in line with over-all foreign policy.  Thus far only about 13 billion dollars of the ultimate surplus, including 5 billion dollars of unsalable aircraft, has been declared.  Of this amount, 2.3 billion dollars have been disposed of, in sales yielding 600 million dollars.  The tremendous job of handling surplus stocks will continue to affect Federal expenditures and receipts for several years.  The speed and effectiveness of surplus disposal operations will be of great importance for the domestic economy as well as for foreign economic policies.

War supplies, maintenance, and relief.-Adequate provision for the national defense requires that we keep abreast of scientific and technical advances.  The tentative estimates for the fiscal year 1947 make allowance for military research, limited procurement of weapons in the developmental state, and some regular procurement of munitions which were developed but not mass-produced when the war ended.  Expenditures for procurement and construction will constitute one-third or less of total defense outlays, compared to a ratio of two-thirds during the war years.

The estimates also provide for the maintenance of our war-expanded naval and merchant fleets, military installations, and stocks of military equipment and supplies.  Our naval combatant fleet is three times its pre-Pearl Harbor tonnage.  Our Merchant Marine is five times its prewar size.  The War Department has billions of dollars worth of equipment and supplies.  Considerable maintenance and repair expense is necessary for the equipment which we desire to retain in active status or in war reserve.  Expenses will be incurred for winnowing the stocks of surpluses, for preparing lay-up facilities for the reserve fleets, and for storage of reserve equipment and supplies.

Military expenditures .in the current fiscal year include 650 million dollars for civilian supplies for the prevention of starvation and disease in occupied areas.  Expenditures on this account will continue in the fiscal year 1947.  The war expenditures also cover the expenses of civilian administration in occupied areas.

During the war, 15 cents of each dollar of our war expenditures was for lend-lease aid.  With lend-lease terminated, I expect the direct operations under this program to be substantially completed in the current fiscal year.  The expenditures estimated for the fiscal year 1947 under this program are mainly interagency reimbursements for past transactions.

Relief and rehabilitation expenditures are increasing.  It is imperative that we give all necessary aid within our means to the people who have borne the ravages of war.  I estimate that in the fiscal year 1946 expenditures for the United Nations Relief and Rehabilitation Administration will total 1.3 billion dollars and in the following year 1.2 billion dollars.  Insofar as possible, procurement for this purpose will be from war surpluses.

(b) Authorizations for war and national defense.