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BUREAU OF MATERIAL AND SUPPLIES.

There shall be a chief of bureau in charge of the handling and disbursing of all material and supplies for the construction of the Isthmian Canal and for the sanitation and government of the Canal Zone. The bureau of material and supplies to be under the jurisdiction of the head of the department of construction and engineering. There shall be a separate storekeeper in charge of the handling and disbursing of supplies for the department of government and sanitation, who shall be appointed upon the recommendation of the head of that department.

The bureau of material and supplies and all storekeepers will be subject to the control and instructions of the general auditor in respect to the proper accounting for material and supplies.

TIME-KEEPING BUREAUS.

Time-keeping bureaus will be organized on the Isthmus, under the jurisdiction of the chief engineer, covering labor employed in the construction of the Isthmian Canal, and under the governor of the Canal Zone covering labor employed for sanitation and government of the Canal Zone. Rules and regulations for the proper keeping of time of employees will be prescribed and enforced by the general auditor.

DUPLICATE ACCOUNTS.

Vouchers, pay-rolls, and accounts-current covering all transactions of the Isthmian Canal Commission and the government of the Canal Zone shall be taken, when practicable, in sufficient numbers to afford a complete file of original papers for the general auditor at Washington, and another for the local auditor on the Canal Zone, in addition to the copies required by the Auditor for the War Department and those desired by the disbursing officer for his files. The general auditor is authorized to exercise reasonable discretion in regard to securing original papers for these purposes. Whenever, in the opinion of the general auditor, it is impracticable or inexpedient to obtain all papers in quadruplicate, he is authorized to substitute therefor other copies, properly authenticated, including certified abstract and impression copies of abstracts and vouchers..

The general auditor's office, at Washington, and the office of the local auditor on the Canal Zone shall be prepared at all times to furnish on authorized request_complete data concerning the fiscal affairs under the control of the Isthmian Canal Commission, and to this end each office shall be provided with properly authenticated abstracts and vouchers, as provided in the preceding section, covering all settlements made by the other office, and shall retain permanently in its files full and exact copies of all settlements made within these respective offices. THEODORE P. SHONTS,

Chairman Isthmian Canal Commission.

(During the reading of the above-mentioned paper Mr. Benson referred to the following sentence contained in said paper: "The bureau of material and supplies to be under the jurisdiction of the

head of the department of construction and engineering," and the following occurred :)

Mr. BENSON. That has since been changed.

The CHAIRMAN. How is it now?

Mr. BENSON. It is under the chairman of the Commission, the administration department. The head of that division on the Isthmus reports to Mr. Ross in respect to the fiscal part of his work. As to the accounting features he reports to me.

The CHAIRMAN. Where were you employed, Mr. Benson, before you came to the Commission?

Mr. BENSON. I was auditor of the Southern Pacific lines east of El Paso, known at the "Atlantic system;" was in immediate charge of the accounts of four of the corporations at Houston, Tex., and had general supervision over all lines east of El Paso.

The CHAIRMAN. Where were you prior to that?

Mr. BENSON. I was deputy and general auditor for the Oregon Railroad and Navigation Company at Portland, Oreg., for ten years. The first thing that confronted me on my arrival at Washington was to organize the office. While there was the nucleus of an office here

Senator GORMAN. When did that begin?

Mr. BENSON. April 27 I arrived here. As I stated, while there was a nucleus of an office there was no system of accounts in operation or in existence, and for two months it required all of our time to devise forms and instructions to get an intelligent system of accounting started, which we inaugurated on July 1. In the meantime, the accounts were run along under the system that was in vogue, although the general books of the new Commission were opened as of the date of the appointments, April 3, 1905. There really were no general books of the old Commission to speak of outside of the record of vouchers which was kept and accounts of the disbursing officer. The organization of an accounting office on the Isthmus had my early attention. We selected a man of railroad experience in accounting matters as the local auditor, a man named W. B. Starke, who had the training of the Southern Railway here in Washington. At the time of his appointment he was auditor of the Atlantic and North Carolina Company, at Goldsboro, N. C. We also, with the approval of the Civil Service Commission, selected a number of experienced railroad accountants for the staff on the Isthmus, it being apparent that we could not in a formative stage secure competent help from the classified service to enable us to go ahead and have an organization at the start that would give satisfactory results. The Civil Service Commission, whom I interviewed on that subject a number of times, appreciated the situation, and allowed us to make certain selections, with their approval, without examination. In that way we have secured a very efficient organization on the Isthmus for the accounting division, and while the results so far have not been as prompt in respect to the rendering of accounts as they will be, we have done, I think, a great deal better than some people might think.

The situation on the Isthmus at the time the present Commission took hold, as you all must know, was somewhat chaotic. The accounting end of it, at least, had been very sadly neglected. The

old Commission undertook to inaugurate a local accounting office. They appointed a man named West, out of one of the Government Departments here, who went to the Isthmus some time in February. He was taken with the yellow fever soon afterwards, however, and died down there. He only took with him some half dozen men, and there was very little done by them in respect to accounting.

I can probably give you a better idea of what has been accomplished in the accounting division if I may read from my report to the chairman of the Commission of the date of October 17, covering the year ending June 30, 1905.

Senator SIMMONS. I was not in the committee room when you began. Do I understand that you started a new system altogether when the new Commission came in?

Mr. BENSON. Yes, sir.

Senator SIMMONS. Your accounting does not embrace, then, anything that transpired before you came in?

Mr. BENSON. We opened a new set of books. We brought over into the books of the new Commission the transactions of the old Commission, so that our exhibits bring down the record of the work from its inception.

Senator SIMMONS. But you do keep separate the transactions of the old and the transactions of the new Commission?

Mr. BENSON. Yes; we made that division as of April 1.
Senator SIMMONS. I wanted to understand that.

when you began your statement.

I was not here

The CHAIRMAN. What do you propose to read from?

Mr. BENSON. My report to the chairman of the Commission.
The CHAIRMAN. Of what date?

Mr. BENSON. October 17, 1905.

The CHAIRMAN. Very well. Go ahead.

(Mr. Benson thereupon read the following report:)

ISTHMIAN CANAL COMMISSION,

OFFICE OF GENERAL AUDITOR, Washington, D. C., October 17, 1905.

SIR: I have the honor to submit herewith a preliminary report of the fiscal affairs of the Isthmian Canal Commission for the year ending June 30, 1905, as covered by the following exhibits:

Balance sheet to June 30, 1905.

Exhibit A. Statement of miscellaneous receipts from all sources.
Exhibit B. Summary of expenditures in all departments.

Exhibit C. Detailed statement of general department of administration expendi

tures.

Exhibit D. Detailed statement of department of government and sanitation expenditures.

Exhibit E. Detailed statement of department of construction and engineering expenditures.

The distribution of expenditures will be in some cases further elaborated as soon as information asked for from departments on the Isthmus can be obtained, whereby may be shown charges to new equipment, covering the expenses of setting up and getting new equipment and machinery ready for operation, construction of new buildings, and other similar items now shown only upon the basis of the original outlay.

Included in the statement of department of administration expenditures appears amount paid out for material and supplies purchased and manufactured, also cost of purchase, handling, and transportation of material and supplies. The amount of material issued by the division of material and supplies to the different departments on requisitions has not yet been reported by that division. Pending the receipt of this information, the total expenditures for account of the respective departments can not be shown, the total report of expenditures being confined to salaries and wages, contingent and other expenses, and such furniture, materials, and equipment as was distributed direct to the work for which purchased on original vouchers and not handled through the division of material and supplies.

The organization of the division of accounts, as created by the Commission, provides for a general accounting office at Washington and a local accounting office on the Isthmus. A general division of the work is arranged so that to the Washington office is reserved the promulgation of all orders and regulations concerning the methods of accounting and the settlement of all accounts for services rendered and for material and supplies purchased in the United States. To the office of the local auditor are assigned all matters relating to the settlement of accounts for services rendered and for supplies purchased on the Isthmus, the inspection of time keeping, the property accounting, and the settlement of the accounts of revenues of the Canal Zone government and of expenditures from these funds.

There have been promulgated with the knowledge and approval of the chairman:

An outline of accounting methods in detail providing a double entry system of bookkeeping; provided records for the offices of the general auditor at Washington and the local auditor on the Isthmus; for writing and exchanging journal vouchers at the close of each month; for each office to write up its journal at the close of the month from vouchers prepared therein, followed by vouchers certified by the other office (a balance sheet drawn from the books of one office, under this system, compared with that drawn from the books of the other office will be found in exact accord in every detail); providing further, for the audit of all accounts consistent with the orders of the Commission and the requirements of the Treasury Department in advance of actual settlement by collecting and disbursing officers; providing a classification of accounts and distribution of receipts and expenditures by departments and bureaus as to administration expenses, and by classes of work of construction, engineering, and sanitation.

The circular of the chairman defining accountable property and • requiring all officers and employees of the Commission to faithfully care for all property in their possession or under their charge.

Methods of timekeeping, the preparation of pay rolls and payment of salaries and wages, outlining in detail a complete system of timekeeping and payments, and providing adequate safeguards in computing and expeditious and safe methods in payment of all classes of employees.

A full and detailed accounting system for the government of the Canal Zone, providing for the prompt deposit of revenues, the payment of obligations, rendition of accounts, and the settlement thereof by the auditing officers.

In cooperation with the general purchasing officer there has been prepared the chairman's Circular No. 17, being rules governing the purchase, delivery, and issuing of, and the accounting for, material and supplies. This order provides in full detail the manner of making requisitions, specifications, and purchases; of forwarding, inspection, survey, and acceptance; for the custody and care of supplies; for issuing, invoicing, and accounting for material and supplies; for handling articles manufactured or repaired at shops; for disposing of scrap, damaged and worthless material, and for inventory of all property and material of the Commission wherever situated, and proper adjustment of the accounts.

At its meeting of April 3, 1905, the Commission adopted the following resolution:

That the books of account of the Commission at the Panama and Washington offices be promptly balanced as of this date and that the books, vouchers, and records of the Commission up to this date be carefully identified and preserved for reference in the future, but that the transactions of the Commission as newly constituted be not entered therein but be entered in an entirely new set of books of account, and that the records thereof be separately kept and preserved, so that the proceedings of the Commission as constituted can be readily and conveniently distinguished and accounted for independently of each administration.

In pursuance of this direction, there have been opened proper books of account in which have been brought over the balances in the accounts of the preceding Commission as follows: Amount expended for rights of the New Panama Canal Company Amount expended for territorial rights in Canal Zone......... Amount expended to April 1, 1905, from the appropriation of June 28, 1902, for a "Canal connecting the Atlantic and Pacific oceans". Balance April 3, 1905, to the credit of the appropriation of June 28, 1902..

From the balance to the credit of the appropriation April 3, 1905, should be deducted amounts paid for account of prior Commission.. Net funds available for this Commission

Balance of funds in the hands of the collecting and disbursing officers.

$40, 000, 000. 00 10, 000, 000. 00

1,977, 686. 40 7,426,568. 27

788, 371. 51 6,638, 196. 76 615, 803. 21

The balance of material and supplies in the hands of the chief of the division of material and supplies, Isthmus, can not now be determined, as heretofore explained, but will be reported later.

By reason of the necessity of carrying to a conclusion all settlements unadjusted on April 1, 1905, there has been maintained a separate account in all details of transactions relating to the former Commission liquidated after April 1, 1905, and of accounts created by the present Commission.

Forms of books and blanks have been prepared to the number of some 125, embracing an entire set of general books, a set of abstracts and reports, various vouchers, time books, time and pay-roll blanks, identification certificates, time vouchers, classification and distribution sheets, bills for collection, certificates of settlements, inspection reports, requisitions for material, supplies, stamps and stamped paper, licenses, registers for courts, hospitals, and land offices. Other forms will be prepared as needed to carry out the proposed accounting system.

In February, 1905, an attempt was made to establish a local accounting office on the Isthmus, Mr. R. R. West being appointed deputy auditor. Owing to his early demise from yellow fever, and to the insufficient force, without properly devised accounting methods, there

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