1917 appropriation totaling about $30,000, and it is probable that the indebtednesses now outstanding against the 1918 appropriation total about $20,000. This will make the total sum expended for all purposes approximately $430,000, making a total deficit of about $130,000. The deficit occurring annually in this appropriation for some years past has been covered by a deficiency appropriation for the payment of claims certified to Congress by the Secretary of the Treasury.

The largest item of expenditure, of course, is for the actual transportation of supplies, which for 1918 amounts to $354,771.94 up to about October 1, 1918, with a number of bills outstanding.

A comparison of amounts expended for this purpose for the last few years is as follows:

1 To October 1. Exclusive of 118,349,520 pounds coal not handled through warehouses.

306, 770. 97 314, 613. 32 333,550.00 354, 771.94

It should be noted that a large volume of supplies on which transportation charges are paid from this appropriation are handled by the field officers and not by the Indian warehouses, particularly so was this the case during the past fiscal year, owing to the fact that all coal for the service was purchased through the Fuel Administration by field officers. This would considerably increase the weights on which transportation charges were paid during the fiscal year 1918. While the tonnage shipped by the field officers is not included in the above totals, the cost of the transportation is included.

The amount specified for 1920, to cover the transportation of supplies is $443,500, but it is believed that at least $460,000 will actually be required. There has been a general increase in freight rates during the past two years, and on June 25, 1918, a further increase of approximately 25 per cent was made on all rates.

If the $300,000 only is appropriated as in the past few years there will be a deficit of about $220,000. This deficit is based on the assumption that the same tonnage will be transported during the fiscal year 1920 as during the fiscal year 1918, and at rates approximately 25 per cent higher. Figures are as follows:

The other expenses chargeable to this appropriation are for the maintenance of the warehouses, three in number.

The amount expended for the fiscal year 1917 and 1918, and the estimated figures for 1920 follow:

Total expenditures for maintaining warehouses, etc.:

$55,666. 20

55, 515. 58 56,500.00

33, 715. 86 34, 387.82 35,500.00

3, 389.59 3,086. 77 3,000.00

The following table shows the amounts appropriated in the Indian bills, amounts appropriated under deficiency acts, and the total amounts expended during the past

A most earnest effort has been made for several years to regulate the expenditures from this appropriation in such a way as to prevent a deficit, but the volume of freight traffic for the Indian Service is increasing so rapidly that this could only be done by changing the entire policy of the service in the purchasing of supplies. It is not believed that any more supplies are purchased for the Indian Service than was the case in past years, but with increased attention to buying has come a complete reversal in the policy under which they were purchased, throwing a larger and larger proportion of the total cost of supplies on this appropriation, and a correspondingly less amount on the various support funds. Up to about 12 years ago, the greater quantity of flour, forage, and fuel for the Indian Service was purchased f. o. b. destination; in fact, so much emphasis was placed on the desire to purchase in this way, that very few bids f. o. b. other points were received. In 1899 the contract system of transportation was abolished and authority was given to ship supplies by common carriers at the regular commercial rates, less any reductions accruing to the Government in return for lands granted the different roads at the time they were constructed. It was almost immediately found that we could ship supplies at rates which were not only much lower than we ever received after inviting bids, but much lower than the rates paid by private shippers. The significance of this fact, as applied to purchasing supplies, was not recognized immediately; however, each year we found it cheaper to buy more supplies at points of manufacture. Several years ago we finally recognized that, owing to the reduced freight rates we receive, we can in almost every case buy cheaper at point of manufacture or production and ship to the various agencies, than by buying the same articles f. o. b. delivery point.

For example: A mill at Portland, Oreg., bidding on lumber for the Nevada Indian School, at Numana, Nev., would have to calculate its delivered price on the basis of a freight rate, Portland to Numana, of $0.40 per hundredweight in carload lots. Their bill would be the Portland price plus freight to Numana, all of which would be payable from the Nevada school support fund. Reductions accruing to the Government, in return for lands granted to the Southern Pacific Co., in Oregon, bring the rate which we would have to pay down to $0.086 per hundredweight in carload lots if we did the shipping on Government bills of lading. The saving in making the purchase f. o. b. Portland and doing the shipping ourselves is obvious, but as the freight on the purchase in this case would be charged against "Purchase and Transportation of Indian Supplies," and only the cost of the material at Portland charged to the support fund, there would be a charge of in the neighborhood of $100 per car against the transportation appropriation which would not have been made had the lumber been purchased f. o. b. destination. Thus an actual net saving of nearly $500 to the Government on the whole purchase, increases the charge against this appropriation by $100.

The recognition of this fact has led to ever-increasing efforts to save money by inviting bids f. o. b. points of manufacture all over the United States, and the acceptance of such bids has led to a constantly increasing volume of freight traffic on behalf of the Indian Service through the warehouses and otherwise, with corresponding increasing, overdrafts in the "Purchase and Transportation of Indian Supplies' fund. We estimate that we save at least $100,000 annually on the total cost of our supplies delivered at destination, by purchasing at point of manufacture or production and shipping at Government freight rates. That is by paying $350,000 from this appropriation for freight charges, we save at least $450,000 from the various support funds. The reason for the constantly increasing amount spent on freight charges is shown most forcibly by the weights of supplies purchased through warehouses in the past few years:

Pounds.

37, 167, 594

49, 857, 085

58, 183, 679

60, 015, 338 73, 393, 584 87,927, 608 90, 008, 853 143, 915, 233

It is estimated that more than two-thirds of the supplies used by the Indian Service are now purchased through warehouses, and that including those purchased f. o. b. shipping point by field superintendents, we pay for freight transportation on about four-fifths of all the supplies purchased for the service, the remainder being delivered at destination by the firm or individual from whom we buy.

You will note, gentlemen, that we are asking for an increased appropriation of $200,000 in this item, for the reason that we have heretofore had a deficit of between $100,000 and $200,000 in connection with this work. The Secretary of the Treasury has certified that deficit to the Appropriations Committee and Congress has made the appropriation. We think it would be good business to consolidate that appropriation with this so that it will not be necessary to ask Congress to provide for these outstanding obligations each year. Mr. HASTINGS. Was that cared for in the sundry civil bill?

Mr. MERITT. It is cared for in the deficiency appropriation act. Mr. DILL. This has been going on for five or six years, I notice. Mr. MERITT. Yes, sir. This appropriation cares for the transportation of the goods and supplies from the place of purchase to the place of delivery.

1

Mr. DILL. Well, Mr. Meritt, that policy of every year running in a deficiency on this item-here is six years that it has run up a total of well on to a million dollars.

Mr. MERITT. It is not good business policy.

1 Includes 118,349,520 pounds of coal which would ordinarily have been handled by the warehouses and field officers but this year on account of war conditions the whole amount was purchased through the Fuel Administration f. o. b. mines or docks on the Great Lakes.

Mr. DILL. It is not only not good business policy, but what is the use of Congress limiting the appropriation if the Indian Department is going to go ahead with a deficiency every year? Of course, a deficiency might occur for one year.

Mr. MERITT. This is one item in the Indian bill where it is difficult for us to state just how much will be needed for the year. For instance, this year freight transportation charges have been considerably more than heretofore.

Mr. SNYDER. Yes; it is 50 per cent higher.

Mr. MERITT. And also we don't know just exactly the distance that we will have to transport goods from the place of purchase to the place of delivery. It is largely an estimate of the cost of carrying on this work.

Mr. DILL. I know, but away back in 1913 you had a deficit of $164,000; in 1914, a deficit of $151,000-and so on. It seems to me if the department goes on making deficits there is no use of the committee putting any particular limit on these things.

Mr. MERITT. This is the only item in the bill where that condition prevails.

Mr. DILL. I thought I hadn't seen it before.

Mr. MERITT. We have called the attention of Congress to this condition, and heretofore, I think, we have asked for more money, but we did not always get it.

Mr. SNYDER. Mr. Meritt's explanation would be perfectly correct covering the past 12 months, but it would hardly apply to the 3 or 4 years further back.

Mr. MERITT. I realize that we are subject to criticism in handling this appropriation.

Mr. SNYDER. If this increased appropriation should apply, you think that would be sufficient to cover the increase that has taken place in the last 12 months in the cost of transportation plus the increase of former years?

Mr. MERITT. Yes, sir.

Mr. SNYDER. It don't seem to me as though it would, but may be it will.

Mr. MERITT. We think we can keep within this appropriation if Congress will give it to us.

The next item reads:

TELEGRAPHING AND TELEHONING.

For telegraph and telephone toll messages on business pertaining to the Indian Service sent and received by the Bureau of Indian Affairs at Washington, $8,000. We offer for the record the following justification for this item:

Telegraphing and telephoning, Indian Service.

The amount asked for under this heading is for the purpose of defraying cost of telegrams between the Indian Office in Washington and the field and to pay the tolls upon such messages and telephone conversations.

In view of the many urgent needs arising, it is necessary to act promptly and therefore many telegrams are sent to and from the Washington office which are paid from this appropriation.

We are asking for the same amount and in the same language as carried in the last appropriation act.

Mr. DILL. You think that will be enough?

Mr. MERITT. Yes, sir.

The next item reads:

COURT COSTS.

For witness fees and other legal expenses incurred in suits instituted in behalf of or against Indians involving the question of title to lands allotted to them, or the right of possession of personal property held by them, and in hearings set by the United States local land offices to determine the rights of Indians to public lands, $1,000: Provided, That no part of this appropriation shall be used in the payment of attorneys' fees.

We offer for the record the following justification for this item:

Court costs, etc., in suits involving lands allotted to Indians.

This item includes witness fees and other minor expenses of suits instituted in behalf of or against Indians with respect to their titles to allotted lands and their right to possession of personal property held by them. Also, expenses in hearings before United States land officials to determine the rights of Indians to public lands. However, no part of the item is to be used in the payment of attorney fees.

In many cases where Indians claim allotments or homesteads on the public domain, whites contest same on the ground of prior settlement. This necessitates a hearing before the local land offices to determine the rights of the respective parties, and witness fees must be paid, traveling expenses incurred, etc., in order to determine the facts and properly to protect the interests of the Indians.

Sometimes it becomes necessary to request the Department of Justice to represent the Indians in suits based on contests of this character or in the State courts when title to an Indian allotment has been clouded by reason of attempted conveyances obtained fraudulently or otherwise, for which the Department of Justice has no specific fund available.

Mr. DILL. There are no changes in this item?

Mr. MERITT. No changes either in language or amount.

Mr. SNYDER. Is there at the present time a necessity for this item? Mr. MERITT. Yes, sir.

Mr. SNYDER. The same as heretofore?

Mr. MERITT. Yes, sir; cases are arising where we need to defend the titles to lands, and other funds are not available to aid the Indians in the protection of their property rights..