concerned. It will be noted that no similar provision is made for payment of overseas or foreign air transportation of such officials and employees, and such provision would seem desirable. The bill gives the Commission authority like that given to the Federal Trade Commission and the United States Shipping Board Bureau of the Department of Commerce to prevent unfair competition and grants the carriers wide authority to make agreements with respect to both service and rates, subject to the approval of the Commission, which will bar the operation of the antitrust laws. While not wholly clear as to the scope of these provisions, and their language in various respects, we are inclined to favor them in principle. The provisions referred to are found in sections 311 (c) and 313. Section 310 (j) provides that nothing in the bill shall prohibit an air carrier in foreign transportation from arranging with any foreign country, or with the Postmaster General, for the transportation of mail of such country, and from receiving compensation therefor; and a proviso to that section prohibits such carrier from receiving compensation therefor both from such country and the United States in respect thereto. Both in principle and as a matter of practical expediency these provisions are probably sound. It occurs to us, however, that substitution of the following language would better express the objective sought and prevent the possibility of a construction not intended: "(j) Nothing in this part shall prohibit an air carrier holding a certicate to engage in foreign air transportation from arranging with any foreign country for the transportation of mail of such country and receiving compensation therefor under any such arrangement now or hereafter existing, or from receiving compensation for the transportation of such mail from the Postmaster General in instances where payment therefor is made by the foreign country directly to the Postmaster General: Provided, That no such carrier shall be entitled to receive compensation both from such foreign country and from the United States in respect of the transportation of the same mail." Section 311 (b) (4) contains the usual restrictions upon interlocking directorates. However, the following language found in the corresponding paragraph of part I of the Interstate Commerce Act has been omitted from H. R. 5234 and, in our opinion, should be inserted: "or to participate in the making or paying of any dividends of an operating carrier from any funds properly included in capital account." Section 312 provides the same control over the issuance of securities as that of parts I and II of the Interstate Commerce Act. However, an additional paragraph (c) has been added to H. R. 5234 which would exempt from control of the section securities of an air carrier in respect of which a registration statement under the Securities Act of 1933 is in effect at the date of passage of the bill. We understand this provision is intended to cover the case of certain securities for which registration statements have been issued by the Securities and Exchange Commission but of which complete delivery has been and will be delayed. We see no objection to the proposed exemption. To conform the bill more nearly to the pattern of the present Interstate Commerce Act, we suggest striking paragraph (b) of section 315, and inserting a new paragraph (b) to section 316 reading as follows: "(b) If any air carrier or person subject to this part operates in violation of any provision of this part (except as to the reasonableness of rates, fares, or charges, and the discriminatory character thereof) or any rule, regulation, requirement, or order thereunder, or of any term or condition of any certificate, the Commission or its duly authorized agent may apply to any district court of the United States of competent jurisdiction, including the district court for any district in which such carrier operates, for the enforcement of such provision of this part, or of such rule, regulation, requirement, order, term, or condition; and such court shall have jurisdiction to enforce obedience thereto by a writ of injunction or by other process, mandatory or otherwise, restraining such carrier or person, his or its officers, agents, employees, and representatives from further violation of such provision of this part or of such rule, regulation, requirement, order, term, or condition, and enjoining upon it or them obedience thereto." To prevent a hiatus and to preserve existing proceedings we suggest the addition of a new paragraph (b) to section 319 reading as follows: "(b) Nothing in this part shall be construed to affect, alter, or impair any order, determination, rule, or regulation made by the Commission or any court of competent jurisdiction and in effect at the time this part takes effect, or to terminate any proceeding pending at that time before the Commission or such court, under any provision of law repealed or amended by this part, and all such orders, determinations, rules, or regulations shall continue in effect until modified, terminated, superseded, or set aside by the Commission, or such court, or by operation of law, and all such proceedings shall be continued by the Commission or such court as though originally commenced under this part: Provided, That the Commission, in its discretion, may reopen proceedings decided under any provision of law repealed or amended by this part, and dispose of such proceedings under the provisions of this part, or consolidate them with proceedings instituted thereunder." In addition to the above matters of rather general importance there are matters of minor importance which invite comment, and quite a few places where we think some minor changes in language might be appropriate. We would prefer, however, with the consent of your committee, to withhold suggestions as to details until we have had an opportunity to study the other pending bills affecting regulation of air transport, and perhaps also to consider criticisms and suggestions offered at public hearings. In our judgment, our comment on these matters of detail will be more helpful to the committee, if it can be so deferred. So far as the general purposes of H. R. 5234 are concerned, and also the general nature of its provisions, the bill has our approval, subject to the comments above made. Respectfully submitted. JOSEPH B. EASTMAN, Chairman, Legislative Committee. The CHAIRMAN. Mr. Eastman, we will be glad to hear you. Mr. MAPES. I would like to ask if the criticism we received from the Postmaster General a short time ago of a bill before the Senate applies to this bill. The CHAIRMAN. A report was sent to this committee, and a report was sent to the Senate committee. Mr. MAPES. I am not referring to the report, but to a mimeographed copy of a statement of the Postmaster General. Mr. BULWINKLE. To the Senate committee? Mr. MAPES. Perhaps it was to the Senate committee. Does that apply to this bill? The CHAIRMAN. Well, I take it that it does. There was a criticism of this bill in the Senate. Prior to this bill being filed there was also a criticism in the Senate directed at S. 2 from the Post Office Department. So that is a consideration which will have to be taken up with the committee in the course of these hearings. Mr. MAPES. I took occasion to read that statement and that is the reason that I asked. The CHAIRMAN. Before the hearings are concluded, the Post Office Department, through its representatives, will appear here to state their position. Mr. Eastman, we will be glad to hear from you now. STATEMENTS OF COMMISSIONER JOSEPH B. EASTMAN AND NORMAN B. HALEY, DIRECTOR OF AIR MAIL, INTERSTATE COMMERCE COMMISSION Commissioner EASTMAN. My name is Joseph B. Eastman. I am a member of the Interstate Commerce Commission and chairman of its legislative committee. I appear here as chairman of that committee in general support of H. R. 5234. That bill provides the same general type of regulation for air carriers as is now provided by law for railroads and motor carriers, and, to some extent, for water carriers. I shall first discuss some general considerations bearing upon the bill, but before I close I shall touch upon some of the detailed provisions. In the first place, I shall say something about the general need for the bill. When I was Federal Coordinator of Transportation I was directed by section 13 of the Emergency Railroad Transportation Act, which created that office, to investigate transportation conditions generally for the purpose of determining whether any further legislation of a more permanent character was needed for their proper control. In that connection I made as thorough an investigation as I could of the motor-carrier situation and of the water-carrier situation. I did not, however, go into the air-carrier situation, because of the fact that Congress had created a special commission with the specific duty of investigating that particular subject. That Commission was the Federal Aviation Commission, which made its report in January of 1935, a report which was printed as Senate Document No. 15 in the Seventy-fourth Congress, first session. That was an able body of men, headed by the late Clark Howell of Atlanta, and they went very thoroughly into the entire air-carrier situation. In fact, they covered not only the air-carrier situation, but the military features of aviation as well, and in the report of that Commission you will find recommendations which suport, I think, all of the important features of this bill, with one important exception that I shall mention. The report covered a much larger field than is covered by this bill, but its recommendations do, I think, support, as I have said, the general features of this bill. Now, the one important exception was that that commission felt, and I can well understand why they might feel that way, that the Interstate Commerce Commission was not an appropriate body to which to entrust the regulation of air carriers, at least in the early stages of the industry. They felt that it was so different from railroad transportation, as, of course, it is, that a body like the Interstate Commerce Commission, which had for years been investigating railroad matters, might have certain habits of thought and certain customs and practices which would not be suitable in connection with the administration of the regulation of air carriers. Therefore they recommended a separate commission, which, however, they indicated might be of a temporary character, the regulation eventually to go, after an experimental period, to the Interstate Commerce Commission. That report was transmitted to Congress by the President with a message, and in that message he did not agree with the special commission so far as this matter of the body to whom the regulation should be entrusted was concerned, and I think that I might well read two passages from the message of the President at that time bearing on that point. It was dated January 31, 1935. The President said [reading]: As I have suggested on many occasions, it becomes more and more apparent that the Government of the United States should bring about a consolidation of its methods of supervision over all forms of transportation. When the Interstate Commerce Commission was created in 1887, the railroad was practically the principal method of rapid interstate transportation. Since that time this monopoly of transportation enjoyed by the railroad, to a very important degree, has been limited by the development of the automobile and good interstate roads. Recently water transportation by lake, by river, by canal, and by ocean has, largely through the construction of the Panama Canal and our inland waterways, definitely brought ships and shipping into the general interstate field. More recently still, air transportation has become an element. All of these developments have changed the general problem of transportation and the concern of the Government with them. A number of valuable reports have been prepared on these related questions. The report of the Federal Coordinator of Transportation has already been submitted to the Congress by the Interstate Commerce Commission. The report deals with the many problems relating to busses, trucks, water carriers, and railroads. Other reports of departmental committees on ocean-mail subsidies have been completed. This present report on aviation is a similar source of information and advice concerning transportation by air. I earnestly suggest that the Congress consider these various reports together in the field of the necessity for the development of interrelated planning of our national transportation. At a later date I shall ask the Congress for general legislation centralizing the supervision of air and water and highway transportation with adjustments of our present methods of organization in order to meet new and additional responsibilities. And at the very end of his message he said [reading]: The commission further recommends the creation of a temporary air commerce commission. In this recommendation I am unable to concur. I believe that we should avoid the multiplication of separate regulatory agencies in the field of transportation. Therefore, in the interim before a permanent consolidated agency is created or designated over transportation as a whole, a division of the Interstate Commerce Commission can well serve the needs of air transportation. In the granting of powers and duties by the Congress, orderly government calls for the administration of the executive functions by those administrative departments or agencies which have functioned satisfactorily in the past, and, on the other hand, calls for the vesting of judicial functions in agencies already accustomed to such powers. It is this principle that should be followed in all of the various aspects of transportation legislation. That was the President's position in regard to that particular recommendation of the Federal Aviation Commission. Since that time the Interstate Commerce Commission has been given certain duties with respect to air carriers in connection with the fixing of compensation for the carrying of air mail, and it has created a bureau of air mail for that purpose. In this way an opportunity has been afforded to the industry and to others to judge how the commission might carry on the regulation of air carriers if general powers were given to it as proposed in this bill. At this point I might say a word in regard to the general character of the Interstate Commerce Commission. We are in no way grasping for power or seeking for aggrandizement. The Interstate Commerce Commission is primarily an agency of Congress and was created largely for legislative purposes, as has been found by the courts. The need for such an institution arises when the field of legislation is. so large that Congress is not, as a body, able to undertake to cover all of the details. What is done in such a situation is to lay down the general policy or rule and then provide an agency like the Commission for the purpose of applying that rule. The Interstate Commerce Commission is in no way a policy-determining body. The policy is fixed by Congress. Our duty is to apply it. And desiring to have the policy applied with the most scrupulous fairness and impartiality, it has been the policy of Congress to make such agencies, like the Interstate Commerce Commission, nonpartisan, in the sense that they are bipartisan, and nonpolitical, and to require them to follow judicial procedure in administering their legislative duties. In other words, it is necessary for the Commission to hold hearings and make a record, and to base its decisions on the record so made. That has been the character of the Interstate Commerce Commission for 50 years, and we hope that it may continue to be its character for the future. On matters like this we are very glad to give our opinions as to what ought to be done, at your request; but so far as mere grasping for power is concerned, we are quite content with whatever you may see fit to do. The Commission has always had plenty of work to do, and I think it will continue to have for the future. Now, in addition to that report of the Federal Aviation Commission, which indicated the general need for regulation of this type, there is further evidence. As I have said, the Interstate Commerce Commission during the past 2 years has had certain powers over air carriers with respect to the compensation for carrying the air mail. As was stated in the report which you made a part of this record, present regulation of air transportation is provided for by three acts, namely, the Air Commerce Act of 1926, as amended; the Air Mail Act of 1934, as amended; and the Foreign Air Mail Act of 1929. The first of these has to do with safety standards and aids to navigation and is administered by the Department of Commerce. The second deals chiefly, directly or indirectly, with the carriage of domestic air mail, and in that connection is administered by the Post Office Department, partly, and partly by the Interstate Commerce Commission. The third act, the Foreign Air Mail Act, is administered by the Post Office Department. In various respects there is a somewhat confused division of authority, and over certain very important matters there is now an entire absence of authority. Now, as a result of its experience with the limited regulation of air carriers, the Interstate Commerce Commission commented on this situation in its recent fiftieth annual report. That comment is included in the report which you have made a part of this record, and I shall not repeat it at this time. It discusses various matters, including the divided authority over air-mail compensation and divided authority over accounting, postal-revenue limitations on rates, the control over rates for nonmail service, and the control or lack of control over new service, and the Commission ended with this comment [reading]: Many provisions of the present law are so worded and their requirements interlocked with other provisions in such a manner that interpretation and administration are exceedingly difficult. As an alternative to further amendment of the existing acts, the drafting of an entirely new law for comprehensive regulation of interstate air transportation similar in scope to parts I and II of the Interstate Commerce Act governing the regulation of interstate railway and ihghway carriers appears. therefore, to be preferable. While the present scheduled air-transport service began as an exclusive mail service, the transportation of persons and property has grown to such a volume and extent in recent years that transportation by air has become an integral part of the transport system of the Nation and should be regulated as such. This bill, H. R. 5234, is in general accord with that suggestion so made by the Interstate Commerce Commission. Mr. KENNEY. Mr. Chairman. The CHAIRMAN. Mr. Kenney. |