Since its fixation of rates initially on the routes, the Commission has changed the rates only in one case involving two routes.

The Air Mail Act as amended contains directions and limitations which the Commission has literally followed in the determination of the rates that it has announced or published.

Mr. MAPES. May I ask a question?

The CHAIRMAN. Mr. Mapes.

Mr. MAPES. May I ask, when the Post Office Department wants to establish an air-mail route, how the Interstate Commerce Commission functions; what it would have to do with it?

Mr. HALEY. If the Postmaster General has the need or desire to establish an air-mail route, he advertises for bids and accepts the lowest responsible bid that is made for the transportation of the mail. Then, the Commission, after the preliminary period of that contract, would be required to fix a fair and reasonable rate to take the place of the contract rate.

Ultimately the Commission fixes the rate for the transportation of the mails.

Mr. MAPES. For how long a time can the Post Office Department contract with the carrier to carry the mail and in that way fix the rates?

Mr. HALEY. In the present act it is a period of 3 years. Then, those contracts, upon satisfactory performance, become indefinitely continued, subject to the Commission's rates.

Mr. MAPES. How do your rates, as a rule, compare with the rates provided by the Post Office Department in the contracts?

Mr. HALEY. Well, there are necessarily some variations. The contract rates were flat rates for so much per airplane-mile.

The Commission's rates are related to definite average monthly mileages and are scaled in a way so that they will fluctuate with the increase or decrease in the frequency of service required from time to time by the Postmaster General.

Mr. MAPES. What consideration do you give to the revenue received from the carriage of the mails?

Mr. HALEY. There is a provision in the present act that requires the Commission to so fix its rates on all routes that, by July 1, 1938, the compensation under those rates shall be within the anticipated postal revenues from air mail. That is one of the limitations of the present Air Mail Act. It is as yet a little early to make a definitive finding as to what the anticipated postal revenues will likely be in the year beginning July 1, 1938, although the Commission, in December, instituted a proceeding for that purpose at which the representatives of all of the air carriers and the Postmaster General aupeared and presented their views. That proceeding is pending before the Commission, and no decision has been reached.

Mr. MAPES. Do you have any authority over the fixing of the postage rates?

Mr. HALEY. No, sir. That is fixed by the present Air Mail Act. Section 2 of the present act fixes the postage rate at 6 cents per ounce. That is fixed by Congress.

Commissioner EASTMAN. Mr. Chairman

Mr. BULWINKLE. Mr. Chairman, in order to get it before the committee: The Interstate Commerce Commission fixes the contract rates with the rail carriers for the carriage of mail, do they not?

Commissioner EASTMAN. They do, for the carriage of railway

mails.

Mr. BULWINKLE. How long has the Commission done that? Commissioner EASTMAN. I could not tell you, offhand. It has been doing it ever since I have been a member of the Commission. Mr. HALEY. Since 1916, Mr. Chairman.

Mr. BULWINKLE. 1916?

Mr. HALEY. Yes, sir.

Mr. MARTIN. May I ask one more question?
The CHAIRMAN. Mr. Martin.

Mr. MARTIN. In your opinion, would this bill, if enacted, create any conflict between the Commission and the Post Office Department in the matter of handling the air mails?

Commissioner EASTMAN. I do not see why it should create any conflict as far as fixing the compensation for the carriage of the mail is concerned, any more than a conflict would arise in connection with the fixing of the rates for the carriage of the railway mails.

Of course, there may be differences of opinion as to what those rates should be. In fixing the railway-mail-pay compensation, for example, the Postmaster General has always presented his case at great length before the Commission, as have the railroads.

The only other thing is that as this bill is drawn, the question of determining what carriers, other than those who are now carrying the air mail, shall be employed to carry it in the future is left to the determination, final determination, of the Commission.

There, again, there might be a difference of opinion between the two departments as to what ought to be done.

Mr. MARTIN. Not having had any opportunity to study these different bills, I was just wondering what powers, roughly speaking, are now exercised by the Post Office Department over the air-mail system which would be transferred to the Interstate Commerce Commission.

Commissioner EASTMAN. Well, of course, this act, to answer your question, goes much further than the present powers which are possessed by the Post Office Department or by the Commission itself. It provides for regulation over the rates and charges of the air carriers for passenger, express, and freight service, such as the Commission has over the rates and charges of the railroads and motor carriers. It provides for control over the issue of securities, for example; over the unification of air carriers, and all that sort of thing, which is not provided for by the present law at all.

Now, so far as the present law is concerned, the Postmaster General has the initial right to make contracts, but the duty is in the Commission to determine what the compensation under those contracts shall be. This bill would leave that situation just as it is at present.

Mr. WADSWORTH. This bill, then, does not take away from the Postmaster General any power that he now possesses, except perhaps the final decision as to which route shall carry the mail.

Commissioner EASTMAN. I think that is the chief thing, the final decision as to which carriers, in addition to those which now have contracts and are given by this bill the right to continue the carriage of the mails, shall have the right to carry the mails for the future.

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Mr. MARTIN. Would it give the Commission power to establish new routes and increase or decrease service, or bring about consolidations, and things of that character?

Commissioner EASTMAN. In connection with the carriage of the

mails?

Mr. MARTIN. Yes.

Commissioner EASTMAN. I do not so understand. The Commission would have the right to grant a certificate of convenience and necessity covering new operations; would have the right to determine, in the last analysis, whether those new operators should or should not carry the mail; but when it comes to fixing the schedules for carrying the mail and how much mail shall be given to each operator, my understanding is that would continue to remain with the Postmaster General.

Mr. MARTIN. For instance, now, under present legislation, the Post Office Department establishes new routes and makes extensions and increases in the service and things of that character.

Commissioner EASTMAN. Yes.

Mr. MARTIN. Would those powers be transferred to the Commission?

Commissioner EASTMAN. So far as the present air carriers are concerned, they would have the right and duty under this bill to carry the mail. My understanding is that the determination of how much mail they should carry and how they shall carry it would rest with the Post Office Department, the Commission fixing the compensation.

Mr. MARTIN. The way I found all of this out, I have been trying to get an extension or a new route for the last 4 years. I have not gotten it, but I have learned something.

Commissioner EASTMAN. May I proceed?

The CHAIRMAN. Yes, Mr. Eastman.

Commissioner EASTMAN. I have been endeavoring to show that the events which have transpired since the report of the Federal Aviation Commission all tend to support the conclusions which that Commission reached as to the desirability of regulation such as is now proposed. At this point may I say a very brief word in regard to the conclusions that I reached when I was Federal Coordinator of Transportation in regard to the general regulation of transportation?

I think it is clear that transportation is an industry that must be publicly regulated. That fact seems to be conceded all over the world. It is an industry which is so affected with a public interest that such regulation is necessary in order to protect that interest, and that regulation should cover, in my judgment, all important forms of transportation.

I also reached the conclusion that the transportation problem is, after all, a single problem and not a series of problems, because all of these forms of transportation are interrelated in at least two ways: They are either interrelated by competition or they are interrelated by the opportunities for cooperation and coordination between them or by both. Therefore it seems highly desirable to concentrate regulation in a single body instead of spreading it over a number of separate bodies. That is necessary, not only in the interest of proper coordination between these various forms of transportation, but to insure fair and impartial treatment of them all by a body which has

no greater or different responsibility with respect to any one of them than to any of the others.

Now, before taking up the details of this bill, there are three matters of rather general importance raised by the bill which I shall discuss.

This bill covers operations, not only in interstate commerce, but in what is called overseas commerce, and in foreign commerce.

Overseas commerce is defined as commerce between the United States and its Territories and possessions which are separated by the ocean from the continental United States.

So far as the regulation of foreign commerce is concerned, there are, of course, many difficulties which are not present in the regulation of interstate commerce or in overseas commerce.

The Commission has had no experience with the regulation of foreign commerce in the sense in which it would have supervision under this bill. We do regulate the operation of the railroads in foreign commerce, but those operations are wholly confined to this country, of course. In other words, they are simply the operations of the railroads in carrying export and import traffic to and from the ports. But when it comes to regulation of foreign commerce which embraces the entire field-in other words, the transportation from this country to other countries, or in the reverse direction-of course, the foreign country has the same right to regulate that this country may have, and that introduces complications which are not present when we are confining ourselves to domestic operations.

The Commission has felt doubt ful about the wisdom of including the regulation of foreign commerce, initially, feeling that it might be wiser to try out the regulation of interstate and overseas commerce until the Commission became more fully informed in regard to the air carrier industry and had had an opportunity to investigate and consider these difficulties presented by the regulation of foreign commerce.

However, it is a fact that the operations of air carriers in foreign commerce are expanding with great rapidity and apparently many of the air carriers themselves are desirous that there should be some regulation over that phase of their transportation.

The Commission has no objection to trying its hand at that regulation, if that is desired by the Congress. In principle, there is no objection to it. The only question that arises is as to the practical difficulties in the way of such regulation.

The second point that I shall speak of is with respect to the jurisdiction over the safety of operation. In one of the bills, the jurisdiction which the Department of Commerce now has over safety of operation of air carriers is proposed to be transferred to the Interstate Commerce Commission. That is not true of H. R. 5234, however, which would leave that jurisdiction over safety of operation with the Department of Commerce, as it is now.

Mr. MARTIN. Mr. Chairman.

The CHAIRMAN. Mr. Martin.

Mr. MARTIN. Why should it not go to the Interstate Commerce Commission if the rest of it goes there?

Commissioner EASTMAN. Well, I shall give you the comments on that particular matter, which I made before the Senate committee. I was then speaking of the so-called McCarran bill, S. 2, and said

that that bill contained a separate chapter 2, to be known as the Air Safety Act of 1937, which would in effect transfer to the Interstate Commerce Commission in strengthened form, and insofar as air carriers engaged in regularly scheduled air service are concerned, the jurisdiction with respect to standards of safety for air transportation now exercised by the Department of Commerce. The Commission now has comprehensive jurisdiction over highway motor carriers with respect to matters affecting safety of operation, and for many years it has had jurisdiction over various important matters affecting safety of operation of carriers by railroad. On the other hand, the jurisdiction now exercised by the Department of Commerce over safety in air transportation is quite like that which for many years it has exercised over safety in water transportation.

This Commission has repeatedly urged that Federal regulation of transportation be concentrated in one administrative body. This is because the various forms of transportation are so interrelated, competitively and otherwise, and because of the clear need for impartial regulation of them all by a body which has no greater responsibility for or interest in one than another. In other words, transportation should be dealt with as an entity and not as a series of separate problems.

The need for concentration of administration, however, is not so clear in the case of safety as in the case of various other matters. Moreover, the need for safety regulation, in the case of air transportation, extends beyond the common carriers of persons or property to the many privately operated airplanes. As S. 2 is drawn, the jurisdiction of the Commission with respect to safety would be confined to the air carriers engaged in regularly scheduled service, and the Department of Commerce would continue to exercise similar jurisdiction over all other aircraft. Such a division of authority might lead to unnecessary duplication of staffs and equipment. On the other hand, it might be deemed inadvisable to extend the jurisdiction of the Commission over safety matters beyond the field of public carriage for hire into the field of private operation.

The question is one of policy on which it is hardly appropriate for us to express an opinion. We believe that the Commission can administer, economically and efficiently, any functions and duties with respect to safety in air transportation which the Congress may see fit to entrust to the Commission. Beyond that expression of belief we do not undertake to go.

Mr. MARTIN. Is this your own statement?

Commissioner EASTMAN. Yes, sir; this is a statement on behalf of the legislative committee.

Mr. MARTIN. Do I understand that the pending bill only involves carriers in public service, not private service?

Commissioner EASTMAN. That is right.

Mr. MARTIN. Section 320 of H. R. 5234, under the heading of "Safety Regulation", is very short.

SEC. 320. Nothing herein contained shall be construed in any way to impair or affect the jurisdiction exercised by the Secretary of Commerce relative to the safety of operation of aircraft.

Now, as I understand it, the whole question of the reorganization of the executive departments of the Government revolves around matters of duplication, overlapping, and all that sort of thing; but it looks like whenever we get up against an instant case where that sort of thing might be remedied, we go right ahead and do some more of it. I am not a stickler for what department or commission shall have jurisdiction over any particular field, except that it shall have jurisdiction of all of that field, and it looks to me as if the Interstate Commerce Commission is going to be given what is tantamount to regulation of the whole air field, with the single exception of safety, that feature ought to go there, too, and the Interstate Commerce Commis