"Naval Administration" by Sir Vesey Hamilton, G.C.B. (1896)
THE SPENDING OF THE MONEY.
The Civil, or executive and spending, Departments of the Admiralty are held responsible for the administration of the votes they compile. It is their duty to see that the money is well expended, and that the expenditure is in relation to the estimate that has been made. In the work of closely watching the outlay of money, the spending Departments are therefore largely occupied, and the work of reporting is continually going on. The Director of Stores, for example - and the remark applies to all store-keeping departments - is directed to keep himself acquainted with the expenditure of the money voted for the purchase of naval stores, in order to guard against any deficit on the vote, and to secure that, if the expenditure is likely to fall short of, or to exceed, the amount allowed, the Board shall have timely notice thereof; and the Accountant-General is to he kept informed of the matter. The Board has laid down express regulations to secure financial order and control as regards liabilities and expenditure.
In regard to this matter the Accountant-General is largely concerned. He is directed to assist the spending Departments in their duty of watching closely the progress of their liabilities and disbursements. To this end he furnishes them with all information that is necessary for securing an efficient control over the expenditure under their votes, and frequent reports at stated periods are made to them for this purpose.
It is not necessary for me to deal with the administration of certain of the naval votes. The whole of the vast business connected with the expending of money on the personnel of the Navy and the non-effective services, transacted in the Accountant-General's Department, calls for little comment. A special section of the Department, the Navy Pay Branch, is devoted to the work, and conducts the details of the business relating to the pay, wages, and salaries of the fleet and the establishments ashore. It is a duty of equal complexity and magnitude, but is conducted with the utmost ease, and with mechanical regularity and smoothness.
It is by the shipbuilding votes that the larger machinery of the Admiralty is set in motion. The executive Departments, as I have said, do not, save in regard to the hulls and machinery of ships built by contract, and the special requirements of the Director of Works, enter upon the purchase of stores. With the exceptions indicated, the whole of this work is carried out by the Director of Navy Contracts.
Within the Controller's Department are centred many of the more important spending branches. I showed, in an earlier chapter, how proposals for ships to be built, initiated in that Department or directed by the Board, are given effect to through the machinery at the Controller's disposal. I explained how the Director of Naval Construction, working in conference with the Engineer-in-Chief, and the Director of Naval Ordnance, as well as with the advice of the Assistant Director of Torpedoes, proceeds to his work. The reader has seen how sketch designs are prepared, embodying the requirements of the Board, how they are discussed, worked upon at the ports, and finally completed in preparation for the practical work involved.
But, while the work of designing has been going forward, the Director of Stores, the Director of Dockyards, and other officials who are concerned in the building of ships, have made full preparation for the work. I have at present only dockyard-built ships in view. Vast quantities of stores of almost every imaginable kind are built up into ships. Steel, iron, timber, hemp, manufactured articles, castings, forgings, armour-plate, machinery, guns - all these are brought together for the construction of a single vessel. The reader has been informed what course is taken in regard to the provision of naval ordnance. The propelling machinery of dockyard-built ships is excepted from the work of the Director of Contracts, but for all else the Director of Stores is responsible. In regard to the materials and stores necessary for the construction and outfit of new vessels, as well as for repairs, of which the annual supply is regulated by prospective demands, the Director of this Department takes steps to obtain most accurate information as to the requirements under the shipbuilding programme, ship by ship, so as to avoid an accumulation of excess stocks for shipbuilding purposes.
But the Director of Stores, is not, as we have seen, a purchasing officer. He forwards to the Director of Navy Contracts requisitions for the purchase of all naval stores necessary for the Service. The Director of Navy Contracts is supplied at the same time with full particulars and specifications; and by one of the methods which I indicated in the chapter devoted to his Department, he proceeds to his work of purchase. In many matters he makes his purchases from the selected firms. In regard to some special requirements he may buy direct from firms of established repute; for others, and perhaps more specially for the requirements of the Victualling Department, he may purchase in the open market. The procedure is different when propelling machinery is bought, as I shall show below. For ships built in the dockyards the machinery is usually procured by contract, but in some cases it has been constructed with advantage in the public establishments.
It may be instructive if I illustrate how far-spreading is the mesh of shipbuilding work under the Admiralty over the industries of the country. In the case of the Renown, built at Pembroke, the contract for the propelling and auxiliary machinery was placed in the hands of an eminent firm of contractors, Messrs. Maudslay, Sons, and Field [the Renown was actually built at Chatham, and had machinery supplied by Penn; Hamilton probably means the Revenge]. The propelling machinery, boilers, and some other parts were manufactured by this firm, but the steering engines, the electric light dynamos, the evaporators and distilling condensers, the hydraulic machinery, the boat hoists, and the indicators were provided by sub-contractors in various parts of the country. The same was the case with the crank-shafts, the intermediate and stern shafts, the piston and connecting-rods, the crossheads, the cast-steel crank-bearing frames, the cast-steel pistons, the cylinder covers, the steel springs, the brass condenser tubes, the copper steam-pipes, the boiler-plates and furnaces, and a considerable number of other parts of the machinery. In this way we see that the spending of naval funds gives employment to a great number of industrial establishments (For these facts I am indebted to an article by Commander C.N. Robinson, R.N., entitled "Naval Reinforcements in War Time - the Supply of Warship Material and Machinery," in the "Naval Annual " of 1895).
The procedure as regards ships built by contract is different, though much of what I have said, mutatis mutandis, will apply to it. Here, again, the Director of Navy Contracts plays no part. As is the case also with propelling machinery built by contract, the professional part of the business is conducted through the Controller of the Navy, who is advised thereon by the Director of Naval Construction and the Engineer-in-Chief. The list of firms to be asked to tender is decided by the First Lord, the Controller, and the Parliamentary and Financial Secretary, who also decide the allocation of the contracts. The relation of the Controller and Financial Secretary to this business is governed by the general relations of the members of the Board to the First Lord. It is the practice of the Admiralty to make one firm responsible for the contract both for the hull and machinery, although a subcontractor may be recognized for the latter. Ship-builders and engineers are associated, and the responsibility is generally placed upon the former. Moreover, it often happens that the productions of specified firms are directed to be employed, where this is seen to be to the advantage of the public service, and capstan-gear, as was the case with the Renown, and other portions of the vessel's equipment, are sometimes supplied by the dockyards. The armour is nearly always bought by the Admiralty, and supplied to the contractor, and, for obvious reasons, the armament is kept wholly distinct from the contract for the hull. The firms selected to be placed on the Admiralty list are judged, as I showed in an earlier chapter, to have sufficient experience in the building of ships and the construction of engines, and no name is placed upon the list until after careful examination has been made. For the hulls of vessels complete specifications and designs are prepared by the Director of Naval Construction, and a like procedure by the Engineer-in-Chief is taken in regard to machinery. Under these conditions, vast sums of money are expended annually in private shipbuilding yards, in which the work is carried on under the close supervision of the Admiralty.
It is highly important, as I have said, for the country that happy relations should be preserved with contractors. Upon this depends the ability to increase upon emergency our constructive means. Shipbuilders must be encouraged by work that assumes the character of continuity to provide themselves with the proper plant for the construction of warships, and to familiarize themselves with Admiralty methods. This applies, as I have shown, in smaller degree, to a great number of contractors who are not brought into direct relations with the Admiralty itself. Unhappily, the best relations have not always been preserved with contracting firms, especially in former times. The Committee appointed in 1886 to inquire into the System of Purchase and Contract in the Navy, reported that invitations to tender had been accompanied with the intimation that alternative designs might be furnished. The absence of a fixed basis of value resulted, making the tenders to some extent a matter of opinion, and placed the Board in the hands of the professional officers, who alone could be in a position to form a judgment upon offers made upon varying designs, In the case of the Renown and Sans Pareil, tenders were invited for the hulls and machinery of the vessels jointly, with an indication as to the natural and forced draught to be developed, and a request for alternative designs. Messrs. Palmer offered to construct one vessel for £587,854, and Messrs. Elder to build two for £590,000 each, with engines of 8,500 i.h.p. as specified. The offers accepted were one from the Thames Iron Works for £601,000, and the other from Messrs. Armstrong for the price of £604,000, the engines providing for 10,000 horse-power. It consequently became a matter of opinion as to what was the value of the additional 1,500 horse-power. A valuation was made by the professional officers at the time, but the Committee of 1886-7 was of opinion that this valuation was perfectly arbitrary, and quite at variance, according to the evidence given before it, with the intrinsic cost of the attainment of the additional horse-power, viewed by the addition it required to the engines and boilers. Even in regard to the ships of the Naval Defence Act, some difference arose. The Thames Iron Works and Messrs. Earle's Shipbuilding Company made claims for loss sustained in building the first-class cruisers intrusted to them. Disputes, too, have since arisen with other contractors.
There is, however, no reason to feel surprise that differences of opinion should exist where work is complex and progress continually suggests further developments, nor that some friction should arise. I cite this matter, not to the disparagement of the Admiralty system, but to illustrate the fact that the Admiralty system must depend very largely upon the wisdom of individuals, and it is unnecessary to disguise that wisdom, as in former times, has in some instances been denied to us.
What I said just now concerning the Director of Naval Stores, will apply equally well to the other Store Departments, which proceed to their work in a closely similar manner. Thus, the Director of Victualling, having made his estimate, spends the money voted by indenting upon the Director of Navy Contracts, There is, however, a certain flexibility in the methods pursued, and necessarily so, for victualling stores are largely of a perishable nature, and are bought under special conditions, often through running contracts. The procedure is closely analogous in the matter of medical stores.
The reader has seen in previous chapters how the stores purchased by all Departments are received, surveyed, and accounted for, and I have sketched the manner in which, with them, ships are built in accordance with designs, provisioned, and fitted, and how thus the great work of building warships and preparing them for commission is achieved. It is a work which goes on at the dockyards under close supervision. The abuses which existed before the Dockyard Committee exposed them have been uprooted. The dockyard administration has been placed upon a new footing, the Expense Accounts have been established, and a most efficient machinery has been created for the supervision, survey, and estimating of work as it proceeds. The operations of the Accountant- General of the Navy are throughout highly important; he is the financial adviser and assistant of the Departments, constantly working at the recording of expenditure, and, as I have explained, furnishing regular returns to assist the executive Departments in their work. In the Ledger Branch of the Accountant-General's Department, all expenditure is brought to book under the several votes and sub-heads of votes, and in this branch the all-important Navy Appropriation Account is prepared.
That account is the public explanation of the progress of naval expenditure, and of the manner in which the money voted is utilized. It enables the closest investigation of facts to be conducted in the soundest way for the public service. The "financial control" of the Accountant-General, as a departmental officer, could never have been efficient. Since his power of "review " was abolished, the work of audit has fallen to the Comptroller and Auditor-General, and the careful investigation of the Public Accounts Committee, before which the heads of the spending Departments explain and defend their administration of the votes, is the soundest guarantee that the public funds are expended well.
The spending well of the public funds voted for the naval service of the country is the crown and completion of the Admiralty's work. That our Navy is the admiration of the world, both for the characters which it possesses and the economy and rapidity with which ships are built, is sufficient evidence that the money is well expended. With the mention of the Navy Appropriation Account, which is the public exposition of Admiralty finance, I bring my book to a close. We have surveyed the whole of the Admiralty organization. From an historical introduction, showing how ancient precedent rules the Admiralty procedure, I went on to describe how the Admiralty Board conducts its operations, and I have completed my work by an attempt, imperfect I know, to describe the Admiralty machine at work. The task has been a difficult one, for upon this subject no one has ever written at length before, but it has been pleasant to describe that organizing force which shapes and directs our naval policy and provides for the maintenance of our sea power. When we read of naval operations, of battles and single-ship actions, of cutting-out expeditions, and of prizes taken from the enemy, we are sometimes apt to forget that behind all this rests the directive hand of the Admiralty Board. It is right, however, that this Board should be recognized as holding its due position in the work of our naval defence. If I have contributed, in some degree, to awaken the public to a knowledge of what our Admiralty administration really is, and of giving a right understanding of the manner in which the Admiralty works, this book will not have been written in vain.