over the countries of Europe, and they are forging ahead in a line of industry in which we should lead.

The airplane in its essentials is no longer an experiment. The real problem is to make it safe and to convince the people that it is safe. The industry is in its infancy. Its possibilities are boundless. Its value in transportation and commerce, if developed as we hope, will be vast. It may never be so cheap as rail or water transportation per mile traveled, but it may be when distance and time are given due consideration. Illimitable space is open to whomsoever will use it. One reason why water transportation is cheaper than rail is because there is no expense for right of way or tracks. It is confined, however, to certain courses or lines and subject to obstructions of various kinds. Air navigation is confined to no particular course and there are no special obstructions. Nothing is paid for tracks or right of way either by way of construction or for repairs or maintenance. There will be no exclusive lines and no monopolies in lines of travel. A short time ago S. 2815 was introduced by Senator Wadsworth, of New York, and referred to the Committee on Commerce. It was most sweeping in its terms and scope. Under it a bureau of civil aviation would be created in the Department of Commerce and all civil aircraft in the country, no matter how engaged, whether interstate or wholly intrastate, would be placed completely under the control of the commissioner of civil aviation, subject, of course, to the Secretary. That bill was prepared by those especially interested in the aircraft industry. It was submitted to the executive committee of the National Advisory Committee for Aeronautics. This advisory committee consists of 12 members appointed by the President and was established by law in 1915. It consists of two representatives from the Army, two from the Navy, the Secretary of the Smithsonian Institution, Director of the Bureau of Standards, Chief of the Weather Bureau, and five civilians from private life. The bill had the hearty approval of that committee. It was also submitted to the committee of the American Bar Association, which gave it its approval and expressed confidence in its constitutionality, and an opinion was rendered by a strong firm of attorneys upholding its constitutionality in every part. This opinion is found in the hearings had on the bill. The Commerce Committee held hearings on this bill. No one appeared or asked to appear in opposition to it. Representatives of the industry urged its passage and letters were received from many who could not come urging its passage, although some suggested modifications in some minor particulars.

Congress has been denounced unsparingly for passing legislation regulating and controlling business. It is rather startling, to say the least, to have an industry really in its infancy and capable of boundless development asking and urging legislation putting the business completely under Federal control. This emphasizes the character of the business and the need of legislation.

Your committee have studied the question very carefully. We are impressed with the lack of development here compared with the Dossibilities and compared to the progress of the industry in other countries. Other nations have grasped its importance commercially and as a means of national defense. Legislation has been passed by all the important countries establishing unified control, and in many cases large money subsidies have been given to encourage develop

ment and the establishment of air lines, with a result thus described by Gen. Patrick, Chief of the Air Service of the Army:

Without going largely into statistics and quoting many figures, a very brief statement of it is this: Air routes have been laid out all over France, from France to England, from England to Belgium, and in Germany, and connecting with many countries, and the planes are flown on regular schedules, with printed time-tables, and with tariffs clearly specified for carrying both passengers and freight; and the reports do show that this means of communication is being used commercially, used very largely, and is meeting with a measure of success.

This means improved machines, increased facilities of all kinds, and a permanent corps of trained mechanics and pilots to be drawn upon in case of war. Here but little has been done. No Government aid has been given as such, and appropriations have been uncertain and scanty. This situation led the President to say in his message to Congress transmitting the report of the advisory committee:

I think there can be no doubt that the development of aviation will be of great importance for the purpose of commerce as well as for national defense. While the material progress in aircraft has been remarkable, the use has not as yet been extensively developed in America. This has been due in the main to lack of wise and necessary legislation. Aviation is destined to make great strides, and I believe that America, its birthplace, can and should be foremost in its development.

I therefore urge upon the Congress the advisability of giving heed to the recommendations of the committee, the first and most important of which is that a bureau be established in the Department of Commerce for the regulation and development of air navigation.

We should delay action no longer. The foundation should be laid for active help in the development of this industry. Your committee are anxious to aid in passing legislation under which aviation will grow and prosper. We have not felt justified in placing so much power in a governmental agency as would be granted by the original bill. We hope to guide rather than coerce. We feel that it is better to be too liberal at the start than too restrictive. While this business is different in many respects from any other, we are sure that the fundamental principles of industrial development apply to it. Private initiative may be crushed in this industry, as in any other, and in our judgment should be as free as possible to bring the success we all hope for.

It

Senate bill 3076 is the product of our study and deliberation. It does not go so far as some of the committee would be glad to go. goes further than some think we ought to go. It is a beginning of the basis of a system that we trust will aid in making air transportation safe and that will lead to uniform rules of air regulation in pilot licensing. We have sought to leave private initiative as free as may be and to avoid promoting private monopoly.

Doubtful constitutional provisions have been omitted, but if we have the power to go further, we do not lose it by not doing so. We can go further in the future if it is deemed wise."

We authorize the Secretary of Commerce to establish in his department a bureau of aeronautics, with a commissioner to be appointed by the President, by and with the advice and consent of the Senate, at a salary of $6,000 per annum, and authorize such additional help as may be appropriated by Congress.

We give to the Secretary of Commerce authority through the commissioner of the bureau of aeronautics to regulate and control civil aircraft engaged in interstate commerce and flying over Government

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property, and leave intrastate flying to the control of the States, hoping and believing that they will adopt uniform laws and regulations corresponding with the provisions of this act and the rules and regulations that will be promulgated under it. A few States have already passed quite comprehensive acts dealing with this subject, but many others have not done so, awaiting action by the National Government, and we believe that when a system of rules and regulations controlling aviation for interstate commerce has been adopted by the Secretary these States will largely follow them in the control and regulation of intrastate flying.

Machines used in interstate commerce must be inspected before use and a certificate given as to their condition, capacity, and safety at the date of inspection. This will not hamper experimental genius and energy in the development of new and better types of machines, but will go a long way to insure safety.

Operators and pilots are to be licensed under rules and regulations to be prescribed by the Secretary. Pilots duly licensed under State laws are given the standing of the pilots of this act. Some seriously doubt the wisdom of doing this, but it is believed that State officials will be just as anxious to see that pilots are fully qualified as Federal officials will be, and that State laws and regulations will be just as stringent in this respect as national laws. If this is not so, and we have the power to do so, we can extend the control of the bureau of aeronautics over intrastate commerce. This is a centralization of authority in a bureau of the National Government that we have no desire to have unless it becomes absolutely necessary.

We make data submitted to the committee showing the condition of aviation here and abroad a part of this report. Some of the routes established abroad are given and also the proposed act in full.

The Secretary of Commerce, the Secretary of the Navy, and the Secretary of War, to whom the original bill was submitted, have approved the same with some slight changes, which have been embodied in the bill reported.

[Extracts from the hearings.]

CIVIL AVIATION SUBSIDIES.

I. BRITISH SUBSIDIES, 1921.

Facing a situation with many points similar to the American aviation problem, the British air minstry has recently announced a new plan for encouraging the continuation of the British cross-channel service. A fund of £200,000 a year for three years has been provided, which includes the £50,000 subsidy under which the present British companies, Handley Page Transport (Ltd.) and Instone Air Line, are operating. Actual payments to the operating companies are to be at the rate of 25 per cent of their annual gross earnings. The most interesting feature of the plan is the provision for the placing of orders by the air ministry with constructors for "modern commercial types." The airplanes so constructed are then to be rented by the Government to "approved firms" at a monthly rental of 21 per cent of the cost of the airplanes. After 30 such payments the airplane becomes the property of the operating company. While it is possible that an airplane after 30 months would become obsolescent if not obsolete, the operating company will have paid 75 per cent of the depreciation charge while the Government has paid 25 per cent. In effect the company gets the airplane on the installment plan for 75 per cent of its original cost.

Another provision is for insuring the airplanes by the operating companies in favor of the air ministry against loss or damage by accident resulting from operation, as well as normal insurance against fire, etc.

The following contract, executed September 8, 1921, between the British air council and S. Instone & Co. (Ltd.), is here reproduced in full as showing definitely and in some detail the character and extent of the assistance given by Great Britain to the development of civil aviation:

This agreement, made the 8th day of September, 1921, between the president of the air council (hereinafter called "the president "), of the one part, and S. Instone &,Co. (Ltd.), whose registered offices are situate at Baltic House, Mount Stuart Square, Cardiff, and whose London offices are at 49 Leadenhall Street, in the city of London (hereinafter called "the company "), of the other part, whereby it is agreed as follows:

1. Commencing on Monday, the 21st day of March, 1921, and thereafter during the ensuing period of seven months, daily, or on alternate days, at their option, as approved in writing by the president or any person duly authorized by him, the company shall provide and operate a regular air service between London and Paris and vice versa for the transport of passengers, goods, and mails. The schedule of flights to be undertaken under this agreement shall be approved by the president and no alteration in such schedule may be made without the previous sanction in writing of the president, provided always, and it is agreed, that no flights in excess of those mentioned in the approved schedule shall have the benefit of any payments by way of subsidy hereinafter mentioned.

2. The said service shall involve one flight to and from each of the said places each day, subject to the weather conditions being reasonably suitable for flying.

3. The said service shall be in accordance with time-tables approved by the president and by machines of a type sanctioned by the president. The schedule of fares for passengers and freights shall be subject to the previous approval of the president, and until otherwise agreed between the parties hereto the tariff for passengers booked from London shall be £6 6s. Od. per single trip and £12 per return journey, and booked from Paris 300 francs per single trip and 600 francs per return journey, and for freights booked from London at approximately 1 shilling per pound avoirdupois and booked from Paris at approximately 7 francs per kilo.

4. The president shall forthwith provide and deliver to the company at Croydon Aerodrome two airplanes of the type known as "D. H. 18," and one spare Napier Lion engine and such other machines as the president can make available to assist in the maintenance of the service (hereinafter with any machines or engines supplied by way of replacement, under the provisions of clause 7 hereof referred to as the said machines and engines"). The company shall be responsible for carrying out such work on the said machines and engine as may be necessary to render them air worthy and to maintain them in an air worthy condition the cost of such work shall be included in the operating costs hereinafter mentioned.

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5. The company shall pay to the president for the use of the said machines hire at the rate of £41 13s. 4d. per machine per month. Such hire shall be due on the last day of each month and shall be paid or accounted for accordingly. The company shall not use the said machines and engine for any purpose other than for the purpose of the said service.

6. On the termination of this agreement the said machines and engine (unless the same or any of them shall have been lost) shall be redelivered by the company to the president at Croydon Aerodrome in air-worthy condition (subject to fair wear and tear). The said machines and engine while in the possession of the company shall remain the property of the president, and the brass plate on such machines denoting such ownership shall in no case be obliterated or concealed from view.

7. The said machines and engine during the term of this agreement are to be at the sole risk of the president and if any of them, the said machines and engine, shall be destroyed or damaged so as to be unfit for passenger traffic to such an extent that it is ascertained to the satisfaction of the president such damage can not be made good within a reasonable time by the staff for the time being in the employment of the company, the president shall replace as soon as practicable any of them, the said machines and engine so destroyed or damaged as aforesaid; provided always that the company shall have no claim against the president, whether for loss of profit or otherwise, in consequence of delay in replacement or nonreplacement of machines so destroyed or damaged as aforesaid, but until the replacement thereof the obligation of the company to provide the said service shall be pro tanto suspended, and

also the amount due for hire as stated in clause 5 hereof shall be pro rata reduced.

8. The company shall, at the expense of the company, provide motor and other subsidiary transport services between terminal aerodromes at Croydon and Le Bourget and the central districts of London and Paris, respectively.

9. The president hereby guarantees to the company a clear net profit of 10 per cent on the gross receipts (excluding the payment by way of subsidy hereinafter mentioned) obtained from the carriage of passengers, goods, and mails on flights made in accordance with the said approved schedules. The president shall advance to the company by way of subsidy the sum of £75 in respect of every single flight completed in accordance with the said schedule, and whether the same shall have been made by a machine of a type sanctioned by the president and provided by the company or by one of the said machines, and at the determination of this agreement adjustment shall be made between the parties hereto in manner following, that is to say: If the total amount of the said gross receipts, together with the total amount advanced to the company by way of subsidy as aforesaid shall be less than the amount of the operating costs (to be ascertained as provided in clause 13 hereof), together with the said profit of 10 per cent on the said gross receipts, the amount of such deficiency shall be paid by the president to the company, and if the total amount of the said gross receipts, together with the total amount advanced to the company by way of subsidy as aforesaid, shall be in excess of the amount of the said operating costs together with the said profit of 10 per cent on the said gross receipts the amount of such excess up to the total amount advanced to the company by way of subsidy as aforesaid shall be refunded by the company to the president provided that in no case shall the company be liable to refund to the president any sum in excess of the total amount advanced to the company by way of subsidy as aforesaid.

10. Under no circumstances shall the total sum for which the president shall be liable under this agreement whether by way of subsidy or in respect of such deficiency as aforesaid, or otherwise exceed the sum of £25,000, and if this agreement is determined before the expiration of the said period of seven months mentioned in clause 1 hereof the total sum for which the president shall be liable under this agreement as aforesaid shall be reduced so as to bear the same proportion to the sum of £25,000 as the time for which this agreement shall be in force bears to the period of 7 months.

11. The advances to be made by the president to the company by way of subsidy as aforesaid shall be paid by the president at the conclusion of every fortnight from the commencement of the said service and shall be in respect of the said flights so completed as aforesaid during that fortnight.

12. The company hereby covenant with the president that the company will during the period during which this agreement shall remain in force insure against all third party risks in respect of the said machines and engine in such sum and in such insurance office as shall be approved of in writing by the president and to pay all premiums payable in respect of such insurance within seven days after the same shall become due and will on demand deliver to the president, or any person duly authorized by him, the policy of such insurance and the receipt for every such premium.

13. The company shall keep proper and usual accounts relating to the said service such accounts shall be kept entirely distinct from those of other operations in which the company may be engaged and all books, accounts, and vouchers kept of the services shall be open to the inspection of the president or any person authorized by him during reasonable business hours subject to an appointment being made for that purpose by the president.

14. For the purpose of defining, ascertaining, and agreeing the term operating costs hereinbefore mentioned, the company shall furnish to the president within one month from the date hereof full particulars of the various items which the company consider liability may be incurred or expenditure will be neces sary in connection with the said service together with the estimated costs thereof, including therein the expenses of overhauling the airplanes necessary for maintaining the said service, overhead charges, capital charges, depreciation, purchase of spare parts, insurance premiums (both for the insurance to be effected pursuant to clause 12 hereof and for insurance which may be effected by the company against damage, accident, fire, or third party risks, in respect of machines provided by the company, for the purpose of the said service as aforesaid, and all other matters which will or may arise in connection with running the said service and such items of liability or expenditure, and the estimated costs thereof, shall be subject to the approval of the president,