Chart 1

Includes Office, Secretary of Defense and other Defense Agencies.

this disposal, the trend of physical quantities stored each year is downward, as shown by the continuing decrease in occupied net storage space owned by the Department of Defense elements. During fiscal year 1966, this decrease amounted to 7.8 million square feet (4.2 percent of the total of occupied covered and improved open storage space in major supply installations). From this, it will be seen that the reduction in physical quantities of equipment and supplies held, which results from the Defense program of the past several years of purging the inventory of long supply, particularly excess, stocks, offset to some extent the net increase of $0.7 billion in the value of supply system inventories.

Table 1 shows the total value of property held by each Department of Defense component, i.e., military service or Defense agency. Weapons and supporting equipment assigned to operational units, amounting in value to $87.6 billion, makes up the largest segment (47.7 percent) of the Department of Defense total of $183.6 billion; last year it was $85.0 billion (48.2 percent). The reported value of real property, surpassing for the second consecutive year the value of supply system inventories, is the next largest segment, $38.4 billion or 20.9 percent of the total. The third largest segment of Defense property is the supply system inventories, those items of equipment and supply that are needed to support the operating forces. These are valued at $37.7 billion, and represent 20.6 percent of the total of all property. Attention is invited at this point to the fact that the ratio between the value of the inventories of equipment, parts, and supplies that support military personnel and the weapons and military equipment that they use, and the value of those weapons and equipment has been steadily diminishing. In 1959, the value of supply inventories

was 70 percent of the value of weapons; by 1961 this had been reduced to a little over 60 percent; at the end of 1964, it had dropped below half to 47.8 percent, and today stands at 43.0 percent.

While this results from the interaction of two factors, the mounting cost of weapons (the reported value of which has, admittedly, increased with enlarged coverage) and the generally decreasing value of inventories in store (also affected by increased coverage), which over this period have been reduced by a little over 15 percent, the facts show that today, for each dollar of operational equipment only 43 cents is tied up in bases and depots, whereas six years ago, 62 cents was required. Or, to put it another way, if $88 billion of weapons were represented by 61.7 percent of depot stocks to support it, as was on hand in 1960, there would be $54 billion of inventories in store today instead of $37.7 billion. The saving amounts to $16.3 billion.

Navy again reported the largest value of property of all kinds, $73.9 billion, an increase of $4.2 billion during the year, and 40.3 percent of the total. Air Force owned $68.6 billion as of 30 June 1966, $1.3 billion more than last year, $0.4 billion of which was owing to the increased coverage. Army reported a total of $38.2 billion, an increase of $1.8 billion during the year, about $0.7 billion of which can also be laid to the increased coverage noted above. Defense Supply Agency and other elements of the Department of Defense account for $2.8 billion, less than 2 percent of the total.

Table 2 shows the geographic distribution of properties by major type located (1) in the United States, (2) in U. S. possessions including the Commonwealth of Puerto Rico, and (3) in foreign countries and afloat. Of the $183.6 billion total, $136.7 billion (almost 75 percent)