tions required for the contemplated conversion of activities listed in exhibit II to Navy industrial fund financing, as follows:

Estimated additional appropriations required to the Navy industrial fund Estimated requirements per exhibit II. Less DOD restriction_____

Estimated additional appropriations required__‒‒‒‒

$61, 700, 000 19,090, 000

At the present rate of conversions to the Navy industrial fund, cash presently available should cover actual conversions in fiscal year 1962, hence no appropriation is requested. However, execution of the complete program will eventually require an appropriation of cash to the Navy industrial fund as indicated above.

Mr. Chairman, I wish to thank you and members of this committee for the courtesies extended me.

1 Includes listed major plants plus 12 branch plants not listed.

Operating deficit on closing, a permanent impairment of the corpus of the fund.

Admiral HIRSCH. The Navy and Marine Corps stock funds are revolving funds used to finance the purchase of material which is held in inventory as an asset of the stock funds until issued for use.

When material is issued from stock fund inventories the customer appropriation is charged for the material issued and the stock funds are thus reimbursed. The reimbursements from these issues (or "sales") are reinvested in inventories for future use, thus perpetuating the revolving nature of the stock funds.

The Navy stock fund was established in 1893 with capitalization of $200,000 to finance purchase and stocking of general stores type of material such as lumber and housekeeping supplies. The fund has been extended to a wide variety of material and now includes fuel, clothing, general stores, medical supplies, provisions, and repair parts for ordnance, electronic, ship, submarine, and reactor equipments. The inventory assets of the fund at the end of fiscal year 1962 are estimated to be $1,700 million.

The Marine Corps stock fund commenced operations in 1953. This fund has also been extended to additional items of material since its inception. The items financed in this fund include general material, clothing and textile, fuel, subsistence items, engineer supplies, construction materials, and repair parts for communications, ordnance, tank, and automotive equipments.

The inventory assets of the fund at the end of fiscal year 1962 are estimated to be $315 million.

I would like to insert in the record at this point a statement by Rear Adm. J. W. Boundy, Supply Corps, U.S. Navy, Chief, Bureau of Supplies and Accounts and manager of the naval stock fund.

STATEMENT OF CHIEF, BUREAU OF SUPPLIES AND ACCOUNTS

Mr. MAHON. Without objection, this material will be inserted. (The statement follows:)

STATEMENT OF THE CHIEF, BUREAU OF SUPPLIES AND ACCOUNTS

REAR ADM. JAMES W. BOUNdy, sc, usn, CHIEF, BUREAU OF SUPPLIES AND ACCOUNTS, DEPARTMENT OF THE NAVY

Rear Adm. James W. Boundy, Supply Corps, U.S. Navy, a native of Seattle, Wash., received his bachelor of business administration degree from the University of Washington at Seattle.

In addition to his present assignment as Chief of the Navy's Bureau of Supplies and Accounts, Admiral Boundy has had broad experience in Navy supply having served as Pacific Fleet supply officer and as force supply officer for Commander, Service Force, Pacific Fleet. He has commanded the Naval supply depots at Great Lakes, Ill., and Bayonne, N.J.; and was commanding officer at the General Stores Supply Office, Philadelphia, Pa.

During 1948 and 1949 he attended the National War College, Washington, D.C., following which he became a member of the Joint Logistics Plans Group, Joint Chiefs of Staff. He has served as director of supply management policy, Office of the Secretary of Defense.

In addition to the Legion of Merit and the Commendation Ribbon, Rear Adm. Boundy has the China Service Medal; the American Defense Service Medal with bronze A; the American Campaign Medal; the Asiatic-Pacific Campaign Medal; the World War II Victory Medal, and the National Defense Service Medal. He is an honorary commander of the Military Division, Order of the British Empire. Mr. Chairman and members of the committee, in the Navy stock fund budget, the Department of the Navy has developed a program which fully supports and documents the Navy stock fund material requirements. It is based on the strategic-logistic guidance received from the Secretary of Defense, the Joint Chiefs of Staff, and the Chief of Naval Operations. It reflects the worldwide supply support mission of the Navy stock fund.

This budget is designed-

To support current operations including the support of new and more modern equipments.

To improve the immediate readiness for limited war support, and

To maintain a readiness posture for general war.

We plan to accomplish these broad material objectives by providing sufficient inventories and procurement authority to support current operations. The support of new ships, new weapons, and new equipments will be accomplished through the procurement of material in the provisioning process.

In the fiscal year 1961 a program was initiated to improve the limited war readiness position of the Navy stock fund. This program consisted of selling down general mobilization reserve stocks and filling deficiencies in specific mobilization reserve requirements to the maximum extent possible. Although this action improved the limited war readiness position without new funding, high priority program deficiencies still exist. Thus, to further reduce these deficiencies $10 million in new funds is programed for fiscal year 1962.

The Department of Defense regulations under which we operat require that the stock fund offer cash in excess of the approved expenditure plan. In fiscal 1961 material receipts will provide the Navy stock fund with an estimated cash balance at the end of fiscal year 1961 of $214.6 million. This cash balance will enable the Navy stock fund to meet the authorized 60-day expenditures and provide a limited reserve to cover unforeseen emergencies. Therefore, no cash recision is recommended.