tion of mails; also that accredited representatives of the Post Office Department shall be permitted free access to the contractor's landing places, flying equipment, etc., for purposes of inspection, at any time;

(d) That unless otherwise agreed to by the Postmaster General, all flying equipment used on said Route No. 14 shall be of United States manufacture, and all other equipment and supplies necessary for the performance of the service hereunder shall be of United States manufacture or United States products if practicable; also that, except in emergency, all pilots and flying crews shall be citizens of the United States and the pilots licensed by the United States Department of Commerce, and all other employees of the contractor in the performance of service hereunder shall be citizens of the United States as far as may be practicable;

(e) That the contractor shall make its own arrangements at its own expense in securing concessions to operate in the territories traversed, for landing fields or facilities to land the mails from the water, lighthouses, radio stations, and such other aids to navigation and other arrangements as may be necessary for the proper performance of the service hereunder, unless some such aid is provided by a United States Government Department authorized to do so;

(f) That the contractor shall furnish such evidence of the performance of service and in such form as may be prescribed by the Postmaster General;

(g) That the contractor shall keep its books, records, and accounts relating to this contract and to the maintenance and operation of its aircraft and services covered by this contract, in such form and under such regulations as may be prescribed by the Post Office Department, and further it shall furnish, upon notice from the Post Office Department, such statements of financial operations, special reports, memoranda of any facts and transactions appertaining to the performance of this contract or transactions or operations thereunder, directly or indirectly affecting the financial results of such operations, and including all transactions or operations appertaining or subsidiary thereto, which in the opinion of the Postmaster General may affect the financial results in the performance of, or transactions or operations under, this contract; that representatives of the Post Office Department shall be permitted to examine and audit the books, records, and accounts of the contractor covering the operation of this contract whenever the Postmaster General may deem it advisable; that special agents or examiners that may be employed by the Post Office Department shall be permitted to examine all accounts, records, and memoranda kept or required to be kept which relate directly or indirectly to the performance of this contract; that the accounts, records, and memoranda of the contractor relating to this contract shall be preserved as directed by the Postmaster General, and that the provisions of this paragraph shall apply also to affiliate, subsidiary and holding companies of the contractor;

(h) That at all times during the existence of this contract the president and managing directors of the contractor shall be citizens of the United States, and the title to at least 75 per cent of the corporate stock of the contractor shall be vested in citizens of the United States free from any trust or fiduciary obligation in favor of any person or persons not citizens of the United States and be free from control by any means whatsoever by any person or persons not citizens of the United States or by any other corporation controlled by a person or persons not citizens of the United States;

(i) That if in the opinion of the Postmaster General the contract rates are too high in view of the operating results of the route, he may from time to time after the initial five-year period of the term of this contract and after due notice and hearing given the contractor, reduce such rates to rates he (the Postmaster General) may find reasonable, any such reduced rates to be applicable to service during the remainder of the contract term or such portion thereof as the Postmaster General may order; provided that in any such case the contractor shall have the right to continue service at the reduced rates or relinquish this contract.

5. It is further understood and agreed

(a) That deductions from pay hereunder may be made for suffering the mails to become wet, damaged, lost, or destroyed, or for other delinquencies in service, in the discretion of the Postmaster General; also that the contractor shall be answerable in damages to the United States for any loss or damage resulting to the mails or any part thereof by reason of any failure on

its part, or its officers, agents, or employees, to exercise due care in the custody, handling, or transportation thereof;

(b) That the Postmaster General, in his discretion, may impose a fine or fines or other penalties upon the contractor in accordance with the provisions of the Postal Laws and Regulations and of the said advertisement, and/or annul this contract, for extended delays due to faulty equipment or other avoidable reason; or for repeated failures in the performance of service; or for subletting the service or any part thereof under this contract without permission of the Postmaster General; or for assigning or transferring this contract; or for combining to prevent others from bidding for the performance of any postal service; or for failure to provide aircraft as specified herein; or for failure to comply with the provisions of section 4, paragraph (g) hereof, or for any other default on the part of the contractor in the performance of this contract, and the annulment of this contract shall not impair the right of the United States to claim damages from the contractor for the failures or defaults; provided that the contractor will not be held liable for failure in performance due to laws or decrees of foreign governments, wars, insurrections, riots, strikes, or acts of God;

(c) That if any promotion or attempted promotion of the sale of stock by the contractor upon the representation or basis of having this mail contract, be unwarranted in the opinion of the Postmaster General, he may annul this contract;

(d) That this contract shall not be transferred or assigned and may be sublet only upon permission of the Postmaster General that may be given for reasons satisfactory to him for subletting only to a subcontractor that can qualify as to ability to perform the service hereunder and that otherwise is satisfactory to the Postmaster General, and then at rates not less than the contract rates of pay;

(e) That the contractor warrants that it has not employed any person to solicit this contract upon any agreement for a commission, percentage, brokerage, or contingent fee. Breach of this warranty shall give the Government the right to annul this contract or, in its discretion, to deduct from the contract price or consideration the amount of such commission, percentage, brokerage, or contingent fee. This warranty shall not apply to commissions payable by contractors upon contracts or sales secured or made through bona fide established commercial or selling agencies maintained by the contractor for the purpose of securing business;

(f) That no Member of or Delegate to Congress or Resident Commissioner shall be admitted to any share or part of this contract, or to any benefit that may arise thereupon, but this provision shall not be construed to apply to any case wherein the contract is for the general benefit of the contracting corporation;

(g) That this contract is subject to all the provisions of the act of Congress approved March 2, 1929 (39 U. S. C. 465a, 465b, Supp. V), to the provisions of the advertisement of the Postmaster General hereinbefore mentioned, and to the Postal Laws and Regulations and postal practices applicable to this contract and service.

6. It is further understood and agreed that the term of this contract shall be ten (10) years, beginning at a date optional with the contractor but not later than 1936.

In witness whereof the parties hereto have executed this contract on the dates appearing opposite their names. THE UNITED STATES OF AMERICA, Postmaster General.

Signed

By 1935, in the presence of

By

PAN AMERICAN AIRWAYS COMPANY,

BOND

(In addition to the bond furnished with the proposal)

Know all men by these presents, That the Pan American Airways Company of the City of San Francisco and State of California as obligor, is held and firmly bound unto the United States of America, in the penal sum of five thousand dollars ($5,000), lawful money of the United States, for the payment of which sum, well and truly to be made to the United States, without relief from valuation or appraisement laws, does bind itself, its heirs, executors, administrators, successors and assigns, firmly by these presents.

Whereas the aforesaid Pan American Airways Company obligor, has entered into the foregoing contract with the United States for air mail service on the route designated as no. 14, from San Francisco, California, by Honolulu, Hawaii, and Manila, Philippine Islands, to Canton, China, and return;

The condition of the above obligation is such, That if the said Pan American Airways Company obligor, shall perform the service and undertakings according to its said contract, then this obligation shall be void; otherwise to be in full force and obligation in law.

The above-bounden obligor, in order the more fully to secure the United States in the payment of the aforementioned sum, hereby pledges as security therefor, in accordance with the provisions of section 1126 of the Revenue Act of 1926, as amended, securities in the principal sum of five thousand dollars ($5,000), which said securities are numbered serially, are in the denominations and amounts, and are otherwise more particularly described, as follows:

which said securities have this day been deposited with Harllee Branch, Second Assistant Postmaster General, and his receipt taken therefor.

Contemporaneously herewith the undersigned has also executed and delivered an irrevocable power of attorney and agreement in favor of Harllee Branch, Second Assistant Postmaster General, authorizing and empowering said officer as such attorney to collect or sell the above-described securities so deposited, or any part thereof, in case of any default in the performance of any of the above-named conditions or stipulations.

In witness whereof, this bond has been signed, sealed, and delivered by the above-named obligor, this 1935.

[SEAL]

day of

PAN AMERICAN AIRWAYS COMPANY,

By

Signed, sealed, and delivered in the presence of—

Name:

Address:

Name:

Address:

POWER OF ATTORNEY AND AGREEMENT

Know all men by these presents, that the Pan American Airways Company, a corporation duly incorporated under the laws of the State of Nevada and having its principal office in the city of -, State of California, in pursuance of a resolution of the board of directors of said corporation, passed on the day of 1935, a duly certified copy of which resolution is hereto attached, does hereby constitute and appoint Harllee Branch, Second Assistant Postmaster General, and his successors in office, as attorney for said corporation, for and in the name of said corporation to collect or to sell, assign, and transfer certain securities described as follows:

such securities having been deposited by it, pursuant to authority conferred by Section 1126 of the Revenue Act of 1926, as amended, and subject to the provisions thereof and of Treasury Department Circular No. 154, dated February 6, 1935, as security for the faithful performance of any and all of the conditions or stipulations of a certain obligation entered into by it with the United States, under date of 1935, which is hereby made a part

hereof, and the undersigned agrees that, in case of any default in the performance of any of the conditions and stipulations of such undertaking, its said attorney shall have full power to collect said securities or any part thereof, or to sell, assign, and transfer said securities or any part thereof without notice, at public or private sale, free from any equity of redemption and without appraisement or valuation, notice and right to redeem being waived, and to apply the proceeds of such sale or collection, in whole or in part, to the satisfaction of any damages, demands, or deficiency arising by reason of such default, as its said attorney may deem best; and the undersigned further agrees that the authority herein granted is irrevocable.

And said corporation hereby for itself, its successors and assigns, ratifies and confirms whatever its said attorney shall do by virtue of these presents. In witness whereof the Pan American Airways Company, the corporation hereinabove named, by (name and title of officer), duly authorized

to act in the premises, has executed this instrument and caused the seal of the corporation to be hereto affixed this day of 1935. PAN AMERICAN AIRWAYS COMPANY,

of

[CORPORATE SEAL]

By

Before me, the undersigned, a notary public within and for the county in the State of (or the District of Columbia), per(name and title of officer), and for and in behalf corporation, acknowledged the execution of the foregoing power

sonally appeared of said

I,

certify that I am secretary (or assistant secretary) of the corporation named as contractor herein; that who signed this contract and bond on behalf of the contractor, was then of the said corporation; that said contract and bond were duly signed for and in behalf of said corporation by authority of its governing body, and is within the scope of its corporate powers.

[CORPORATE SEAL]

CERTIFICATE OF OATH OF CONTRACTOR

I, the undersigned, being employed in the care, custody, and conveyance of the mail as contractor on the route named in the foregoing contract, do solemnly swear that I will faithfully perform all the duties required of me, and abstain from everything forbidden by the laws in relation to the establishment of post offices and post roads within the United States; and that I will honestly and truly account for and pay over any money belonging to the said United States which may come into my possession or control; and I also further swear that I will support the Constitution of the United States; so help me God. PAN AMERICAN AIRWAYS COMPANY, By Contractor

Sworn to and subscribed before me a notary public this

1935.

Contract and bond approved as to fact:

[SEAL]. day of

Notary Public.

Second Assistant.

Contract, bond, and execution approved as to form and legal sufficiency:

Mr. BRANCH. Would you like to have a copy of the advertisement to go along with it?

Senator MCKELLAR. And the advertisement, too, may go along with it; yes, sir.

Mr. BRANCH. I will submit it for the record.
(The advertisement referred to is as follows:)

ADVERTISEMENT FOR FOREIGN AIR MAIL SERVICE

POST OFFICE DEPARTMENT, Washington, D. C., August 13, 1935.

1. Sealed proposals will be received at the Office of the Second Assistant Postmaster General in Washington, D. C., until 12 m., October 21, 1935, for carrying the mails herein specified by aircraft during a term of ten years, beginning at a date optional with the contractor, but not later than one year from the date of the award of contract, in accordance with the provisions of this advertisement, on the following-described route:

ROUTE NO. 14. FROM SAN FRANCISCO, CALIFORNIA, BY HONOLULU, HAWAII, AND MANILA, PHILIPPINE ISLANDS, TO CANTON, CHINA, AND RETURN

(If it is not practicable for the contractor to make operating arrangements for landing at Canton, service may be performed to a point immediately accessible to Canton, satisfactory to the Postmaster General, or the service curtailed to terminate at Manila pending the making of operating arrangements for landing at Canton or at some point immediately adjacent to Canton, payments to be made at the contract rates accordingly.)

This service is being inaugurated to provide for a more expeditious method of transporting the mails of the United States to and from the Hawaiian Islands, the Philippine Islands, and the Far East, and to promote more friendly and better trade relations with Far Eastern countries. Accordingly, a Committee composed of the Secretary of State, the Secretary of War, the Attorney General, the Postmaster General, the Secretary of the Navy, and the Secretary of Commerce, will be formed, which will examine all bids received under this advertisement. Upon the report of this Committee the Postmatser General will determine the qualifications and responsibilities of any bidder, whether any bid should be accepted, and any other questions of administrative policy in connection with the award of such contract.

2. The frequency of service each way shall be once a week; provided that the Postmaster General may increase or reduce the frequency as he may determine to be in the public interest, with allowance of increased pay at the contract rate for any increased service and with reduction at the contract rate for any decreased service involved thereby.

3. The Postmaster General, with the consent of the contractor, may curtail the route to omit points and omit intermediate points or embrace such intermediate points as may be deemed necessary for safety in operation or for postal purposes, with allowance of additional pay at the contract rate for any additional mileage involved and with reduction of pay at the contract rate for any reduced mileage involved. The Postmaster General shall have the right, after due hearing given the contractor, to discontinue the contract and service connected therewith or curtail such service upon the payment to the contractor of one month's extra pay as full indemnity and compensation under said contract, in accordance with Order No. 7592 (copy attached hereto). The contract may be terminated by Congress as provided by the act of June 8, 1872, 39 U. S. Code, 656. No allowance of additional pay shall be made if such discontinuance of said service is ordered by reason of any fault of the contractor in performance of the service under said contract. Service on the whole or any portion of the route may at any time be suspended or discontinued upon reaching an agreement between the contractor and the Postmaster General without the allowance of any indemnity.

4. The service shall be performed by a schedule satisfactory to the Postmaster General. The schedule to be authorized will require continuous flights over the route or as continuous as may be practicable. Day and night flying may be required.

5. The contractor shall carry on all authorized flights each way over the route, all mails (of the United States and its possessions and of other countries) offered by post offices of the United States and its possessions on the route and all mails offered by post offices of other countries on the route or by United States representatives at any point of landing, under arrangement therefor by the U. S. Post Office Department. All mails carried must be for the account of the U. S. Post Office Department.

6. The specified load of mails to be carried per flight each way over the route, to be paid for at the mileage rate, shall be eight hundred (800) pounds