such appropriation as a result of any such transfer. To the extent that such methods do not, in the determination of the Secretary of Defense, provide adequate amounts of working capital, there is hereby authorized to be appropriated, out of any moneys in the Treasury not appropriated for other purposes, such sums as may be necessary to provide adequate working capital.

"(e) Subject to the authority and direction of the Secretary of Defense, the Secretaries of the military departments shall allocate responsibility within their respective military departments for the execution of functions which each military department is authorized by law to perform in such a manner as to effect the most economical and efficient organization and operation of the activities and use of the inventories for which working-capital funds are authorized by this section. "(f) No greater cost shall be incurred by the requisitioning agency for stores, supplies, materials, or equipment drawn from inventories, and for services rendered or work performed by the industrial-type or commercial-type activities for which working-capital funds are authorized by this section, than the amount of appropriations or funds available for such purposes.

"(g) The Secretary of Defense is authorized to issue regulations to govern the operation of activities and use of inventories authorized by this section, which regulations may, whenever he determines the measures set forth in this subsection to be required by the needs of the Department of Defense, and when they are authorized by law, permit stores, supplies, materials, and equipment to be sold to, and services to be rendered or work performed for, purchasers or users outside the Department of Defense. In such cases, the working-capital funds involved may be reimbursed by charges against appropriate appropriations or by payments received in cash.

"(h) The appraised value of all stores, supplies, materials, and equipment returned to such working-capital funds from any department, activity, or agency, may be charged to the working-capital fund concerned and the proceeds thereof shall be credited to the current appropriations concerned; the amounts so credited shall be available for expenditures for the same purposes as the appropriations credited: Provided, That the provisions of this subsection shall not permit credits to appropriations as the result of capitalization of inventories authorized by subsection (d) of this section.

"MANAGEMENT FUNDS

"SEC. 408. The Act of July 3, 1942 (56 Stat. 645, c. 484), as amended, is hereby further amended to read as follows:

"(a) For the purpose of facilitating the economical and efficient conduct of operations in the Department of Defense which are financed by two or more appropriations where the costs of the operations are not susceptible of immediate distribution as charges to such appropriations, there are hereby established the Navy Management Fund, the Army Management Fund, and the Air Force Management Fund, each within, and under the direction of the respective Secretaries of, the Departments of the Navy, Army, or Air Force, as the case may be. There are authorized to be appropriated from time to time such funds as may be necessary to accomplish the purposes of the funds.

"(b) The corpus of the Navy Management Fund shall consist of the sum of $1,000,000 heretofore transferred to the Naval Procurement Fund from the Naval Emergency Fund (17X0300), which amount, and all balances in, and obligations against, any accounts in the Naval Procurement Fund, are hereby transferred to the Navy Management Fund; the corpus of the Army Management Fund shall consist of the sum of $1,000,000, which shall be transferred thereto from any unobligated balance of any appropriation available to the Department of the Army; the corpus of the Air Force Management Fund shall consist of the sum of $1,000,000, which shall be transferred thereto from any unobligated balance of any appropriation available to the Department of the Air Force; in each case together with such additional funds as may from time to time be appropriated to any of said funds. Accounts for the individual operations to be financed under the respective management funds shall be established only upon approval by the Secretary of Defense.

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“‘(c) Expenditures may be made from said mangement funds from time to time for material (other than material for stock) and for personal and contractual services, under such regulations as may be prescribed by the Secretary of Defense: Provided, (1) That no obligation shall be incurred against any such fund which is not properly chargeable to available funds under an appropriation of the department within which the funds is established or, whenever necessary to effectuate purposes authorized by this Act, as amended, to funds of another department or agency within the Department of Defense, and (2) that each

fund shall be promptly reimbursed from the appropriate appropriations of such department for all expenditures properly chargeable thereto. Nothing herein or in any other provision of law shall be construed to prevent advances by check or warrant, or reimbursements to any of said management funds from appropriations of said departments on the basis of the estimated cost of a project such estimated cost to be revised and necessary appropriation adjustments made when adequate data become available.

"(d) Except as otherwise provided by law, amounts advanced to the management funds under the provisions of this Act shall be available for obligation only during the fiscal year in which they are advanced: Provided, however, That nothing contained in this Act shall alter or limit the authorized period of availability of the funds from which such advances are made. Final adjustments of advances in accordance with actual costs shall be effected with the appropriate funds for the fiscal year.

"(e) The portion of the Naval Appropriation Act, 1945 (58 Stat. 301, 310), relating to the Naval Procurement Fund is hereby repealed.'

"ADJUSTMENT OF ACCOUNTS

"SEC. 409. (a) When under authority of law a function or an activity is transferred or assigned from one department or agency within the Department of Defense to another such department or agency, the balances of appropriations which are determined by the Secretary of Defense to be available and necessary to finance or discharge the function or activity so transferred or assigned may, with the approval of the President, be transferred to, and be available for use by, the department or agency to which said function or activity is transferred or assigned for any purpose for which said funds were originally available. Balances so transferred shall be credited to any applicable existing appropiration account or accounts, or to any new appropriation account or accounts, which are hereby authorized to be established on the books of the Treasury Department, of the department or organization to which such function or activity is transferred, and shall be merged with funds in the applicable existing or newly established appropriation account or accounts and thereafter accounted for as one fund. Balances transferred to existing accounts shall be subject only to such limitations as are specifically applicable to such accounts and those transferred to new accounts shall be subject only to such limitations as are applicable to the appropriations from which they are transferred.

"(b) The number of employees which in the opinion of the Secretary of Defense is required for such transferred functions or activities may, with the approval of the Director of the Bureau of the Budget, be deducted from any personnel maximum or limitation of the department or agency within the Department of Defense from which such function or activity is transferred, and added to any such personnel maximum or limitation of the department or agency to which such function or activity is transferred.

"AVAILABILITY OF REIMBURSEMENTS

"SEC. 410. To carry out the purposes of this Act, reimbursements made under the authority of the Economy Act (31 U. S. C. 686), and sums paid by or on behalf of personnel of any department or organization for services rendered or supplies furnished, may be credited to authorized replacing or other accounts. Funds credited to such accounts shall remain available for obligation for the same period as the funds in the account so credited and each such account shall constitute one fund on the books of the Treasury Department.

"COMMON USE OF DISBURSING FACILITIES

"SEC. 411. To the extent authorized by the Secretary of Defense, disbursing officers of the Departments of the Army, Navy, and Air Force may, out of accounts of advances available to them, make disbursements covering obligations arising in connection with any function or activity of any other department or organization within the Department of Defense and charge upon vouchers the proper appropriation or appropriations of the other department or organization: Provided, That all said expenditures shall subsequently be adjusted in settlement of disbursing officers' accounts.

"REPORTS OF PROPERTY

"SEC. 412. The Secretary of Defense shall cause property records to be maintained in the three military departments, so far as practicable, on both a

quantitative and monetary basis, under regulations which he shall prescribe. Such property records shall include the fixed property, installations, and major items of equipment as well as the supplies, materials, and equipment held in store by the armed services. The Secretary shall report annually thereon to the President and to the Congress.

"REPEALING AND SAVING PROVISIONS

"SEC. 413. All laws, orders, and regulations inconsistent with the provisions of this title are repealed insofar as they are inconsistent with the powers, duties, and responsibilities enacted hereby: Provided, That the powers, duties, and responsibilities of the Secretary of Defense under this title shall be administered in conformance with the policy and requirements for administration of budgetary and fiscal matters in the Government generally, including accounting and financial reporting, and that nothing in this title shall be construed as eliminating or modifying the powers, duties, and responsbilities of any other department, agency, or officer of the Government in connection with such matters."

MISCELLANEOUS AND TECHNICAL AMENDMENTS AND SAVING PROVISIONS

SEC. 11. (a) The National Security Act of 1947 is amended by striking out the term "National Military Establishment", wherever it appears in such Act, and inserting in lieu thereof "Department of Defense".

(b) Section 207 (a) of the National Security Act of 1947 is amended to read as follows:

"SEC. 207. (a) Within the Department of Defense there is hereby established a military department to be known as the Department of the Air Force, and the Secretary of the Air Force who shall be the head thereof. The Secretary of the Air Force shall be appointed from civilian life by the President by and with the advice and consent of the Senate."

(c) Section 207 (b) of the National Security Act of 1947 is repealed.

(d) The first sentence of section 208 (a) of the National Security Act of 1947 is amended by striking out the word "under" and inserting in lieu thereof the word "within".

(e) Section 308 (b) of the National Security Act of 1947 is amended to read as follows:

"(b) As used in this Act, the term 'Department of Defense' shall be deemed to include the military departments of the Army, the Navy, and the Air Force, and all agencies created under title II of this Act."

(f) The titles of the Secretary of Defense, the Secretary of the Army, the Secretary of the Navy, the Secretary of the Air Force, the Under Secretaries and the Assistant Secretaries of the Departments of the Army, Navy, and Air Force, the Chairman of the Munitions Board, and the Chairman of the Research and Development Board, shall not be changed by virtue of this Act, and the reappointment of the officials holding such titles on the effective date of this Act shall not be required. It is hereby declared to be the intention of Congress that section 203 (a) of the National Security Act of 1947, as amended by section 5 of this Act, shall not be deemed to have created a new office of Deputy Secretary of Defense but shall be deemed to have continued in existence, under a new title, the Office of Under Secretary of Defense which was established by the Act entitled "An Act to amend the National Security Act of 1947 to provide for an Under Secretary of Defense", approved April 2, 1949 (Public Law 36, Eighty-first Congress). The title of the official holding the Office of Under Secretary of Defense on the effective date of this Act shall be changed to Deputy Secretary of Defense and the reappointment of such official shall not be required.

(g) All laws, orders, regulations, and other actions relating to the National Military Establishment, the Departments of the Army, the Navy, or the Air Force, or to any officer or activity of such establishment or such departments, shall, except to the extent inconsistent with the provisions of this Act, have the same effect as if this Act had not been enacted; but, after the effective date of this Act, any such law, order, regulation, or other action which vested functions in or otherwise related to any officer, department, or establishment, shall be deemed to have vested such function in or relate to the officer or department, executive or military, succeeding the officer, department, or establishment in which such function was vested. For purposes of this subsection the Department of Defense shall be deemed the department succeeding the National Military Establishment, and the military departments of Army, Navy, and Air Force shall be deemed the departments succeeding the Executive Departments of Army, Navy, and Air Force.

MAY 12 (legislative day, APRIL 11), 1949.-Ordered to be printed

Mr. TYDINGS, from the Committee on Armed Services, submitted the following

REPORT

[To accompany S. 1843)

The Committee on Armed Services, having had under consideration amendments to the National Security Act of 1947, report favorably a bill (S. 1843) to convert the National Military Establishment into an executive department of the Government, to be known as the Department of Defense; to provide the Secretary of Defense with appropriate responsibility and authority, and with civilian and military assistance Vadequate to fulfill his enlarged responsibility; and for other purposes, and recommend that it do pass.

I. INTRODUCTION

Development of the National Security Act of 1947

From the beginning of the discussions conducted by the Woodrum committee in 1944, it has been apparent that our postwar system of national security is a matter of deep concern to the public, the Congress, and the military services. Such widespread awareness of the importance and gravity of this question of a sound organization for our armed forces was a natural outgrowth of the impact on the national consciousness of a long and bitter war. World War II demonstrated with startling clarity that the demands of modern warfare call for a far tighter integration of all phases of national effort than was the case in World War I. In no field of our prodigious wartime endeavor had this need for unity of effort been more apparent than in the operations of the armed forces themselves. Throughout the period of actual hostilities each succeeding year emphasized with increasing clarity the fact that the conducting of successful combat operations required a degree of coordination among the Nation's land, sea, and air forces that was far beyond anything which had been required before. Fortunately, under the stress of the most trying

conditions, during which the very existence of the Nation was imperiled, our armed forces were able to develop wartime operating procedures which were sufficiently integrated to bring about the total defeat of all hostile military forces.

With the end of active hostilities it became apparent that the statutory organization for national security under which the Nation had previously operated needed extensive revamping lest in the relative apathy of peace it revert to its antiquated prewar structure and the invaluable lessons learned during the stress of combat be lost.

It was against this background of war experience that the discussions originally begun in 1944 were continued during the succeeding years, with the result that the more basic issues began to identify themselves clearly, and the areas of disagreement became more apparent. There was general agreement that our postwar military organization should be built around a tightly knit core of land, sea, and air power. The difficulty lay, not in determining whether, but how closely, these three major branches of our military strength should be integrated.

On the one hand many persons, civilian as well as military, having impressive ability and broad experience, advocated an outright merger of the services. On the other hand, a very substantial number of individuals, having equally impressive ability and experience, advocated a much less drastic course of action and suggested that the solution to this very complex problem lay in a plan of voluntary coordination among the Army, Navy, and Air Force. In the face of such widely differing opinions, it is not strange that over 3 years elapsed before an acceptable solution was formulated, and the National Security Act of 1947 was enacted into law. This act was admittedly a compromise between the two extremes of opinion, but it was regarded at the time as the most suitable basis upon which to build for the future. The declaration of policy which appears in section 2 of that act is so fundamental to the basic concept of the statute as to merit quoting it at this point.

In enacting this legislation, it is the intent of Congress to provide a comprehensive program for the future security of the United States; to provide for the establishment of integrated policies and procedures for the departments, agencies, and functions of the Government relating to the national security; to provide three military departments for the operation and administration of the Army, the Navy (including naval aviation and the United States Marine Corps), and the Air Force, with their assigned combat and service components; to provide for their authoritative coordination and unified direction under civilian control but not to merge them; to provide for the effective strategic direction of the armed forces and for their operation under unified control and for their integration into an efficient team of land, naval, and air forces

A significant provision of the declaration of policy is that the three military departments of the Army, the Navy, and the Air Force shall retain their identity and shall be administered on a departmental

basis.

Operation of the 1947 act

Most students of the problem of unifying the armed forces have felt that the process is basically one of evolution and will take considerable time to reach full fruition. Further, they are in general