manufacturers have, in general, been manufacturing very small training airplanes, but they have had no experience in manufacturing big airplanes. They do not have the necessary engineering staffs, and they were not considered capable of manufacturing the types of airplanes we desired. We are using all available manufacturers who are willing and able to manufacture tactical airplanes. There are 1 or 2 manufacturers that were named there, or listed, who have rather bad performance records. They were never up on deliveries, and their managements were continually squabbling. They have been hiring and firing managers, and they were simply not able to put out the product. Therefore, it seemed unwise in the emergency to go to an unreliable concern and place millions of dollars in contracts when they could not complete them. There is another important thing to be considered in connection with the whole program, and that is that we have tried to reduce the types and models. Every manufacturer that comes in wants to build a complete airplane and put his name on it. With these small manufacturers we have had a considerable amount of difficulty in getting an acceptance of subcontracting when we needed them. There is a great deal of difficulty in getting them to join up and accept subcontracts, because they want to build complete airplanes of their own, in order to have their names on the airplanes.

COORDINATION OF PROCUREMENT

The CHAIRMAN. What arrangements are now being made whereby the Army and Navy are cooperating with the Office of Production Management for some centralization and standardization in the matter of letting contracts? Is there complete understanding between those different branches?

General ECHOLS. I do not understand the allegation of the committee that there has been a lack of understanding with regard to the placing of contracts and on the matter of standardization. The committee states, for instance, that the Army had no plan. Back in 1940, representatives of the O. P. M., the Army, and the Navy made a production plan. The questions who could build airplanes, where they would go, and what facilities were available were all considered. The result of the joint effort was a plan made by the Army, Navy, and Office of Production Management. The procurement problem was to be worked out by them together.

The CHAIRMAN. The statement in the report of the Truman committee is this:

Though it was seemingly created to organize and manage production facilities, it appears that, as far as aircraft production is concerned, the Office of Production Management simply acted as a rubber stamp for the service agencies, allowing them to follow their own policies of procurement.

General ECHOLS. The only answer I can make to that is that I feel certain that the committee did not investigate far enough into the question of what the manufacturers had to offer, and the result of the efforts at cooperative development, particularly for the Army and Navy, through the Aeronautical Board in the matter of development work. It is not a case of taking what manufacturers have to offer. We have been constantly working on the development of experimental airplanes over a long period of years, and the airplanes we have today

are the result of the experimental work we did prior to 1940. It took several years to get those experimental airplanes into production. When the time for production came, we had to take what had been developed, or else we would be starting all over again.

Mr. POWERS. General Echols, the heads of the Air Corps have come before the War Department subcommittee year after year pleading for money for research and development, but we never got around to the point of giving them enough for that purpose until 1939, when, I believe, we gave them ten or twenty million dollars. That ten or twenty million dollars given them, I think, is in some way responsible for some of the fine ships that you have flying today.

General ECHOLS. Yes, sir.

The CHAIRMAN. Is there anything further on that point, General? General ECHOLS. One thing more: I would like to say, briefly, this: As to the lack of cooperation between the Army Air Corps, the Navy Bureau of Aeronautics, and the O. P. M., the production programs have been made up, as stated, as the result of cooperation between those organizations. Our services place contracts, but the question of the number of airplanes that a certain given manufacturer can produce is determined jointly by the Army, Navy, and O. P. M. Those manufacturers are called in and asked if they can meet the program. If they believe they can, the contract is then written by the Army or Navy.

AIRPLANE PROGRAM IN THE PRESIDENT'S ANNUAL MESSAGE

The CHAIRMAN. You have given us the number of planes in the program, and I take it for granted that they are intended to meet the goal set by the President. To refresh your memory on that, I will read from the President's message of January 6, which sets the objective toward which we are striving:

To increase our production rate of airplanes so rapidly that in this year, 1942, we shall produce 60,000 planes, 10,000 more than the goal set a year and a half ago. This includes 45,000 combat planes-bombers, dive bombers, pursuit planes. The rate of increase will be continued, so that next year, 1943, we shall produce 125,000 airplanes, including 100,000 combat planes.

I take it for granted that the President spoke of both the Army and Navy there, and that your plan or program ties in with the general program for the production of the number of planes indicated by the President in his message.

General ARNOLD. The number that we are asking for here does not meet that. The program, we are asking for here with the exception of the heavy bombers simply carries us on at the present rate of production so we will not fall back in production in the latter part of the present year.

The CHAIRMAN. You are not quite up with the President's goal? General ARNOLD. No, sir.

The CHAIRMAN. Is that because you find that it is impossible to do so?

General ARNOLD. We have under way in the War Department plans that are being prepared to meet the President's goal. This present request for funds was made before the President's message.

The CHAIRMAN. This is a preliminary step in that direction, to enable you eventually to meet the President's request?

General ARNOLD. It is a step that will aid materially in meeting the President's production goal, but not quite.

The CHAIRMAN. Of course, you will have to let contracts to meet the program requested by the President, and you have to have funds and authorizations in order to do that. Would you require all cash, or could some of it be covered by a contract authorization?

General ARNOLD. Some of it could be taken care of by contract authorization. I do not know how much should be in cash. I think about 30 percent could be covered by authorization.

The CHAIRMAN. Of course, that is all in the future.

General ARNOLD. I am only talking about this estimate.

The CHAIRMAN. When should the funds be made available so as to enable you to let the contracts?

General ARNOLD. Just as soon as we can get them. It takes 6 months to get the raw materials. They have to have their orders out for the raw materials.

The CHAIRMAN. Is it necessary to make advances to these manufacturers?

General ARNOLD. In most instances we have made advances to manufacturers.

The CHAIRMAN. You do not know whether in the future it will be increasingly necessary to do that?

General ARNOLD. Yes, sir. I am certain that advances will be necessary in many cases.

NATURE OF CONTRACTS TO BE LET

The CHAIRMAN. What will be the nature of the contracts used in getting this production?

General ECHOLS. We are using the fixed-price and the cost-plusfixed-fee contract.

The CHAIRMAN. Do you consider that the most practical way? How does the cost-per-unit plan compare with this plan or the plan used heretofore?

General ECHOLS. It has been rather difficult to determine. For instance, we have difficulty with the manufacturer who has never manufactured airplanes or the type of model of airplane we require. He asks for a cost-plus-a-fixed-fee contract because he is unable to figure the cost. For instance, Mr. Ford, in the manufacture of engines, was unable to determine the cost, and for that reason he was given a costplus-a-fixed-fee contract. I am unable to make a statement as to whether the cost-plus-a-fixed-fee contract is more expensive than the fixed-price contract.

The CHAIRMAN. Do you not think that should be determined, in view of the tremendous task ahead of you?

General ECHOLS. We are trying to determine that as rapidly as we can, but we have not gone far enough along in the program to get any accurate basis.

The CHAIRMAN. Is this a cost-plus-fixed-fee contract, or a cost-plus contract?

General ECHOLS. A cost-plus-fixed-fee contract.

LEND-LEASE ALLOCATION

The CHAIRMAN. General, there is a provision in this estimate which provides that $4,000,000,000 out of the $12,500,000,000 may be used by the Secretary of War, when authorized by the President, for the defense of other nations, under the terms of the Lend-Lease Act. How do you arrive at that specific sum of $4,000,000,000?

General ARNOLD. I am not prepared to say that $4,000,000,000 is the exact sum because, as I stated when I first started my testimony, we do not know where the airplanes will go. We have to send them where they will do the most good. Whether that should be $4,000,000,000 or $8,000,000,000 worth, I cannot say.

The CHAIRMAN. Have you any intention of relaxing more or less the procedure followed on these items? In a prior justification the lendlease procedure was referred to as involving too much paper work.

General ARNOLD. My policy is, within the limits of the law, whatever the law may be, to utilize this equipment wherever it will do the most good.

The CHAIRMAN. Now I recognize Mr. Snyder, chairman of the Subcommittee on War Department Appropriations.

Mr. SNYDER. May I make a few observations and then ask a few questions, without interruption, please?

First, I want to commend General Echols on what he has said about the manufacture of airplanes and about the different little companies wanting to have an opportunity to manufacture planes when they could only manufacture a part, and that is a part of this report.

I have had the pleasure and satisfaction of visiting some of these smaller airplane factories and seeing their plants, and they were in no position at all, either financially or otherwise, to turn out advance training planes or combat planes of any type and kind.

Secondly, I want to say, with reference to the P-40's, and the P-40's A, B, C, and D. We hear constantly our planes could not compare with the English planes, the Spitfire, and so on. It was my pleasure to sit in a Spitfire and to sit in a P-40, standing side by side on a certain airfield in England, and talk to a pilot who had made 46 raids over Germany in these two planes, 28 in the Spitfire and the other 18 in a P-40. He was an English pilot, and he said that our P-40—and that was not a P-40-D, either-our P-40 was one of the most satisfactory and maneuverable planes, and, in many respects, it was superior to the Spitfire; but the English pilots had, of course, accustomed themselves to handle the Spitfire and, naturally, the majority of them would rather go up in a Spitfire than in the other.

Then I also talked to young Peterson, from Utah, who just 2 days before was made a commander of an air squadron over there, 21 years of age, an American boy, who had been there 12 months, and he said, of course, that the majority of the American volunteer boys over there as English pilots at that particular time came over and accustomed themselves to the Spitfires; but he said that two young fellows, when they were over here in America, crawled up on the wings and said. "Give me a new P-40, if I am going after the Jerries"-meaning the Germans-"over the channel."

From there, I went in around the lunch table that day and asked the officials of that particular air depot about the performance of our

planes. They said, "Well, if we just had enough of them, that is all we are asking for; their performance is all they pretend, and is better than we thought at first."

You may remember this, that they drive on the other side of the road over there and, while you say that does not make any difference in an airplane, they had to get accustomed-I think General Arnold will bear me out-that they had to get accustomed and had to install certain gadgets that we did not put in, before they could take them off over there. Is that right, General Arnold?

General ARNOLD. That is correct, sir.

RATE OF AIRPLANE PRODUCTION

Mr. LUDLOW. As the chairman of our committee, Mr. Cannon, has well said, this is the most gigantic appropriation bill that has ever been presented to any legislative committee in the history of the world.

Now, I would like to ask you this question: Do you think that you can effectively, and without waste, spend such an enormous sum of money as is contemplated in this bill?

General ARNOLD. I think that we not only can, but we must.

Mr. LUDLOW. And do you think that it is possible to safeguard against waste?

General ARNOLD. The reason why I say that is, we have now reached a productive capacity of approximately planes a month. In order to maintain that productive capacity, it is going to take billions of dollars. So it is not a question of trying to reach something, it is just a question of feeding the money in so that the airplanes can go out the other door.

Mr. LUDLOW. This is going to be such a speedy outflow of money that I just wondered if it was humanly possible to safeguard the expenditure of it.

General ARNOLD. We have the facilities now for most of this expenditure; and we are providing for additional productive capacity through some of the money. But most of this money will just keep the airplanes flowing out the door.

Mr. LUDLOW. I understood you to say that your airplane production has been at times considerably jerky. Will the money that is carried in this bill bring about a level, continuous, maximum flow of airplanes, in your opinion?

General ARNOLD. Due to the time element involved between placing orders, there have been those shallow spots in our production curves. We have done everything we could to iron them out and I believe that the money that we will get now will smooth out the whole production curve so that there will be no periods in any plant in which we are not producing airplanes.

Mr. LUDLOW. In other words, there will be a continuous flow.
General ARNOLD. There will be a continuous flow from now on.

FEASIBILITY OF TRANSFER OF FACTORIES

Mr. LUDLOW. I was very much interested in what you said about the success, and the facility with which the Russians have transferred their airplane factories from one section of their country to a section

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