Government departments and agencies in relation to current procurement matters-all with a view to assuring that the procurement business and relations of the War Department are conducted in a businesslike way and that the laws, regulations, and policies governing procurement are followed.

The size of the War Department procurement task is indicated by the sum expended in the fiscal year 1937 for supplies and nonpersonal services $434,000,000. Practically all of the purchases involved were made in the field, but my office, by the receipt of timely information and reports, was able to influence and control purchases to the extent necessary and to take corrective action in those cases demanding it.

Constant effort has been made to increase the already large amount of competition in the Army's purchasing. In order to permit a more orderly purchasing procedure, particularly near the end of the fiscal year, special efforts were made to have all money-allotting agencies within and outside of the War Department make funds available to purchasing agencies in ample time to allow formal advertisement for supplies needed. In some cases work for relief purposes under funds allotted to the War Department required less formal methods in order to meet the purposes for which the funds were expended. In those cases, however, the maximum competition in a manner common among business men has been demanded.

Execution of indefinite quantity contracts has been encouraged where such action has appeared advantageous in procuring commercial supplies not included in contracts executed by the Procurement Division of the Treasury Department.

In all current procurement activities, it is constantly insisted that all purchasing be conducted with scrupulous honesty, efficiency, and economy, with due regard to the principle of impartiality and fairness to dealers and manufacturers doing business with the Government, and in strict compliance with the various provisions of law applicable to the procurement activities of the Department. Consistent with. the foregoing, it has been recognized that procurement is not an end in itself, but the means to an end-the business of supplying the Army with what it needs, when and where needed, to enable it to carry out its primary mission of national defense.

Aircraft procurement program.-In my report last year I pointed out that the aircraft procurement policy inaugurated in 1934, providing for the acquisition of aircraft in quantity only as a result of competitive bidding, was functioning satisfactorily and that the combat airplanes under construction as a result were in general the best and most efficient airplanes in the world. Now, however, our former technical superiority in aeronautical development is no longer clearly apparent. Recent advances in other countries have equaled if not exceeded our efforts. We have known for some time that foreign nations far surpassed us in the number of military aircraft at their disposal but we also knew that we led the field technically. It now appears that our research and development programs must be accelerated if we are to regain our position of technical leadership.

It appears further, and this, it seems to me, is an aspect of our defensive situation that must be faced, that our current construction program as well as our existing war-time procurement program for aircraft both fall far short of providing even the minimum amount of

this essential item which any realistic view of the problem will show as necessary. The same remark holds true to an even greater degree with respect to antiaircraft matériel. In my opinion the people of the United States must be awakened to a realization of their weakness in the matter of defense against hostile aircraft and they must be convinced that, if adequate protection is to be provided, they must spend money for the purpose. Anyone acquainted with the facts, who considers the bombing activity which has characterized operations in Spain and in China, must stand aghast at a contemplation of the havoc which a hostile bombing attack could and, in the event of war, doubtless would, wreak on our unprotected cities.

DELEGATED DUTIES

Certain nonstatutory duties have been delegated to me to perform. The most important of these cover the sale or disposal of surplus property; the purchase or sale of real estate; claims-both foreign and domestic; and matters relating to national cemeteries, national military parks, and national monuments. The administration of these matters was conducted in the usual efficient manner during the past year. In my opinion, the interests of the Government were fully protected in all cases which arose under this class of duties.

National Matches.-The National Matches were held again last year with notable success. The greatest number of teams ever to take part, 122, attended. The matches were conducted with operating personnel from the Regular Army and Marines. The War Department is contributing its full share to the encouragement of this necessary element of national defense.

Authorization for the formation of 400 junior rifle clubs throughout the country was issued by this office in December 1937. Since then, 101 junior clubs, with a membership of 5,685, have been formed. This is striking evidence of the popularity of rifle shooting throughout the country.

CONCLUSION

In conclusion, I voice the thought that substantial progress along fundamentally sound lines has been made during the last year in the conduct of the War Department's business activities. Through the hearty cooperation of the Navy and other governmental agencies, and of American industry generally, we have moved forward toward our objective the provision of an adequate, coordinated, and integrated program of war-time procurement adapted to the American system of government and industry, which will function effectively in case of war. LOUIS JOHNSON,

The Assistant Secretary of War.

ANNUAL REPORT OF THE CHIEF OF STAFF

The Honorable, The SECRETAry of War.

MY DEAR MR. SECRETARY: I submit the following report on the state of the Military Establishment at the close of the fiscal year 1938.

The Military Establishment set up by the National Defense Act in 1920 differs fundamentally from those maintained elsewhere by the larger powers. In a special sense it is an Army of the people. Its professional component, the Regular Army, is only its nucleus. Around it the civilian components can be assembled and integrated only after an emergency arises.

The National Defense Act fixed an upper limit for the strength of this nucleus at 280,000 enlisted men. This strength it has never attained. On the contrary, in subsequent years its strength was allowed to fall to 118,500. Successive studies have indicated the grave inadequacy of this latter figure. It is a source of gratification to record that legislation enacted at the last session of Congress authorized the attainment of 165,000 enlisted men.

Our Regular Army at this latter strength ranks only eighteenth among the standing armies of the world. This marked inferiority in strength suggests that it is all the more imperative that the armament of this force be equal to that which it may be called upon to face. Here, too, we fell behind. We failed to keep pace with the development in defensive weapons that has occurred since the World War. Among the more notable innovations in that war was the development of the airplane and the tank-arms that are essentially offensive. There was necessarily a lag in time before there could be developed weapons effective for defense against these new arms. Efficient antiaircraft and antitank armament did not appear until after the close of the war. Contemporaneously also there appeared new and greatly improved types of small arms and of various classes of howitzers.

Until the past year the limited amounts appropriated annually for armament were devoted largely to the procurement of aircraft. To a lesser extent they were applied to the procurement of tanks and similar combat vehicles. Substantially little was devoted to the new defensive weapons. Fortunately, considerably larger appropriations for rearmament were made at the last session of Congress. They will suffice for the attainment of the objective of the Baker Board, and they will permit a marked reduction in the extreme shortages of semiautomatic rifles and antiaircraft armament and the initiation of the procurement of an efficient antitank weapon.

The current operations in Spain and China illustrate from day to day the greatly increased power of these new defensive weapons. They have restored to the defense the superiority it seemed to lose with the advent of the new offensive arms. It is largely because of these new defensive weapons that we find current operations con

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firming anew the testimony of history that the Infantry is the core and the essential substance of an army. It alone of all the arms approximates a military entity. It alone can win a decision. Each of the other arms is but an auxiliary-its utility measured by the aid that it can bring to the Infantry.

It is a source of gratification to record also that during the past year our people seem to have come to a clearer understanding of the fact that our Army is purely defensive in type and nonprovocative in outlook. The charge that it is militaristic, that its activities menace peace, is now rarely heard. The facts are, of course, quite the reverse. Our Army has never in the slightest degree contributed to the occurrence of any of our wars. Throughout its entire history it has remained consistently within the field assigned to it by the Constitution always wholly subordinate to the civil authorities. It has jealously guarded itself against political connections of any nature. It has remained true to its traditions-withdrawn and aloof in peace; a forward, dependable bulwark in war.

In the paragraphs which follow I shall endeavor to describe the present status of the Military Establishment and its more important deficiencies.

STRENGTH OF THE REGULAR ARMY

a. Enlisted men.-In the fiscal year 1938, budgetary limitations restricted the average enlisted strength of the Army to 162,000. Appropriations for the fiscal year 1939 provide for an average strength of 165,000. Heretofore, this strength has been regarded as the minimum required to provide adequate oversea garrisons and the force needed at home to perform the many tasks that devolve upon the Regular Army as the nucleus of the Military Establishment. It has been found, however, that a slightly larger enlisted strength will be necessary, primarily because of the increased needs of the Air Corps and of antiaircraft defense. Recent legislation authorizes an enlisted strength of 21,500 for the Army Air Corps. It is hoped that the necessary additional funds will be provided to bring the Air Corps enlisted strength to this figure in the fiscal year 1940. The requirements of the whole Army in that fiscal year will aggregate a total of about 168,000 enlisted men.

b. Officers. The enactment of Public, No. 485, Seventy-fifth Congress, third session, authorizing a commissioned strength of 14,659 is an important step toward the provision of a more adequate commissioned personnel for the Army. The first increment of the increase under this general authorization is provided in the Appropriation Act for the fiscal year 1939. This act carries, in addition to increments under the Thomason and Engineer Acts, an increase of 200 officers in the Air Corps and 75 officers in the Medical Depart

ment.

UNITED STATES MILITARY ACADEMY

The additional construction authorized in the First Deficiency Act of 1936 has been completed or is nearing completion. The major items comprise an addition to the gymnasium, a barracks, an academic building, an armory, and 50 sets of officers' quarters. Construction of the last-named item has been completed; the other items are nearing completion. Legislation for the fiscal years 1937 and 1938 provided an appropriation of $862,000 and an authorization for the