GENERAL STATEMENT OF THE SECRETARY OF NAVY

Secretary MATTHEWS. Mr. Chairman and members of the committee, my purpose in appearing before you this morning is to present the estimates for the Navy's supplemental budget for 1951. Their consideration by you will necessitate the exercise of the trained judgment which your long experience as members of this important committee has placed at your command. It is fortunate for the country that the conclusions to be made shall be the product of such wellseasoned thinking as this committee is capable of directing toward the statements to be submitted to you.

When I appeared before you in February of this year to initiate the presentation of the 1951 fiscal-year budget, I said that the estimates then presented represented the best balance of programs we could achieve under the dollar ceiling necessarily established by a proper respect for the limitations imposed by a prudent regard for our national economy. I also indicated that the operating forces and the support programs suggested for maintenance were, in the opinion of our professional military personnel, below those essential to meet mobilization requirements in the event of an emergency. knew that the acceptance of those estimates at that time involved a certain recognized calculated risk.

The impact of the serious events that have since occurred in Korea has forcibly driven home the reality of that risk. We are now asking you to consider the Navy's supplemental estimates as an initial increment to increase our military readiness to bridge the gap between our world-wide responsibilities and our strength to discharge them. The action of the North Koreans calls for the discharge of a difficult task, new in very important respects to American tradition. The United States is confronted with the greater share of the stupendous task of keeping order in the present distracted world. It involves using our military power under the United Nations to enforce the peace, even at great distances from our shores under extremely adverse conditions. It will not be effected by spasmodic or intermittent efforts. A continuous, judicious application of adequate military power in behalf of peace must be invoked. A modern Navy, with men, and ships, and the very best of all kinds of weapons, on the sea, under the sea and in the air, is a vital element of that power.

The Navy's requested supplemental budget will maintain the Navy and the Marine Corps in the Korean area on a wartime basis, and the remainder of the Navy on a peacetime basis with substantially increased readiness. Procurement will be based on peacetime rates except in Korea. Critical items of equipment now being used in the Navy will be promptly replaced.

The total new obligating authority requested in this supplemental estimate is $2,648,000,000, which, when added to the $4,076,000,000 in the Senate bill, will total $6,724,000,000 new obligating authority for the fiscal year 1951.

I will be followed by the professional and technical authorities of the Navy and Marine Corps who will discuss the plans for operating forces, and by other witnesses who will explain the details of manpower, equipment, and funds needed to support the operations. I shall discuss some general matters affecting the naval budget.

MILITARY PERSONNEL

The estimates before you provide for an average of 508,328 active personnel in the Navy and 118,561 active personnel in the Marine Corps.

In order to reach this average with men of proper training, selected personnel and units of our Naval and Marine Corps Reserve are being called to duty with the Regular forces. To maintain our Reserve forces at our 1951 planned strength, we will rebuild with volunteers.

SHIPS AND SHIPBUILDING

The combatant ships will be increased from 243 in the fiscal year 1951 budget by 39 to a new total of 282 ships. The mine and patrol, auxiliary and amphibious-type ships will be increased from 386 in the fiscal year 1951 budget by 243 to a new total of 629 ships, thus bringing the over-all total of operating ships of the Navy to 911.

The shipbuilding program in this estimate contains a minimum number of ships essential to the task ahead, at an estimated cost of 185 million dollars.

AIRCRAFT

This estimate contemplates the operation of 3 additional attack carrier groups, 3 antisubmarine carrier groups, 7 patrol squadrons, 18 lighter-than-air antisubmarine blimps, and an increased pilottraining rate-1,550 pilots per year versus 1,050 pilots per year in the 1951 fiscal-year budget.

The Navy and Marine Corps Reserves will operate about the same number of aircraft, 1,840.

The aircraft-procurement program in this estimate contemplates replacing the aircraft lost in operations in Korea, as well as estimates of losses using peacetime attrition rates in all other areas, but does not provide modernization for the Naval and Marine Corps Reserve aircraft, which I consider to be a serious deficiency. We expect to supply the estimates to correct this omission.

RESEARCH AND DEVELOPMENT AND INDUSTRIAL MOBILIZATION

The Navy has submitted its urgent needs in the research and development and industrial mobilization areas and understands that the Secretary of Defense has made the estimates available to you.

PUBLIC WORKS

The Navy has some very urgent projects in this category directly attributable to the impact of the Korean situation. Some will require legislative authority, and others additional funds to speed projects already authorized. These will be taken up with you at a later date.

In conclusion, the funds which the Navy requests are essential to support the international policy and commitments of the United States. Our Navy today is stationed at many distant places in support of these commitments. Admiral Sherman will tell you about the operating forces and how they will be used. General Čates will dis

cuss Marine Corps requirements. Admiral Hopwood will tell you about the financial aspects of the estimates. I want to assure you that the Bureau Chiefs, and any other Navy personnel whom you may wish to question, will appear before you to discuss any aspect of the estimates in which you may be interested.

Mr. MAHON. Thank you, Mr. Secretary.

I think that it would be well for us to have Admiral Sherman proceed with his statement before we have any questions.

GENERAL STATEMENT OF ADMIRAL SHERMAN

Admiral SHERMAN. As a matter of background, sir, I have had my statement prepared in two parts; one which I will read for the record and one which contains tables of essential data which I request not be incorporated into the printed record.

Mr. MAHON. We do not want anything incorporated in the record which might be injurious to our security, so you are free to be the judge as to what may be in the record, and will you please take note.

Admiral SHERMAN. In order that the committee may have a thorough understanding of the situation existing in the Navy at the beginning of this emergency, I have devoted some of the early part of my statement to a summary of the basic things that have happened in the past few years.

HISTORICAL

Demobilization occurring during the 12 months ending September 1946 brought the Navy to 3,763 ships and 500,000 enlisted men.

Further shrinkage took place from September 1946 to the spring of 1948. From the spring of 1948 to the summer of 1949 there occurred a period of moderate expansion during which plans for the operating forces were revised upward. Some of the planned increases were actually not attained. For example, the planned strength of 24 large carrier air groups for fiscal 1949 was not reached, only 16 such groups being formed.

Appropriations for fiscal 1950 involved a further shrinkage from the 1949 levels. It was decided early in fiscal 1950 to reduce during 1950 to the levels planned for 1951. Using the large carrier air groups as an example, the shrinkage was from a planned 24 groups (actually 16) to 9 such groups.

I may interject at this point that the last carrier air group that brought us from 10 down to 9 was disbanded on the 24th of June and by the 25th the pilots were spread all over the United States.

Thus, at the time of preparation of the fiscal 1951 budget, the Naval Establishment had gone through a year of demobilization, a year and a half of shrinkage, a year of moderate expansion, and a period of rapid cut-back.

PREPARATION OF FISCAL 1951 BUDGET

The following policies were promulgated by the Secretary of the Navy on September 23, 1949, as guidance in preparation of the 1951 budget:

(a) Within the limitations imposed by budgetary and manpower ceilings every effort will be made to maintain the operating forces of the Naval Establishment in the highest possible degree of readiness for the immediate execution of the roles and missions which have been assigned as the principal responsibility of the Navy.

(b) In the expenditure of manpower and funds, maintaining the readiness of active naval forces to accomplish the Navy part of the national basic undertaking and defensive tasks common to all war plans and to initiate the Navy's offensive work under currently approved strategic concepts is paramount. Expenditures for the shore establishment must be the minimum required to provide absolutely essential support for the active fleet and for early, high-priority mobilization requirements. All other expenditures in support of mobilization requirements must be subordinated to the foregoing.

(c) All shore activities not essential for the peacetime support of the operating forces, for approved research and development projects, and for early mobilization requirements must be completely inactivated and, if possible, eliminated.

(d) All shore activities presently inactivated will, unless urgently needed for support of early war operations, be declared surplus and disposed of by sale, lease, or permit, with the application of the national security clause, as may be appropriate, in order to reduce the personnel required for their retention and security to a minimum.

(e) All shore activities which are presently in a maintenance status will be carefully evaluated for inactiviation and, wherever possible, disposed of, as described under paragraph (d).

(f) As a calculated risk in order to provide funds to maintain essential active naval forces, the quinquennial overhauls of all Reserve Fleet vessels will be canceled, and only docking and the work required for inactivation and preservation will be provided.

(g) All Reserve Fleet vessels will be further screened for obsolescence and for such disposal as appears appropriate under the new manpower ceiling. No further work nor funds will be expended for the maintenance of vessels so recommended for disposal.

(h) All district craft, landing craft and boats which are presently inactivated will be further screened for such disposal as appears appropriate.

(i) No Bureau of Ships alterations, Bureau of Ordnance alterations, nor other modifications to equipment or spare parts to be carried in stock will be permitted unless it is certified that the equipment or spare parts are required for installation in vessels of the active fleet and the accomplishment of the work is approved by the Chief of Naval Operations.

(j) The overhaul of aircraft engines and accessories will be maintained at the level necessary to insure flight safety and combat readiness of operating forces plus those reserve stock combat aircraft essential to meet prospective deficiencies in new production.

(k) The manufacture of equipment and spare parts will be limited to those items and amounts considered essential for the support of the operating forces. (1) The program for the rehabilitation and storage of all equipment and supplies in excess of (a) that essential for the support of the operating forces, and (b) that which, after rescreening, is reapproved to be carried as war reserve, will be canceled, and the material disposed of in accordance with existing instructions. No work nor funds will be expended on such material, except in the interest of disposal. The work and funds expended for disposal will not exceed a predetermined minimum percentage of the book value of the material.

That directive has been carried out for 9 months. In carrying out that directive, which was necessary to maintain the Navy within the funds available, our mobilization readiness was inevitably considerably impaired. The problem that we now face is the result of that directive which, parenthetically, I must say, was a good directive considering the situation under which it was issued.

THE 1951 BUDGET

The 1951 appropriations for the Navy, as passed by the House, total $3,999,590,000. The Senate committee has recommended a total of $4,075,951,000. As a result of the Korean situation and the general world situation which necessitates a higher level of naval power, a supplemental amount for the Navy of $2,648,029,000 has been recommended to the Congress. This would bring the revised 1951 budget for the Navy to $6,723,980,000.

THE INCREMENTS

Action to meet the emergency which was precipitated on June 25 has been phased in three increments which are: (1) To provide what is necessary at once in the theater of operations; (2) To replace what was committed under the first increment; and (3) To build to a longrange level of increased strength.

The supplemental amount of $2,648,029,000 which has been recommended to the Congress provides for most (not all) of what is necessary to the Navy during fiscal 1951 for these increments.

I may say that the level of forces involved in this presentation resulted from two factors.

During the spring of this year there was a study made by the Joint Chiefs of Staff in which we estimated the strength which, in our opinion, would be needed at a future date, and as to what was required in the fiscal year 1952 in order to be on our way toward this higher target for a year that I would rather not name on the record.

(Discussion off the record.)

When we were called upon to function quickly in the Far East, other increments of expansion, as represented here in the so-called first and second increments, were forced upon us.

For example, in order to support active operations of the four Army divisions and the five Air Force groups in the Far East Command, plus augmented naval forces, we had immediately to procure and activate more shipping for the military sea transport service, planning for these operations at that very great distance, which is a greater distance than any at which we operated during World War II. World War II operations started in the mid-Pacific. They gradually pushed westward, but the pipeline all the way up into the Sea of Japan is one that we planned on but never actually had to establish. We had to lay great stress in the early increment of naval expansion on these activities which were out of balance with the rest of the Navy.

It resulted in our giving our first attention to other than combat units. Immediately we were called upon to increase the strength of our amphibious force in the Pacific, which had been set during years past as lift for only one regimental combat team. We are actually engaged in building that up to assault lift for a division. The doubt as to whether or not amphibious operations are still necessary in the technique of war is now being resolved.

Early increments of expansion included the building up of the Marine Corps very quickly. Early expenditures included the cost of chartering ships and considerable work being done in private shipyards; increased activities in naval shipyards; speeding up key ships such as the carrier Oriskany, now approaching completion-the Essex