flood the area to be occupied with local currency to such a point that it becomes practically worthless as a satisfactory medium of exchange; and may even resort to the use of counterfeit local currency.

Financial problems will vary in different areas freed by the forces of the United Nations. Although the basic principles underlying the authority of the military commander remain unchanged, the details of procedure must be adapted to the circumstances found to exist in liberated areas.

It should be noted that in contrast with Axis procedure, which is governed by a policy of exploitation or of outright destruction of the existing economy of a conquered area, Allied military policy and procedure is governed by a spirit of liberation and a policy of rehabilitation and fair dealing with the liberated peoples.

Mr. SNYDER. It was stated here the other day that when the Allied military lira is expended upon objects normaily chargeable to War Department appropriations, such appropriations are charged with the dollar equivalent, but that the appropriation credits are not covered into the Treasury but carried in a special account. Why should not such credits be covered into the Treasury?

General RICHARDS. Dollar equivalents of Allied military lira expended for objects normally chargeable to War Department appropriations are charged to applicable appropriations and deposited in the Treasury in a special account. The lira actually expended are procured from a common allied pool. The ultimate disposition of the dollar equivalents deposited in the special deposit account is therefore dependent upon the terms of subsequent international agreements involving reparations and other allied settlements.

RECRUITING EXPENSE AND EDUCATION AND TRAINING

Mr. SNYDER. Turn to page 465, please, pertaining to recruiting expense. Is the number of Air Corps Reserve recruits correctly stated?

General MCKINLEY. That is the program.

Mr. SNYDER. The educational and training project was pretty well explained here yesterday by General Weible and others. I notice an item here, however, of $12,000,000 for a nonmilitary training program. Will Will you tell us about that, please.

General McKINLEY. That is the other item of the training program about which we spoke previously. The first item was for $5,000,000. Those two items make up the $17,000,000 referred to previously.

HORSES, DRAFT AND PACK ANIMALS

Mr. SNYDER. I understand Colonel Carr is here to testify on the estimate under the head of horses, draft and pack animals.

Colonel CARR. Yes, sir.

Mr. SNYDER. The estimate is $100. What are you going to do with that money?

Colonel CARR. That is a bookkeeping entry to keep the appropriation alive.

Mr. SNYDER. How much do you expect to have available, Colonel? Colonel CARR. $1,047,000.

Mr. SNYDER. You have had available this year $4,762,506, and we have been advised that your obligations are not expected to exceed $1,962,506. Is that right?

Colonel CARR. Yes, sir.

Mr. SNYDER. What has happened?

Colonel CARR. Fewer animals are being used than expected.

Mr. SNYDER. Did we not ship a lot of horses out of the United States to the battle fronts?

General GREGORY. Not to my knowledge.

Colonel CARR. There were some horses purchased in Australia, we understand.

Mr. SNYDER. We are using horses in China, are we not?

General MCKINLEY. They are purchased locally out of this appropriation. All of the animals secured overseas that are not provided on reverse lend-lease are purchased out of this appropriation.

Mr. SNYDER. What are the main subdivisions of the estimates, and the amounts for each?

Colonel CARR. There is $983,583 for purchase of animals and $63,517 for breeding operations.

Mr. SNYDER. How is the purchase money to be employed?

Colonel CARR. The larger item of $983,583 is to purchase 4,278 mules.

Mr. SNYDER. What is the authorized strength of pack and riding mules?

Colonel CARR. Twelve thousand six hundred and twenty-nine.
Mr. SNYDER. What is the actual strength?

Colonel CARR. Thirteen thousand four hundred and twenty-seven as of January 1, 1944.

Mr. SNYDER. Is not your attrition estimate rather high?

Colonel CARR. No, sir. The rate in the theater of operations is much higher than in the zone of the interior.

Mr. SNYDER. You are not planning to buy any horses, Colonel Carr?

Colonel CARR. No, sir.

Mr. SNYDER. Suppose we insert this table on page 500.

(The table referred to is as follows:)

Mr. SNYDER. I think we might put in, also, the statement pertaining to stallions.

(The statement referred to is as follows:)

Mr. SNYDER. You expect to buy 71 stallions?

Colonel CARR. Yes, sir.

Mr. SNYDER. And that number, you feel, will enable you to maintain the 600 objective?

Colonel CARR. Yes, sir.

Mr. SNYDER. General Gregory, do these items we have been considering accord with your submissions to the Budget?

General GREGORY. No, sir; not exactly.

Mr. SNYDER. What were the Budget cuts, and what will be the effect?

General GREGORY. The total Budget cuts amounted to $213,665,315. Of this amount $39,115,052 represented taxes and $388,932 represented increased postage costs provided in the recent revenue act. Exclusive of the increased costs occasioned by the revenue act the cuts amounted to $174,161,331.

SUPPLIES AND FACILITIES FOR SOLDIER VOTING

Mr. MAHON. General, is provision made in here for the purchase of supplies and facilities for the voting of soldiers in continental United States and overseas?

General GREGORY. Currently we are purchasing envelopes for ballots from the regular suplies appropriation.

Mr. MAHON. It is being done out of the 1944 appropriations?
General GREGORY. Yes, sir.

Mr. SNYDER. General Gregory, unless you have something to add, I should say that covers the items under your cognizance.

I want to thank you, General, and these splendid officers who have come with you, for the fine presentations that have been made.

General Somervell made a statement here the other day about the tasks and accomplishments of the Army Service Forces. It was a great compliment to each component of his command, and he could not have made it without the fine contribution of your corps, of which we are well aware and are proud.

General GREGORY. Thank you.

TUESDAY. MAY 16, 1944.

TRANSPORTATION SERVICE, ARMY

STATEMENT OF MAJ. GEN. C. P. GROSS, THE CHIEF OF TRANSPORTATION, ACCOMPANIED BY COL. J. F. MITCHELL, JR., AND CAPT. GUSTAVE JAY, JR., TRANSPORTATION SERVICE

Mr. SNYDER. We have a new item here in a sense under the head of "Transportation service, Army." It seems to be a consolidation of certain activities formerly appropriated for under the Quartermaster Corps and the Corps of Engineers.

General Gross, this is administered by you, I believe?

General GROSs. It is. It is not new in the sense that it has happened within the last year. The change was made in early March of 1942.

Mr. SNYDER. General Gregory has informed us that the change is already in effect; that it became effective, in part at least, on March 9, 1942. What is the authority for the change, General? The law prescribes rather definitely the duties of the Quartermaster General. General GROSS. You refer to the National Defense Act of 1920 when you speak of the law. But under the War Powers Act the President issued an Executive order in which he authorized the reorganization of the Army and the transfer of functions within the War Department. Based upon that Executive order the War Department issued orders creating the Army Service Forces. Within the Army Service Forces there was organized a transportation service which later became a corps to take over all transportation functions.

Mr. SNYDER. Do you think over-all, it was a good thing, as it has developed?

General GROSS. I think without question it was, it enabled us to take advantage of the lessons learned in World War I.

You remember that in the World War we had overseas the Motor Transport Corps, the Rail Transportation Corps, and also the Army Transport Service which was the water end of it; and that just about the time of the armistice the plan was to integrate all those agencies and services, into one service. However, the armistice came and that was never done.

In this country the Quartermaster General initially handled transportation. Then better to meet the situation, General Goethals was made head of the Purchase, Storage, and Traffic Division. The railroads practically collapsed and were taken over by Mr. McAdoo. We had no organization in this country to integrate our transportation here with that overseas. We had congestion on our rails and at our ports.

In this war, based upon those lessons, we formed a Transportation Corps in the United States that integrated transportation from the point of origin to the overseas destination.

As it is now, the Transportation Corps handles the job from points of origin to the points of debarkation overseas. There it provides the port battalions, the railroad battalions to carry on the task from the ports of debarkation forward. The Transportation Corps takes a man and his equipment and supplies from his post or camp in the United States to his final destination overseas.

For the first time we have an integrated corps that is fast, flexible, and responsive to the desires of the overseas commander. Mr. POWERS. And it is working?

General GROss. It has worked and is working. All of our ports are very fluid. There has been no real congestion. We are constantly meeting emergency requests from theater commanders all over the world with top speed.

Mr. SNYDER. We, and other laymen marvel at the smooth and efficient transportation of this huge amount of supplies for the Army over our roads, through the air, on railroads, and over public highways. I should judge from what you have said if you had not done something like that at the very beginning it would not have been possible to have had such smooth movement of this huge amount of transportation.

General GROSS. I think that is definitely so. If we had not integrated our operations from beginning to end, with this huge amount of transportation, we could not have obtained such a result. By our system of traffic control we have prevented any tie-ups. The cooperation between the parent organization here and the Chiefs of Transportation overseas brings about a smooth, orderly flow from points of origin to final destination.

OPERATIONS OF TRANSPORTATION CORPS

Mr. SNYDER. Proceed in your own way and indicate just what functions the proposed separate appropriation embraces, and why a separate appropriation is advocated.

General GROSS. Mr. Chairman and members of the committee, it is a pleasure to appear before you to present the estimate of the Transportation Corps for the fiscal year 1945.

I have prepared this brief formal statement which I hope will give you an insight into the operations of the Transportation Corps. Because many facts are of a secret nature, I have brought with me certain charts that I would like to show, but which should not be made part of the published record.

There has been incorporated in the fiscal year 1945 estimate now before you a request for a separate appropriation, title "Transportation Service, Army." The Transportation Corps was organized July 31, 1942, in accordance with War Department General Order No. 38, and now numbers approximately 20,000 officers, 220,000 troops and 108,000 civilians, including marine personnel, who operate transportation facilities and equipment in the continental United States and in all overseas theaters. Since that date, this corps has operated completely independent of other technical services, except for the appropriation which is still part of the appropriation "Supplies and transportation," which includes Quartermaster activities.

I am most desirous of having this separate appropriation for the Transportation Corps. A separate appropriation will greatly contribute toward facilitating Transportation Corps reports of expenditures, which at the present time become very confused with Quartermaster reports of expenditures, since both bear the identical appropriation symbol number. Many of the reports from field installations show an intermingling of Quartermaster and Transportation Corps funds, and portray an incorrect picture of both obligations and