diseases. Was there any answer, any explanation of that from Army sources? Was this apparently widespread criticism published all over the United States merited, or was there any ground for it?

General OSBORN. I think if you are referring particuarly to the criticisms which were voiced in the review of Dr. Parran's book

Acting Chairman MEAD (interposing). That is right.

General OSBORN. I have known Dr. Parran for years very intimately. Acting Chairman MEAD. And, I believe, later confirmed by authentic sources in press releases.

General OSBORN. Yes.

Acting Chairman MEAD. They very severely criticized the Army and said that they were responsible for breaking down the strong barrier that was so effectively built up in the World War under Secretary Baker and continued on, evidently, until just recently.

General OSBORN. I haven't read the book, and I didn't read the reviews, but I am quite clear on this, Senator Mead, that this attackand I am not sure that he did attack, but I think he indicated, certainly, or the reviews indicated—

Acting Chairman MEAD (interposing). I think "indicated" is better than "attacked." It really wasn't an attack.

General OSBORN. Indicated that the trouble with General Marshall and Mr. Stimson was that they were not convinced of the necessity of enforcing the May Act, you see. Now that, to my personal knowledge, was highly unfair, and that is the reason that I know the book has actually been circulated. I know there has been a terrible lot of going back and forth between Federal Security office and the War Department, because in that respect I think that if the book does say that, it was grossly unfair.

Now, if the book says there are Army officers who don't concern themselves with the suppression of prostitution, undoubtedly the book is correct. This is a large Army, and there are lots of officers and I am perfectly sure there are officers as there are civilians of high caliber who believe that a segregated district is a good thing; that it is a way to reduce venereal, and so on. Those officers are being told they are wrong and the staff won't stand for it, but it takes some time. So, in that respect, I think there was real unfairness because I know the efforts that Mr. Stimson and General Marshall have made in this direction, intensely sincere. I feel quite strongly about it.

Acting Chairman MEAD. I understand the book was sent to Members of the House and sent from some source that evidently wanted action taken.

OPERATION OF POST EXCHANGES

Acting Chairman MEAD. Another matter I would like to bring up this morning is the question of post exchanges and the system that governs their operation. For instance, it is my understanding that in some of these posts the Army is exempted from tax payments on cigarettes and other articles, but they in turn charge the boys the retail plus the tax prices. In some cases they charge them more than they would have to pay for the same article in a neighboring store. Why is that?

General OSBORN. Colonel Montgomery?

311932-42-pt. 10- -4

Colonel MONTGOMERY. They are not exempt from the tax in the Army exchange.

Senator HERRING. Unless Federal reservations, according to the law?

Acting Chairman MEAD. There are certainly many of them on Government reservations. Do you know of cases where cigarettes are tax exempt?

Colonel MONTGOMERY. None whatever in the Army; only outside of continental limits on the Navy ships, after they have passed the zone; then they can sell them without tax, but in our Army camps the cigarettes are not tax exempt.

Acting Chairman MEAD. What about State taxes?

Colonel MONTGOMERY. I think there are probably other cases of exemptions, too, that may slip our mind for the moment.

Acting Chairman MEAD. What about exemptions in Alaska, Newfoundland, outposts in the south? At any rate, there are certain exemptions, even though they be only State. Now, why is it that they are not sold at cost? Why is it necessary to make a profit on these sales?

General OSBORN. Until May the Army post exchanges were small stock companies belonging to the units using them and run at a profit, the profit being distributed to the unit and comprising a part of their company funds. That system was immensely valuable in many cases. The company had pride in the profits and in their company funds and it meant the officers of the company had some discretionary funds to use when they moved around the country, or had some critical thing come up.

In May it was realized that with the enormous growth of the Army the system should be somewhat centralized; that you couldn't multiply your post exchanges as rapidly as you were multiplying the size of the Army, so the stock system was done away with. The post exchanges on each post were consolidated, so instead of there being separate post exchanges for each unit, maybe a dozen on one large post, they were in effect made small chain stores on each large post, one central chain-store operation on each post. They were made trusted organizations and not stock organizations, and a central control was set up in the form of the Army Exchange Service, which is the Morale Branch.

That central control has wide powers under regulations issued last May. It reaches price agreements with large manufacturing companies on standard articles and sends those price agreements out to all of the post exchanges as the price at which they can buy these goods. It can determine what goods within limits, what standards goods the post exchange, local post exchanges, will buy. It can also fix the selling price on all these standard goods. It can describe the type and specify the cost of the equipment used in the post exchanges.

It can limit them in their inventories and it can specify limits to their profits as well as in the write-up or mark-up before they sell the goods, so it has very broad powers, ample, sufficient for profit control, I believe.

It also audits all of the post exchanges, central audit system. These regulations for the chains were drawn up toward the end of May, I think. They changed from stock companies to a trusted organization

and the chain store sort of operation in the posts began to take place in July, from the 1st of July. It was supposed to go into effect the 1st of July, but actually it took a little while. The profits of the old outfits were turned over to the outfits and the new post exchange took over the inventories with a debt for them, you see, so that the process of turning over wasn't a very rapid one; couldn't be because if a new central post exchange took over a regimental post exchange it paid for its inventory and it took a little while to build up its own standard. It had to finance itself afresh. Now in part that financing has been done out of the profits of the operation and in part it has been done out of the advance of funds from the Army Exchange Service. The Army Exchange Service has negotiated a loan up to $2,000,000 with the R. F. C. for this purpose. At the present time, however, it has only got $200,000, to small exchanges.

Acting Chairman MEAD. That profit matter ought to be eliminated as rapidly as possible.

General OSEORN. We think there should be 8 or 9 percent profit on the post exchanges. That would still enable them to sell cheaper than any store because so much of their overhead is covered.

Acting Chairman MEAD. I mean that original more or less unreasonable profit ought to be eliminated as rapidly as possible.

General OSBORN. That is right.

Acting Chairman MEAD. What is your agency able to do with profiteers who prey upon the service men by overcharging them in their own private enterprise located not far distant from the camp? For instance, at one Army post we paid 5 cents for Coca Cola at the service club, and just a short distance away we paid 25 cents for the same brand of Coca-Cola. Now I was wondering if these big national organizations would permit their agents or their customers to profiteer at the expense of the service men to that alarming, and I might say, disgraceful degree.

General OSBORN. So far as it is a community problem one of the jobs of the post morale officer is to be in touch with the community people, the local political officers of the community, the local recreational director, and the local U. S. O. or other recreation group in the community, and in great numbers of cases the communities have worked with the morale officer of the post on such matters as rents and other things where prices tended to rise exorbitantly. I don't know that there is much you can do on a matter like this Coca-Cola thing.

Acting Chairman MEAD. Except perhaps you could take it up with the national organization and they may prevent it as far as possible. They are a patriotic organization, I understand; they are doing some building operations for the War Department, building a big ordnance plant, and certainly they are interested in the defense program, and it occurs to me that you might communicate with companies like that and insist that they use their influence to cut down this profiteering on the boys.

ARMY EDUCATIONAL PROGRAM

Acting Chairman MEAD. There was another matter, the matter of education. We are interrupting the education of a great many of these boys; we are taking them out of high schools and colleges and

universities and we are training them for the Army. Why isn't it possible for an educational program to be instituted in which these boys might learn Spanish or other helpful languages? Why couldn't they initiate a correspondence course that would be helpful in all these camps and cantonments? Why couldn't they give them refresher courses in various engineering vocations? Now I understand they have educational activities in some places, but in others they haven't. What do you think about that?

General OSBORN. Well, there are so many aspects to that problem. I wish I had Colonel Young, in charge of education in the Morale Branch, here, but I can give you some of the salient points. We have had an excellent civilian committee on education, of which Dr. Dykstra was originally chairman, working as a subcommittee, joint committee, and advising with us. We have done some of the things they wanted us to do. We haven't been able to get all of them through. We have set up an Army institute correspondence school; got it through the staff last week. It will cost $500,000.

Acting Chairman MEAD. Army Institute Correspondence School? General OSBORN. It will cost that, roughly.

Acting Chairman MEAD. And what courses will it suggest?

General OSBORN. Any type, of course. We are going to use the material, the standard material of some of the big correspondence schools as our teaching material so we will have every course available.

Acting Chairman MEAD. Such as Scranton or La Salle, one of those correspondence schools?

General OSBORN. But we are going to use Army personnel because of the great reduction in cost. There are some 6,000 college professors in the Army and I don't know how many more men who are teachers, who are qualified to handle the papers in the correspondence course. There are going to be two branches of the institute set up, one in the Ninth Corps Area on the coast and one in the Second Corps Area in New York. They will be in effect two separate correspondence schools. We have just this past week been interviewing the men for those major jobs. Colonel Young of the Morale Branch is a specialist in university correspondence school work himself and knows a great deal about them. Plans were delayed somewhat because by bringing in civilian teachers there would have been other advantages, either civilian teachers or soldier teachers. We were 3 or 4 weeks trying to decide which; the civilian teachers would have been more expensive. That would have weighed against it. It also would have been less elastic because they couldn't be moved in and out. The staff finally decided, and I think very wisely, on the Army teachers for the school. Those schools will be in operation shortly. There will be a $2 charge which will cover all the courses a man wants to take. I think the actual cost is something like $20, so we will be coming to Congress to ask for the other $18 in supplemental appropriations.

Senator HERRING. During the past 7 or 8 weeks while these boys have been on maneuvers there hasn't been much chance for schooling. General OSBORN. We are just in under the ropes on this. Now other educational activities have been local. We have cooperated, and the corps areas and the posts have cooperated, with local agencies so that there has been a great deal of sporadic educational work being done in the camps. Local universities have sent teachers in to teach

courses; some States have appropriated funds to provide teachers for teaching. I think the State of Maryland provided some funds for teaching in Meade and some other camps. There is a group at Harvard who have been supplying lecturers and teachers. The College of William and Mary has been doing a good deal. Princeton is planning a series of lectures and teaching schedules, and in addition, arrangements have been made in this correspondence institute by which the universities will give courses to men in order to enable them to complete their university or continue their university curriculum.

I can't make as specific a statement on that as I should but arrangements have been made so if a man wants to continue his college curriculum and take college courses which will be credited at the college, that provision is made for that in the Army Institute.

Acting Chairman MEAD. I suppose the same is true insofar as vocational courses are concerned, if you are going to have a mechanized Army you want to have an ever increasing force of skilled workers and no doubt you are making arrangements for the education of men in the skills.

General OSBORN. Well, the Army, of course, as part of its training has one of the most immense educational programs there ever has been, all the mechanical skills for the men actually in their job. There is a real demand for training mechanical skills on the part of the men who are not in that particular service and we expect that demand will be met through the correspondence school.

Acting Chairman MEAD. But nothing has been done yet insofar as fitting the men to skilled trades in civilian life after they leave the Army. They train them to do a specialized job in the Army, but in the Navy they give them a more general training, so that they are fitted for skilled occupations in civilian life, but your correspondence course is going to treat that insofar as your department is concerned? General OSBORN. Yes; that is right. That is all we will be doing of that sort.

Acting Chairman MEAD. When we consider the attractiveness of the service in the Navy and the fact that they have been able to secure all the necessary personnel on a voluntary basis and assuming that their wants are not as high as the Army, we must attribute some of it to the educational program, the training program, and perhaps the facilities for education and for recreation that are perhaps a little more available in the Navy than in this new, rapidly developing selective army. General OSBORN. And the travel and sense of adventure. Acting Chairman MEAD. But you can see that the education and the training has something to do with attracting personnel.

TREATMENT OF ENLISTED MEN AND DRAFTEES IN PUBLIC PLACES

Acting Chairman MEAD. Now, another matter, General, that I am interested in, and it is attaining more and more interest in the Congress every day, and that is the debarment of our service men from hotels and restaurants and public places because they wear a uniform. I understand that a bill has lready been introduced in the Senate bearing upon this apparent boycotting, and it occurs to me that it is becoming rather widespread and will have an effect upon the morale. I know of cases where the boys come to Washington and they have to find a place to change their clothes, take off their uniform and hide it,