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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, vhich 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 timo 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 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 gorernment 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.

Mr. KENNEY. When can we get that report, the fiftieth annual report, just referred to! Is that available and where can we get it?

Commissioner EASTMAN. Yes; that has been transmitted to Congress. It is a public document. I will be glad to send you a copy of it.

Mr. HOLMES. What is the date of that, Commissioner?
Commissioner EASTMAN. Of the annual report?
Mr. KENNEY. I have been trying to get one for a week.
Commissioner EASTMAN. It is dated November 1, 1936.
The CHAIRMAN. The report has been available for some time.

Mr. KENNEY. I called the Interstate Commerce Commission for one, and I did not get it.

The CHAIRMAN. The clerk of the committee can give you one.

Mr. BULWINKLE. I think in all cases those are mailed out to Members.

Commissioner EASTMAN. I shall be very glad to see that you get a copy of this report.

Now, the third thing indicating the need for this manner of regulation has been the very rapid growth in the air service and the change in its general character.

As I have indicated, it started as purely an air-mail service; it was operated by the Government for some years until it was taken over by private operators.

Only a few years ago the air-mail revenue constituted 70 percent of the entire revenue of the air carriers in scheduled service. It now constitutes about one-third of that revenue.

To indicate the growth, in 1926, taking the domestic scheduled air lines, the miles flown were 4,250,000. In 1934 that had gone up to 41,000,000, and in 1936 to 63,000,000.

Passengers carried, in 1926, 5,782; in 1934, 460,000; in 1936, 1,021,000.

Express and freight carried (pounds) in 1926, 3,500 pounds; in 1934, 2,130,000 pounds; in 1936, 6,960,000 pounds.

Mail carried (pounds) in 1926, 703,300; in 1934, 7,400,000; in 1936, 17,700,000 pounds.

And, in addition to the mileage flown by these domestic scheduled air lines, non-scheduled commercial operators flew about the same number of passengers, a total of 88,480,000 miles, or a mileage about 38 percent greater than the mileage flown by the scheduled air lines.

Also, as you know, very important services have been established between the United States and its possessions and territories, such as Puerto Rico and Hawaii, and also between this country and other countries, such as all parts of South America.

And quoting again from the report which you have made a part of this record

Mr. MAPES. May I ask a question ?
The CHAIRMAN. Mr. Mapes.
Mr. MAPES. What is a nonscheduled carrier ?

Commissioner Eastman: A nonscheduled operator is an operator who has no special route or regular schedule. They fly passengers as the need develops.

Mr. MAPES. You say the nonscheduled operators carry about as many as the scheduled operators carry?

Commissioner EASTMAN. That is true. And I understand that there are about 1,200 such unscheduled operators.

Have I explained that properly, Mr. Haley?
Mr. Haley is our director of air mail.

Mr. HALEY. Yes, Mr. Eastman. You might perhaps at this point say that most of these nonscheduled operators are fixed-base operators. They have no particular route and are generally nonscheduled.

Mr. KENNEY. Mr. Chairman.
The CHAIRMAN. Mr. Kenney.

Mr. KENNEY. Mr. Eastman, did the Interstate Commerce Committee recently submit a report or further studies of air-mail lines?

Commissioner EASTMAN. Well, last year we submitted a report on wages and working conditions.

Mr. KENNEY. I mean within the last 3 weeks.

Commissioner EASTMAN. No; the only reports are the reports which I have submitted, either to the Senate committee or to this committee, in regard to this pending legislation.

Mr. KENNEY. Well, you have submitted one copy to this committee; are there additional copies available?

Commissioner EASTMAN. Yes, sir. The report on H. R. 5234 did not come up until yesterday. Mr. Layton has sent for additional copies, and they will be available.

Mr. REECE. Mr. Chairman. The CHAIRMAN. Mr. Reece. Mr. REECE. You gave the number of passengers and the amount of freight carried by the air carriers; the average distance which the air carriers carry the passengers and the freight is greater than the average distance carried by other forms of transportation, particularly the rail carriers, or at least I should think so.

Commissioner EASTMAN. I have no doubt that it is. I do not have the figures here. They could be made available.

Mr. REECE. That is, I should think that the passenger or freight miles units would be even more startling than the mere quantities.

Commissioner Eastman. Yes; just as a matter of general knowledge, I should say that the average journey of passengers or property by air was considerably longer than the average journey by rail, and certainly longer than the average journey by motor carriers.

Now, in this report which has been made a part of the record, we had this to say about the present situation:

From inquiries to our Bureau of Air Mail it appears that several individuals and firms are contemplating the institution of new air-transport services. These interests seem to be concerned only with the transportation of passengers and express. The present air-mail laws apply only to those air transport operators holding mail contracts. New non-air-mail carriers entering the competitive field of passenger and express transportation thus would not be subject to any of the provisions of those laws and serious competitive situations might arise from their operations.

Recently there has been a sharp reduction in passenger fares by at least five scheduled air-transport companies in a competitive race for more business, and another company has inaugurated an air freight service at rates substantially lower than air express rates.

It appears, therefore, that without some governmental supervision over rates, fares, charges, and practices for the transportation by air of both persons and property, as well as mail, a situation may be created which will endanger the stability of commercial air transport in the United States. At present our jurisdiction over rates is limited to establishing fair and reasonable rates of

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