of the Munitions Board, but that seems to me to be upon a lower level than this fundamental assignment of priority to the scheduling of procurement programs.

How frequently is that review?

Mr. MCNEIL. That is virtually constant. touched upon every day.

There is some facet of it

In my prepared statement I remarked that the Munitions Board carries on this allocation process based on the military guidance of the Joint Chiefs.

As Mr. McCone stated, it is their responsibility to furnish the guidance as to what forces should be equipped and when, the types of major equipment which may be needed to supply them.

The Munitions Board tries to see that the target dates and the priorities are accomplished.

Senator O'MAHONEY. This guidance comes from the Joint Chiefs of Staff through the Secretaries of the three Departments?

Mr. MCNEIL. Through the Secretary of Defense, and when it is approved there, it becomes the guidance for the Muntions Board and the three Departments.

Senator O'MAHONEY. What success have you had thus far in actually eliminating duplication and setting up these realistic schedules of which you speak?

Mr. MCNEIL. In the preparation of the budget the pattern that was outlined to this committee in its opening session was generally followed. The actual preparation and initial review of schedules was begun in January in order that a pattern which later could be translated into the budget request could be developed.

There were about 170 principal items accounting for about 50 percent of the cost of procurement items which actually went under this review in the Office of the Secretary of Defense and in the Munitions Board, with the balance of the schedules having the same general treatment in the departments.

Many of those early schedules are good today. Some of them may require revision because of certain faster progress in tooling and, therefore, can be revised slightly upward. Certain others in which a better knowledge of the availability of material, better evaluation of certain capabilities might be adjusted downward. There will be a constant check to keep track of the schedules which have been prepared in order to be sure we are doing the job as efficiently as we

can.

The pattern I outlined to you has been going on heretofore but we are carrying it much further in the review which has been undertaken since May 31.

RATE OF DEFENSE EXPENDITURES

Senator O'MAHONEY. What can you tell us about the rate of expenditure you foresee during fiscal year 1952? And what is the rate now?

Mr. MCNEIL. The current rate of expenditure is about $2,300,000,000 monthly. Expenditures for 1951 up through June 30 will run about $19,400,000,000.

The charts you have before you indicate current and cumulative expenditure rates. One chart indicates the monthly rate of expendi

tures expected through 1952. The total expenditures in 1952 will be approximately $40,000,000,000.

The other chart on your left indicates the cumulative expenditures. Senator O'MAHONEY. At the present time you anticipate that there will be expended for the Department of Defense approximately $40.000.000.000 during fiscal 1952?

Mr. MCNEIL. That is right.

Senator O'MAHONEY. You have broken that down as indicated in that right-hand chart into a monthly rate of expenditure?

Mr. MCNEIL. That is correct.

Senator O'MAHONEY. What were the factors which led you to the conclusion represented on this chart? How can you figure it on a monthly basis now for what you may be doing in April, May, and June of next year?

Mr. MCNEIL. It is the consensus of a considerable number of factors. First, in military strength the forecast of military strength by month is rather firm. The average rates of pay are quite firm. The food costs are reasonably firm.

Then in the case of the broad area of maintenance and operation, there is the steaming rate for the fleet, the flying hour rate for naval aviation, and the Air Force, which is patterned in the budget.

The flying hours, as indicated in the budget, give a measure of consumption of fuel and spare parts. All such factors are considered together with experience as to actual performance or accomplishment with the result that, in the past several years we have been able rather accurately to forecast expenditures.

KOREAN WAR EXPENDITURES

Senator YOUNG. Is there any money to buy fuel in this appropriation for the Korean War?

Mr. MCNEIL. Not at combat rates in 1952.

Does pay of

Senator YOUNG. That is what I was trying to get at. Does soldiers in Korea come out of this bill?

Mr. MCNEIL. Yes.

Senator YOUNG. Does their regular clothing and their food?
Mr. MCNEIL. Yes, sir.

Senator YOUNG. Anything over what you consider their normal expenditures would be charged to the Korean War?

Mr. MCNEIL. What we would do if the Korean War continues at its present intensity through the next year, inasmuch as we have not financed some certain of those excess requirements, would be to use certain material that is being procured for active force to be activated, pipeline or for the reserve that should be on hand at some possible future D-day.

We can currently use the necessary amounts of such material, but we probably have to come back and tell you we are using it and have to replace it.

The stock level would be reduced below the level which should be maintained. That is why we can carry on without asking for immediate financing for something we cannot measure with reasonable accuracy at the moment.

Senator YOUNG. Have you any idea when there will be a budget request for the requirements of the Korean War?

Will it be a special budget?

Mr. MCNEIL. I do not believe that I can give you a definite answer but possibly some time around the first of the year.

Senator YOUNG. You think you have enough to carry you?

Mr. MCNEIL. At that time we would be far enough into the nex fiscal year to have a much better idea of what would be required. Senator O'MAHONEY. You will have a pretty good idea what the combat rate of consumption will be in 3 months?

Mr. MCNEIL. That is correct.

Senator O'MAHONEY. Things will begin to show the shape of the future, I would thing, within that time.

Mr. MCNEIL. Any requests we might make later in the year would cover the requirements for Korea and would take into account any differences in our delivery schedules which might show up after 6 or 8 months' additional production experience and would also probably take into consideration any changed evaluation of our dangers in the world.

STOCKPILING OF MATÉRIEL FOR EMERGENCY USE

Senator THYE. The question I am concerned about is: How much of the money we are spending as of today will become a military strength in this respect, that it is in supply depots placed strategically around the world so that if and when an emergency were to occur we would have it is a military strength to draw on and we would not be dependent upon the daily output of factories and ordnance depart ments to give us the military strength that was then demanded of us!

Mr. MCNEIL. Probably the best measure would be the deliveries of hard goods, less the amount consumed, principally in Korea, and less some of our current inventory that may become obsolescent, for example, aircraft.

Senator THYE. What percent would be consumed in Korea, and what percent would go into the military depots that would be a military strength against any unforeseen emergencies or crises?

Mr. MCNEIL. I would hesitate to hazard an estimate.

Mr. KOEHLER. I would like to say, Mr. Chairman, in partial answer to what the Senator has asked, and I do not think Mr. McNeil intended to convey the impression, but it is unrealistic to assume that we can isolate Korea with its necessary expenditures in manpower and material from our program for fiscal year 1952.

The fact is that a certain amount of our purchases would not have been made but for Korea and they do form a part of Korean requirements and over-all strategic requirements that you mentioned."

Senator YOUNG. Does the equipment, material, and other supplies that we give all the United Nations in Korea, including the British, come out of this budget?

Mr. KOEHLER. No, sir.

Senator YOUNG. What budget does that come out of?

Mr. MCNEIL. You mean the material we are using in Korea now? Senator YOUNG. That we are supplying to the South Koreans, for instance.

Senator O'MAHONEY. NO. He is asking about the material we are providing through military assistance.

Mr. MCNEIL. The military-assistance program is separate and apart from the action in Korea. That relates primarily to Europe.

If the South Koreans fire the 105-millimeter gun today, that comes out of the Army ammunition stocks. Other United Nation forces are generally upon a reimbursement or subsequent settlement basis for United States material consumed. The British are directly supplying many items used by them from their own sources.

BASIS FOR BUDGET REQUEST

Senator O'MAHONEY. Let us get back to the question that is before this committee.

As I understand it, it is that, under the instructions of the National Security Council, you have undertaken to present to us a budget for the support and equipment of a military establishment which will include 311⁄2 million men. That would be divided in 18 divisions for the Army, with certain regimental combat teams and supporting units; into the maintenance by the Navy of 1,161 ships, and the building up by the United States Air Force of 95 wings, together with two and a half divisions of Marines.

That is the objective.

The money which you are asking Congress to supply is intended to support that military force and not to give it all of the material that it might need to use in an emergency, but, rather, to prepare the production facilities so that a rate of production can be maintained to supply this military force with all of the materials necessary in case there should be an emergency.

Have I correctly summarized the basic facts?

Mr. MCNEIL. Generally, that would be a complete statement.

I might mention a couple of exceptions. There would be certain areas in a few long lead time items of equipment where the budget before you would not provide equipment for the 18 divisions, and so forth, together with all pipeline and minimum reserve requirements, because at this point it is not necessary to finance entirely the whole program. A similar situation would exist in the Navy and the Air Force.

At this point I should like to insert in the record a statement relative to the preparation and review of this budget estimate. (The statement referred to follows:)

During January and early February preliminary estimates totaling about $104,000,000,000 for the military build-up for the remainder of fiscal year 1951 and for fiscal year 1952, were developed in the military departments. After discussions between the Deputy Secretary of Defense and the secretaries of the three military departments, it was decided to review and refine the budget estimates within the military departments prior to submission of the estimates to the Office of the Secretary of Defense. This review was conducted by Under Secretary Kimball for Navy, Under Secretary McCone for Air Force, and Assistant Secretary Bendetsen for Army. The professional staffs of the Budget Division, Office of the Secretary of Defense, which is under the supervision of Mr. Lyle S. Garlock, and the National Security Estimates Branch of the Bureau of the Budget, which is under the supervision of Mr. G. E. Ramsey, Jr., were defailed to work under the direction of Under Secretary Kimball, Under Secretary McCone, and Assistant Secretary Bendetsen.

The professional staffs of both the Bureau of the Budget and the Office of The Secretary of Defense are organized on functional lines. This helps to secure Similar action in the various procurement, personnel, and operational areas of the military departments, as the same group reviews a particular area for all

three services. For example, the aircraft group would hear and analyze requests for funds for aircraft and related procurement requested by the Army, Navy, and Air Force.

Separate hearings, under the chairmanship of Under Secretary Kimball, of the Navy, Under Secretary of the Air Force McCone, and Assistant Secretary Bendetsen, of the Army, were scheduled for the Departments of the Army, Navy, and Air Force. At these hearings Bureau and technical service chiefs presented in detail their requirements and justification for their estimates for fiscal year 1952. During the investigation which lasted for 2 months, detailed information was secured concerning requirements, quantities on hand and on order, feasibility of projected delivery dates, production lead time, progress of related research and development, and many other pertinent facts were considered on a large number of items. The staff was provided full information on any item or program under review. Much supplemental information was developed by the services. On the basis of this sampling of the budget request (the samples covered from 20 to 90 percent of the requests) the staff developed very restrictive recommendations and formulated the major policy questions needing decisions. These major policy questions and recommendations were reviewed during a 2-day conference with the Secretaries of the military departments and the ap propriate chief of service at which time all the facts were considered and a decision made. The budget was then formally submitted to the Bureau of the Budget where minor modifications were made in the interest of national policy before it was submitted to the Congress on April 30, 1951.

Senator O'MAHONEY. That is why you have contracted authority or obligational authority that will go on.

But with that in mind, let us turn to these two charts which you have brought here, Mr. McNeil.

The cumulative chart indicates you are estimating that during fiscal 1952 you will expend a total of $40 billion for all of the services. including the hard goods and the soft goods.

This rate of expenditure begins at zero and rises to $40 billion. That is scheduled that way, I suppose, because this job deals solely with the money in this budget and does not deal with any money that is coming over from 1951.

Mr. MCNEIL. It includes the expenditures from 1951, any carry-over into that year and the portion of the 1952 money which would be expended. That is the measure of the checks to be drawn on the Treasury by the Department.

Senator O'MAHONEY. But you will be drawing more than the checks.

Mr. MCNEIL. That represents the total withdrawals. The other chart indicates the rate.

Senator O'MAHONEY. Yes. So that the total monthly rate, as shown on the second chart, begins with $2,400,000,000 or so, and runs up to a monthly expenditure of probably $4,400,000,000 in June of 1952. Mr. MCNEIL. That is correct, sir.

Senator O'MAHONEY. How is it possible for you to estimate that monthly expenditure of $4,400,000,000 as far ahead as next June? Mr. MCNEIL. It is the best estimate that can be made based on the schedule of deliveries of material, on the forces to be maintained, on the amount of soft goods that will be purchased and consumed by those forces.

PROGRESS IN EQUIPPING SERVICES TO PLANNED COMBAT STRENGTH

Senator O'MAHONEY. What progress will have been achieved by that time, at the end of fiscal 1952, in equipping the Armed Forces in the manner in which you are planning to equip them? Will they be fully equipped?