Adjusting the total amount reported for the Army's supply system inventories in the last year's report by the amount of stocks in hands of property disposal officers, in order to show the two reports on the same basis, will show that the total supply system inventories decreased $1,197,373 thousand.

The total reduction in inventories is accounted for by a drawdown of $1.5 billion in stock fund property with an increase of $0.3 billion in appropriated fund inventories.

An analysis of the total reduction of Army-owned inventories in the amount of $1.2 billion during fiscal year 1958, shows the following significant changes in the inventory stratification:

A revised policy on economic retention stock which placed stringent criteria on the retention of this property reduced its value from $4.2 billion to $1.4 billion. Some of these stocks were added to the mobilization reserves; others were determined to be excess under operation elimex (elimination of excess stocks).

Operation elimex, which has for its goal the elimination of nonessential stock from the Army supply system, has had 2 significant results; it has reduced the peacetime operating stocks by $1.8 billion (from $6.3 to $4.5 billion) and it has contributed to an increase in the excess account of $2.2 billion (from $3.8 to $6.0 billion).

As of June 30, 1958, 23.2 percent of the distributed portion of Army's supply system inventories were classified as peacetime operating; 37.2 percent mobilization reserve; 7.1 percent economic and contingency retention; 31.1 percent excess; and 1.4 percent claimant stocks. Chart 8 shows the Army supply system inventories by these major classifications.

Army stock fund inventories.-Included in the $20.2 billion inventories shown in table 32 are $6.1 billion carried in the Army stock fund. This $6.1 billion of stock fund inventories in the Army represent 30 percent of the total inventories reported by the Army in its supply system.