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REPORT 64TH CONGRESS, HOUSE OF REPRESENTATIVES.

I No. 489. 18t Session.

PUBLIC-UTILITY FRANCHISES IN HAWAII.

APRIL 4, 1916.- Referred to the House Calendar and ordered to be printed.

Mr. HAMLIN, from the Committee on the Territories, submitted the

following

REPORT.

[To accompany H. R. 14071.)

The Committee on the Territories having had under consideration the bill (H. R. 14071) to amend certain public-utility franchises in the Territory of Hawaii, reports the same to the House with recommendation that the bill do pass without amendment.

This is a general bill offered as a substitute for two separate bills passed by the Legislature of Hawaii which have come to Congress for ratification and approval. Both of those bills embody the provision that the per cent of gross receipts which the franchise of each company now requires to be paid to the Territory of Hawaii shall hereafter be paid to the treasurer of the county in which the company operates.

In addition, the Territorial legislature has recently passed two other utility franchises for companies located in two additional counties, and in each case has specified that the per cent of gross receipts should be paid to the county in which the company is to operate.

Your committee feels that it is merely carrying out the intention of the Legislature of Hawaii in drafting this general law to apply to all public-utility franchises granted or approved by Congress, and therefore recommends that the bill do pass without amendment.

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64TH CONGRESS, | HOUSE OF REPRESENTATIVES. 18 Session.

, } HOUSE OF REPRESENTATIVES. { Reportez.

FLEET SUBMARINES.

APRIL 4, 1916.-Referred to the House Calendar and ordered to be printed.

Mr. PADGETT, from the Committee on Naval Affairs, submitted the

following

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The Committee on Naval Affairs, to whom was referred the bill (H. R. 13670) amending an act entitled "An act making appropriations for the naval service for the fiscal year ending, June thirtieth, nineteen ' hundred and sixteen, and for other purposes, relating to the authorization of fleet submarines, having had the same under consideration, report the same favorably with the following amendment, and as amended recommend that the bill do pass.

In line 3 strike out the word “provisions" and in lieu thereof insert the word "provision”.

The naval appropriation act of March 3, 1915, provided for two submarines, to be of seagoing type, to have a surface speed of 25 knots or more if possible, but not less than 20 knots, to cost, exclusive of armor and armament, not exceeding $1,500,000 each."

In an attempt to carry out the provisions of this act the department advertised for bids but found that it was unable to obtain a bid for a guaranteed surface speed of 20 knots, the minimum mentioned in the appropriation act, and the bill under consideration reduces the minimum surface speed from 20 to 19 knots. The following letter from the Navy Department to the chairman of the Committee on Naval Affairs of the House of Representatives sets forth at length the action of the Navy Department in an attempt to carry out the provisions of the naval appropriation act of March 3, 1915.

NAVY DEPARTMENT,

Washington, March 3, 1916. My Dear Mr. PadGETT: The naval appropriation act of March 3, 1915, provided, among other things, for

"Two submarines, to be of seagoing type, to have a surface speed of twenty-five
knots or more if possible, but not less than twenty knots, to cost, exclusive of armor
and armament, not exceeding $1,500,000 each.”
This provision contemplated a submarine of unprecedented characteristics ag
regards speed. As the department had not contemplated such a departure, no pre-
liminary investigation of the possibility of building a 25-knot submarine had been

made, and it was necessary to prepare entirely new plans. The provisions of the law were explicit, and the department of course undertook to carry them out to the letter.

It was found wholly impossible in the present state of the art to undertake a submarine of 25 knots, using oil engines for surface propulsion. The largest oil engine installation on our submarines contemplated up to this time was that on the Schley, and it was soon found that the submarines in the act of March 3, 1915, in order to make 25 knots, would require about two and one-half times the horsepower of the Schley. It was necessary then to prepare an entirely new design for a vessel materially larger than the Schley, about two and one-half times the horsepower, propelled by steam in surface condition. You will readily understand that this involved careful and lengthy investigation of various novel problems.

The designs were finally completed, and on December 11, 1915, the department called for bids, to be opened on February 16, 1916—the usual 60 days being allowed for the preparation of bids. When the bids were opened on February 16 it was found that there were no bids for a 25-knot submarine.

The Lake Torpedo Boat Co. submitted bids of $1,748,000 and $1,689,000 for vessels to make 20 knots in each case, but requiring acceptance provided they showed 18 knots or more. These bids, which were for one vessel in each case, being beyond the limit of cost of $1,500,000, could not be considered.

The Electric Boat Co. bid for two vessels at $1,491,000 upon design 63-B, or $1,494,000 upon their design 63-C, the bid of $1,494,000 being regarded as preferable in view of the superior battery. The bid offered to guarantee a speed 20 knots the minimum mentioned in the appropriation act—but required acceptance of the vessels (with a penalty at the rate of $20,000 per knot) provided a speed of 19 knots was reached upon the usual four-hour full-speed trial. The times of construction named were 31 and 33 months. The vessels bid for were substantially duplicates of the Schley, already under contract with the bidder. In view of this fact and of the fact that the company, although it has made little progress in actual construction to date, owing to the fact that it has entirely recast the design, maintains its ability to complete the Schley within the contract time, or by March 19, 1918, the department regarded the times of 31 and 33 months for these duplicates of a vessel already under contract as wholly inadmissible.

This question was taken up on February 25 with an authorized representative of the Electric Boat Co., who was asked to state what could be done to shorten the time of construction. He stated that so far he had been unable to obtain promises of delivery of the steel required in the construction of the hulls in less than a year, but that by suitable alterations in the specifications, contract, and administrative rulings of the department, it would be possible to reduce the time bid by about three months. He was informed that this was unsatisfactory, and he undertook to negotiate further with the steel manufacturers. On February 29 the detartment received information as to the result of these negotiations in a telegram which, with its confirming letter, are appended, marked inclosure A. The letter No. 175 referred to in the telegram is also appended, marked inclosure B.

At the interview with the representative of the Electric Boat Co., his attention had been called to the fact that the act prescribed a speed of not less than 20 knots, and that the department did not consider his bid requiring acceptance of the vessel provided she showed a speed of 19 knots or over, acceptable under the law.

In order to place the contract for these vessels, the department, though somewhat unwillingly, was prepared to accept a majority of the changes suggested by the bidder. One change, however, proposed that the usual provisions in the tenth clause of the contract regarding delays should be replaced by a provision under which any delay in obtaining material should virtually automatically extend the contract. The customary provision as regards delay caused by nondelivery of materials in contracts is a very liberal one. It provides that for such delays in obtaining material, the Secretary of the Navy "may in his discretion grant such extension of time in the fulfillment of the contract as he may deem proper under the circumstances." This the bidder proposed to strike out. The other objectionable change required that the maximum speed should be demonstrated, not by a four-hour trial, as customary for all naval vessels for many years, but by three consecutive runs over a mile course. At 20 knots the actual time of three runs on the course would be only 9 minutes, and allowing for time between runs the time occupied from the beginning of the first to the end of the last would probably not exceed 20 minutes.

The department regarded the proposed change as regards delay due to the material as nullifying any definite contract period, and felt that in view of the plain intent of Congress and the practice of many years as regards the method of determining speed the method proposed by the bidder was distinctly contrary to the spirit and intent

for the payment of bonuses over the prevailing high market prices for the purpose
of hastening delivery. We expect to have final information on this subject to-morrow
afternoon or Wednesday morning, when we will, in accordance with our promise,
take pleasure in telegraphing the department, stating what further, if any, reduction
in time can be made.
Very respectfully,

ELECTRIC Boat Co.
L. Y, SPEAR,

Vice President. SECRETARY OF THE NAVY,

Navy Department, Washington, D.C.

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