be standard, otherwise the Government will be powerless to defend itself.

I just wanted to convey my idea about the matter.

Mr. JAMES. I would like to ask General Ruggles a question. In the case of those gun carriages, for instance, would it be your idea to turn that work over entirely to one concern, without any advertising; or would it be your intention to advertise and let the work out on bids, and give the work to some small concern if that concern happened to be the lowest bidder? If you gave the work to some other concern, a larger concern, just as well qualified to do it, it might cost a little more. Would it be your idea to give out that work without letting bids, and turn it over to that other concern?

General RUGGLES. Of course, the ideal way would be, as a matter of preparedness, to have that firm whom we must rely upon in the war program get not only the experience and knowledge, but have a set of dies and jigs adapted to that plant.

The idea is that eventually, we hope, each of the manufacturers in the war program, as far as the money will permit, will have had the experience and will have one set of dies, jigs, fixtures, and other special tools, many of which will be of general application, but some of which will have to be particularly suited to their particular plant. We made a calculation on our reserve. I had it made several times, and had it checked. For the reserve for a million men--not for the general mobilization that was spoken of, not for the three or four million men that we had during the World War-but for an amount of material that we should have in our storehouses at the beginning of a war if we were not going to be short of munitions for 1,000,000 men until we can get quantity production after war is declared the saving of two months in the time of getting into quantity production would be equal to about $185,000,000 to $200,000,000 in the amount of protection it would give us by material in store. That is, the saving of two months in getting into quantity production would be equivalent to an amount of material in the storehouses of nearly $200,000,000.

It takes a tremendous time to get into quantity production; and, based on the experience of the World War, the amount of munitions used, of course, is appalling. Unless we reverse all history, I see no reason why the expenditure of munitions in the next war, if we are so unfortunate as to have one, will not be at least as great as the expenditure in the last war.

Of course back of this whole idea is that if we are properly prepared we will not have war; but the amount of saving in our war reserve, if we ever come to establish a war reserve, will be infinitely greater than the extra cost of giving out these educational orders and of accumulating a set of jigs and fixtures for the manufacturers who are enlisted in the war program. It is the most economical way of assuring that our troops will have the munitions that they need-much more economical than storing the same amount of material in storehouses.

Mr. JAMES. What would be the effect of this legislation if Congress did not appropriate any additional money for reserve in a year or so, for additional munitions?

General RUGGLES. If the Congress appropriates money for additional reserve we should like to use these educational orders; and

we can assure the Congress that it will reduce the amount of material that they must put in reserve by many times the money value of the extra cost of the educational orders. It is a very economical proposition from that point of view.

Mr. JAMES. What would the effect of the legislation be if Congress did not appropriate increased money for the next few years?

General RUGGLES. If the Congress does not appropriate any money, there will be no money for educational orders.

Mr. JAMES. You would have the munitions made at the arsenals, the same as you are now doing?

General RUGGLES. Yes; the same as we are now doing; and, of course, it would be an uneconomical proposition. If we had in our arsenals the capacity to supply the war needs, that would be a different thing; but inasmuch as the capacity of our arsenals is negligible, and we must go to commercial concerns, it would not be an economical thing to shut off and refuse to train our manufacturers as we do.

We have admitted the training business as a proper thing. The Army bill is full of training-training for Regular Army soldiers, training for reserves, training for civilians. It is equally important to train munition makers; and we will save many times the value in the amount of munitions that we would keep if we ever went to the proposition of a war reserve.

Mr. JAMES. Then it is not the intention of this legislation to cripple the arsenals, directly or indirectly?

General RUGGLES. The idea, Mr. James, is to keep always at the arsenals the nucleus of a force that understands the manufacturing. The manufacture of munitions is an art. The arsenals will be the center where these manufacturers will go for information. We want to keep at the arsenals a force that understands the production of munitions, so that we will always have in this country a few men who understand it.

It is not the intention to cripple the arsenals; but the arsenals have more capacity than they need for peace-time production, and we do not want to fill up the arsenals to their entire capacity. It is much better to keep a reasonable force there and put the rest of the money in commercial life, and give these people upon whom we must rely in war an experience that will save months in the production of munitions should we be forced into war. It will save many lives; it will save millions of dollars; and it may make the difference between winning or losing the war.

Mr. WURZBACH. General, the size of the war reserve depends upon the speed with which the needs can be supplied in time of emergency. In other words, your war reserve must be large, due to the fact that under present conditions we are not able and would not be able to produce the munitions needs in case of an emergency?

General RUGGLES. Yes, sir.

Mr. WURZBACH. The easier you make it to produce munitions in time of emergency, the more you can reduce your war reserve in peace time?

General RUGGLES. That is absolutely so. That is correct.

Mr. WURZBACH. The war reserves that we have on hand, say, at this time-the reserves that we ought to have on hand to take care of

an emergency-are not used in peace time, are they? There is an obsolescence and a deterioration in those reserves, and there must be a continuing replenishment of them? General RUGGLES. There should be.

Mr. WURZBACH. And the cost of deterioration, obsolescence, and so forth, is practically a dead loss to the Government?

General RUGGLES. Yes; that is true. That is particularly true of ammunition. It is not true as to the obsolescence of guns. They are not as good guns, but we can use them. If the ammunition goes bad, you can not use it. It is not safe.

Mr. WURZBACH. Not only that, but your guns become obsolete, perhaps, during the period?

General RUGGLES. Absolutely. They are obsolete now-every mobile cannon we have of war or pre-war construction.

Mr. WURZBACH. You would have a greater loss, on account of the advance that is being made in guns, if you had a large peacetime reserve?

General RUGGLES. It is freely admitted that we will have to fight the first 15 months of a war essentially with the material that we have in our storehouses at the beginning of the war. What is not in our storehouses at the beginning of the war we will have to do without for the first 15 months at least.

Mr. WURZBACH. And that is exactly the reason why you have to have this large reserve-because you have not any means to get these supplies, these munitions, when the emergency begins?

General RUGGLES. Yes; and anything that we can do to expedite the production in the event of war will reduce the amount of reserve that we must keep in our storehouses, or will reduce the time, if we do not have a reserve, when our troops will be facing an enemy without munitions.

Mr. WURZBACH. And you say by reducing the time two months you save how much?

General RUGGLES. On the basis of a reserve for a million men we we would save $185,000,000 and possibly $200,000,000-not less than $185,000,000. If we could reduce the time of getting manufacturers into quantity production by two months, the actual money saving in the value of the reserve we might have to keep is $185,000,000 to $200,000,000. That is a matter of calculation.

Mr. WURZBACH. One hundred and eighty-five or two hundred million dollars would take care of this contemplated program for a great many years, would it not?

General RUGGLES. Many times over.

Mr. JAMES. General, I wish you would put in the record how you expect to make that saving.

General RUGGLES. Yes, sir; I shall be very glad to do that.

The method by which this data was computed is as follows: Five items of the war reserve, namely, .30-caliber ball ammunition, 75-mm. high-explosive shell, 75 mm. shrapnel, 155-mm. gun high-explosive shell, 155-mm. howitzer high-explosive shell were selected. The replacement value of the war reserve of these items totals approximately $543.000,000, and represents about 83 per cent of the total replacement value of the entire ammunition war reserve for two armies or 1,000,000 men, which equals approximately $657,000,000. Production of these five selected items was assumed as set forward by two months. New war reserves for them were computed on this basis and the replacement

value determined, which equalled approximately $378,000,000. Deducting this new value from the present value gives a saving of $165,000,000, or 30 per cent. This percentage applied to the entire ammunition war reserve gives an estimated saving of approximately $197,000,000.

Mr. MCSWAIN. May I ask the general if he has contemplated the advantage of commissioning in the Officers' Reserve Corps, Ordnance Corps, the managers and superintendents and other directive heads of these so-called friendly plants, so that in the event of an emergency you may call them immediately into active service, and have somebody that you can control there in charge of these plants-somebody that knows the plant, that is on the ground, and thereby has a military obligation that you can control?

General RUGGLES. Of course, the civil officer of a plant has an obligation to his stockholders; and it is not the policy of the department, and I am very glad to say that it was not during the World War, and it can not be-it is absolutely 100 per cent removed from the policy of the War Department-to take over a plant and operate it by an Army officer, regular or reserve.

I noticed in one of the speeches on the Army appropriation bill the statement that Army officers, regular and reserve, expected to take the direction of private plants away from their regular owners and operators in time of war and operate the plants themselves. This statement must have been due to a complete misunderstanding of what is contemplated. The Government has a law by which you can commandeer à plant if the plant refuses to engage in the program or refuses to quote a reasonable price; but we must rely for speedy production on people who are thoroughly familiar with the operation of the plants, and commandeering would only be resorted to in very exceptional cases.

We do get, among our reserve officers, a number of experienced manufacturers who will not operate plants, but will negotiate for the Government with the plants, and will inspect the material in the plants, and pay the bills, and generally attend to the Government's end of the business in dealing with them.

I will say this much: We have a contract that has been worked up for use in war which we think is about as fair a contract as can possibly be, both for the Government and for the plants. It is a contract that will relieve the mind of anybody who understands it of any fear of profiteering. I think, as Mr. Pease just said, that his concern has not paid a dividend for 10 years because of its experience during the World War.

Mr. MCSWAIN. Of course, there are lots of people in the United States who went broke as a result of the war who never supplied a bit of munitions, and a lot of people lost their lives. War is a disturbing factor.

General RUGGLES. What profit was made during the war by industries was made principally before we got into the war. There was really very little profit made after we got into the war. In the first place, we immediately took charge of prices, and things of that kind; and than a thing happened which will undoubtedly happen in another war-that the war ended, you know, and all these contracts were stopped, most of them before they got to a profitable stage. If you make material in large quantities, the early months, when you are making your preparations and only making a few articles, is

the time when money is going out with very little return. After you once get into quantity production, and things are going smoothly and regularly, and great quantities are coming through, then is when you make your profit. The first part of a contract is always the losing end.

In practically every case we stopped our contracts on account of the World War ending just when they were commencing to be profitable. They had not been running at a profitable rate long enough to offset, in most cases, the losses that were bound to occur in any manufacturing job in the early stages. That is where the expenditure of the money occurs, for experimentation, buildings, tools, planning, and so forth. After the thing gets running in an automatic way, then the money comes in.

It would be the worst possible mistake to try to operate our tremendous industries by Government officers, even if we could get these people into the Reserve Corps. We could not be sure we could get them all. There is a thing called "good will" that we can not commandeer.

This contract that I am telling you about comes as near commandeering in a just sense as anything that has been devised. think it would be very satisfactory to the American Legion, and I think it would assure anybody that this is the fairest scheme that has been devised, not only for industry but for the Government; and surely there will be no profiteering in it. In order to get expeditious production, however, we must leave the plants in the hands of those who know how to run them, who have been spending yearsperhaps the best part of their lives-in those plants; who know every man in the line.

Mr. MCSWAIN. I agree with that; but I was thinking of the advantage of having the superintendents and the managers of the particular plants commissioned officers in the emergency, and leave them there with the very plants that they have been operating in peacetime. I admit that it would be destructive to industry, and demoralizing to labor, to try to transfer and exchange and shift either the managerial forces or the laboring forces in time of war. I admit that that would be suicidal.

Mr. PEASE. Mr. McSwain, in our district that very thing is being done. In our plant we have three or four ordance officers commissioned in the Reserve Corps. One of them is in charge of our tool room. Another one is in our engineering department. Another one is our assistant production superintendent. They are all capable men, and men that are being used by the ordnance office in the Bridgeport district just along the lines you have suggested.

Mr. MCSWAIN. I appreciate the importance of that.
Mr. PEASE. It is very important.

General RUGGLES. We are doing a great deal of that; but those men will deal with the plants on the part of the Government. As I say, they will negotiate with them, investigate the price, and determine whether it is fair; they will inspect the material; they will pay the bills; they will aid the plant in getting material from outside; but as far as operating the plant is concerned we are going to leave that in private hands. We will have a contract, however, which, after many years of study, we think is the fairest possible

31115-29- -5