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recognize that these problems must be at all times considered in the light of the best interests of the Government as a whole; and, therefore, it seems unnecessary to impose any legislative limitations in this regard.

Mr. HOLIFIELD. What you are in effect objecting to is the utilization of the Army in what you consider nonmilitary functions actually?

Mr. GRAY. That is right, and functions which get over into diplomatic fields, for example, dealing with foreign governments and for another reason: that our people are not experienced, nor should they be devoting themselves to that type of function.

Mr. HOLIFIELD. Do you realize that the military forces have been burdened with a great job in the occupied territories which is principally a civilian function because the exigencies of the case have forced that.

Mr. GRAY. Right.

Mr. HOLIFIELD. There might be arguments very well presented that as long as the military forces are occupying some of those areas over there and could perform a function as long as they are not engaged in actual aggressive military action and as long as they are stationed in these countries, but it would seem to me as though your service should stand ready to help the State Department rather than force Congress to set up a different organization over there.

Mr. GRAY. I would say, in answer to that, that I agree, Mr. Chairman, and I think the statement of principles which I have read into the record indicates that as to future generations of surplus we would be willing to take the responsibility, but we feel that some other agency ought to carry forward the ones that have already been reduced to contracts or which are in present negotiation.

Mr. HOLIFIELD. You are taking practically the same position you took before Senator Aiken's committee last year?

Mr. Gray. That is right. I am not suggesting that there need be legislative limitations, but I would like to show that within the framework of this bill that is the procedure we hope to be followed.

Mr. HOLIFIELD. That is certainly acceptable for the record to have the attitude of the Military Establishment.

Mr. GRAY. Yes, sir.

Mr. HOFFMAN. All your position amounts to is that you do not want the Army going into merchandising?

Mr. GRAY. Stated in its simplest terms, that is it.

The CHAIRMAN. They are willing to go into it provided they do not have ot take over contracts already entered into.

Mr. GRAY. I would say that we preferred not to, but we would do it under this bill and we are not opposing.

Mr. HOFFMAN. But you do not have any complaining along that line and your business is not set up for that?

Mr. GRAY. We would prefer not to.

Mr. HOFFMAN. We would need a commercial school established at Annapolis or at West Point.

Mr. GRAY. The Military Establishment recognizes the need for some central clearinghouse on the development of excesses to permit the widest use of materials and equipment on a Government-wide basis. However, we would like to point out that there is a vast difference in the concept of the accumulation of materials and equipment by the military services than that which is envisaged for the other departments of the Government. In the Military Establishment, reserves against possible emergency are constantly being accumulated to permit the expansion of forces, should an emergency arise.

Mr. HOLIFIELD. Does that apply to common-use items as well as to strategic materials and implements of war?

Mr. GRAY. To some extent to common-use items and, for example, a 21/2-ton truck would be a common-use item. We do not have reserves of 21/2-ton trucks.

Mr. HOLIFIELD. But they are usually designed under military specifications and are not the common-use civilian-type truck?

Mr. Gray. Generally speaking, that is true, although we do have a lot of vehicles; and I might say in that connection that we are putting every emphasis we can in the Military Establishment now in developing requirements and specifications toward relating them as nearly as possible to commercial specifications. We are trying to hold to a minimum the unnecessary refinements which I might say is very difficult to do if I may take a moment of the committee's time. Of course, ultimately, all of your matériel is procured for the user, taking the Army, for example, the Ground Forces. Sometimes there is some difficulty in reconciling what the user feels to be specialized requirements with this principle of attempting to meet what we understand to be commercial specifications.

We are in the middle now of a problem with some cross-country trucks. The average commercial truck is not a cross-country vehicle. The Ground Forces feel they need a particular type of vehicle.

On the other hand, there is a tendency sometimes to overrefine in their requirements and sometimes a tendency to engage in gadgeteering, and there is always a necessity for reconciling these conflicting interests. To the best of our ability, we are attempting to hold everything we can to what would generally be considered a commercial specification.

Mr. HOLIFIELD. I want to encourage that attitude because I think the Members of Congress have been given ample evidence of waste in procurement and particularly in the procuring of items which are of no commercial use when the war is over. I am speaking now of many of your types of trucks which are built on such specifications that, once the war is over, they are practically useless from the standpoint of the civilian economy. I realize that in defense you must have different specifications on many things, but I am of the opinion, and I think a lot of people who know more about it than I do, that many of the things that are used by the military forces could be among the spectifications that are used in ordinary commercial production.

Mr. GRAY. I agree with that, sir, and I assure you that there is a very real consciousness among the people who have the policy responsibility in the Military Establishment. The Munitions Board is monitoring the standardization of specifications as well as the cataloging project which Mr. Carpenter referred to, and among the criteria which are foremost in the minds of people engaged in standardization is this commercial applicability of the items being considered.

In response to your comment about the waste, war is a wasteful business.

Mr. HOLIFIELD. I realize that.

Mr. GRAY. I would certainly be less than honest if I did not say that I am sure we could have saved many millions of dollars. I can assure

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you, however, that there is a consciousness of economy and efficiency in people who are responsible for the activities of the three military departments, and I do think we are making progress.

The CHAIRMAN. Whatever waste you incurred was incurred in the desire to win a war?

Mr. GRAY. Well, the emphasis when we are in a war period is not on what it is going to cost but how to win the war.

The CHAIRMAN. That is right.

Mr. GRAY. Your attitudes change in wartime; and one of our problems, I must say, Mr. Chairman, is to change the philosophy that people became imbued with, because in war haste and quantity were the important things and economy was the secondary thing. I think we have changed that situation over. I hope we have.

I Mr. HOLIFIELD. I hope that you have proceeded along the line of inventorying the production facilities of the United States so that when the time does come, if it comes, for procurement that you do not have different branches of the service competing with each other in certain industrial areas and buying without regard to a general reserve in the place of each one accumulating special reserves for the different branches of the service. The unification bill went through this committee, and we are very much interested in it, and as soon as we can get around to it we are going to take up a study of how it is working.

Mr. GRAY. In connection with that observation, of course, one of the statutory functions of the Munitions Board is to plan for the military aspects of industrial mobilization; and we are engaged in a program, pursuant to the directive contained in the statute, of determining and allocating plant facilities among the three services.

As an example, the Army has now requested over 14,000 tentative allocations of plant capacity, and over 13,000 of these have been established by the Munitions Board. Then there follow plant surveys, studies with management as to production schedules, and ultimately a confirmed allocation is granted; and, when that is granted, then not only the armed services but the manufacturer himself knows who had cognizance of his plant in wartime, what he is to make, what his schedule of production will be, and there is no conflict.

Mr. HOLIFIELD. Then this determines what changes are necessary in the equipment to change it from a civilian to a military item?

Mr. GRAY. That is correct.
Mr. HOLIFIELD. You are going forward with that?

Mr. GRAY. We are going forward with that. Since this is on the record, I want to say that that is a program which will not be completed this year; it is a program which will extend over a period of years.

In answer to your question, given time and if an emergency does not break upon us immediately, and which we all hope will not happen, and I do not believe it will, this plan of allocation will, when completed, pretty well establish in the minds not only of the people out in the business world but in the services themselves who is going to make what and in what quantity.

Mr. HOFFMAN. Under the National Security Resources Board and the Munitions Board and the Development Board, I assume those three are acting together as much as they can?

Mr. GRAY. That is right.

Mr. HOFFMAN. Is it the policy of the armed services to tell the civilian producers what they need, furnishing the specifications and let them make it, or is it the policy of the Department to go into the production business?

Mr. GRAY. If I understand your question, sir, the first statement was the correct one. The military services develop their requirements based on the strategic plans furnished by the Joint Chiefs of Staff. Requirements are furnished to the Munitions Board; that is, so many tanks, so many submarines, and so many pairs of shoes, and so forth.

Mr. HOFFMAN. Under certain specifications?
Mr. GRAY. Under certain specifications.

Mr. HOFFMAN. Is it the policy of the services then to permit the civilian folks to go ahead and produce that, or are you planning to take over the factories and tell them how to do it?

Mr. GRAY. Well, we have no plans to take over the factories.
Mr. HOFFMAN. Well, to tell them what to do then.

Mr. GRAY. Let me finish, please. The Munitions Board takes the requirements of the three services, consolidates them, and makes estimates as to how much steel and how much copper and how many plant facilities and all of the rest, including personnel, are required, and these estimates are then submitted to the National Security Resources Board, which acts as a referee between the military and the civilian establishments.

The National Security Resources Board may say that your military requirements are beyond the capacity of the country to produce, taking into account the necessities of the civilian economy. They then report that fact to the Munitions Board, who in turn inform the Joint Chiefs of Staff, “The country cannot make the number of planes which your plan calls for." Then the plan must be revised.

So far as the question of who operates the plans is concerned, there is no plan by which the military would take over the operation of plants except to the extent that we say to a manufacturer, "We will expect in wartime your complete capacity to be devoted in wartime to jet engines." He has agreed to a production schedule which he says he can meet, and he knows what retooling will be necessary and what manpower is involved, and his best estimate is that he can meet this production schedule; so the management agreed to it.

There are forms which they sign and send back to the Munitions Board, and we ask the XYZ plant whether it is going to be available for jet engines, and they will have the manpower in the community available. The raw materials will be available, and in the event of an emergency then the Air Force, if that is the cognizant agency, would deal with the management in obtaining the requirements which are needed.

Mr. HOFFMAN. Are the services going to permit the civilian production plants to go ahead and do those things or is it the purpose of the armed forces to tell them how to do it and supervise the production? Let me tell you what I mean. In making a Corsair plane down in one area, they told them what they wanted; and then, when they came to production, the Navy permitted individuals to interfere with production, for instance, as to working hours and where they would work. I recall very distinctly a hearing before the Naval Affairs Committee, and as å result certain individuals wera convicted for interfering with production and violating naval regulations.

Nevertheless, although they were convicted and sentenced, when they came here to Washington, they were all excused from serving any time, so that when you got down to production they were not getting production and they were not getting the kind of planes that they had asked for.

Mr. Gray. The services would have their inspectors in the plants.

Mr. HOFFMAN. They did but the inspectors were told in this case by some of the guards what they would do and what they would not do. Maybe you are not familiar with the instance ?

Mr. GRAY. I am not; I am sorry.

Mr. HOFFMAN. There was another one where the factory was making certain parts and the specification just happened to be wrong. The parts for the gun did not fit. When they got them to the gun, they would not go together. Nevertheless, the armed services' representative on the job said, “That is the way you make them." The manufacturer knew more about what would go together, although he knew little of what the Army wanted.

Mr. GRAY. I would say that such instances are rare exceptions to the production throughout the country.

Mr. HOFFMAN. I think it was recognized that if the Army wanted something they would get it quicker if they left it to the people who knew how to manufacture it.

I was wondering on the unification bill whether it was going to be the policy of the armed services to try to take over these plants in the sense of trying to operate those plants?

Mr. GRAY. I know of no such philosophy.

Mr. HOFFMAN. That bill looked like it to me and that is why I am asking these questions because, although I am thoroughly convinced that the military know what they want and how they want it, the civilian manufacturers know how to do it.

Mr. CARPENTER. The general approach to this thing is thoroughly in accord with your viewpoint. Various people in industry are apprehensive about the possibility of an emergency.

Mr. HOFFMAN. Very much so. Mr. CARPENTER. They are wondering what is going to happen to them if one comes and they are eager to know what they are going to be making and the terms under which that product is going to be made. In other words, they are just as eager in many cases to have this information as the Military Establishment is on its side.

Now sitting in between, more or less, the Munitions Board, we are trying to reconcile that desire on the part of both. I have seen no desire whatsoever that the military department themselves intend to get in and run these plants. I think it would be a very foolish thing. Does that answer your question?

Mr. HOFFMAN. It answers it except for these portions of the Unification Act, which, while they say they are planning for certain things, experience has demonstrated that when they plan sometimes it is accomplished before we realize what their plans have been.

Mr. HOLIFIELD. We are going to have to conclude the hearing very shortly.

Mr. GRAY. In many instances, property which loses its strategic value may become of value to other departments of the Government and

may effectively be utilized through the procedures established for the screening of such materials by the Federal Works Administrator.

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