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

tems.

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 SPARK MAN. In other words, you applied a horizontal cut, a percentage cut?

General STEWART. Yes, sir.

Senator SPARK MAN. 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 economie 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 SPARKMAN. 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 thisGeneral 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

.

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

Senator SPARK MAN. All right. Now, let me ask this: Will the inreased production-as I recall, there was testimony before us, I hink Secretary Wilson testified, that the rate of production would e 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 tepped up to a sufficient extent to make up for the difference beween 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?

General STEWART. Yes, sir. When you try to be extremely accurate in your reply it becomes a little involved. That is true except that each year we start this cycle about September.

Senator HUMPHREY. That is right.

General STEWART. Each year we are furnished some theoretical figure to work against. I do not even remember what the original figure was, but that does not in any way mean that what is said about the development of these lists was not done exactly as it is.

DETERMINING DEFICIENCIES

When it got back here, then we had to kind of figure that theoretical figure, but the field submitted their deficiencies against a force basis.

Senator HUMPHREY. What do you mean by a force basis?

General STEWART. Well, if you can figure deficiencies you have got to know what you are trying to equip.

Senator HUMPHREY. All right.

General STEWART. We used for the initial go-around last September, when we started to work up this program, a force basis known as the MRC12, which was a standing group recommendation for the forces which should be used for fiscal 1954. It was not at that time agreed internationally, but we had to have something, and that was the decision was made that we would use that basis, so we went to the field and said, using MRC12, give us a deficiency list.

Senator HUMPHREY. In other words, using MRC12, which may have been interpreted as a certain number of divisions, with certain combat readiness and certain quality and quantity of armament and munitions, they were asked to give you their deficiencies, is that right?

General STEWART. That is correct; yes, sir.

Senator HUMPHREY. And that, of course, was just a calculated judgment that was made unilaterally by the United States at that time?

General STEWART. Yes, sir. We had to start somewhere and, sir, we took that.

Sonator HUMPHREY. Let me ask you the following question. Was that decision we made unilaterally as a starting point by the United States-was that later on altered or agreed to or amended in any way internationally?

Genral STEWART. I have it here, sir. I can give you the relative

basis of it.

Senator HUMPIIREY. I think that would be helpful.

FORCE FIGURES

General STEWART. The MRC figure for 1954 was in round figures 61 divisions--this is D plus 30. That is what we counted, total divisions, not new divisions, the total we were dealing with, and what they finally came up with in Paris-I am speaking of 1954, calendar year 1954 figure now- was 53 2/3. I will have to go back again to be exactly accurate, sir. The original 54 figure was 61 divisions, plus a total of 12 for Germany, and that was what we started out on; and the ones that came up in Paris were 53 2/3, not

unting Germany, because Paris did not take in Germany since e EDC was not signed.

Senator HUMPHREY. I see.

General STEWART. So there was a difference, sir, between those two lculations.

Senatom HUMPHREY. In other words, the figure of $5.8 billion kes into consideration the noninclusion of Germany; in other ords, Germany was not included, plus paring down from 61 to 53 visions?

General STEWART. Yes, sir. That was the difference in our orig al basis from this one, and I might add that those figures did not clude Greece and Turkey, sir.

Senator HUMPHREY. Did not what?

General STEWART. Did not include Greece and Turkey.

Senator SPARKMAN. General, you said D plus 30. Did you mean -Day divisions, because I notice by the chart that D-plus 30 is 102y the chart, and D-Day was 55.

General STEWART. You have to add in there, sir, Greece and Turkey. Unfortunately, it depends on where you start from, and I pologize for confusing people. If you start with the original title ne, which I have been presenting to the Congress, you have my gures; if you start with General Ridgway's responsibility you have o add in Greece and Turkey, and sometimes it is confusing, sir. Senator SPARKMAN. But the difference would be about eight diviions, plus the German divisions; is that correct, General?

General STEWART. From the original calculation, yes, sir; it would e eight, and plus the German divisions, you are correct, sir. Senator HUMPHREY. Are we not, sir, under the contemplated program, the one under this committee for purposes of authorization, ontemplating some stockpiling of material for German divisions. -ven under the present program?

General STEWART. We have in the present program, 1 division for Germany, and some aircraft.

Senator HUMPHREY. But your original estimates were being made on 12 divisions for Germany, is that correct?

General STEWART. On the existence of 12 divisions before the end of 1954, sir. Now, we are already funded for some German divisions.. I have to keep breaking this up to be accurate, sir.

Senator HUMPHREY. Well, I think this is very helpful to get this. There has been a calculated military decision made, very careful decision arrived at, as well as one on the basis of economic ability of the nations to concentrate on the figure of 53 and a 3d divisions in much more readiness, in combat effectiveness; that is the situation, is it?

General STEWART. Yes, sir.

Senator HUMPHREY. And that is considered to be for the calendar year 1953 considered to be the goal, is that right, your goal of achievement for 1953, for calendar 1953?

General STEWART. The money that we are asking for, sir, will not apply to calendar year 1953, of course.

Senator HUMPHREY. No; but I am having a little difficulty with your chart. Your chart shows 53 1/3 as the 1953 goal, and you said the chart referred to calendar years.