Mr. SNYDER. These estimates contemplate a carry-over into the fiscal year 1944 of $12,472,839,200. I take it that that_is substantially the present estimated unobligated balance on next June 30? General CARTER. That is correct; yes, sir. Mr. SNYDER. In the Budget Bureau's report the estimated unexpended balance next June 30 was given as $67,602,300,000. What is the latest prediction on that? General CARTER. The present estimated amount is slightly less than that. I have the exact figure. Mr. SNYDER. How much is it? General CARTER. $66,256,000,000. Mr. SNYDER. All of which will be obligated except the estimated amount of carry-over, namely, $12,472,839,200, as of June 30? General CARTER. Correct, sir. Mr. SNYDER. My thought, in getting this information at this time, was to enable us to make pertinent inquiries of the branch chiefs whose appropriations are involved. However, if you wish to make any comment upon the unexpended but obligated balances, we should be very glad to hear from you at this time, and it might be helpful to us. General CARTER. That is a very pertinent question, Mr. Snyder, since it goes right to the heart of Government financing. While you gentlemen are thoroughly familiar with those details, still a brief explanation as you pointed out, will be helpful in understanding why additional appropriations are necessary at this time. When the Congress authorizes us an appropriation it enables the War Department to go to business and say “We have the authority of the Federal Government to enter into contracts with you for the manufacture of the implements of war which we need, and when deliveries are made the Treasury is legally authorized and obligated to pay the bill." This does not mean that the Treasury must raise cash immediately, because delivery of the goods may not take place in some instances until a year later; and bills are generally not payable until the terms of the contract are fully met. The law authorizes the Secretary of the Treasury to pay bills 2 years after the expiration of the appropriation against which the obligation was incurred. Each month we notify the Treasury what we think the cash withdrawals by months are going to be for the next 18 months. The Secretary of the Treasury takes these figures, studies them to see what the cash requirements to pay our bills are going to be, and uses this as the basis for taxation and borrowing so that he will have the cash on hand to pay the bills when they become due. I like to look at the difference between an appropriation, an obligation, an expenditure, and a cash withdrawal this way. After I had deposited my April pay check to my credit at the bank, I had, as of May 1, a credit at the bank of $1,000. So on May 2 when I purchased from my haberdasher on my charge account a suit of clothes for $50, I obligated myself to pay the haberdasher $50. There remained, then, in the bank to my credit $950 unobligated, against which I could order additional merchandise or services. At the end of the month, the haberdasher mailed me the bill, at which time I wrote him a check for $50. When I wrote the check, I expended $50. When the check reached the bank, the cashier deducted $50 from my credit but he must have had at that time $50 cash to deliver to the merchant. At that time the bank had $50 cash withdrawn from it.. Referring now to the case at hand, the War Department estimates that as of June 30, it will have ordered from industry some $53,783,160,800 ($66,256,000,000-$12,472,839,200) worth of munitions which have not as yet been delivered, but will be delivered in the relatively near future. Thus the War Department has obligated $53,783,160,800. As the munitions are delivered, the War Department will rite checks on the Treasury for the appropriate amounts and thus expend the funds. When these checks reach the Treasury, the Secretary of the Treasury must have the cash on hand to pay the checks that is, the cash to be withdrawn from the Treasury. There is a legal requirement that the War Department cannot obligate funds unless the funds have been appropriated. The appropriation of the funds merely establishes a credit in the Treasury for the War Department. When the orders for the munitions are placed, the funds are obligated. When the munitions are delivered the checks in payment therefor are drawn, and the money is thereby expended, as far as the War Department is concerned. When the checks reach the Treasury, funds must be available for their payment and are withdrawn from the Treasury. At the end of each fiscal year, any portions of appropriations which remain unobligated can no longer be used unless they are reappropriated. Mr. SNYDER. Are there any questions, gentlemen? If not, we thank you very much, General Carter. FRIDAY, MAY 28, 1943. FINANCE SERVICE STATEMENTS OF MAJ. GEN. H. K. LOUGHRY, CHIEF OF FINANCE; COL. T. P. WALSH, MAJ. J. M. PARKER, CAPT. WILLIAM S. SKELLY, BRIG. GEN. B. M. BRYAN, JR., COL. CATESBY JONES, LT. HUGH H. BROWN, CAPT. A. J. BONIS, LT. COL. DANIEL H. PRATT, COL. W. E. GARRAWAY, LT. COL. W. W. GERKEN, COL. J. E. MORRISETTE, COL. R. S. MOORE, AND COL. LEWIS SANDERS, OFFICE OF DIRECTOR OF SELECTIVE SERVICE Mr. SNYDER. Finance Service, Army, is next on our agenda. I am glad to see that our friend General Loughry is present. General, are you still Chief of Finance, or just what is your title now? I understand there has been some more reorganization going on. Gen. LOUGHRY. I am still Chief of Finance. There has recently been created on the Staff of the Commanding General, Army Service Forces, the Office of the Fiscal Director, of which the office of the Chief of Finance is an integral part. Mr. KERR. Is the Fiscal Director an Army man or a civilian? General LouGHRY. The Fiscal Director is Maj. Gen. A. H. Carter. Mr. SNYDER. Prior to the recent change, to whom were you directly responsible? General LOUGHRY. I was responsible to the Chief of the Administrative Services of the Army Service Forces. Mr. SNYDER. And you exercise that responsibility now under whom? General LoUGHRY. I am now a member of the Office of the Fiscal Director. Mr. SNYDER. Under this latest reorganization, has there been any transfer of duties or functions from your supervision or control to any other official or agency? I am referring to duties or functions for which you have no responsibility now, either directly or indirectly. General LOUGHRY. Yes, sir. In future the Chief of Finance will function under the immediate direction and control of the Fiscal Director. Mr. SNYDER. Are you in a position to tell us whether or not, under this latest reorganization, any duties or functions assigned to you by law have been placed under other control or direction? General LOUGHRY. Paragraph 9a of the National Defense Act prescribes that the Chief of Finance shall be charged with the disbursement of all funds of the War Department and the accounting therefor; and with such other fiscal and accounting duties as may be required by law or as may be directed by the Secretary of War. Since I am now the subordinate of the Fiscal Director, I should say that the only proper interpretation is that he, the Fiscal Director, is responsible for the supervision of the performance of the functions prescribed for the Chief of Finance by paragraph 9a of the National Defense Act. Mr. SNYDER. Has a situation of this sort been brought about: As Chief of Finance, are you placed in the position of being required by law to sign official papers or perform official acts, though in so doing you are acting under the direction of other authority? General Loughry. It is my understanding that I will continue to function as Chief of Finance and head of the Receipts and Disbursements Division of the Office of the Fiscal Director. Mr. SNYDER. General, aside from any friendly interest we may have in matters of this kind, we have a legislative responsibility where added expense may be involved, either directly or indirectly. You are conversant with this new arrangement. Is it your judgment that it will entail more help, military and civil, which would mean also more office space and more office expense? General LOUGHRY. No; I do not think it will. Mr. SNYDER. In view of your long Army service and your service first as budget officer of the General Staff, than whom we never have had a more capable one, and later your service as budget officer of the War Department, we should like a frank expression from you as to this change from the standpoint of efficiency. General LOUGHRY. I have no reason to suppose that the new organization will not function efficiently. PAY OF THE ARMY Mr. SNYDER. General, let us proceed with your appropriation items. The first is "Pay of the Army," for which the estimate is $11,505,686,000. That is the full amount, I understand; there is to be no carry-over? General LoUGHRY. That is correct. Mr. SNYDER. For the current year you have had $6,007,367,501, which it has been necessary considerably to augment, as indicated on page 17 of the subcommittee print. That table shows a number of debits and credits and a net credit of, roundly, as I make it, $647,000,000. Is that correct? General LOUGHRY. That table is correct, but the actual augmentation of the appropriation, as shown on page 9 (a) of the justifications, is $724,000,000 instead of $647,000,000. The latter amount excludes allotments from pay of the Army. Mr. SNYDER. The base appropriation was predicated upon a peak man strength of 4,703,000, as I recall. General LoUGHRY. That is correct. Mr. SNYDER. It now appears, however, that the enlisted strength next June 30 will be 6,500,000. Is that the present objective? General LOUGHRY. Yes, sir. Mr. SNYDER. And you are going to finance that increase, approximately 1,797,000 men, with a net increase, by diversion of other appropriations, of but $724,000,000? General LoUGHRY. That is correct. Mr. SNYDER. And that is due, no doubt, to a man-year rate of a considerably lesser ratio as to the increase than as to the peak number originally provided for. General LoUGHRY. That is correct. Mr. SNYDER. This estimate constitutes a peak enlisted strength of how many? General Loughry. 7,533,000. Mr. SNYDER. What is the figure as to officers? General LouGHRY. 643,224. Mr. SNYDER. General, is there any objection to the inclusion in the record of the peak numbers of officers and men and women and nurses for 1943 and 1944? I have in mind a table such as appeared in the report on the 1944 naval appropriation bill. 1 Women's Army Auxiliary Corps officers and enrollees must be added to officers (men) and enlisted men to arrive at the 1944 peaks of 643,224 officers and 7,533,000 enlisted strength. Mr. SNYDER. What are the peak numbers for officers and enlisted ratings for the WAAC.? General LOUGHRY. Officers, 40,202; enlisted, 334,798; these figures are included within the peak totals for officers and enlisted men which I have just given you. Mr. SNYDER. General, this estimate is based upon the numbers we find on page 3 and 4 of the folder; is it not? General LOUGHRY. Yes, sir. Mr. SNYDER. The rates used as to service personnel are those prescribed by law, using averages dictated by experience? General LOUGHY. Yes, sir. Mr. SNYDER. Has the computation been made as carefully as it formerly was, in your estimation? General LoUGHY. It has. PAY AND ALLOWANCES OF DIETITIANS (FEMALE) Mr. SNYDER. Dietitians (female) appear in the break-down for the first time. I suggest the insertion of the supporting data on page 25 of the folder. (The statement referred to is as follows:) 243 first lieutenants, 202 man-years, at $2,304.20 465, 448 1,978 second lieutenants, 1,594 man-years, at $2,058.20----- 3, 280, 771 Total base pay, longevity, and subsistence (officers, 2,230; man-years, 1,805) 3, 774, 445 Rental allowance_ 3, 600 Overseas pay. 125, 940 Gratuity 5,777 Air Forces: Total pay and allowances for Ground Forces (dietitians) 3,909, 762 Pay and allowances: 4 captains, 2 man-years, at $3,136.20---- 72 first lieutenants, 61 man-years, at $2,304.20. 594 second lieutenants, 480 man-years, at $2,058.20-- Total base pay, longevity, and subsistence (officers, 670; Overseas pay. Total pay and allowances for Air Forces (dietitians) 6, 272 140, 556 987, 936 1, 134, 764 37, 860 1, 926 1, 174, 550 Mr. SNYDER. Why the amount of $3,600 for rental allowances? Who is not going to be provided with quarters? General LOUGHRY. That amount has not been determined on any specific basis. It is included in the justifications to indicate that there will be certain payments of rental allowances. Dietitians, if and when they are on leave during a change of station, will be entitled to rental allowances like other commissioned personnel. There are now in Washington, I understand, two or three dietitians on duty in the Office of the Surgeon General who would be entitled to rental allowance. There will be very few who will be entitled to rental allowance. Mr. SNYDER. These women are all for service with the Medical Department? General LOUGHRY. Yes, sir. Mr. SNYDER. Have all of those we have had heretofore been carried in civilian capacities? General LOUGHRY. Yes, sir. They have been estimated for as civilians. |