General OLMSTED. That is correct. used.

"Excess" is the word they

Senator HICKENLOOPER. I do not understand excess to be the same as reserves. I understood reserve to be reserve for emergency, that the excess would more nearly apply to surplus. General OLMSTED. That is right.

When the invasion of Korea occurred within 3 months thereafter, then we were confronted not only with the problem of utilizing those stocks which otherwise would have gone more promptly to our partners for our own purposes. Almost immediately thereafter we were confronted with a problem of a major expansion in our own United States Armed Forces, and of course that required equipment too, and I assume you have been told this many times before, but our rate of combat expenditure in Korea for the first 12 to 15 months exceeded the rate of combat expenditure at the highest point of World War II, the expenditure of ammunition and the loss of end items, like their being overrun or not being able to maintain them due to lack of facilities in the early stages of that action.

Senator GREEN. Was there any large amount lost to the enemy? Senator HICKENLOOPER. A very substantial part of that was lost by the South Koreans.

General OLMSTED. A very substantial part.

Senator HICKENLOOPER. I think we have had the figures on the amount lost by the South Korean- forces at the time when they did not stand too firmly.

General OLMSTED. We got our 1951 money, as you recall, in two appropriations, an original and a supplemental. The original came in the fall of 1951 and the supplemental was not available to us until about a year ago. In fact, we did not get the final increment of it until last June.

What we had to do with our 1951 money was to go into the procurement of new items, and even on the simplest item we cannot improve on a 12-month lead time very much. I mean, we had all the problems of expanding our production facilities in this country, getting new lines rolling; in the augmentation of our services, bringing the competent logistical personnel back from civilian life in order that they could do all of the contracting and the permanent work, or work that the permanent or Regular Army Staff was insufficient strengthwise to do, and all of that took time.

Our '51 money was obligated substantially in full by the end of fiscal '51. Now we are just beginning to get the effect of the placing of those orders. The figures which you have before you account for-well, our total expenditures as of the end of February are a little over $2 billion. That means that our '50 money has been spent in full and about between 10 and 20 percent of our '51 money as of the end of February of this year, and when I say "spent" I am relating in my mind the matter of expenditures and deliveries. By and large this money is spent on items that have been delivered. Senator SMITH of New Jersey. The Alsop column says:

Even by June 30, when the current fiscal year ends, the most reliable unofficial estimate is that not more than $2 billion worth of arms will be delivered.

He makes it June 30 and you make it February.

*

General OLMSTED. He is talking about Europe only and I am talking world-wide. That would close that difference somewhat.

Senator WILEY. Of course the answer to that would be, if you added to what you have delivered to Europe the tremendous amount that has been delivered in Korea, you would run into tremendous sums, would you not?

General OLMSTED. Very much; yes, sir.

Senator WILEY. How much do you estimate?

General OLMSTED. I have never seen the figures on our military end item expenditure in Korea. I could get you an estimate on that. Senator WILEY. It would be quite an increase in answer to that item. That goes on the theory that everybody has been loafing and nothing has been done. The facts do not disclose that at all.

DIFFICULTIES IN PROCUREMENT

General OLMSTED. There have been some difficulties of which all of you are aware. Mr. Lovett mentioned the new medium tank. I just got the latest forecast of shipment on new medium tanks.

Senator SMITH of New Jersey. Is that because of that adjustment that had to be made on all these tanks that Mr. Lovett spoke about? General OLMSTED. That is right.

Now, of course, a tank is a large item tonnagewise and it is a large item dollarwise. One of the things that affects these figures and is liable to lead us to an erroneous conclusion is the fact that your longer lead items are the larger ones that it takes a long while to get. We have substantially solved our motor transport problem. We have a check on this business of shipping equipment that they cannot absorb. However, one of the added duties of our MAG's, our missions, is to call for the equipment, and they must personally verify the fact that the unit is in being and at the state of training ready to receive that equipment before it is called forward from here.

I do not mean to say that there have not been slippages, deficiencies, errors. There have, of course. There are bound to be. I do not

mean to draw any conclusions.

Senator GREEN. Those should be taken into account, the average number, in any preliminary effort that is to be made.

General OLMSTED. That is right, although there is a wide latitude. for errors in judgment at that point.

Senator GREEN. That should be allowed for too.

NO COMMITMENTS MADE TO EUROPE

General OLMSTED. There is one misconception in the article that you speak of, Senator Smith, and that is that we made promises or commitments. At no time do we ever tell a country "You will get so many items" or "You will get so many items at such and such a time." Our missions in each country are constantly in negotiation and discussion with their opposite numbers. When I was in Paris last fall, General Richards, the head of our mission there, was engaged in a very vigorous discussion with his opposite number of the French Army about their plan for activation of units this year, and whether or not the motor vehicles could be assured in time. Those things go on all the time. What they do and what we can do is a matter of almost day-to-day discussion and negotiation, but because we put a specified number of tanks in a country program-the 1953 program,

for example those figures originally being made up last summer, that number will be changed many times and there will be no violation of promises or commitments flowing out of that. We never talk dollars to a country; we never tell them how many dollars they are in the program for, and we never make them any commitment as to numbers of items or dates of delivery.

So there has not been a breach of faith or a nonperformance in terms of a final obligation or commitment.

Senator SMITH of New Jersey. Then the Lisbon Conference did not have before it that table we saw here yesterday of the items to each country?

General OLMSTED. No, sir.

Senator SMITH of New Jersey. You have not given that in the form of a target, for example?

General OLMSTED. That is correct.

Senator SMITH of New Jersey. It has not been done, and there have been no assurances of any kind?

General OLMSTED. No, sir.

You might wonder, on that basis, how will they agree to go ahead and activate a unit? Well, there is considerable flexibility in the level of equipment which a unit requires in order to train properly and in order to become substantially combat worthy.

Now, if you are actually going to commit an outfit to combat, then of course it needs all of its unit equipment with its combat reserve back of it, and as I explained yesterday, should that overtake us before we have the equipment all in place, it would be a commander's decision then how to concentrate his forces and his available equipment to get the best results.

USE OF NATIONAL GUARD EQUIPMENT

Senator HICKENLOOPER. General, has not most of the equipment of the National Guard been taken? Has it not been sent to Korea, and so on?

General OLMSTED. Some. I have no idea what percentage, but some of it.

Senator HICKENLOOPER. I have talked to a lot of National Guard top fellows in various parts of the country, and they said they were just denuded.

General OLMSTED. Some of that has taken place. I may say I have some personal familiarity with the National Guard. When I am not on active duty I command the One Hundred and Third Infantry Division in Minnesota, and at the closing days of our training the summer before last they came to us and said, "You can't have these tanks for firing purposes the last 2 days of the camp because we have to load them up and send them to Korea." They took the equipment right out before the training period had been concluded. There has been some of that, and there is more of it going on right now.

Senator HICKENLOOPER. And did they not take a lot of trucks the National Guard had?

General OLMSTED. Some.

Senator SMITH of New Jersey. Because I have personally had so many inquiries about this column of the Alsops, I suggest, if it is proper that there appear in the record here the full column of the

Alsops, with the criticism, so as to make it appear in the record that the General has answered the criticism specifically. I think that would be the proper place for it in the record.

(The column referred to, and the tabulation of selected major items shipped is as follows:)

[From the Washington Post, March 26, 1952]

MATTER OF FACT

(By Joseph and Stewart Alsop)

WHY DID WE FAIL IN SUPPLYING NATO?

It is time to say bluntly what neither General of the Army Dwight D. Eisenhower, nor his deputy, Gen. Alfred Gruenther, who is now testifying on Capitol Hill, can say in public. It is time, in fact, to point out that there has been a downright disgraceful failure to deliver weapons and war goods to General Eisenhower's command in anything like the quantity promised.

Figures are apt to be dull, but those given below deeply and directly affect the security of the United States. Since the aggression in Korea, about $10 billion has been appropriated to strengthen Western Europe against renewed aggression, the bulk of this money for arms. Of this great sum, only about $1,400,000,000 worth of weapons has actually been delivered to this country's Western allies. And much even of this comparatively miserable sum represents arms from surplus stocks in the United States and in Germany.

Even by June 30, when the current fiscal year ends, the most reliable unofficial estimate is that not more than $2 billion worth of arms will be delivered, 50 percent behind schedules already revised downward. Of the great appropriations already made, a whopping $5 billion has reportedly not even been obligated-the money is lying unused in the Treasury, and no contracts have been let against it. the current estimate is that when the next fiscal year ends on June 30, 1953, there will still be an unexpended balance of well over $5 billion.

And

These figures are a record of abysmal failure. It was to protest in the strongest possible terms against this failure that General Eisenhower returned to this country last November. As a result of Eisenhower's protest, President Truman issued a directive upping the priority on arms for Eisenhower's command, which had previously rated in practice below the National Guard. But the current and future figures cited above show clearly that the record of failure still continues. This is having a deeply dangerous effect throughout the western alliance. As Winston Churchill told the British Parliament recently, Britisn rearmament has been delayed for at least a year because, although "there is no question of reproach on either side," Great Britain "has not received aid in keeping with our defense burden undertaken by the late Prime Minister." The effect on the other NATO partners is even more serious than on the British, who produce the great bulk of their own arms. Arms promised for France and other continental allies simply have not been delivered. This long lag in delivering the goods is directly connected eith the current crisis in France and elsewhere.

But what is really important to Americans is the effect of this failure on the security of this country. Unless virtually every strategic expert is dead wrong, the United States will itself be in deadly danger, if western Europe is still indefensible when the Soviets have decisve stock of atomic bombs-and this time is coming soon now.

Thus the failure to produce and supply the planned and promised margin of arms which the Europeans cannot produce themselves directly endangers the United States. And this is only a part of a larger failure. For by any reasonable test, the United States is losing the arms race with the Soviet Union in which we are now engaged.

Surely this life-and-death race is one which this country, with its superb industrial equipment, should be able to win hands down. The failure is, indeed, mysterious. In Europe, the job General Eisenhower has done seems all the more prodigious since he has really had so little to work with. The top mobilization civilians in this country, including men like W. Averell Harriman, Robert Lovett, and Charles Wilson, are without exception very able men. And there has certainly been no lack of money appropriated.

There are all sorts of partial explanations-the heritage of the Johnson era, the mysteries of "lead time," the bungling of the military, especially where the Mutual

Security Program is concerned. But the central explanation seems to lie in a curious, mutually contradictory attitude about the American economy.

On the one hand, we have heard so much about the "miracles of American production" that we have become complacent. The American economy is now performing miracles of a sort, to be sure. On top of a defense program which is very large on paper, the United States is producing at the rate of 5 million cars and a million houses a year, and the price trend is down if anything. But cars and houses, or refrigerators and television sets, do not weigh heavily in the scale against Soviet jet planes and Soviet tanks.

On the other hand, there is a skittish fear that the American economy will somehow explode if a really serious effort is made, although all the current evidence suggests that the economy is carrying the present mobilization load without any real strain at all. At any rate, the essential facts are easy to demonstrate. not producing the arms it set out to produce; not doing the job And there is less and less time left in which to do the job.

country is simply it set out to do.

This

Senator SMITH of New Jersey. I apologize for the delay. It seems. to me it was a very important point. Mr. WOOD. Very important.

ILLUSTRATIVE NATURE OF ESTIMATES

Could I, just before the general proceeds, comment on one thing? I think it ought to be stated again this year, concerning our estimates for each country, not only as to the amounts of money involved and the types of military equipment, but also as to amounts of defense. support, which have been and will be placed before you, that they are in no sense commitments. We always, in presenting these figures, make it clear that they are what we call illustrative. They do not constitute commitments on our part to anybody. They are our present thoughts on the basis of the best analysis we can make, and they should be quite close to the mark generally.

Senator GREEN. On any statements made up and submitted I think that comment should be added.

Mr. Wood. I think that is a good suggestion, but I did want to get it in the record, Senator, that these are our present best estimates and in no sense commitments.

Senator GREEN. I do not think you can cover up all the statements you will put in by a general statement now. I think it would be much more effective by adding it to the different statements.