"The term 'interstate air commerce' means commerce from one State or Territory or possession of the United States, or the District of Columbia, to any other State or Territory or possession of the United States, or the District of Columbia, or from one place in such Territory or possession or District of Columbia to another place in the same Territory or possession or the District of Columbia, except that the term 'interstate air commerce' shall not include commerce from one place in the Philippine Islands to another place in those islands. The term shall also mean commerce between places in the same State through the air space over any place outside thereof, whether such commerce moves wholly by air or partly by air and partly by other forms of transportation."

Under the revision of section 303 (i) suggested above the term "interstate air commerce" would not apply to commerce wholly between places in the Philippines. The application of this term to air commerce between places in other Territories and possessions is, however, a matter concerning which you may wish to seek an expression of views from the departments having jurisdiction over these Territories and possessions.

I desire to invite attention to section 304 (d) of your proposed bill. (d) reads in part as follows:

Subsection

"The Commission is authorized to make all necessary expenditures, at the seat of the Government and elsewhere, for the carrying out of the purpose of this part; to cooperate with and to attend meetings and conventions, when in public interest, of such organizations as are related to or a part of the commercial aviation industry or the art of aeronautics in the United States or any foreign country; to make investigations and conduct research in all matters pertaining to interstate and foreign air commerce when in the public interest."

It is not clear as to what may be the purpose of providing in the subsection quoted above for cooperation with and attendance at meetings and conventions of such organizations as are related to or a part of the commercial aviation industry or the art of aeronautics in any foreign country, and for making investigations and conducting research in all matters pertaining to foreign air commerce, in view of the general purpose of the proposed bill to restrict the activities of the Interstate Commerce Commission to interstate air commerce. There are numerous foreign aeronautical organizations of an official and semiofficial nature dealing with air navigation on an international or a regional basis.

Generally speaking, these organizations deal with problems that do not directly concern air-transport operations in the United States, although the Department of State has been disposed to obtain, through its representatives abroad, as much information as possible concerning the work of such organizations as may be of interest to any agencies of this Government. The work of these organizations is to be distinguished from international aeronautical conferences dealing with international aviation on broad lines, at which the United States has from time to time been represented.

The Department of State would, of course, be disposed to cooperate with the Interstate Commerce Commission in the matter of obtaining from the Department's representatives abroad any data that might be of interest to the Commission in connection with its duties, and as the Department of the Government charged with the duty of making preparations for international conferences, the Department of State would in making recommendations for the selection of American delegates to attend any international aeronautical conferences be glad to take into consideration the desirability of designating one or more representatives of the Interstate Commerce Commission or of any other agency of this Government having an interest in the questions on the agenda of the conference. It is suggested that the provision of the subsection quoted which authorizes the Interstate Commerce Commission to make investigations and conduct research in all matters pertaining to foreign air commerce might result in an overlapping of jurisdiction as between the Interstate Commerce Commission and the Department of Commerce, in view of the apparent intention to continue to have matters of foreign air commerce handled by the Department of Commerce in cooperation with the Department of State.

In view of the above comment you may desire to consider whether it might not be desirable to omit the words "or any foreign country" and the words "and foreign" in subsection (d) of section 304 of the proposed bill.

It is suggested that you may, if you have not already done so, desire to seek an expression of the views of the War Department concerning section 318 of the proposed bill, relating to the regulation of aeronautical activities and facilities in the Canal Zone, in view of the fact that the Canal Zone has been declared by the President to be a military air space reservation.

Sincerely yours,

CORDELL HULL.

TERRITORIES AND PRINCIPAL ISLAND POSSESSIONS OF THE UNITED STATES

The Territories and the principal islands and island groups under the sovereignty of the United States of America comprise the Territory of Alaska (which includes all of the Aleutian Islands east of longitude 167° east of Greenwich); the Territory of Hawaii (including Ocean or Kuré Island and Palmyra Island); Kingman Reef; Johnston or Cornwallis Island and Sand Island; Midway Islands; Wake Island; Guam; the Philippine Islands; Howland, Baker, and Jarvis Islands; American Samoa (including the island of Tutuila, the Manua Islands, and all of other islands of the Samoan group east of longitude 171° west of Greenwich, together with Swains Island); Puerto Rico; the Virgin Islands of the United States; and Navassa Island.

General information relating to the Territories and possessions of the United States listed below may be obtained by communicating with the appropriate department or office as indicated:

Under the provisions of an act of Congress approved March 24, 1934 (48 Stat. 456), and the proclamation of the President (No. 2148) of November 14, 1935, the status of the Philippine Islands as a commonwealth dates from November 15, 1935. During the period of the commonwealth (see sec. 10 (a) of the above act), sovereignty over the Philippine Islands rests with the United States.

General information relating to the Canal Zone, which is under the jurisdiction of the United States, may be obtained by communication with the Panama Canal, Washington, D. C.

There are certain small guano islands, rocks, or keys which, in pursuance of action taken under the act of Congress, August 18, 1856, subsequently embodied in sections 5570-5578 of the Revised Statutes, are considered as appertaining to the United States. A discussion of the subject of guano islands is contained in Moore's International Law Digest, volume I, beginning on page 556.

DEPARTMENT OF STATE, July 22, 1936.
Senator TRUMAN. Colonel Crowley.

STATEMENT OF KARL A. CROWLEY, SOLICITOR. POST OFFICE

DEPARTMENT

Mr. CROWLEY. Mr. Chairman and gentlemen, my name is Karl A. Crowley. I am Solicitor of the Post Office Department. The Postmaster General has asked me to state the views of the Post Office Department here on this bill. He has heretofore submitted a report on the original draft, and I have another to file on the amended draft today.

Senator TRUMAN. Will you file that with the reporter so that it may appear in the record?

Mr. CROWLEY. Yes; I will. I want to use that report to guide me in my statements here.

(The report referred to will be found at the conclusion of Mr. Crowley's statement.)

Mr. CROWLEY. The Post Office Department is opposed to the enactment of this legislation. It feels that it is not wise at this time, nor is it necessary, for the reasons that I shall hereafter state.

This is the third report that has been made on this bill, or similar bills pending before Congress for the past 2 or 3 years. These reports, which were signed by the Postmaster General, who, of course, has given consideration to the matter, I believe have all been filed since the Executive order or the message to Congress that Mr. Eastman testified about here today.

I think that Postmaster General Farley feels that he would not be going counter to the wishes of the President in making his recommendations.

The domestic air-mail service was first established in this country by the Government in 1918. It was operated by the Government until 1926, when the first contract service was set up in this country. The laws were amended from time to time until 1934, when the old air-mail contracts were canceled and the Air Mail Act of 1934 was enacted by Congress.

During all this time I was the Solicitor of the Post Office Department since 1933, as a matter of fact and have been reasonably familiar with the legislation since that time.

The law, of course, was recommended by the Post Office Committees of the House and of the Senate. During the entire time that the Government carried mail by air the administration of the air lines has been under the Post Office Department, that is, up until the act of 1934, when representatives of our Department appeared before the Post Office Committees of both the Senate and House and recommended that certain functions normally belonging to the Interstate Commerce Commission be transferred to it-that is, the function of making rates, based on investigations and audits made by the Interstate Commerce Commission, and also the question of regulating unfair practices, the two things that particularly concern the Interstate Commerce Commission.

The present bill here, and the original bill, S. 2, would transfer to the Interstate Commerce Commission, as we see it, all the normal functions of the Post Office Department with respect to the transportation of air mail, the regulation of schedules of air-mail contractors, and other incidental regulatory matters that we feel should be left with the Post Office Department so long as the carrying of mail is one of the great objects of the air-mail payments.

The safety features that were incorporated in the original bill have been omitted from this second bill.

Senator TRUMAN. In the substitute, S. 2, they are omitted. Mr. CROWLEY. But they are pending in S. 1760, another bill entirely. The Post office Department, of course, is not concerned with that part of the legislation. I want to take occasion to say, however, that the Department of Commerce has cooperated to the fullest extent with the Post Office Department. We counseled and advised with them on all matters concerning aviation. They prescribed the equipment to be used on different lines for passengers, the approximate size of it, and other questions relating to safety features, safety devices and appliances, to be used on planes, and we have had very satisfactory relationships with the Department of Commerce.

The Postmaster General has stated in his report, which I shall file [reading]:

It is my belief that if the transportation of air mail and the payment of compensation therefor by the Post Office Department is to be considered a factor in the continuance of air-mail service in this country, the Post Office Department should be allowed to continue to establish necessary air-mail lines, and that such lines should be operated under the jurisdiction of the Post Office Department. Similar jurisdiction over the foreign air-mail lines should be vested in the Department. Unless the Post Office Department has the authority to set up the airmail routes, prescribe the stops, and fix the schedules on such routes, the usefulness of these lines insofar as the expeditious transfer of the mails is concerned would. without doubt, be minimized.

The air mail service is coordinated with the railroad and steamship transportation service for carrying the mails. Oftentimes on air lines the Post Office Department will not carry mail the entire distance, but it will be diverted, on occasions, where it can be delivered by bus or by railroad to some nearby point much more expeditiously. The superintendent of the Railway Mail Service and the Air Mail Service is the same person, Mr. S. A. Sisler. He has the superintendence of air mail under his direction, but the two services are coordinated fully.

The Postmaster General has made reference in his report to the remarkable development of aviation under the present system and points out that the law of 1934 radically changed the air-mail set-up in this country. That law was designed by the committees and by the Department, and enacted following a message by the President, to protect the public against unfair combinations, monopolies, to insure reasonable competition, but to forbid cutthroat competition; and to put a limit upon the air mail service that could be set up under the Post Office Department jurisdiction, automatically controlling, by the terms of the law, the amount of money that could be spent for air-mail service.

It put safeguards around this Service, and left so little to the discretion of the Post Office Department and to the Interstate Commerce Commission, it was thought, that they would have little leeway to permit abuses.

I might say that the author of this bill, Senator McCarran, was a member of the committee that investigated the air-mail contracts, along with Senators Black, Austin, White, and King.

That led to the enactment of the bill of 1934, in cooperation with Senator McKellar, of the Senate Post Office Committee, and Chairman Mead, of the House Post Office Committee.

All the present domestic air-mail contracts have been let under the Domestic Air Mail Act of 1934 and the amendments thereto. Under this the Air Mail Service has grown and expanded to the point where it serves most of the principal cities of the country, and every State in the Union, with the exception of Delaware, which is served by nearby airports.

Air-mail service is also maintained in Hawaii and Alaska.

Foreign air-mail service is at present operated from the Pacific coast to the Orient, and from the United States through Central and South America and the West Indies.

At the time the present domestic air-mail law went into effect, the air-mail contractors were undoubtedly operating extravagantly and inefficiently. Many of the contracts were held or controlled by holding companies and banking interests. Some of them were also

affiliated with manufacturers' organizations from which they were required to purchase their equipment and to pay prices fixed by the manufacturing companies; they were not free to seek their equipment in the open market.

There were interlocking boards of directors and many, if not most, of the lines were dominated by others than practical air-line operators. Three holding companies controlled 92 percent of the air-mail contracts then in existence.

The present law changed all this, and the following table, showing comparisions of operating results during the fiscal year 1936 as compared with 1933, depicts the changes for the better in the Air Mail Service.

Quoting from Mr. Farley's table in his letter, in 1933 the express revenues of all the contractors were $2,567. In 1936 the express revenues of the contractors were $796,171.

In 1933 the passenger revenues were $6,407,748. They have grown to the point where, on June 30, 1936, they were $17,413,260. The total revenues of the contractors in 1933 were $6,610,315, as compared to $18,209,000 in 1936.

The mail pay in 1933 was $19,400,264. The mail pay in 1936 was $12,934,953.

The mail pay for the year preceding the date of the cancelation of the contracts, I belive, reached $22,000,000. That is an offhand statement, but I think that is about right.

There is an increase in the revenues over this period of time of about 44 million dollars.

In 1933 the miles flown by the contractors were 35,909,811. In 1936 the miles flown were 38,699,449.

In 1933 the average mail pay per mile was $0.540. In 1936 that had been reduced to $0.311.

Senator TRUMAN. That is a pound-mile?

Mr. CROWLEY. No. That is the average airplane mile. I have the pound-mile figures that I will get to in just a moment.

One of the amazing developments is the increase in the use of air mail. In 1933 the pounds transported were 6,741,088. The past year the poundage was 15,377,993.

The pound-miles performed were 4,834,540,535 in 1933. That jumped to 9,771,841,815 in 1936.

These figures show, of course, that the mail pay has dropped from almost $20,000,000 to $12,000,000, and that the service has greatly expanded and increased, not so much from the standpoint of the miles flown, there being only a difference of 3,000,000 miles, but in the performance and in the cost.

Three years ago we had 27,679 route-miles in the domestic service. The last fiscal year we had more route-miles, having altogether 29,198 route-miles in the system.

The cost per pound-mile for the mail transported under the present law and under the new system has consistently decreased. The cost of carrying 1 pound of mail per mile has dropped from a fraction over 4 mills, set out in tables that I will file with you here, to a fraction over 1 mill per mile.

There has been a reduction in the cost of carrying the mail per pound per mile of approximately 70 percent under the cost of 1933, notwithstanding the fact that the Interstate Commerce Commission

132711-37-pt. 1- -8