General RIDGWAY. We do not specify. We say that it ought to be attained

Senator SPARK MAN. Out in the future.

General RIDGWAY [continuing]. As soon as possible; as soon as possible.

Senator SPARK MAN. But your program is 102 and one-third for the next fiscal year?

General RIDGWAY. Yes, sir.

Senator SPARKMAN. Of that number, what is that lower figure? The CHAIRMAN. 102, that is.

Senator SPARKMAN. 102.

General RIDGWAY. Can you see that, sir? We will bring it up a little closer.

Senator SPARKMAN. Yes, I can see it; 102 and a third.

General RIDGWAY. That is 55 that would be battle ready on DDay.

Senator SPARKMAN. And 102 and a third on D-Day plus 30; is that right?

General RIDGWAY. That is right; these are calendar years.

Senator SPARKMAN. These are calendar years rather than fiscal. General RIDGWAY. Yes, sir. Those are bites rather than force goals over the attainment of the overall requirement which is not tied to time. In other words, we do not say that these requirements are the requirements at the end of 1954, 1955. I say that so far as the economic capabilities and other factors are concerned, the sooner we reach them the better because they represent a minimum, but everybody recognizes that they are completely unattainable by the end of 1954. You could not produce the stuff for them anyway even if you had the money for them, except under all-out mobilization.

BUDGET PROCEDURES

Senator SPARKMAN. General Bradley, if I remember correctly, told us this, in discussing the way the budget, the military budget, was made up; that they were assigned a certain quota or a certain number of dollars, and then out of that they built a military budget, if I remember correctly-that is the sum and substance of what he told us.

Is that true with reference to you? Are you told how much money you will have available, and then you build up your budget, based on that?

General RIDGWAY. No, sir, not quite. What I report, sir, is the deficiency, existing deficiency, to meet the approved force goal, and then it comes over here, and it is costed; they say to meet these deficiencies it is going to cost so much, and then the administration decides on how much of that is going to be costed and that adds up to a total figure.

Then, at the time the gentlemen of the Congress get through with it, it may be a different figure, and then it has got to go back again. Meanwhile, we may have been given an opportunity sometimes, to submit our comments, but usually it happens so fast that all we get finally is a notification that "you are going to get so much and so much."

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Senator SPARK MAN. You do not

General RIDGWAY. Equipment wise, not dollars.

Senator SPARKMAN. Then you do not represent to us that this $5.8 billion would necessarily do the job that you would like to see done! General RIDGWAY. NO.

Senator SPARKMAN. Does this term that you used, the bare minimum, apply to that insofar as you know?

General RIDGWAY. Well, it does, sir, but it is hard to make a positive accurate answer to that.

For instance, I am talking about deficiencies to meet these in equipment, equipment deficiencies is what it is, to meet those goals. Then what comes back to me here quickly is so much money as being in the bill, but I do not know at the moment how much of those equipment deficiencies that much money is going to buy. That is the point I am trying to make.

Senator SPARKMAN. But the $5.8 billion figure we can assume was arrived at after considering what you sent in as being what you thought ought to be the minimum for this year?

General RIDGWAY. Yes, sir.

The CHAIRMAN. You have got to take into consideration the unobligated that remains. Don't forget that.

Senator SPARKMAN. Of course, I realize that. I am talking about new money appropriated.

Senator FULBRIGHT. If I can summarize it, one point you were trying to make is that you do not think we ought to appropriate any less than $5.8 billion even though you do not know exactly how many airplanes it will buy?

General RIDGWAY. I would say so, sir; I do not know what the $5.8 is going to buy. If it will buy any less than I reported as required, then I certainly say that it is not sufficient.

Senator FULBRIGHT. Yes.

OLD AND NEW FIGURES

Senator SPARKMAN. Senator Humphrey asked you this question a while ago, and I suppose this is a good time for you to answer it. if it is all right with him; what happened when the figure was $7.2 billion? You had submitted then what you thought were the minimum requirements, and that figure was based upon it, and then did it come back and you were asked to cut that down to a certain figure or just what happens in between?

General RIDGWAY. Yes, sir. With your permission, and the permission of the Chairman, I would like to have one of these gentlemen on my staff, who is just thoroughly immersed in the details of this process, which is a complicated one, try to answer that question; may I? General O'Hara.

General O'HARA. I am Brigadier General J. J. O'Hara. Deputy Director of the Military Assistance Division at General Ridgway's U.S. Headquarters in Frankfurt, Germany.

In arriving at the original figure of over $7 billion we were directed by the three services here in Washington, and it varied slightly between the instructions we received from each of the services we were directed on a designated force basis that they

gave us, to work up valid deficiencies and priorities for those deficiencies that met the Joint Chiefs of Staff criteria. I mean by that that they are items that the United States should furnish, not including, of course, quartermaster, medical, clothing, fuel, and such

items.

Those deficiencies, based on that directed force basis, were furnished to Washington in order that they would have the basis upon which to calculate the amount of assistance which should be given in fiscal year 1954.

General RIDGWAY. In money.

General O'HARA. Yes, sir. They were not provided by us. We submitted how many items of this kind and of that kind, and all the pricing was done here, and the decision was made here as to the total amount of the fund that would be attempted to be secured from Congress, the total amount of funds and the division of those funds between the three services and between the commitment of the United States throughout the world.

In the case of the $5.8 billion, a decision was made to request that figure as opposed to the previous figure, without reference to the field, and the program being presented here in Congress has not been commented on in the field, and I understand that General Bradley has testified that the reason it was not was that time just would not permit it. They only had something in the neighborhood of 2 days to work up the whole program, so that what they did, they took the same deficiencies that we had submitted, and, in effect, came out of it with a reduced number of items.

WAS THE REDUCTION ARBITRARY?

Senator SPARKMAN. My understanding is-am I to understand then that that simply represents an arbitrary reduction?

General O'HARA. I think General Stewart ought to answer that, sir. I would say, yes, myself.

General STEWART. Mr. Chairman, what has been said is exactly what happened, and the original budget and the original request was studied along with a lot of other factors, and they came up, I think it was 2 weeks ago last Thursday in the National Security Council, with a figure that we would be permitted to use to program against.

Senator SPARKMAN. Was that the $5.8 billion?

General STEWART. Yes, sir. Of course, that includes the economic side, in addition to the military.

Senator SPARKMAN. Yes, sir; $5.8 minus the economic.

General STEWART. At that point, we had to go to the Joint Chiefs of Staff, which is our procedure, and say, "How do you want this divided; how do you recommend that this be divided between services and between titles?" And we were under great pressure to get up here, so their best judgment was that all we could do in the time permitted, and the Secretary of Defense did indicate a time, is to give a proportional reduction from our previous carefully prepared recommendation, and that is how we arrived at this, and there was no time to refer it back to General Ridgway's headquarters, but the same items but not the same number, the same general type items are in the program.

Senator SPARKMAN. In other words, you applied a horizontal cut, a percentage cut?

General STEWART. Yes, sir.

Senator SPARKMAN. Title by title all the way through the bill! General STEWART. Yes, sir; the Joint Chiefs of Staff did, sir. Senator SPARKMAN. Yes.

General STEWART. They recommended such a thing.

Senator SPARKMAN. And the Security Council had directed them to do it. I do not mean directed them to do that, but had directed the reduction in that amount.

General STEWART. Had arrived at the amount of money that was to be requested.

Senator SPARKMAN. Yes, sir. I believe I am beginning to understand it. Then the field and, I take it, that is General Ridgway and his group, referred items back here that they needed to meet the goals or requirements, and that total, when they were figured up, came to $7.2 billion, including or I will say, minus the economic side?

General STEWART. Yes, sir.

Senator SPARKMAN. I will just use that figure for convenience as we go through.

Senator HUMPHREY. May I just say that the $7.2 billion also included the Far East.

Senator SPARKMAN. When I use that I mean the overall and, of course, I am referring to the military part of it.

The Security Council then-well, no, the next step was then that under the direction of the Joint Chiefs of Staff, the distribution was made, and the program was set up. They costed it, that is, the price was established, and the distribution and the number of items and so forth were arrived at?

General RIDGWAY. Yes, sir.

Senator SPARKMAN. Then the Security Council of its own accord reduced the overall to the figure of $5.8 billion, and referred that figure back to the Joint Chiefs of Staff?

General STEWART. That is the overall results, sir.

Senator SPARK MAN. Yes.

General STEWART. There were a number of reviews.

Senator SPARKMAN. There was no time for the Joint Chiefs of Staff to refer it back to the field-excuse me, just let me say this— General STEWART. I am sorry.

Senator SPARKMAN. What we have got here then is the initial program that was carefully worked out to which has been applied an arbitrary or percentage or horizontal cut.

General STEWART. Yes, sir; but there were a number of exercises between January and April when that was finally applied, and these data from those exercises were made available to the Bureau of the Budget and various people.

Senator SPARKMAN. What do you mean by exercises?

INCREASED PRODUCTION

General STEWART. Well, we were required to go back and review this; we were required to work out production lead times, reorder

lead times, and we were given an assumption, "How much money would you need if the rate of production continued at the present rate." There were about four exercises like that, and so to say it was an arbitrary cut is not quite the entire story, sir.

Senator SPARKMAN. All right. Now, let me ask this: Will the increased production-as I recall, there was testimony before us, I think Secretary Wilson testified, that the rate of production would be stepped up on contracts that have already been let, a part of that $81 billion that they refer to so often-will that production be stepped up to a sufficient extent to make up for the difference between the $5.8 billion and the $7.2 billion?

General STEWART. What has happened, sir, is that we are now beginning to receive from production, as a result of many things, including the time element, a faster delivery, and we are going to make substantially greater deliveries in the rest of this year than we have been making, but that cannot, of course, make up the difference between the items contained in the $7.2 billion budget and this budget.

Senator SPARKMAN. Are your stepped-up deliveries more than were anticipated-you knew ahead of time you were going to have. those stepped-up deliveries, did you not; in other words, it is the machinery getting turning, is it not?

General STEWART. There has been some added pressure back of this program in addition to the natural step-up, sir.

Senator SPARKMAN. But, even with all of that, you will not be able to program-the program will not be able to supply the deficiency items that General Ridgway certified earlier?

General STEWART. Well, we will not have the money to supply the items that had to be taken out of the program, sir.

Senator SPARK MAN. Even using the carried-over contracts and obligations and appropriations under pressure?

General STEWART. They had all been accounted for, sir, before they were counted as deficiencies.

Senator SPARKMAN. In other words, the deficiencies that came in from General Ridgway were such items over and beyond what already appropriated funds would have provided?

General STEWART. Yes, sir.

Senator SPARKMAN. This was really Senator Humphrey's question, what I had planned to ask General Ridgway, if you wanted to discuss it. If there is any further question I would be glad to yield at this time.

Senator HUMPHREY. Yes. I have been interested in this because primarily for two factors: Number one, the documentation and support of the $5.8 billion, because the Cabinet officers who have been here have testified this was an imperative minimum, let me put it that way. We must not go below this.

I was always of the opinion, without any detailed knowledge, such as we have obtained here today, that the $7.2 billion or whatever that figure was, was the result of field investigating, field reporting, then costing or pricing, as you have pointed out, on the basis of the number of items; then totaling it up to meet these deficiencies, and I understand that is the case; is that right, General?