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April, 1923 government as a competitor in _ busi- ness, which was the final object of liquidation, would eventually have re- sulted in involving the government still more deeply. These stores were useful, however, in introducing to the public a variety of articles for which previously there had been little general use and practically no demand. In other words, they created a market in which they themselves could not compete. The gov- ernment had to give way to. private business, which could and does keep lines well balanced with fill-in orders, thus helping the manufacturer and the job- ber. Out of the discussion of the various plans-:suggested, there developed a very definite policy, safe, sane, reasonable and in keeping with the interest of business men, as well as the interest of individual citizens and taxpayers. That policy was the gradual liquidation of surplus, the rapidity of such liquidation being gov- erned by the ability of the markets to absorb the various commodities without undue interference with established — in- dustry, while at the same time « safe- guarding the public interest in every possible way. i No Competition In the: application of this set policy of liquidation, the establishment of the office of the director of sales was one of the first essentials. The various supply services of the army such as the quarter- master department, the ordnance depart- ment, air service, engineer corps, signal corps and others, each had in their possession and controlled a large amount of property, much of which was to _ be- come surplus. Had these services been permitted to act independently of each other in the disposal of this surplus, it would have been impossible to have pre- vented one competing with another. There would have been no such thing as effective supervision and nothing at all of that co-ordination so necessary to suc- cess. Each of the services I have just mentioned designated an official to sup- ervise and control the disposal of all surplus property held by that service. The activities of these officials, usually known as surplus property officers, were in turn co-ordinated . and controlled through established channels from the office of the director of sales. The mag- nitude of operation is reflected by the sales figures of the two largest services; the quartermaster corps, which to Dec. 15 last had disposed of property which cost the government approximately $1,500,000,000 and the ordnance depart- ment, following with approximately $675,000,000. During the first year of liquidation, sales were made by negotiation, sealed bid, fixed price and auction. Each suc- MARINE REVIEW ceeding year has increased. the difficul- ties of selling, and caused a revision of our methods. At the present time no sales are made by negotiation unless the property concerned has’ first been offered to the public at large by sealed bid or auction and failed to bring a sat- isfactory offer. Besides, experience has proven that, as a rule, on commodities such as are now being offered, higher prices are obtained by auction than by any other method, .Large Surplus Remains The progress of liquidation has in the main been extremely satisfactory and gratifying to those connected with the business organization of the government. Sales have kept abreast the declarations of new surplus reported from the var- ious supply departments and from now on should exceed these declarations by a good wide margin. Since the estab- lishment of the office of the director of sales property originally valued at over $2,000,000,000 has been sold and the visible supply reduced to about $200,- 000,000. Estimates of future surplus to be reported will swell this total to ap- proximately $400,000,000 cost value, which still remains to be sold. : An interesting problem that confront- edithe ordnance department was the dis- position of an enormous amount of am- munition for artillery and for small arms. There was no domestic market for am- munition as such, government-owned facilities were not equipped to break down this ammunition in large quanti- ties, nor. did the government desire to assume the risk involved. I do not be- lieve more consideration has been given to any single proposition that has come before the director of sales, nor do I believe that a more complete or searching investigation could have been made to se- cure the best interests of the government before and after making the contract that was entered into. This contract was made with a large salvage corporation, which undertook to take over the ordnance stocks “as ‘is’ “where is” all ammunition, unload it, break it down into commercial products, such as scrap metals and chem- icals and place these products on the market, The contract provided for the government to receive 40 per cent of the gross proceeds of sale, the salvage com- pany 60 per cent, while the control of the price was retained. by the ordnance sal- vage board. Thus was the government enabled to dispose of its huge holdings of ammunitions without the outlay of a single cent for additional overhead expense, without incurring any liabilities whatever, and by its control of price undue pres- sure on the regular markets was pre- vented. Furthermore, the particular in- terests of industry were additionally safe- guarded by turning this ammunition over 149 to the salvage company at times and in such quantities as not to unduly disturb the industrial equilibrium. Picture if you will, more than 100,000 items, each with a market problem of its own, The quantities in which some of these items were held demanded the ut- most care and consideration be given to their disposal. Let us take one item, wool, the disposal of which is typical and illus- trates clearly how the government’s meth- ods have worked for the good of all. It should be recalled that the govern- ment through the quartermaster corps of the army took over the entire wool clip of 1918, together with all wool in the hands of dealers. The total amount taken over by the government was slightly in ex- cess of 674,000,000 pounds, at a cost of ap- proximately $478,000,000, or an average price of 71 and a fraction cents per pound. The liquidation of the wool stocks of the quartermaster corps, began under the direction of the present quartermaster general who at that time was zone supply officer at the army supply base, Boston. In this work he was ably assisted by Al- bert W. Elliott, chief of the wool top and yarn branch of the Boston depot. A large measure of credit is likewise due Col. Ralfe, quartermaster corps, whose able supervision of the work at the Wash- ington end made possible its prompt con- summation. Wool Recovered 86 Per Cent Prior to the armistice the government had allocated for use about 210,000,000 pounds, leaving on hand avai'able for sale as surplus about 465,000,000 pounds. The total recovery on the entire purchase was remarkable, the average percentage being in excess of 86 per cent of the cost, and this squarely in the face of approximately a year and a half of most serious business depression in 1920 and 1921. The liquidation of this enormous stock of wool presented innumerable difficulties and the decision to dispose of it through a series of auction sales to properly safe- guard the interests of the government and of industry met with considerable opposi- tion from several sources. Notwithstand- ing this opposition, the government perse- vered in its plan. The complete disposal | of this government-owned wool was con- summated by auctions divided into 49 series, comprising 118 separate auction sales and nine sealed bid sales. Early in the summer of 1920, after the long expected readjustment in wool values had become apparent, all wool sales were temporarily suspended to permit condi- tions to settle. The readjustment process in wool and woolens was extremely se- vere, and every reasonable measure was taken to protect the interests of the wool industry of the country, consistent with | the best interests of the people. Not a pound of wool was marketed from then