DIVERSION OF U.S. MILITARY SUPPLIES FROM PROPER CHANNELS

Senator INOUYE. Thank you very much. My third question, Mr. Secretary, I believe one of our illustrious Senators went to Vietnam to investigate some of our shortcomings there in the area of black marketing, et cetera. I assume that part of the goods sold on the black market were actually stolen, but I am also assuming that a goodly part of that was either sold or transferred to these Vietnamese by our troops. What sort of activities do we have to counteract this type of activity?

Secretary MCNAMARA. Well, first let me give you the facts as best I can on the diversion of U.S. military supplies from proper channels. We find practically no significant diversion of what I will call combat equipment and supplies introduced into Vietnam for use by our own forces. These are vehicles, weapons, et cetera.

We have audits of our inventories and, as best one can in a battle area, compare the amounts sent into the area with the amount presently there.

A second category of goods is represented by the military assistance to our allies of combat equipment and supplies. Here again we check through audit procedures the amounts introduced into the country versus the current inventories, and given the problems in a combat area, we can account for the total amount received there very satisfactorily.

The third area, and I think the area that leads to the charge of unwarranted diversion from normal use, is the category of post exchange supplies. Here I think there has been a problem, caused in part by the very rapid expansion of the post exchange operations. 1. In a 2-year period, from January 1965 to December 1966, the post exchange operations increased eighteenfold. It was running $1 million a month in January 1965. It ran $18 million a month in 1966. That is a very large retailing operation indeed, expanding from a rate of $12 million a year to over $220 million a year.

I think the controls during that buildup period were perhaps not as effective as they should have been. The result is that we feel that for the 19 months, 5.8 percent of the goods shipped into the country as post exchange supplies were diverted without cause or without justification from normal channels of distribution.

Now that 5.8-percent rate has, we believe, been brought down to 4 percent at the present time. Of that 4-percent amount, three-quarters is pilferage and the other quarter waste and deterioration.

The 4 percent is not as high as you might think it to be, because the average for such losses in department stores in this country, commercial enterprises, retailing enterprises, is about 1.5 percent, compared to our 4 percent in Vietnam today.

Worldwide, the post exchange system has a loss ratio of about .6 percent compared to 4.0 percent in Vietnam today, so the rate is still above average. It is above the level we would like to see it. But it is not alarmingly high, and I think that it is consistent with the unusual conditions in which we are operating.

Senator INOUYE. Thank you very much.

QUESTIONS FOR 1968 BUDGET CONSIDERATION

Chairman RuSSELL. Senator McClellan, anything further on the supplemental?

Senator MCCLELLAN. Mr. Chairmain, I would like to resume on this same topic I was inquiring about this morning. Mr. Secretary, is the Air Force F-111 activation schedule the same as was planned last year, or has there been a delay in the activation of the squadrons?

Secretary MCNAMARA. I would like to answer this and then ask Senator McClellan's permission to discuss the F-111 later in the hearing, when we come to fiscal year 1968 budget, because there is no financing associated with it in the supplemental.

Senator MCCLELLAN. Very well. Mr. Chairman, I am perfectly willing to defer to get to the other budget, if I can be present. That is all I am trying to do.

Chairman RUSSELL. I don't think we have a great deal more on the supplemental.

Senator MCCLELLAN. I am perfectly willing. I think these questions should be directed to the regular budget. Chairman RUSSELL. Senator Cannon.

Senator CANNON. Mr. Chairman, I don't have any more questions on the supplemental. I have one comment to make off the record if I may.

(Discussion off the record.)

Chairman RUSSELL. Senator Miller.

B-52 UTILIZATION

Senator MILLER. Thank you, Mr. Chairman. At the risk of us all catching Asian flu, I would still like to get back to Vietnam again.

Mr. Secretary, could you tell us why B-52's have not yet been used over North Vietnam except, as I understand it, in the demilitarized zone?

Secretary MCNAMARA. Yes, really for three reasons. One, we have adequate airpower for use against North Vietnamese targets in the tactical aircraft, fighter and attack craft. Hence we don't need the B-52's.

Secondly, the B-52's are designed for pattern bombing, which is not as precise as the kind of pinpoint bombing required for some of the targets in the north which the fighter and attack aircraft are capable of performing.

Third, the risk of loss of B-52's to surface-to-air missile systems, is greater than the risk of loss of fighter and attack aircraft. So for all three reasons we think at least at present there is no need for B-52 operations over North Vietnam.

EFFECT OF INTENSIFIED BOMBING OF NORTH VIETNAM

Senator MILLER. General Wheeler, assuming that if additional military targets in North Vietnam were taken out, they would not, as some have suggested, materially reduce the flow of troops and supplies to the south, would there still not be a military or a substantial military advantage to taking out these additional military targets, if by doing so it would tie up thousands of more civilians?

As I understand it, some 200,000 to 300,000 civilians are estimated to be tied up now as a result of the bombing we have done, so wouldn't it follow that there would be another 100,000 or 200,000 that would be tied up if certain other targets were taken out?

General WHEELER. [Deleted.]

[Deleted.]

Senator MILLER. I believe there is an increasing number of people in this country who have the feeling that this war could be shortened substantially, if we would take out additional military targets.

I would guess that a great many of them think that this would help to impede the flow of troops and supplies from the north to the south. But for the sake of argument, even if it didn't do that, it would suggest that tying up another 100,000 or 200,000 civilians up there would perhaps be the straw that breaks the camel's back, so that the persuasiveness that we are trying to get across to these leaders in Hanoi might work.

BOMB INVENTORY IN SOUTH VIETNAM

Mr. Secretary, for the record, I am sure you don't have this handy, but for the record would you mind furnishing us the bomb inventory picture in South Vietnam, and preferably on the basis, of 500-, 750-, and 1,000-pound bombs say from July 1965 through the most recent date that you can?

Secretary MCNAMARA. Surely, I will be very happy to.

Senator MILLER. By month, or if you can do it, break it down beyond that, although I doubt that you can.

Secretary MCNAMARA. Yes, I would be very happy to. I just noticed during the noon hour the latest bomb inventory report for southeast Asia [deleted] and the naval ships that are serving in the bombing operations. As of the 15th of January we had somewhat over [deleted] tons of air ordnance on the ground, compared to [deleted] tons consumption in the first 15 days of January, so our bomb supplies are very adequate, have been for some time, and I will be very happy to give you a breakdown in those terms.

(The information requested is classified and was furnished separately to the committee.) May I go back to your question and statement for just a moment, Senator Miller. [Deleted]. [Deleted.]

NORTH VIETNAM APPARENT ACCEPTANCE OF PRESENT PRICE INFLICTED UPON IT

Senator MILLER. Would you yield just at that point? If they had to off-load in a very inefficient manner 300 to 350 ships which went into Haiphong last year, this would tie up a tremendous number of people and delay things.

I am not saying that they might not get the materials out eventually, but I think that this would be a horrible problem for them to surmount, and this, added to the continued lack of being able to make progress in the south on their part, might just be the thing, the added pressure that we need.

In other words, we are going along right now, and what we are doing seems to be an acceptable price for them to pay for their continued aggression. We don't know how much more the price is going to have to be, but it might not have to be very much higher.

AMERICAN IMPATIENCE TO SHORTEN WAR

It might have to be substantially higher. I am sure that you and the Joint Chiefs have talked about this a lot. But I would have to point out to you that I think today, compared to say 6 months ago, there are many, many more people throughout the country who are getting impatient, and feel that this war can be shortened, and I don't know what you are going to do to offset this opinion, but it is there.

Secretary MCNAMARA. I think that there are two problems. One is what action will shorten the war, and that is our primary responsibility.

Senator MILLER. That is right.

Secretary MCNAMARA. And the second is how to prove to our people that we are acting in a way that will produce the shortest possible war and the lowest possible casualty count. These problems are separate, and I don't think we ought to confuse one with the other. Senator MILLER. [Deleted.] Secretary MCNAMARA. [Deleted.] [Colloquy deleted.]

BUDGETARY ASSUMPTION OF WAR TERMINATION

Senator MILLER. Mr. Chairman, I just have one more question. I would like to go back to the question I asked you the other day, Mr. Secretary, about this July 1 assumption for the current fiscal year; that is, that the war would be ended by July 1 as an arbitrary assumption.

I asked you at the time whether there was any indication from our military people that this was a likely assumption. I would just like to ask again is there any indication from any of our military people, such as the Joint Chiefs of Staff or General Westmoreland, that there is anything but the remotest possibility that the war might be over by July 1, 1967?

Secretary MCNAMARA. I don't think they were willing to predict one way or another, nor should they have been willing to predict under those circumstances. So there wasn't any indication that the war would be over, and I don't think there was any indication as to when it would be.

But neither was there any reason to believe then or now for that matter, that this was other than the most prudent basis on which to present the budget.

Senator MILLER. In other words, there was really a divorce between military opinion on this, and budgetary considerations.

Secretary MCNAMARA. Well, I think the military opinion fully supported the basis on which the budget was submitted.

The budget is a financial document, not a military plan or a fore cast, and at no time did we ever state that we believed the war would terminate on June 30, 1967, or earlier. But we did state then-and I think with hindsight that we were correct that the financing of the initial fiscal year 1967 budget operations through June 30, 1967, and

not beyond, was by far the most prudent basis on which to submit that budget.

Senator MILLER. I would be inclined to agree with you on that, and I recognize that the military people are only concerned with whether they are going to get what they need.

Secretary MCNAMARA. Exactly.

CONFUSION OF PUBLIC MIND

Senator MILLER. But at the same time when this date was used, I think there was some idea in the public mind that there was some euphoria on the part of possibly our military leaders that this conflict might end by that time. When I was over there a year ago, the impression I got, especially around Cam Ranh Bay, was that this was not going to end by July 1, 1967.

General WHEELER. I would like to comment on what you just said, Senator. I can assure you that the Joint Chiefs of Staff as a body, and in their service capacity as Chiefs of services, never thought this date of June 30, 1967, was anything more than a budget guideline, which, of course, the Secretary provides annually for the preparation of the budget for the forthcoming fiscal year.

Senator MILLER. Thank you very much. Thank you, Mr. Chair

man.

ENEMY SUBMARINE ACTIVITY

Chairman RuSSELL. I think that was made perfectly clear in the testimony. The Secretary of Defense stated that several times during the hearing last year. It wasn't a prediction. It was just a standard of financing.

General Wheeler, has there been any instance where any of our ASW devices have located any submarines playing around the 7th Fleet units out there?

General WHEELER. [Deleted.]

Chairman RUSSELL. The Chinese do have quite a submarine base over there right across the Tonkin Gulf, don't they?

General WHEELER. They have a base on the far side of Hainan Island, Mr. Chairman. [Deleted.]

Chairman RUSSELL. I suppose we are maintaining a very high degree of vigilance in undertaking to detect any possible submarines.

General WHEELER. We certainly are, sir. The Navy commanders, as you will see when you go out on the carriers, are flying the usual air patrols above, ahead of, and around the carriers, and also have the picket ships and screen ships out listening for any other type of activity, such as possible submarine activity.

NAVAL GUNFIRE

Chairman RUSSELL. I suppose both of you gentlemen are familiar with this particular chart that shows the range of naval gunfire? General WHEELER. Yes, sir.

Secretary MCNAMARA. Yes, sir.

Chairman RuSSELL. [Deleted] have any estimates been made as to what it would cost to put one of our four battleships back into operation?