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The Army Industrial College has had another successful year. The graduating class comprised 52 officers of the Army, Navy, and Marine Corps. In the work of my office on planning for war procurement and industrial mobilization, which necessitates the closest and most cordial relations with the Navy Department, a truly cooperative spirit between the officers of the sister services, as fostered in the Industrial College, is, I am happy to say, becoming increasingly more apparent.

During the past year the policy of the War Department was modified so as to make possible an increased output of trained officers from the higher tactical and strategical schools of the Army. I believe the Army Industrial College should receive a corresponding increase in its student body. The total number of those graduated from this institution up to date approximates 500-only a very small proportion of the number which will be needed in an emergency. The size of the student body of the Army Industrial College has not only been too small to satisfy the real needs of the service, but it has been particularly deficient in furnishing a sufficient number of officers of the arms trained in planning for procurement and for industrial mobilization. In order that procurement may be properly handled in time of war, it is essential that not only those in authority over the supply side of the war machine, but those in charge of the command side as well, should have a very definite knowledge of procurement and industrial problems. In order to provide for this, proper training must be given in time of peace to a sufficient number of officers so that, if and when war does break out, there will be available for assignment to key positions enough of our best officers—both line and supply-who have been educated to understand the importance and difficulties of the mass procurement of military equipment and supply. The building of this pool of trained officers requires time and a continuing policy of sending sufficient officers to the Army Industrial College each year.

The policy of my office controlling current procurement for the Regular Army and the Civilian Conservation Corps, which I outlined broadly in my last report, has been continued successfully with but few minor changes. Purchasing operations for the Civilian Conservation Corps have been consolidated at large depots at corps area, district or regional headquarters where personnel experienced in purchasing is available. This method has not eliminated the local firms from competing for the business of nearby camps. In order to carry out the policy of assisting in the rehabilitation of business, whenever possible, bids, especially those covering perishable subsistence supplies for the requirements of the camps, have been solicited from local firms. The former system for inspecting meat and meat products of the Civilian Conservation Corps, which had been carried on in cooperation with the Bureau of Animal Industry, Department of Agriculture, was discontinued and replaced by a system operated by the Veterinary Corps of the Army under the supervision of the Surgeon General. The volume of this class of Civilian Conservation Corps inspection work became so large that the Bureau of Animal Industry could not carry on its regularly assigned work and it asked to be relieved from this additional task. The scope of the inspection was widened to include dairy products. The system under the Veterinary Corps now covers plant inspection and the post and ante-mortem inspection of animals at the plants as well as inspection

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at destination. At all times the Bureau of Animal Industry cooperated whole-heartedly in efforts to furnish the Civilian Conservation Corps with the best meat and meat products at a reasonable price. The helpful assistance of the Bureau well merits the thanks of the War Department.

During the greater part of the rear, with the large increase in Government purchases, my office has been working in close harmony with the National Recovery Administration. My instructions, I believe, have resulted in my office cooperating to the fullest extent with that agency in carrying out the provisions of the Executive order requiring bidders for Government business to submit with each bid or quotation a code compliance certificate and further requiring the inclusion of code compliance provisions in contracts." With relatively few exceptions, incompleted contracts were promptly ordered cancelled by my office whenever it was determined by the Administration that the contractors involved were violating applicable codes. The administration of the order caused some delays in the purchase of supplies but in most cases they were of minor importance. Naturally, certain exemptions from some of the provisions of the Executive order became necessary and some time was lost before these applications for exemptions by the War Department could be acted upon. Even though firms involved in certain cases had been reported as code violators, it became necessary, in order to expedite delivery of supplies, to continue to make awards and to accept deliveries under contracts-otherwise the demands of the Civilian Conservation Corps could not have been met in time. At the very end of the year the code compliance provisions were withdrawn from Government contracts due to the decision of the Supreme Court that these provisions were not enforcible. This materially reduced the contact between my office and that of the National Recovery Administration.

All contracts for the purchase of products covered by the Agricultural Adjustment Act contained a clause requiring the contractor to comply with

approved marketing agreements and licenses. The clause provided for the cancellation of a contract if it was determined that the contractor was violating any applicable marketing agreement or license. This caused no difficulty whatsoever in connection with War Department contracts.

During the past year I have given much time and thought to the carrying out of the policy for the procurement of military airplanes and accessories which I outlined in my report of last year. I have taken special care to assure the legality of my procurement policy under the act of July 2, 1926. I have studied closely the results of this procurement policy during the past year and find that it has materially aided the rapid development and progress of military aircraft and has permitted efficient procurement of airplanes to meet the needs of national defense. Although the War Department is desirous of procuring the finest available airplane of each type, I have had the matter of cost carefullly examined to insure that the Government is not being required to pay excessive prices therefor. Where examination of cost data indicates that such an airplane is excessively priced, I have had steps taken to obtain this airplane at & price in line with what the Government experts find to be reasonable. I believe that this policy is giving full rein to the inventive genius

and engineering ability of the manufacturer and permits the incorporation of all worthwhile developments in the sample to be submitted practically up to the actual date of opening the bids. If advertising had been based upon detailed specifications and drawings with no incentive for turning out the finest type of airplane, it is fair to assume that proposals would have been received offering airplanes meeting only these detailed specifications and drawings and not including therein the engineering developments which have taken place since the issuance of the specifications many months before.

The making of awards under this system on the basis of a tested article rather than on a “paper promise to perform” has had an additional marked advantage. It enables the War Department to make contracts for quantity procurement with the knowledge that the manufacturer has actually demonstrated his ability to construct the finest available type of airplane, thereby eliminating the total service test of an article, which would be necessary if samples were not required. This factor alone reduces by at least a year the elapsed time between the inception of a design and delivery of airplanes in quantity to troops in the field and eliminates to a great extent criticism, made heretofore, to the effect that airplanes were becoming obsolescent by the time they reached the hands of tactical organizations. I believe it is fair to say that progress in the art of design has been advanced at least 2 years by this system.

I have been gratified to find that this competitive policy of procurement has resulted in increasing the available sources of supply for the different types of airplanes. In addition to quantity procurement competition, design competitions are being held on many types of aircraft. I am happy to be able to report that the response of the aviation industry to the new procurement policy has been most gratifying. Competition on standard equipment has been keen and has resulted in a considerable increase in the amount of engineering research on the part of manufacturers. In some cases manufacturers are offering airplanes whose performance exceeds expectations. It appears reasonable to assume that no such advance would have been made at one stroke without the incentive of competition and the assurance that award would be made to the manufacturer offering the most advanced plane.

Practically no changes have occurred in the character of the nonstatutory duties assigned to me. For the first time since 1931 the National Matches were provided for by Congress. These matches are a culmination of the assistance rendered each year by this office to approximately 87,000 civilian marksmen throughout the country. These matches focus the attention of rifle marksmen on the importance of rifle shooting. They bring together, in a competitive match, men from all components of the Army and civilians as well. A point of contact is thus established that has most happy results. They also serve to prepare a nucleus of potential instructors in case of emergency and to bring to the attention of the citizens of the country the importance of rifle shooting as a part of military preparedness. The matches are to take place in the early fall. I shall, therefore, furnish you in my next annual report an outline of the events, with any constructive criticisms and recommendations which I have to make.

In conclusion, I wish to emphasize again the importance of a continuous, progressive and comprehensive planning for industrial preparedness. This is a vital element in national defense and involves matters affecting the economic life of the entire Nation. The rapidly changing conditions of the past few years, and the increased interest of Congress and of the country, have focused the attention of my office on the extreme importance of keeping up-to-date our plans for the mobilization of industry in an emergency. Although the progress made along these lines has been most gratifying, I most earnestly recommend that this activity be fostered and strengthened by the assignment of additional personnel. The personnel now assigned to these duties represents the minimum. I believe that the importance of industrial planning is taking its rightful place in the minds of those in authority and with the combined efforts of the interested parties directed toward the improvement of this phase of national defense, it leaves no doubt in my mind but that the gratifying progress already attained will continue in the years to come. In no lesser degree does this apply to our methods of conducting the current business of the War Department. I am impressed with these facts and have insisted that those in my office keep them constantly in mind. Consequently, the cooperation of other Government departments has been sought as well as the constructive ideas and assistance of industry in general. I am happy to say that only the most cordial relations exist-a condition which is so necessary to the successful carrying out of the duties assigned to my office,

(Signed) HARRY H. WOODRING,

The Assistant Secretary of War.

ANNUAL REPORT OF THE CHIEF OF STAFF FOR THE

FISCAL YEAR ENDING JUNE 30, 1935

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To the honorable the SECRETARY OF WAR,

Washington, D. C. DEAR MR. SECRETARY: For the first time since 1922, the Army enters a new fiscal year with a reasonable prospect of developing itself into a defense establishment commensurate in size and efficiency to the country's minimum needs. Obstacles, which for 13 years have impeded, if not inhibited, progress toward this goal, have only recently been either swept aside by Congress or materially reduced in importance. The present year definitely marks the beginning of a long-deferred resumption of military preparation on a scale demanded by the most casual regard for the Nation's safety and security.

The general form and composition of the Army of the United States are prescribed in the National Defense Act, as amendesi shortly after the close of the World War. Implicit in that law is the clear intent of Congress to develop and maintain the Army solely for the promotion of domestic tranquillity and for assuring freedom from attack. The purpose was to provide a protective shield in the lee of which citizens might pursue their normal habits and occupations, undisturbed by threat of organized violence regardless of its origin. This conception of the Army's function is the very cornerstone of our whole military structure.

In its broad organizational features, the system established by the 1920 law is unique. Before that time only two general methods existed in the world as the basis of military organization. One was the conscript system; the other, the employment of the professional soldier. The former affords maximum strength at minimum cost, by prescribing service with the colors as a civic duty; the latter is pro

a ductive of the highest possible unit efficiency but entails abnormal expense due to the necessity of reimbursing along professional lines all personnel involved. For this reason, all the larger military machines of modern times are based primarily upon conscription, although to mold annual levies of conscripts into usable military machines there is required also the maintenance of professional cadres.

In this country, tradition and sentiment preclude conscription as the basis of a peace-time Army. Maintenance of a professional force sufficiently strong for every requirement of emergency would entail prohibitive costs, even for the United States. Consequently, the plan written into the National Defense Act, while based exclusively upon voluntary enlistment, is so devised as to present a workable compromise between the frequently conflicting considerations of desired efficiency and immediate economy.

The system places ultimate reliance for the Nation's defense upon a citizen Army, the great proportion of which must be organized,

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