bills since 1933, and this is only a follow-up. They are all of record. No air-mail carrier or other air-transport company had anything to do with it. I want you to know that now. If you are imputing any improper motive by this bill toward me or through me, I want to know it now.

Senator MCKELLAR. No; I am just trying to get the history of this bill, and I think I am getting it now.

Senator MCCARRAN. You are not even getting started on it.

Senator TRUMAN. I think that Senator McCarran knows more about this bill than anybody else. If he wants to make a statement, I think we should hear him.

The CHAIRMAN. All right.

Senator MCCARRAN. I will make this statement: In 1933, as the record will show, I drafted the first air-mail bill, following the Black hearings. That was fought out on the floor of the Senate, and the Senator from Kentucky took a very active part against my bill, and he was successful. I followed that up by taking the hearings that were conducted before the special commission appointed under the Senator's bill, and redrafted and reintroduced that bill. It did not come to a hearing, because I was taken ill and could not pursue it. This bill is the follow-up of all of those bills and a redraft of them after a careful study for nearly 4 years.

Senator MCKELLAR. Mr. Eastman turned down that first bill, did he not?

Mr. HALEY. I would not say he turned it down, Senator.

Senator MCCARRAN. I should like to know what bill you are speaking of.

Mr. HALEY. The bill I am talking about is H. R. 5234, now pending in the House.

The CHAIRMAN. The first bill, as I repeat, that they are talking about, was a bill that Mr. Lea, chairman of the House Committee on Interstate and Foreign Commerce, sent to Commissioner Eastman before it was introduced, and Mr. Lea asked Mr. Eastman to look it

over.

Mr. HALEY. That is correct.

The CHAIRMAN. Mr. Eastman took that bill, made interlineations and changes in it, and then sent it back to Mr. Lea.

Mr. HALEY. That is correct.

The CHAIRMAN. Did Mr. Lea then introduce it, or did he ask Commissioner Eastman to assign someone to investigate it?

Mr. HALEY. Before he introduced it, he wrote a second letter, in which he asked Mr. Eastman if he could not have the staff of the Commission get together with the legislative committee of the Air Transport Association to see if it would not be possible to iron out the differences between the draft which Mr. Eastman had made and the draft which Mr. Lea had first sent.

Mr. Eastman did that, and Mr. Eastman sent the report to Mr. Lea before the bill was introduced.

After the bill was introduced, it was forwarded by the chairman of the committee, Mr. Lea, in the regular way, and we made a report on it. Commissioner MCMANAMY. That final report I was consulted on and agreed to, because it was before the Commission's legislative committee.

Senator MCKELLAR. What was the principal difference between the first and the second bills?

Mr. HALEY. Senator, I have not the drafts here. There were quite a number of changes made

Senator MCKELLAR (interposing). Don't you remember?
The CHAIRMAN. Let him finish his answer.

Mr. HALEY. I cannot remember the details of all the changes. Senator MCKELLAR. I am just asking about one change, the principal question.

Mr. HALEY. May I have the privilege of doing this: May I send you a draft of the first bill and set up in parallel columns the language of the second bill?

Senator MCKELLAR. That would be fine. I want to ask you, however, to refresh your memory:

Was it not then that Mr. Eastman referred to the matter of air-mail schedules? You wanted to control-your Commission wanted to control-I am talking about you, because you were running that part of it—you wanted to control the air-mail schedules and the routes, and Mr. Eastman thought that that was absolutely impossible. Was that not true?

Mr. HALEY. Senator, that is not quite the way to put it.
Senator MCKELLAR. Put it, then, in your own language.

Mr. HALEY. All the drafts of the bills you have been referring to contained provisions that would authorize the Interstate Commerce Commission to issue certificates of convenience and necessity for the service of mail as well as of passengers and express. If that bill passed, of course, it would have the effect of placing in the Interstate Commerce Commission the control over the introduction of new service. It would not, however, necessarily, affect the frequency of mail schedules, and I believe that the Postmaster General would still be free to work out his arrangements for transporting the mail pretty much as he does with respect to transporting mail on the railroads.

Senator SCHWARTZ. Senator McKellar and the witness are not talking about Senator McCarran's bill?

Mr. HALEY. No; it is the House bill.

The CHAIRMAN. The House bill at the present time is the same as the Senate bill.

Senator MCKELLAR. The bill I am talking about is the bill that Mr. Lea introduced.

Mr. Haley, do you sometimes go to the Carlton Hotel?

Mr. HALEY. Yes, sir; and may I say, Senator, that I was at the Carlton Hotel on several occasions in February, at least, if not in the latter part of January, in connection with this very matter. The reason why I went to the Carlton Hotel was that we were doing this work overtime-nights and Sundays-and the offices of the Commission were closed, and the guards would not let people come in who were not employees of the Commission.

Senator MCKELLAR. Those meetings were held in room 212, were they not?

Mr. HALEY. I think the rooms we worked in were 212 and 214. They were adjoining rooms.

Senator MCKELLAR. Colonel Gorrell was one of those present? Mr. HALEY. Yes.

Senator MCKELLAR. He is president of the Air Transport Asso

ciation?

Mr. HALEY. Yes.

Senator MCKELLAR. His assistant, Mr. Paxton, was there?

Mr. HALEY. That is correct.

Senator MCKELLAR. Mr. Godehn, of the United, was there?
Mr. HALEY. Yes, sir.

Senator MCKELLAR. Mr. Brophy, of the TWA was there?

Mr. HALEY. That is right.

Senator MCKELLAR. Mr. Hale and Mr. C. R. Smith, of the American, were there?

Mr. HALEY. That is right.

Senator MCKELLAR. Mr. Carleton Putnam, of the Chicago & Southern, was there?

Mr. HALEY. That is correct.

Senator MCKELLAR. Mr. Denning, who represents some of the companies, was there?

Mr. HALEY. I did not happen to see Mr. Denning there; but Mr. Denning did join the conference in Mr. Eastman's office later.

Senator MCKELLAR. Was the bill that you gentlemen finally agreed upon endorsed and approved by all present, or did anybody object to it? If so, who?

Mr. HALEY. We were not there for the purpose of voting on the bill; we were there for the purpose of assisting the committee in working out the changes in the bill.

Senator MCKELLAR. Was that not the bill, after you had worked it out, that was sent to the House?

Mr. HALEY. It was introuced, Senator, and referred to the Commission. It then went to the legislative committee of the Commission, which made a report on it. I presume that the Commission would have no objection to having a copy of that report go into the record here.

Senator MCKELLAR. Did you make a report on it?

Mr. HALEY. No, sir; not a written report.

Senator MCKELLAR. Was Mr. Westwood also at that meeting?
Mr. HALEY. Mr. Westwood, also.

Senator MCKELLAR. He was there, too?

Mr. HALEY. Yes; and he is here today.

The CHAIRMAN. Who is Mr. Westwood?

Mr. HALEY. Mr. Westwood is attorney for the Air Transport Association.

Senator MCKELLAR. Was any member of the Post Office Department there?

Mr. HALEY. I do not recall that there was; no, sir.

Senator MCKELLAR. You knew that you were undoing all the provisions in the two air-mail bills, under one of which you were operating?

Mr. HALEY. Senator, all I was doing, as I have said before, was carrying out the assignment that Mr. Eastman gave me; and I am sure that Mr. Eastman had no ulterior motive in doing what he was asked to do by Representative Lea. He was giving Representative Lea his advice, and I merely handled the mechanics of it.

132711-37-pt. 2—6

May I say just one thing further, which will take but a moment? Senator McKELLAR. Surely.

Mr. HALEY. I think it has been said here before that the Commission has no interest in legislation. The Commission does not advocate legislation. It does in its annual reports to Congress occasionally make recommendations, but they are usually for changes in existing laws. The Commission does not function as a policy-making institution. That, of course, is also true of the bureaus of the Commission. The bureaus of the Commission and the directors and employees of the bureaus do not tell the Commissioners what to do; they merely carry out the assignments that the Commissioners give them. I thought that that ought to be in the record.

Senator MCKELLAR. Mr. Haley, I want to ask you about another

matter.

Up to the time this bill was passed, what experience had you ever had in fixing rates for air-mail companies?

Mr. HALEY. Before what time, Senator?

Senator MCKELLAR. Up to the time the bill was passed giving the authority to the Interstate Commerce Commission.

Mr. HALEY. I had had none.

Senator McKELLAR. You had had none at all?

Mr. HALEY. No, sir.

Senator MCKELLAR. Had you ever worked for any utility company of any kind that had its rates fixed by governing bodies?

Mr. HALEY. No, sir; I never worked for a utility. May I explain that prior to my entering the Commission's service I worked for the American Express Co. and also for a railroad.

Senator MCKELLAR. Did you make rates in either case?

Mr. HALEY. No, sir; that was not my function in those days. Senator MCKELLAR. You knew nothing about the making of rates? Mr. HALEY. No; not in those days.

The CHAIRMAN. Since you have been connected with the Interstate Commerce Commission, what has been your business?

Mr. HALEY. I have served in various capacities, Mr. Chairman, from stenographer and clerk to the disbursing office, where I became disbursing officer of the Commission. When the Transportation Act of 1920 was passed the Commission created a new bureau-the Bureau of Finance and I was one of the first men to enter that Bureau. I remained there until I was appointed Director of the Bureau of Air Mail in June 1934, when the Air Mail Act was passed. I do not claim, Senator, to be a rate expert.

Senator MCKELLAR. Did you ever discuss rates with the chairman of your division, Commissioner McManamy?

Mr. HALEY. Did I ever discuss rates?

Senator MCKELLAR. Did you ever discuss changes in rates?
Mr. HALEY. No, sir.

Senator MCKELLAR. You do not think you ever did?

Mr. HALEY. I discussed rates, of course, because I would have had the reports before the division of which Mr. McManamy is chairman; but if you mean rates in general or the changing of the limits, I had no discussion with him.

Senator MCKELLAR. Soon after the authority was given to you to make rates, the first thing you did was to recommend a large number

of increases in rates where, in your opinion, the contractor had bid too low a price, did you not? Is that not a fact?

Mr. HALEY. The Commission instituted a hearing on its own motion to investigate that subject, and that hearing was continued in the usual way. As a result of the hearing a proposed report was issued, to which all the parties, including the Post Office Department, were permitted to file exceptions. Argument was had, and finally the report was adopted by the Commission. That is our usual procedure.

Senator TRUMAN. Did you refuse to furnish to the Post Office Department any information that they asked for?

Mr. HALEY. Did we?

Senator TRUMAN. Yes.

Mr. HALEY. No, sir; we have not refused to furnish any information that the Post Office Department has asked us for, at any time.

Senator MCKELLAR. What was the aggregate increase in the amount of money paid to the aviation companies because of that first increase in rates? What was the amount?

Mr. HALEY. We have, I believe, a statement here showing that. Senator MCKELLAR. If you have, will you be good enough to put it in the record at this point?

Mr. HALEY. It will have to be explained.

Senator MCKELLAR. I shall be glad to have you explain it. Mr. HALEY. I do not think we have it in typewritten form. Senator MCKELLAR. In whatever form you have it, give it in your own way. All I want are the facts.

Mr. HALEY. Mr. Chairman, this is Mr. R. W. Stough, Assistant Director of the Bureau of Air Mail, who has been continuously in the service of the Commission for 24 years, I believe. Mr. Stough is a lawyer.

STATEMENT OF RAYMOND W. STOUGH, ASSISTANT DIRECTOR, BUREAU OF AIR MAIL, INTERSTATE COMMERCE COMMISSION, WASHINGTON, D. C.

Mr. STOUGH. I might say, Mr. Chairman, that it is practically impossible, without having definitely the information as to the service that has been performed, to know exactly what changes the Commission's rates would bring about. We have, however, made up a computation designed to trace the effect of the Commission's rates and also the effect of service changes.

We took as a base the authorized annual pay mileage, as nearly as we could get it, at the inception of service. To that we appliedMr. HALEY (interposing). Was that in June 1934 or in July? Mr. STOUGH. Sometime in June and July-May, June, and July. Senator MCCARRAN. May I interrupt, Mr. Chairman?

The CHAIRMAN. Yes.

Senator MCCARRAN. Is it not true that by Senator McKellar's bill, that passed the Congress sometime in 1934, the Commission was required to make fair and reasonable rates?

Mr. STOUGH. That is true.

Senator MCCARRAN. Notwithstanding the bids that had been put in?

Mr. STOUGH. Yes; subject to the limitations in the act itself.