment to the Government. It is my view to consider that if the Senate Naval Affairs Committee decides to lease this dry dock, that no lease should be even considered for a less period than ten years. With all of this data I think you will agree that the Committee should uphold the position of the Navy Department and the Honorable Secretary of the Navy in protesting against the leasing of the Algiers naval dock. With assurances of my personal esteem, I am Sincerely yours, 23, 130 9, 000 Taxes: City rate, 24 cents; State, 84 mills, based on 40 per cent valuation__ Insurance: Marine, fire, and explosion at one-half per cent.. Total first 7 years. Inasmuch as the State of Louisiana passed an act whereby drydock facilities would be assessed for 10 years on a 40 per cent valuation, and since this act has been in effect already 3 years, the amount of taxes as shown above will only apply for the next 7 years. After that time assessment will be based on 100 per cent valuation, increasing the taxes to $57,825; therefore, on the basis of a 10-year lease the last 3 years' taxes will be increased by-. Total last 3 years. 176, 130 34, 695 210, 825 Further, if you consider the water front accessories such as wharf and other facilities at a valuation of $500,000, you have the following additional cost: Interest on capital investment at 5 per cent__ Insurance Total first 7 years. Add increase in taxes for the last 3 years__ Total last 3 years. $25,000.00 25, 000. 00 6, 425.00 4,500.00 60, 925. 00 9, 637.50 70, 662. 50 SUMMARY First 7 years on the dock, water-front accessories_. Last 3 years-- -per year__ 237, 055. 00 do. 281, 487.50 (Thereupon, at 4 o'clock p. m., the committee adjourned.) Britten, Hon. Fred A., Member of Congress, statement of. Chalmette Petroleum Corporation, telegram of Copeland, Hon. R. S---- Coyle & Co. (Inc.), W. G., telegram of.. 45 29 14 13 49 34, 39 51 Dockings, bids on, New Orleans_. Docking facilities, United States, tables_ 29 19 Cost of maintaining-- Replacement cost Dockings, in naval floating dry dock, New Orleans__. Dry dock, naval, New Orleans: Fleet Corporation, United States (Vice President Kelly). General Contractors' Association, telegram of-- Gomilla, Dr. F. R., telegram of Gregory, Rear Admiral, L. E., United States Navy, Chief of the Bureau Gulf ports: Tonnage of vessels entering, table_ Docking facilities at---‒‒‒‒ 56 59 66 17 53 45 54 26 26 Hartson, Azcona M. J., telegram of__ 45 Hibernia Bank & Trust Co., New Orleans_. 53 Jahncke, Ernest Lee, president Jahncke Dry Docks, Inc_-- 22, 33, 66 Johnson, Warren, president Johnson Iron Works & Dry Dock Co---- 35, 37 45 International Association of Machinists (N. P. Alifas). 53 Kelly, Edward A., vice president United States Fleet Corporation__. New Orleans Coal & Bisso Towboat Co., telegram of. New Orleans Steampship Association, telegram of O'Connor, Hon. James, Member of Congress_ 52 29 45 50 Navy Department (Rear Admiral L. E. Gregory, United States Navy). 54 28 52 28, 53 50 49 42 O'Keefe, Arthur, mayor of New Orleans, telegrams of |