The increasing recognition of industrial planning as a vital element of national defense is clearly evident. The wisdom and foresight of those who inaugurated industrial planning in the War Department shortly after the World War is now confirmed. Much has been accomplished, but much remains to be accomplished. With the increased personnel assigned to this work, I am confident that the satisfactory progress already attained will be accelerated and greater strides toward completing and perfecting our plans for the mobilization of matériel and industrial organizations, already proceeding along sound lines, will be made.

The policies governing supervision of current procurement, a duty also charged by statute to my office, have been in effect for some time and have been successfully tested. Much of the past year has been devoted, therefore, to eliminating any minor defects and to oiling the machinery necessary for efficiently supervising the current purchases of the War Department so as to produce the most effective and economical results.

This supervision has been accomplished with no radical changes in the responsibilities of corps area commanders and chiefs of supply arms and services but with some material changes in the routine by which these responsibilities are carried out. All corps area commanders have been required to supervise operations within their respective jurisdictions to a much greater extent than heretofore. This action has resulted in increasing the efficiency of procurement in large measure.

Much has been done to eliminate unnecessary reports, to simplify routine procedure, and to consolidate and clarify existing instructions governing this important duty. This simplification process has not been completed, but it is hoped that in another year these instructions and routine procedures will be so standardized and simplified that much less time will be required for inexperienced purchasing personnel to become proficient in their duties.

My office and the current procurement operating agencies of the War Department have cooperated to the greatest possible degree with all of the emergency agencies of the Government. While routine has been affected in some cases by the actions of the latter, the service has continued to be highly satisfactory.

During the past year it has been a source of gratification to those deeply interested in a sound national defense policy to note the progress that has been made in the procurement of aircraft for the Army Air Corps, both from a standpoint of quantity of aircraft and increased efficiency of type. During this period the speed and performance of aircraft have shown a marked advancement until at the present time the later types have a speed approaching 300 miles per hour. The new system of development has produced planes carrying greater loads for longer distances and at greater speeds than were dreamed of a few years ago. These results, together with the greater ease of operation and comfort for the personnel manning the planes, places them at the head of similar known aircraft of the world powers.

When the results of the lean years which preceded the installation of the present procurement system were felt, it was readily realized that the delivery of aircraft to the Army Air Corps had to be speeded up. Careful study and analysis resulted in the installation of the

present system of procurement. Since that policy has been put into effect the War Department has contracted for 849 airplanes, and of this number, 181 have been delivered up to the end of the fiscal year. Inasmuch as this delivery may at first glance seem small, it must be realized that the greater part of the period was necessarily taken up in development and in exhaustive tests of performance and design which are essential before delivery of airplanes can be accomplished at an accelerated rate. Every effort has been put forward to reduce the length of time elapsing between the inception of the airplane design and the delivery of this finished product to the tactical units of the General Headquarters Air Force. It is expected that the contracts for the purchase of new airplanes with the funds appropriated by Congress for the fiscal year 1937 will be made, with one exception, prior to January 1, 1937. Furthermore, plans for the procurement of aircraft for 1938 have already been made and the contracts for these airplanes will be made shortly after the funds become available in July of next year. During the fiscal year 1937 it is contemplated that orders will be placed for upwards of 600 airplanes of various types.

The tangible results of the procurement plan now in operation may be seen on the several air fields in watching the maneuvers of the various tactical units with their trim, fast, modern aircraft. It has been possible to furnish the General Headquarters Air Force, the highly mobile fighting section of the Air Corps, with a substantial number of the new tactical types of aircraft. These consist of medium range bombardment planes with proportionate numbers of single and two-place pursuit and swift, heavily armed attack planes. New observation planes, which travel 40 miles an hour faster than any previous types, are being supplied to the corps and army observation units. Cargo airplanes capable of carrying heavy loads are now being delivered. They will be able to transport practically all the supplies for the Air Force, giving it a high-speed aerial express, which in an emergency can be used for the transportation of personnel.

The great increase in speed and range has not been overlooked by those in charge of the training schools, and the Air Corps training center is now being rapidly supplied with new, fast, and better performing training planes than those heretofore provided. All of the new-type planes are of an all-metal structure, which insures longer life, greater efficiency, and greater safety. It is a pleasure to note that aircraft procurement has been gradually slipped into high gear with the maximum advantage, both to the Army Air Corps and to the aircraft industry of the Nation.

In the event of a national emergency it may readily be seen that in any calculation of Government needs for aircraft the burden of production, particularly in the first stages of the emergency, must be borne by existing commercial plants and organizations. An adequate aircraft industry, therefore, becomes the backbone of immediate national defense. The results of the past 2 years readily substantiate the contention that sources of supply will increase rather than decrease as a result of opportunities offered to a bona-fide manufacturer to compete for the airplane business of the War Department. Creative interest in engineering and development has been stimulated

to the extent that industry is now in a better position to meet the needs of the Army Air Corps in an emergency than ever before.

One of the greatest factors for stimulating interest in a growing industry is the assurance to inventors, patentees, and designers that their rights will be fully recognized and that they will be suitably rewarded for their efforts. The Aircraft Act of 1926 provides for such rewards in certain cases and extensive use of its provisions is advocated. Patented inventions and patents are protected by law but proprietary design rights often cannot be covered by patents and can be protected only by their recognition by the Government and the adoption of a protective policy based on such recognition. The War Department agrees that the design rights of designers and manufacturers should be recognized and such recognition is covered in the present policy of procurement.

With our present War Department procurement system reaching its full stride, our patriotic citizens interested in national defense can now feel that our Army Air Corps is on its way toward taking its proper place among those of the other nations of the world with respect to both efficiency of fighting aircraft and numbers of planes. The Nation may rest assured that our aircraft industry is gradually being built up to the point where it will be adequately prepared for any emergency that may arise.

In addition to those imposed on my office by statute, there are several duties delegated to me, one of the most important of which is supervision over that part of military education which pertains to industrial mobilization for war and wartime procurement. Officers are educated along these lines at the Army Industrial College. This school has now been in operation for 12 years. During this time 496 officers of the Army, 62 Navy, and 17 Marine Corps officers have been graduated. Although this group represents a very small proportion of the large number of officers which will be needed to man the great wartime procurement machine, nevertheless, it forms a well-trained and important nucleus which may readily be placed in key positions to carry out the fizetions of procuring the huge amount of supplies that will be needed in a major emergency. It is now possible with this number of graduates of the institution to detail none but these on procurement planning duties and this policy is carried out insofar as practicable. From this list of graduates should come the offers assigned to my effe, the War Industries Administration, and other agencies which may be involved in pro

nitions in time of war. Also, this constant increase in the ber of graduates should make the coordination of the industrial mobilization plans of the sister services the Army and Navy-3 watter more readily attainable. With this group of younger officers, trained in the same sound principles, gradually reathing positions

ity, there is every during that increased harmony wil panal in perfecting the Nation's plans for industrial mobiliza and in carrying them out should devasion arise. The seeds for is peller of operation, recessary for the success of such a farSg and mportant enterprise are sewn and fostered in the

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Me training of a suddent number of offers in this school is Bandicapped at present by the things: (1) An insufficient number of

instructors; (2) inadequate facilities for proper instruction. The small number of instructors now assigned makes it barely possible for them to keep up with the immediate work which faces them each day. There is practically no opportunity for them to pursue the necessary research which a school of this nature demands. Consistent with the other demands for officer personnel, I consider it desirable that the instructor staff of the institution be augmented as soon as possible in order to maintain a proper standard for a school of such high standing and importance.

The question of proper facilities for the school I have mentioned in my preceding reports. I again recommend that this matter be given serious consideration when a building for the entire War Department is decided upon.

Another source of training for officers destined for procurement duties is the Harvard School of Business Administration. Ninetyfive officers of the Army have graduated from this institution, and as a group have made an enviable scholastic record. This contact with a civilian business-training institution is extremely valuable to the Army. It produces a small group of officers who are familiar with the methods and conditions which are encountered in the business world. In order that the maximum use may be made of their training, careful attention should be paid to placing them in positions in the Army procurement set-up where their services can be of the most value. The economies in purchasing which can be effected by the supply arms and services are in direct ratio to the ability of the personnel placed on procurement duties. Consequently, the War Department should be amply repaid for their education by the proper utilization of the services of the graduates of the Harvard School of Business Administration.

The National Defense Act authorizes certain activities for the encouragement of rifle practice throughout the United States. Under this authority the assistance which the War Department is permitted. to give may be classed under (1) that rendered to civilian rifle clubs; certain schools with a student strength of from 40 to 100 uniformed cadets; the National Rifle Association; (2) sales of ordnance matériel to members of the National Rifle Association.

Funds again having been appropriated, the national matches were held, for the first time since 1931, at Camp Perry, Ohio, from September 1 to 19. The renewal of this competition gave a decided impetus to the interest in small-arms firing among both military and civilian marksmen. Judging from the excellent results obtained and the enthusiasm shown by all participants in these matches, it is quite evident to me that they constitute a project well worthwhile and contribute their share to the cause of national defense.

Due to the numerous other activities in which it was engaged, the Regular Army was not able to furnish the entire operating personnel for the matches, as it had done in the past. It was necessary, therefore, to hire about 600 National Guard men, with an appropriate complement of officers, from the State of Ohio. They were used for such purposes as marking targets, scoring, and other necessary tasks. These National Guard troops performed their duties in a highly efficient manner and considerable credit is due them and the State authorities for their fine cooperation. It is my opinion, however,

that the national matches should be conducted by the War Department and that a proper complement of personnel should be furnished from the Regular Army for this purpose whenever possible. The influence of the matches on target practice of the National Guard and the enthusiasm that they arouse among civilian marksmen fully justify the expense and the employment of Regular troops.

Another matter worthy of attention includes the fact that members of the National Guard and Organized Reserves teams did not receive pay for participating in the matches as competitors. Instead. they volunteered to serve without pay for this duty. As a partial recompense, however, they received travel allowances of 5 cents a mile from their homes to Camp Perry and return. This change was made necessary because of a decrease in the appropriation for this purpose. During the coming national matches members of these teams will receive pay, and this, together with the detail of sufficient Regular troops to handle the necessary activities, will tend to bring the matches back to a normal status. I believe that each year the regular appropriation for this activity should be sufficiently large to permit

this.

As an indication of the improving interest in rifle marksmanship throughout the country during the past year it is interesting to note that the number of rifle clubs has increased and there is now a waiting list. In addition, there has been a considerable advance in the money value of ordnance matériel sold through this office to members of the National Rifle Association who now aggregate over 50,000 and are associated with some 1,600 clubs whose total membership is over 90,000. The funds derived from the sale of ordnance matériel amounted to about $160,000. It appears to me from the above that rifle marksmanship, in which our forefathers fortunately excelleda condition which has always been such an important factor in bringing to a successful conclusion the wars in which this country has fought-is still receiving a due amount of emphasis and is in a healthy condition.

One of the nonstatutory duties assigned to my office is supervision over the national cemeteries. Some of them near the centers of large population are becoming crowded or are already filled, making it necessary to seek other sites in which to bury the deceased veterans of the Nation's wars. As time goes on this problem may become very acute as the enormous number of veterans of the World War reach the end of their lives. The procurement of suitable sites conveniently located at a reasonable price will become more difficult as the centers of population build up. Considerable foresight must be used in solving this problem.

In reviewing the activities of my office during the year and the progress made in solving the problems connected therewith, I am confident that the current business of the War Department is being conducted along sound lines. With the continued cooperation of the other Government agencies involved and of the business world in general, I am sure the War Department's system of purchasing current supplies will produce economical and efficient results which will be mutually beneficial to all concerned. With industry taking as active and helpful an interest as it has in the past, the plans for preparing the Nation industrially for war should proceed gradually