We yesterday got into the relationship particularly in your industry of Federal involvement through the development of new resources and methods in your industry by the encouragement of the Department of Defense in needs of the national war effort versus the changes and progress which have been made in the private sector.

Could you provide some statistical or financial information with reference to the air industry about the amount of private investment versus Federal activity in this field?

Mr. TIPTON. We would be very glad to do that. I referred to the scope of investment by the airlines themselves which is going during this 5-year period to be $5 billion. During 10 years it is going to be $12 billion, about.

Mr. BROWN. You are saying "billion”?

Mr. TIPTON. Yes, billion.

Mr. BROWN. Do you have any idea what the Federal investment in various aspects of aviation over this period of time has been?

Mr. TIPTON. I cannot give you a reasonably good figure on that, but I can contribute something offhand and present a paper at this stage of my testimony which will set it out in more detail.

Mr. BROWN. And, if you could, I would like to have a separation so that we know whether the Federal funds are being spent in the defense area or whether they are being spent in the nondefense area. Mr. TIPTON. That we can break down.

(The material requested follows:)

GROSS INVESTMENT IN

OPERATING PROPERTY and EQUIPMENT

Gross investment in operating property and equipment-U.S. scheduled

Federal investment in air traffic control and airport facilities, fiscal year 1950

Mr. TIPTON. At the moment, the extent of Federal financial participation is in several categories. The airways system is an investment which they regard to be in the neighborhood of $400 million. And they have imposed, as you know, user charges on air transportation which return them about $150 million from the airlines alone. Another contribution is the airport program which at the present time has just about $70 million.

There is also a program for subsidizing small carriers, local service, Alaska, and my recollection is that that is in the neighborhood of $75 million annually.

And that is about it.

Mr. HOLIFIELD. The weather service?

Mr. TIPTON. Well, we have never been able to define the weather service cost as it relates to airlines. It contributes to so many different elements in the country, the public as a whole. And part of the cost that might be attributed to the airlines is offset by work we do for the Weather Bureau in observation.

We never have figured out or tried to analyze actually what contribution that is to transportation or to air transportation. So I did not include it because I do not know.

Mr. BROWN. I think in these vague areas it might be worthwhile to make some comment, but I subscribe entirely to your comment because the weather service is useful to the Department of Agriculture or a newspaper which prints weather maps as well as to the airlines. I do not know how you would be able to break out the function contribution the weather service has made to the airlines as opposed to other aspects of our economy.

On that basis, if we were to ascribe all the weather service to the airlines, then I presume you should ascribe our $50 billion defense budget also to the airlines because that keeps your commercial planes from being attacked by Cuban planes, I suppose.

But I think we have to be a little careful here in what we just simply lump as a subsidy to the airlines.

Mr. TIPTON. I was just going to say that this sentence which says that a good part of the work of the Department of Transportation is going to be dependent upon massive private investment, I regard as a very important element in all of this. Because, as he examines the transportation system as a whole and also based on statements in the message about need in other forms of transportation for additional investment, it inevitably is going to require the various forms of transportation to pour a great deal of private money into the system. We are doing so and will continue to do so.

So that in order for him to get on with his work, he is going to be heavily reliant upon that.

Mr. BROWN. I do not think anybody in this committee would argue that the Federal Government has an appropriate function in stimulating private sectors of the economy with Government assistance and interest. This has been true of our country since it was founded. But I am trying to get a comparative figure here on what the current situation is in the airline industry and to what extent this industry is a captive to the whims of the Federal Government and to what extent it is still a private industry.

Mr. TIPTON. I think we can demonstrate, Mr. Brown, that air transportation and the money that has been put into it by the Federal Government has been one of the best investments the Federal Government ever made.

Mr. BROWN. I would just like to point out I come from the part of the country where the Wright Brothers came from, and I cannot think that their effort was the result of any Federal stimulation.

Now, if I may go on to page 4 to a comment you made in order again to clarify the word you used, you say this:

Also, in the interest of achieving its general objective of matching transportation services with transportation needs, the Department will be a focal point for the coordination of transport facilities planning and transport policy. In the same interests, it will make determinations as to the extent and character of Federal contributions to the transportation system.

Now, do you mean "determinations" or do you mean "recommendations"?

Mr. TIPTON. The point made here is that within the Department the Secretary and his assistants will presumably make up their own mind

as to what they think the program of Federal contribution for transportation is. In that sense they make a determination. Once they make the determination, as I believe I pointed out a little bit later, they have quite a number of things to do in order to put their determination into effect.

They must work with agencies who actually have the money. They must work with

Mr. BROWN. Clarify that, will you?

Mr. TIPTON. The agencies that actually have the money?

Mr. BROWN. Yes.

Mr. TIPTON. Well, for example, the Defense Department in itswell, that gets me into a complicated area, and I had better leave them out for the moment.

But the FAA, the Public Roads, the Maritime people who have contributions to make. Work with those agencies to determine first whether their program is workable.

The next stop on that road inevitably will have to be the Bureau of the Budget, which is there to present the budget to the Congress.

And the last and ultimate step they will have to take is to come to Congress with their recommendations as to what the financial program is and then Congress will settle the matter.

Mr. BROWN. Now, let's go back to the point of working with agencies who actually have the money. We got into a little discussion in this committee earlier about the inviolate nature of the trust fund of the Bureau of Public Roads and whether or not the Secretary of Transportation would have the authority under this legislation to take the Bureau of Public Roads' trust fund and divert money into other modes of transportation, or to otherwise exert control over their usage in that connection.

Is that a fair comment, Mr. Chairman? Is this not the area

Mr. HOLIFIELD. That is a good question. I am waiting for the witness to answer it.

Mr. TIPTON. I do not know much about the Bureau of Public Roads. But, based on my understanding, the Congress has set up a trust fund in which the people were asked to put a great deal of money and did. It being a trust fund, it would seem to me that it is just that. It cannot be used for any other purpose.

But I will say this: The bill is not clear in my opinion as to the relationship between section 7 and that trust fund.

Mr. BROWN. In other words, when you are talking about agencies which have their own money, you are talking about agencies to which money has been appropriated by Congress and the funds available to these agencies are available in connection with their responsibilities and are not funds available to the Secretary for manipulation as a means of setting the policy? That he can try to influence the usage. of these moneys but cannot determine what the usage of those funds would be?

Mr. TIPTON. I think that is right. Ultimately Congress settles the matter. They decide who gets the money. And the Secretary's role. here relates to this congressional function. It is a good role to play. But the way to play it is to make solid, persuasive recommendations to the Congress and thus exercise that kind of leadership.

Mr. BROWN. Somebody has suggested that money is power, and I think in no place more than the Federal Government is this proved. And so what we are talking about here is who actually controls the money with reference to transportation policy. And your recommendation is that the Congress controls the power to appropriate and that it will continue to appropriate money to the agencies and while the Secretary will have authority to recommend how the money is to be used, he would not have the authority to override the direction of Congress?

Mr. TIPTON. My understanding of it is that the Congress will continue to settle those questions.

Mr. BROWN. You go on to say:

It is reasonably obvious from the message and the legislation that he is not expected to do his work through the issuance of directives or positive and unassailable determinations.

I would submit to you that I am not convinced that it is as reasonably obvious as it may seem to you on this point. Because the thing we get into here in Federal Government and in any other government or any business operation is the fact that the guy that sits at the top and wears the big hat frequently can make a policy determination which it is very difficult to get anybody down the line to contradict or to come in and testify about with frankness to Members of Congress. And this is where we get into this sketchy area about the relative independence of so-called independent agencies with reference to the coordination of the Secretary of Transportation.

The reason I asked you the question about the Bureau of Public Roads is because on page 5 you go on to say, "No one contends that the Secretary will somehow takeover the congressional power to appropriate."

Well, there was some concern expressed and some doubt ful comments made about whether or not the Secretary would in fact control the trust fund of the Bureau of Public Roads, at least with reference to the standards and criteria by which those funds should be spent. And this is one of our concerns in this piece of legislation.

I want to go on to page 6, and I will not cover quite as thoroughly the rest of your testimony, but there are some points I want to make here.

You say:

Countless other examples could be brought to mind which illustrate that the Secretary is to play a leadership role, but is not expected to carry his ideas into effect by mandatory order.

I trust that this again will be of some encouragement and guidance to this committee in setting up the powers of the Secretary so that we can get back to the idea that a Secretary is a Secretary and not a czar. Then you go on to say:

He will not be able to settle the day-in and day-out questions which arise in that agency, but he would not want to anyway.

What makes you think he would not want to?

Mr. TIPTON. The reason I thought he would not want to-and maybe I was being naive there; I am not sure-but the reason I said that and the reason I think that is that he can not really do his job as Secretary if he gets involved in the day-in and day-out work. He has got a mas