and realistic support of the masses of the people by improving the political and economic situation immediately. The effectiveness and timeliness of these improvements will determine in my opinion whether or not the Central Government will stand or fall before the Communist onslaught.

During the war while serving as the Generalissimo's Chief of Staff, I tried to impress upon all Chinese military officials the importance of reestablishing excellent relationships between officers and enlisted men. I explained that officers must show sincere interest in the welfare of their men both in times of war and in peace. Wounded must be evacuated from the battlefield and cared for in hospitals or aid stations. Officers should visit their men in the hospital and find out if they can help them in any way. Officers should play games with their soldiers such as basketball and soccer. The junior officers should know all of their men in the unit by name. They should talk to them and encourage them to discuss their problems. Explain to them why they are fighting. Explain the objectives of their Government and encourage open discussions. This will create a feeling of mutual respect and genuine affection. Discipline acquired through fear is not as effective as discipline acquired through affection and mutual respect. It would be so easy for the Chinese officers to win the respect and admiration of their men who are simple, kindly, and brave and who will gladly endure hardships and dangers if they are properly led and cared for.

CONSCRIPTION

I have received many reports that the conscription of men for military service is not being carried out honestly or efficiently. Again, as in taxation, peasants are expected to bear the brunt of conscription, although in the cities there are thousands and thousands of able-bodied men, who should be under the conscription laws eligible for military service. Rich men's sons by the payment of money avoid conscription and the sons of rich men are being sent to school abroad instead of remaining here to help their country in a time of great crisis.

RELATIONSHIP BETWEEN MILITARY AND CIVILIAN

I cannot emphasize too strongly the importance of establishing and maintaining good relationship between military forces and the civilian population. Officers and men in the army and air corps should be very careful to be courteous, friendly, cooperative, and honest in all of their contacts with civilians. In Manchuria I was told by many sources that the Central Government armies were welcomed enthusiastically by the people as deliverers from Japanese oppression. Today, after several months of experience with these Central Government armies, the people experience a feeling of hatred and distrust because the officers and enlisted men were arrogant and rude. Also they stole and looted freely; their general attitude was that of conquerors instead of that of deliverers. In Formosa the reports are exactly the same, alienating the Formosans from the Central Government. All of this is a matter of discipline. Of course if the officers themselves are dishonest or discourteous, one can hardly expect the enlisted men to be otherwise. Good relations between the military forces and the civilians are absolutely essential if the Central Government expects to bring about successful conclusion of operations against the Communists. At first the Communist armies were also crude and destructive and made the people hate them, but in the past few weeks, they have adopted an entirely new approach which requires their officers and men to be very careful in all their relations with civilian communities. You can understand therefore how important it is that your own military forces adopt steps immediately to improve the conditions that I have mentioned.

Promotion in the military service should be by merit and merit alone. Older officers or incompetent ones should be retired and relieved. The retired officers should realize that they must make room for the younger ones and they must accept retirement patriotically and philosophically. There are entirely too many generals in the Chinese Army. Most of them are not well-educated and are not well versed in modern combat. Generals should never be used in civilian posts of responsibility, for example, as governors, mayors, and magistrates, except perhaps as Minister of Defense. Military men should not be permitted to belong to a particular political party. After the constitution goes into effect on December 25, they should be permitted to cast a vote, in other words, exercise the right of suffrage, but no military men should be permitted to hold Government office or be active members of a political party.

GOVERNMENT ORGANIZATION

I have carefully studied the existing organization of the Government. In my opinion a definite clear-cut delineation of the authorities and functions of each major division of the Government from the State Council on down to subdivisions of the ministries, is urgently required. At present there is an overlapping of responsibilities and authorities causing frictions and inefficiencies. Also a tremendous streamlining program is necessary within each Government ministry or bureau. There are entirely too many employees, this would effect economy in manpower and in funds and I am sure would bring about efficiency. In studying your Government organization, for example, I could not determine the exact authority and function of the National Assembly and Legislative Yuan with regard to the enactment of legislation. There must be a streamlined organization and clearcut enunciation in the duties of all of the ministries and bureaus of the Government. In April a year ago I discovered that there were well over 60 sections in the National Military Council with duplicating functions and conflicting authorities. There was little coordination between the various groups or sections. Actually there were some groups within the National Military Council that were handling matters which had nothing whatsoever to do with antional defense matters. Today in the Ministry of Defense we have grouped 60 sections under 6 general heads and reduced the personnel about 50 percent. Actually over 75,000 individuals were eliminated.

CORRUPTION

One hears reports on all sides concerning corrpution among Government officials, high and low and also throughout the economic life of the country. With spiraling inflation, the pay of Government officials both in civil service and in military service is wholly inadequate. I am sure that persons who are presently practicing dishonest methods would never consider doing so were it not for the fact that they receive insufficient remuneration to meet the bare necessities of life. Many of them are not trying to acquire vast fortunes, but are just trying to provide a standard of living commensurate with their position. On the other hand, certain rich families, some of whom have relatives. in high positions of the Government, have been greatly increasing their fortunes. Nepotism is rife and in my investigations I have found that sons, nephews, and brothers of Government officials have been put in positions within the Government, sponsored firms, or in private firms to enable them to make huge profits at the expense of their Government and their people. It would be interesting and revealing if you would conduct an investigation into various large banking organizations and other newly created business organizations, to ascertain how much money has been made by such organizations and to what individuals or groups of individuals the money has been paid. To reduce corruption, it will be necessary to establish an index of the standard of living and as the exchange rises the pay of civil service and military service must be increased accordingly. I should emphasize that I am sure many patriotic and selfless Chinese are eking out a bare existence under difficult conditions. They are a great credit to China. However, it must be very discouraging to them to realize that many who already had amassed great fortunes have taken advantage of the present unfortunate situation in China to increase their wealth.

NATIONAL ASSETS AND RESOURCES

I have just completed an extensive tour in England and on Continental Europe. I made a survey of conditions in those areas such as I have just completed in China. The people in Europe are hungry. They have very limited fuel to keep them warm and to run the utilities such as electric power and to provide water. It is difficult for them to obtain as much as 1,500 calories a day, which is barely enough to keep a healthy person moving about. Here in China there are untold resources, food, raw materials, and manpower. It should be at once apparent that organization and honest, efficient administration will strongly contribute to alleviate your problems.

There are approximately 10 million Chinese citizens living abroad. These Chinese in many instances are financially able to help their country in this time of dire necessity. Also there are many Chinese here in China who have vast sums of money invested abroad. They should be required to make a complete report on their holdings in securities and capital goods. It has been conservatively estimated in America that they could raise at least one billion United

States dollars from these sources. China is far from bankrupt in a financial sense or with regard to material resources. China is practically bankrupt in spiritual resources. If the people of China really love their country and want it to emerge strong and united, they should be prepared to come forward and make any sacrifice, including their lives if necessary. Again I should like to emphasize that it is predominantly the poor people, the peasants, who are making great sacrifices and predominantly the rich class who are not coming forward to assist their country.

PUNISHMENT AND SECRET POLICE

I have had reported to me many instances of misdirection and abuse in meting out punishments to offenders political or otherwise. In Formosa there are many so-called political offenders who are still in prison without any charges or sentences. Some have been released but only after paying large sums of money and being required to sign a statement to the effect that they were guilty of an offense against the Government. Actually in their hearts and minds they did not feel that they were guilty of such offense. Secret police operate widely, very much as they do in Russia and as they did in Germany. People disappear. Students are thrown into jail. No trials and no sentences. Actions of this nature do not win support for the Government. Quite the contrary. lives with a feeling of fear and lose confidence in the Government.

RESTORATION AND REVITALIZING CHINESE ECONOMY

Everyone

State ownership should be discouraged. Many Japanese Government and private Japanese properties in Formosa, Manchuria, and other parts of China have been taken over by the Central Government. This was perfectly normal procedure, but the Government should dispose of these properties as quickly as possible to private individuals or groups to encourage free enterprise. It should be a standing rule that persons in Government service, civil or military, should not participate in speculative businesses, in banking, and commercial enterprises.

FINAL REMARKS

The Government should not be worried about criticism. I think constructive criticism should be encouraged. It makes the people feel that they are participating in Government; that they are members of the team. I have mentioned earlier the terrible economic conditions that exist in England. Criticism of the Government is expressed freely in meetings on the streets and in the press and on the radio. This is in my opinion a healthy condition. The Government should point out that it is made up of human beings who are of course fallible and can make mistakes. The Government should emphasize, however, that once the mistakes are pointed out, effective steps will be taken to remedy them. The Government should publish information freely concerning expenditures, taxation. Let all the people know how much income tax each individual, particularly wealthy people and big business firms are paying. Announce publicly when any official or any individual has been guilty of some crime or offense and also indicate the punishment meted out. By the same token, announce publicly the accomplishment or good work of individual Government activities. All of these matters would contribute to confidence on the part of the people in the Government. They want to know what is going on and they have a right to know. Open and public official announcements on the part of the Government will also serve to stop malicious conjectures and adverse propaganda of opponents of the Government.

I realize that many of the ideas that I have expressed are quite contrary to Chinese tradition. However, I have carefully studied the philosophy of Confucius and I am sure that all of these ideas are in consonance with the fine principles of conduct that he prescribed. I have confidence in the good, sound judgment and in the decency of the bulk of the Chinese peoples. I hope sincerely that you will accept my remarks in the same spirit in which they were given, namely, in the interest of China. Anything that I can do to help China become a strong, happy, and prosperous nation, I would gladly do. Anything I could do to protect the sovereignty of China and to insure her a place of respect in the eyes of the world in the family of nations, I would gladly do.

ADDITIONAL POINTS

1. A sign of general frustration on the part of Chinese officialdom.

2. Generalissimo's dabbling in all strata of government.

3. Weak Executive Yuan.

4. Urge closer relationship with the Generalissimo who should encourage criticism.

APPENDIX Y

(Referred to on p. 2601)

STATEMENT OF SECRETARY OF DEFENSE LOUIS JOHNSON BEFORE THE ARMED SERVICES SUBCOMMITTEE OF THE SENATE APPROPRIATIONS COMMITTEE, APRIL 26, 1950

Mr. Chairman, I have read with much interest the testimony of General Eisenhower before this committee, and I should like to begin my testimony by discussing some of the areas General Eisenhower touched upon.

First, let me discuss Alaska construction. Last October, Congress made available approximately $130,000,000 for construction in Alaska. In addition, public works authorizations pending before the Congress, and proposed supplemental appropriations requests under the one line item for military public works in the President's budget, contain approximately $100,000,000 more for Alaska construction-and the enactment of these pending bills, when added to the $130,000,000 mentioned above, gives us a total of approximately $230,000,000 for military public works and housing in Alaska during the 1950 and 1951 building seasons. I want to emphasize that the availability of the additional $100,000,000 is dependent on congressional enactment of S. 2440--the military public works bill that has been before the Congress for some time. When this $100,000,000 is made available by the Congress--and I hope it will be made available speedily— we will have a total of $230,000,000 for Alaska construction, and this will enable us to launch as large a housing program as the highly seasonal construction picture in Alaska will permit, and is based upon our plans for providing adequate housing for military forces of the size which the Joint Chiefs of Staff intend to maintain in Alaska.

Second, when he appeared before this committee, General Eisenhower stated that he had been closely associated with the budget that is before you, from January to July of last year but that he had not been closely associated with the budget since July. This is true. As compared with the levels that had been contemplated in July, and within the $13 billion ceiling established by the President, a number of significant increases in military forces and matériel procurement for fiscal year 1951 were made. The July planning ceiling for aircraft procurement during fiscal year 1951 was $1,800,000,000-$1,100,000,000 for the Air Force, and $700,000,000 for the Navy. At that time, General Eisenhower expressed to me the hope that I might be able to increase the amount allocated to the Air Force for aircraft procurement. As a result of changes between early July and the time the President submitted the 1951 budget, this amount was increased by $200,000,000-with the result that $2,000,000,000 was requested for aircraft procurement-$1,350,000,000 for the Air Force (that is, $250,000,000 more than the July figure) and $650,000,000 for the Navy. In order to round out the picture, particularly in the light of the apparent decrease of $50,000,000 for naval aircraft procurement, it should be added that there was a $79,000,000 increase over the original allocation for antisubmarine warfare equipment, together with the provision of funds for 700,000 additional flying hours for combat type units in the Navy.

With respect to the Army, the dollar figures reflect an increase in Army matériel procurement of $41,000,000, as compared with the July level. This $41,000,000 figure includes $10,000,000 for new type signal equipment for the mobile striking forces; $17,500,000 for heavy ordnance, including special type prime movers; and $7.8 million for modernized portable bridges and other new engineer equipment. In this general connection, mention should also be made of increases in the amounts recommended for Army civilian components. Specifically, there were increases of $5,000,000 to rebuild and modernize equipment for the National Guard, and there was provision for an increase of $16,000,000 to cover the cost of armories for the National Guard and the Organized Reserve.

Thirdly, as I have already stated, the amount in the President's budget for the Navy includes a readjustment to increase by $79,000,000 the amount originally allocated for antisubmarine equipment last July. Specifically, the amount originally alocated was $40,000,000—and after Admiral Sherman became Chief of Naval Op rations he asked for and received (from savings made in the budget) an increase of almost 200 percent in the amount of funds allocated to antisubmarine warfare equipment.

Fourth, the field of intelligence: As General Eisenhower stated to the committee, this is not a field where large sums of money are involved, nor is it a field which lends itself to discussion in open session. I shall be glad to discuss the matter in greater detail in executive session, if the committee should so desire.

The fifth and final field is industrial mobilization. At the present time, our plans in this regard are already well-advanced, and the Munitions Board of the Department of Defense, working in conjunction with the National Security Resources Board, has revised the plans we have heretofore made, in order that the revised plans may be submitted to the President at an early date. One product of our current planning in this regard was the publication, last week, of the 1930 edition of our Production Allocation Manual. It is my opinion that the portion of the industrial mobilization picture which is the responsibility of the Department of Defense is adequately provided for, by the funds included in the President's budget-an amount totaling approximately $100,000,000. In its broader aspects, of course, industrial mobilization is by law the responsibility of the National Security Resources Board. I am sure that Secretary Symington, in his new capacity as Chairman of that Board, will leave no stone unturned in his quest for constant improvement in our plans for industrial mobilization.

The points I have just been discussing have been addressed, in the main, to General Eisenhower's testimony before this committee. With your permission, I should like to turn now to a more general subject-to be exact, I should like to discuss the adequacy of the military budget in the light of world conditions. This will be the first time that I have been able to discuss this subject as candidly as I would like—and it is only the highly encouraging outcome of our recent conference of Defense Ministers at The Hague, coupled with the progress that has been made in some studies to which I will refer in a moment, which permits me to discuss the subject publicly at this time. It was this factor-and in particular, the point at which we have now arrived in our defense consultations under the North Atlantic Pact-which prompted Assistant Secretary McNeil to request that the appearance before this committee by the Secretary of Defense be delayed until after The Hague Conference.

In beginning my discussion of this subject, I would like to go back to last September. Immediately after the President's announcement, on September 23, that there had been an atomic explosion in the U. S. S. R.-which was a date somewhat in advance of the date we had anticipated-we began a reevaluation of our own military requirements. Almost simultaneously with this development, the President directed the Secretary of State and the Secretary of Defense, as a working committee of the National Security Council, to conduct a broad reevaluation of our national program, in the light of our international commitments and in the light of the constantly changing world situation. Some of the results of the reevaluations mentioned above are already known to this committee. Specifically, the President's decision to proceed with the construction of the II-bomb was based in part on the studies described above. In addition, many of the steps we have taken in furtherance of the North Atlantic Pact and the military-aid program implementing that pact have been based on the continuing studies I have already mentioned.

I would not like to leave the impression that these studies are completed. Indeed, in the broad sense, studies of this nature are never completed, for both the State and the Defense Departments must continuously review foreign policy and the military strength that goes hand in hand with it. In making continuing reviews of this type, we have the advantage of the very excellent organizational arrangements Congress has provided, through the vehicles known as the National Security Council-and I refer particularly to the language used by Congress in assigning to the National Security Council the duty "to assess and appraise the objectives, commitments, and risks of the United States in relation to our actual and potential military power, in the interest of national security." The point at which we have arrived at the present time can be described as follows: Based on the work already done by the Council of Foreign Ministers, 83797-51-pt. 5-8