North American Aviation, Inc..

American Airlines, Inc.

Chicago & Southern Air Lines, Inc.

North American Aviation, Inc..

Western Air Express Corporation...

Senator MCKELLAR. Does that give the mileage in 1937?
Senator AUSTIN. I think not.

Senator MCKELLAR. Does it give the mileage for 1937 as far as you have gone?

Senator AUSTIN. No; it ends with 1936.

Senator MCKELLAR. That is right. It is perfectly natural that it should.

Senator AUSTIN. There are some other calculations which I have no authority for unless the witness testifies to them, and I will have to postpone it until he comes.

Senator TRUMAN. We will now hear further from Judge Crowley. Senator Austin, you had some questions to ask him, I believe. Senator AUSTIN. Yes.

STATEMENT OF KARL A. CROWLEY, SOLICITOR, POST OFFICE DEPARTMENT-Continued

Senator AUSTIN. Judge Crowley, when you were last on the stand you agreed that you would supply full details of the settlements and the amounts paid in the suits referred to in your examination. Mr. CROWLEY. Yes; you asked for three things, I believe; the amounts paid to the contractors on their settlements-that is, the settlements of those suits

Senator AUSTIN (interposing). That is right.

Mr. CROWLEY (continuing). The exceptions to the proposed report on the application of the American Airlines, and the computation showing the estimated added pay that would be made necessary by the enactment of this bill and especially the amendment by Senator Andrews.

Senator AUSTIN. I think those three things are out of this category. The thing I asked about is the settlements.

Mr. CROWLEY. I have that here in the form of a letter, some six pages long, addressed to Senator Truman, which I will read, if it is agreeable.

Senator AUSTIN. Yes; all right.

Mr. CROWLEY (reading):

POST OFFICE DEPARTMENT,

OFFICE OF THE SOLICITOR,
Washington, April 7, 1937.

Hon. HARRY S. TRUMAN,

Chairman, Subcommittee, Committee on Interstate Commerce,

United States Senate.

MY DEAR SENATOR TRUMAN: On Saturday, April 3, at the hearing before your subcommittee on S. 2, Senator Austin requested that there be placed in the record a statement of facts concerning the settlement of suits brought by domestic air-mail contractors in the Court of Claims for damages alleged to have accrued from the annulment of various air-mail contracts, effective February 19, 1934.

Senator Austin also stated at the hearing on April 5 that he desired to develop statistics regarding miles flown, mail carried, etc., during the past few

years.

Cases filed by several of the contractors have been settled upon advice of the Attorney General of the United States, but no money payments have been made by way of satisfaction for damages.

Some of the former contractors whose contracts were annulled filed suits in the Court of Claims. One suit was filed by Northwest Airlines, Inc.; one by Western Air Express Corporation; one by Transcontinental & Western Air, Inc.; and two by American Airlines, Inc. The four-named contractors early in 1936 proposed to dismiss their suits growing out of the annulment of their contracts with prejudice and without costs, in consideration of payment of the earnings which had accrued under their contracts prior to the effective date of annulment, February 19, 1934, amounting to $601,511.03, and the return of performance bonds, this amount and these bonds having been withheld by the Government while the cases were pending. The amount of damages asserted in the suits in question was $8,841,094.65.

Upon receipt of these propositions, the Post Office Department advised the Attorney General of the terms thereof and received advice from him to the effect that the proposition should be accepted. The letter of the Attorney General with reference to one of these offers of settlement, this letter being typical of all cases settled, reads as follows:

"Your letter of April 15, 1936, in which you advise me of the offer made by the Northwest Airways, Inc., for settlement of the suit of that company now pending in the Court of Claims, has received consideration. It is our understanding that your Department has no objection to the proposed disposition of the matter, if, in the opinion of the Department of Justice, the offer is in the interest of the Government.

"The company offers to dismiss its suit, wherein claims are made for damages by reason of the cancelation, pursuant to your order of February 19, 1934, of an air-mail route certificate theretofore issued to said company, such dismissal to terminate all claims of every nature arising out of the contract or route certificate involved in the suit; that thereupon the moneys earned for the carrying of mails prior to the date of cancelation (which moneys were retained by the Government pending further investigation) should be paid to the company, and the performance bonds deposited with the Government should be returned. "As it would not be appropriate to approve a settlement of a civil controversy if criminal proceedings growing out of the same matter are contemplated, the conclusions of this Department, with reference thereto, should be stated. "The reports of the inspectors of the Post Office Department and other available data relating to this and other mail contracts have been fully examined. There can be no reasonable doubt that the arrangements, understandings, and agreements out of which the route certificate subsequently grew, were highly irregular, and interfered with the freedom of competition contemplated by the statutes. These circumstances and irregularities were such as to impel you to cancel the route certificates as a necessary preparatory step to the putting of the air-mail system of the country upon a more wholesome basis, and one that would work both for the better development of air transportation and the more economical handling of the mails by such means. While the course pursued by you in this respect was amply warranted, it is our opinion that the irregularities referred to are not such as to justify or require criminal prosecution. Such irregularities would, however, be pertinent and vital factors in the event of further litigation.

"The controversy is, therefore, one which, in the exercise of a sound discretion, may appropriately be compromised. The matter is complicated and continued litigation would be both prolonged and burdensome. In the opinion of the Department, it appearing that a settlement can be effected without the payment of any damages because of the cancelation complained of, a termination of the litigation would be to the interest of the Government. We advise, therefore, that the offer made by the Northwest Airways, Inc., should be accepted."

You will note that all payments from Government funds made in these cases were earnings which accrued to the contractors prior to the effective date of annulment, and no money payment whatever was made by way of satisfaction for damages.

Northwest Airways, Inc., which had sued for $531,378.73, received accrued earnings in the amount of $51,365.87. Western Air Express Corporation, which had sued for $774,435, received accrued earnings of $50,711.43. Transcontineutal and Western Air, Inc., which had sued for $2,684,280.92, received accrued earnings of $183,865.26. American Airlines, Inc., which had sued for $4,851,000, received accrued earnings of $315,568.47. The aggregate of the amount sued for in the cases settled was $8,841,094.65, and the aggregate

accrued earnings paid in settlement thereof was $601,511.03. The total amount claimed in all suits relating to air-mail contracts was $15,324,514.10, and these settlements disposed of $8,841,094.65 of this amount.

The further information which Senator Austin desires is as follows:
Mail pay for the fiscal years 1931 to 1936:

Miles flown in mail service for the fiscal year 1936, nevertheless, exceeded any of the prior years as reported, miles flown being as follows:

$0.417

The average mail pay per mile for these years was as follows:

. 283

.311

The pounds of mail transported have greatly increased, poundage being as follows:

Pound-miles performed have also increased, being as follows:

It is gratifying to note that express and passenger revenue have steadily increased. Express revenue has been as follows:

It will thus be observed that the total passenger and express revenue of the contractors has increased as follows:

1931

1932. 1933

$1,560, 492 1934.
4, 984, 122 1935.
6, 610, 315 1936_.

$9, 289, 519

12, 782, 630 18, 209, 431

By way of comparison, it may be observed that whereas in the fiscal year 1933 there were flown 35,909,811 miles, 6,741,788 pounds of mail being transported at a cost of $19,400,264, the average mail pay per mile being $0.540 and the pound-miles performed being 4,834,540,535; in the fiscal year 1936, 38,699,449 miles were flown, 15,377,993 pounds of mail being transported at a cost of $12,034,953, the average mail pay per mile being $0.311 and the pound-miles being performed being 9,771,841,815. In other words, more than double the amount of mail was transported at far less cost. At the same time, the express revenue of the contractors almost quadrupled and their passenger revenue almost trebled. While, as noted, the mail pay for 1936 was a great deal less than the mail pay for 1933, the grand total of express and passenger revenue and mail pay, which was $26,010,579 in 1933, was $30,244,384 in 1936. Trusting that this is the information which is desired by Senator Austin, I remain

Very truly yours,

KARL A. CROWLEY, Solicitor.

Senator AUSTIN. Then I asked for the Ristine report.

Mr. CROWLEY. I am informed that there is no such report.
Senator AUSTIN. Who informed you of that?

Mr. CROWLEY. I asked Mr. Page to get in touch with the Department of Justice, and it seems, according to the best information we can get, the advice was just informally given to the Attorney General. Senator MCCARRAN. What was that, Senator?

Senator AUSTIN. The Ristine report to the Attorney General, concerning which there was publicity, and which report I put into the Congressional Record.

Mr. CROWLEY. We have no such report. At the time Colonel Ristine was employed on that work by the Attorney General, I had Mr. Thomas J. Murray, Assistant Solicitor, in my office, and it was Mr. Murray who informed me that we have no such report.

Senator MCCARRAN. Mr. Ristine was employed for quite a considerable time on that?

Mr. CROWLEY. He was appointed as special assistant to the Attorney General about the time we were holding these foreign-air mail and ocean-mail hearings.

Senator MCCARRAN. Yes; and for a long time afterward?

Mr. CROWLEY. Yes, and I think he still is; but he has been detailed to different kinds of work. Just what kinds, I do not know.

Senator MCCARRAN. Do I understand that he made no report of his investigation?

Mr. CROWLEY. Well, he has given us none. If there is any such report, we have not been informed of it. If there is any such report, it is in the Department of Justice, and we haven't anything to do with it. I myself have never seen it.

Senator AUSTIN. I have no further question to ask.

Senator TRUMAN. Is Mr. Haley here?

Mr. HALEY. I am here, Mr. Chairman.

Senator TRUMAN. Mr. Haley, will you take a seat at the table?

STATEMENT OF NORMAN B. HALEY, DIRECTOR OF THE BUREAU OF AIR MAIL OF THE INTERSTATE COMMERCE COMMISSION, WASHINGTON, D. C.

Senator MCCARRAN. I would like to ask Senator McKellar if this is the Mr. Haley to whom he referred.

Senator MCKELLAR. I think he is the one who came to my office with Mr. Branch and Commissioner McManamy-are you note? Mr. HALEY. Yes, sir.

Senator MCKELLAR. You are the one who was present there?
Mr. HALEY. On one occasion; yes.

Mr. Chairman, I am Norman B. Haley, Director of the Bureau of Air Mail of the Interstate Commerce Commission. I have been continuously employed in the service of the Commission for a period of over 27 years, and during that time I have had no other interest or vocation. Mine has been strictly a career service.

When the Emergency Railroad Transportation Act of 1933 was passed, Commissioner Eastman was appointed Federal Coordinator of Transportation, and he asked me to serve on the staff of his or