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The CHAIRMAN. Wouldn't you save on personnel, shipment, freight, storage, warehouses?

Mr. KIMBALL. You don't save on personnel. What you do is you superimpose the top structure over the three. The easy way to do it is call up between each other just the way they are doing it now. You have to get so much storage.

I want to take a survey. I am starting the thing out next week. I want to take three or four major cities and I want to see what the activities of all the three services are in that city, where can we coordinate? It is pretty hard to coordinate the thing at the top if you don't start down at the bottom. Let's take maybe Denver or Chicago or Cincinnati, let me see what the services have got there in personnel and functions, see where we can put them together. Many places we can't, but there are many places we can.

Senator KNOWLAND. Would that be like recruiting, for instance, where they might have three different or four different recruiting stations, they might put them all under one roof?

Mr. KIMBALL. That is right, or inspection, or administration, or transportation, and there are just these hundreds of functions that are public works and each of us would be going our own way.

Let's find out what we can consolidate in one area first and then we will take the second area, because the size is so large, the Navy has 360,000 civilian employees. Well, it staggers you to see these numbers of people in these different places. I said “How can we fire 20 percent of them?” I said, “Don't start doing that or you will get yourself right in the middle." If you don't approach it that way you can't make any progress.

The CHAIRMAN. That sounds like an awfully good way to go at it, to me: Take any area, city, or even function, and find out where there is overlapping and duplication, and where there can be consolidation in the interest of not only economy, but efficiency. We have got to find some way of cutting down what might be called purely administrative expenses of these departments in order that we have more money for the military end.

Mr. KIMBALL. Cut out the overhead and get production.
The CHAIRMAN. That is right.

Senator Hunt. I have always thought, Mr. Chairman, from my limited experience of the service, that the cost of paper work was tremendous. We have, for instance in the Medical Corps, hundreds and hundreds of competent surgeons, medical men, sitting in a chair doing paper work. They go in with ambitions to become or to show what good surgeons they are, internes, or what not, and the first thing you know they are stuck at a desk. Their value is just nullified by sitting there doing paper work that a $200 clerk could do.

(Discussion off the record.)

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NATIONAL SECURITY ACT AMENDMENTS OF 1949

TUESDAY, APRIL 12, 1949

UNITED STATES SENATE,
COMMITTEE ON ARMED SERVICES,

Washington, D.C. The committee met, pursuant to adjournment, at 11:20 a. m., room 212, Senate Office Building, Senator Milard E. Tydings (chairman) presiding

Present: Senators Tydings, Chapman, Johnson of Texas, Kefauver, Hunt, and Knowland.

The CHAIRMAN. We have with us this morning Kenneth Royall, Secretary of the Army, who is here at the invitation of the committee to testify on S. 1269 which, of course, is the bill to convert the National Military Establishment into an executive department of government and for other purposes.

Secretary Royall has had an opportunity to look over the bill, I am sure, before he appears here, and we will be very glad to hear his comments on this matter.

Secretary Royall.

STATEMENT OF KENNETH C. ROYALL, SECRETARY OF THE ARMY,

ACCOMPANIED BY MAJ. GEN. W. H. ARNOLD, CHIEF, BUDGET DIVISION, DEPARTMENT OF THE ARMY

Secretary ROYALL. Mr. Chairman, I have no prepared statement on the bill or on any other subject today. Before I start discussion of the bill itself, I would like to have the permission of this committee to advert very briefly to some press comments based on a report of the Hoover Commission yesterday.

The CHAIRMAN. Go ahead, Mr. Secretary.

Secretary ROYALL. That report contained criticisms of all three of the defense departments. I am sure that the Secretary of the Navy as well as the Secretary of Air would want an opportunity also to make a correction.

I know personally that some of the statements made about the other departments were not correct, but I will not undertake to go into them because I think they can do it better themselves.

As to the Army, the charges made in that report against the Army are totally incorrect. I am not going to take the time of this committee to go into it in great detail. I would like to do two things: I would first like to present to this committee and put in your record a copy of a letter written to Mr. Hoover on the 7th day of March,

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1949, which deals with this report and, second, to pick out just one instance of how erroneous the report is.

I am sure that Mr. Hoover personally, with his many responsibilities, has not had an opportunity to take this letter and compare it with the report, and I do not infer there was any intention on his part at all to misrepresent the facts or permit erroneous inferences to be drawn. He is a great supporter of national defense and a fair and high-principled American citizen.

This letter contains a request that these errors be corrected in the report before it is given publication, and, if that cannot be done, that the letter itself be affixed to the report. Neither request so far has been carried out.

The CHAIRMAN. Very well, Mr. Secretary. The letter will be made a part of the record. (The letter and attachments referred to are as follows:)

MARCH 7, 1949.. Hon. HERBERT HOOVER, Chairman, Commission on Organization of the Executive Branch of the Government,

Washington 25, D. C. DEAR MR. HOOVER: The report submitted to you on November 15, 1948, by the Committee on the National Security Organization (Eberstadt committee) has been studied carefully by the Headquarters, Department of the Army. As might reasonably be expected, on some points honest differences of opinion exist between the committee and the Department of the Army. The Department of the Army does not question or take issue on these points.

In other instances, however, it is felt that the testimony of the Army respresentatives was not properly recorded or interpreted by the committee representative. Attached hereto are 10 misstatements of fact and the comments of the Army with reference to each.

It is requested that the Report of the Committee on the National Security Organization be corrected on these 10 points or that the Army comments furnished herewith be appended to the report as an annex. Sincerely yours,

KENNETH C. ROYALL,

Secretary of the Army.

COMMENTS OF THE EBERSTADT COMMITTEE ON THE MILITARY BUDGET

COMMITTEE COMMENT

Included in the estimates submitted by the Army on August 16 for the National Guard was an item of $529,000,000 for the purchase of 1,567 M46 tanks. Investi. gation showed that a major part of the money was wanted for retooling the industry to produce tanks, this despite the fact that the Ordnance Department secured permission from Congress in 1946 to retain the Detroit Tank Arsenal, which cost $48,000,000 to build during the war and, in addition, a large allotment for tools (vol. II, p. 145).

ARMY COMMENT

It is a well established long-term practice of the Army. when requesting industry to make an extensive modification of an existing major item or produce a new major item, to include the cost of tooling industry in the unit price of the item.

This practice is followed regardless as to whether the item is manufactured by a Government establishment or by industry, since it is a necessary cost of manufacture. Such tooling-up costs are furnished to the Bureau of the Budget and the Congress as a separate cost break-down.

Considering that both the T37 and the M46 tanks would have been new items, had their procurement been approved, it would have been necessary

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for industry to tool their factories for produetion of the engines, power trains, traverse gears, shock absorbers, tracks, and other major components not manufactured by the Detroit Tank Arsenal. Tanks of the above types have never been manufactured by anyone, therefore, neither industry nor the tank arsenal had the equipment required to produce them.

The number of M26 tanks available for conversion into M46 tanks is not sufficient to meet Army requirements, therefore, any tanks that the National Guard Bureau might require would necessarily have to be procured as new items, if and when authorized.

COMMITTEE COMMENT

Under projects for fiscal year 1950 the Army asked for funds to modernize 102 more tanks than it possessed (vol. II, p. 146).

ARMY COMMENT

When the original budget estimates were made in July 1948, the Army had in its possession the exact number of tanks budgeted for. In September 1948, 102

were transferred to the Marine Corps. The budget was adjusted accordingly at that time.

COMMITTEE COMMENT

The Army Ordnance Department has on order 6 light tanks and 10 M46 tanks for research and development and extensive service testing. No modernization of M26 tanks or procurement of M46 tanks was to be undertaken until the 10 M46 tanks on order have undergone extensive service testing. Still in the 1950 budget there was requested an appropriation to modernize 1,215 existing M26 tanks into the equivalent of M46 tanks (vol. II, pp. 145–146).

ARMY COMMENT

The 6 light tanks are not related to the M46 program. The 10 M46 tanks are under procurement with fiscal year 1948 funds to permit extended service tests and are scheduled for completion by not later than April 1949. The engine and transmission have already been fully proven as independent units. In view of the world situation, it is necessary that the program be implemented in fiscal year 1949. Were this not done, the procurement lead-time would delay completion of these vital weapons by a full year. Actual assembly of the first increment of this program will not begin until June 1949, ample time within which to ascertain and incorporate any changes which tests of the 10 may reveal as necessary or desirable. Hence the modernization program is definitely set up to take full advantage of the research and development tests.

COMMITTEE COMMENT

Investigation of the tank situation raised the questions of how many tanks the Army has in its possession and of what became of the tanks produced during the war-for which a figure of 86,000 has been stated. After some delay, Army Ordnance produced an inventory statement showing 15,960 tanks on hand—most of which were described as obsolescent. Three weeks later Ordnance stated, "The best data this office can assemble indicates that 25,045 gun tanks of all calibers, all chassis types, and all conditions were in the possession of the Army at the close of the war (vol. II, p. 146).

ARMY COMMENT

The Army Comptroller received an oral request from the Eberstadt Committee (Mr. Arnstein) for data regarding the number of tanks the Army had in its possession at that time. On September 22, 1948, Mr. Arnstein was furnished the following data in substantially the form indicated.

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