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I believe that it would facilitate understanding of these estimates if I mention briefly certain areas in which they are intended to improve, at least partially, our military posture. These areas are those involving strengthening of our combat forces and equipping our troops with the most modern equipment. At the start of hostilities in Korea there were 10 divisions in the Army's troop basis. However, with the exception of two, these divisions had an authorized strength considerably below that provided in Tables of Organization. In the Far East Command each infantry regiment except one was short an infantry battalion, or a total shortage of 11 in the 4 divisions in Japan. There was also a shortage of 11 field artillery firing batteries in those divisions. Army-wide, including the Far East Command, insufficient combat and service support units were available to back up our divisions and sustain them in combat. Shortages in numbers of units were aggravated further by the Army being 40,000 under its budgeted strength of 630,000.

Because of a rapidly changing concept of the steps that should be taken, it was necessary to develop by increment the estimates of funds necessary to improve the Army's unit and equipment status and to enable it to carry on operations in Korea.

I have a chart which I have prepared which I believe will be helpful in understanding the procedure which was followed. On the chart the black indicates the amount of the regular 1951 estimate; and the rest of the chart indicates the additions to it.

On July 6 the JCS recommended to the Secretary of Defense that the Army strength be increased. A few days later they recommended an additional increase. This total increase was approved by the Secretary of Defense and the President and is shown on the chart under the heading "Expanded Army." The explicit purpose for which these spaces were provided are as follows: To bring Army units now in FECOM to war strength; to bring to full strength those units in ZI being shipped to FECOM; to replace in the general reserve the units shipped overseas. This includes activating an additional division, bringing the total to 11; to provide for the activation of two additional replacement training divisions; additional spaces to provide a steady flow of replacements to the combat area.

The fund requirement for this increase is $495,000,000. This includes all maintenance and operation costs connected with this personnel. It provides for only limited major procurement.

The next subdivision on the chart pertains to the support of the forces operating in Korea.

The supplemental estimate provides for logistic support of these forces including supply of equipment, ammunition, food, clothing, medical care, transportation, communications and everything else needed to sustain them in combat. The estimates also provide for replacement of critical items withdrawn from our present reserve stocks. The fund requirement for this increment is estimated at $1,743,000,000.

The final increment identified on the chart as "Expended Army, third incremento provides for an additional augmentation of Army strength and the logistic support incident thereto.

Fund requirements for this increment are estimated at $832,000,000. Referring to the other side of the chart I shall show the areas in which the Army expects to spend the funds requested. The area shown in black indicates the funds in the regular fiscal year 1951 appropriation. The hachured segment of the bar indicates the increase provided in the supplemental estimates.

MAINTENANCE AND OPERATION

The first item is in the field of maintenance and operation which covers generally costs incident to the use of forces in carrying out assigned missions, including costs of modification and repair of equipment and facilities and costs necessary to maintain them in serviceable condition or to restore them to serviceability. $885,000,000 is to be utilized in this area. This amount will provide for: (a) Activation and operation of two additional replacement training centers; (6) overhaul and rebuilding of equipment to replace combat losses and to equip units to be deployed to the Far East command; (c) renovation of ammunition to fulfill combat needs and increase training requirements; (d) acceleration of production scheduled through contracts with private industry; (e) increase in depot operations due to the expansion of the Army and activities in support of the Korean task force and an increase in supply levels from zone of the interior depots to depots in Korea; (f) increase in communication services incident to augmentation of the Army and supply of the task force; (g) increase in zone of the interior and ocean transportation due to augmentation of forces in the Far East and increased tonnages to support combat operations; (h) increase to permit maximum utilization of indigenous labor in Japan and Korea to support the Korean task force.

MILITARY PERSONNEL COSTS

The supplemental estimate for “Category I, military personnel costs,” is $475,269,489. Military personnel costs include costs for all Regular officers and enlisted personnel, Reserves on extended active duty with Regular forces and Reserves on continuous active duty for training Reserve forces. These costs include “Pay and allowances, “Subsistence," "Individual clothing," "Permanent change of station travel,” and other military personnel activities such as "Welfare and morale.” The supplement will provide for:

(a) An increased Army strength.

(6) Increased cost of combat field and operational rations, issue of combat items, and combat losses.

(c) Current increased cost of subsistence, increase in subsistence pipeline for the Korean task force and operational costs of increased subsistence sales.

(d) Disposition of remains of deceased personnel.

In connection with military personnel costs, this next chart indicates the deployment of our military personnel at the time the trouble started and what we expect it to be after we have built up FECOM to the strength now believed necessary to accomplish our purposes in Korea.

MAJOR PROCUREMENT AND PRODUCTION

For “Category III, major procurement and production," the supplemental requirement is estimated at $1,650,000,000. We group in this category costs of acquisition of items of particular planning or budget significance. Costs include those resulting from procurement contracts, orders placed with other governmental agencies, and labor, material, and overhead for production accomplished in Government arsenals.

It may be noted that the greatest proportionate increase in funds is evident in this area. The amount requested will provide: (a) For purchase of equipment not now available for units operating in or destined for deployment to the Far East Command; () for replacement of combat losses of critical items of equipment where such losses are in excess of normal peacetime consumption; (c) funds for expediting production; (d) approximately $490,000,000 for modernization of equipment.

This is the first opportunity that the Army has had since World War II to make perceptible progress in this important field. Now we are faced with an old-fashioned conventional type of war that is somewhat different from that anticipated and our ground forces are carrying the brunt of it—not only outnumbered but temporarily outgunned. A major effort financially and industrially is required to overcome our deficiencies.

I have had prepared a chart which shows a further breakdown of the dollar requirements for certain major items in this category. These requirements are as follows: Subcategory:

Thousands of dollars C. Combat vehicles and artillery--

753, 554 E. Ammunition and guided missiles-

414, 677 Expediting production

125, 000 I. Railway, construction and heavy materials handling equipment

96, 444 F. Electronics and communications_

87, 655 G. Vehicle (noncombat).

55, 783 B. Ships and harbor craft.

44, 256 A. Aircraft

36, 087 Accelerating production in ordnance facilities_

25,000 D. Weapons

7, 478 H. Special training equipment--

4, 289 Total_

1, 650, 223 The funds requested will not be sufficient, however, completely to re-equip the Army.

CIVILIAN COMPONENTS

For category V, civilian components, the cost of additional requirements included in the supplemental request are estimated at $33,154,000. This amount will provide: (a) Additional week-end training of National Guard units (for the purpose of qualifying an estimated 70 percent of individuals in small arms firing) and for an acceleration of school training programs; (b) an increase in the number of ORC units receiving 48 drills per year and an increase in active duty training and administrative support; (c) $9,000,000 is included for the Reserve Officers Training Corps to provide for pay, allowance, and administration of an additional 28,750 basic and an additional 9,000 advanced students.

RESEARCH AND DEVELOPMENT AND INDUSTRIAL MOBILIZATION

In categories VI and VII, research and development and industrial mobilization, the Army has a number of very high priority requirements. No money is included for those items in the Army budget, since it is understood that a lump-sum appropriation for activities in these fields will be made to the Secretary of Defense, with later allocations to the services to meet their demonstrated needs. The over-all importance of these activities is so great that close coordination by agencies of the Office of the Secretary of Defense is necessary in order to insure the best use of funds which can be made available.

ESTABLISHMENT-WIDE ACTIVITIES

For category VIII, establishment-wide activities, the supplemental amount requested will provide: (a) Contingency items totaling $10,000,000, of which an allocation of $5,000,000 has already been made to the Commander in Chief, Far East; (6) $4,585,000 for accelerated production and distribution of military maps and supporting operations incident thereto; (c) $599,000 for an expanded Armed Forces information and education program resulting from strength augmentation of the services.

In addition to these amounts I have discussed, there is included in the supplemental Army estimate a total of $4,393,000 for the Alaska Communication System. This is a civil works item but is presented at this time because of its importance militarily.

In summary, I wish to point out that the Army is now carrying out a greatly expanded program in order to provide the necessary support of our operations in Korea. Our estimates are conservative, but it is considered that they are adequate for the present. An acceleration of programs, or increase in the scope of the operations to be undertaken will require a recomputation of our requirements.

There are present with me today representatives of the Army General Staff who are prepared to give you such additional detailed information as you may desire in connection with their particular field. Later the heads of the various estimating agencies will appear. I am personally grateful to the members of the committee for affording me this opportunity to appear before them. Thank you.

Mr. Mahon. That is a very excellent over-all statement, I think, General.

Of course, these categories are rather broad and the funds rather large. In order to get the real picture we will have to go deeper into the various categories.

BASIS OF COMPUTING SUPPLEMENTAL ESTIMATE

I would like to ask you to tell us how this budget was put together. In other words, if this budget is on a firm basis, it is entitled to be a real guidepost for us in this bill. If it is just thrown together in a haphazard way it may not be worthy of as much credence as we otherwise might give it.

General DECKER. Yes, sir.

Mr. MAHON. I realize that you have been working on a timetable which has made it impossible for you to do as thorough a job of

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calculations as you might otherwise have done. I do not see how you could have arrived at some of these figures without more or less blocking things off and making some guesses.

Just tell us how you arrived at the various figures for the various purposes such as maintenance and operation, military personnel, major procurement and production, civilian components, research and development, and so forth. How did you come up with those figures?

General DECKER. The guides that we had to follow were, of course, the decisions reached by the Joint Chiefs of Staff, approved by the Secretary of Defense and the President. There were certain assumptions that had to be made in connection with the development of the estimates.

Insofar as the increases in strength are concerned—that has to do with military personnel—that is figured on a purely mathematical basis. So many men will cost you so much money insofar as pay and subsistence are concerned. Those are fixed figures.

However, when you get into the field of computing the costs of the operations in Korea those must be based on an estimate of what those forces will be and what the operations are that will be conducted.

In that connection we have followed the guidance of the Joint Chiefs of Staff.

If I may, I would like to go off the record for a minute.
(Discussion off the record.)

Mr. ENGEL. In the final analysis, however, you based your require-
ments upon the recommendations of those unit commanders in the
field who were actually carrying on the combat operations; is that
right?
(Discussion off the record.)

General DECKER. Insofar as the funds requested for major procurement and production are concerned, we have tried to bring about a certain improvement in the equipment status of the Army.

RATE OF MODERNIZATION OF EQUIPMENT

As I have pointed out in my introductory statement, this does not provide completely for the equipping of the Army, but it takes a good step forward in giving us this new equipment which we should have if our Army is to be brought up to a better state of combat readiness.

Mr. MAHON. In other words, since the end of hostilities you have bought very little modern equipment for the Army?

General DECKER. If I may give you an example of that, sir, in fiscal years 1949, 1950, and 1951 there was approximately $8,800,000,000 appropriated for the Armed Forces for major procurement. Of that the Army got about 10 percent, or $800,000,000. That is what we have had to use in modernizing our equipment.

We have made certain progress in that field, but it has been far below what should have been made to bring our Army to the stature it should be.

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