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ules, one on top of the other; and the competition is not only there, but it is ruinous competition that is forcing both of these companies into bankruptcy, according to the evidence.
“There are undoubtedly cases where monopolies should not be set up that would be detrimental to other air lines that would be affected, not only to give business exclusively to one company but to enable that company to enter into arrangements with other companies whereby an injury would be done to the public.
"I feel, and I shall so advise the Postmaster General in this case, that I think the Post Office Department should not interfere in any way with the sale of an air-mail contract where it is not clearly prohibited by law or does not clearly adversely affect the public interest or the Air Mail System. For this particular transfer to be prohibited by law, I think, we undoubtedly would have to read into the law a prohibition against the combination of two companies where one may have some service off the line of its air-mail contract that is operating a parallel competitive service with another air-mail contractor. I do not feel like taking that responsibility on myself or the responsibility of reading that into the law. I feel it should be plainly stated that to deny a transfer of this kind might be contrary to the public policy, so that the Postmaster General would not have to accept that responsibility.
"In this particular case, if there ever was a justification for the sale or for the consolidation of the services, it is present in this case. It probably will enable the stockholders to make some money out of the operation of the new service if it is allowed. It certainly will not increase the cost of the mail service to allow this agreement to become effective.
"On the other hand, if the agreement is not allowed to become effective we undoubtedly might expect applications for increased pay by the Post Office Department, or applications before the Interstate Commerce Commission to take away some of the services, off-line services, now being rendered by these companies. The present conditions, as I see it, would not interfere with the granting of this application; and I shall, therefore, advise the Postmaster General that in my opinion there are no legal objections to the granting of this application."
The above quotation has been copied from the transcript in this case, pages 49 to 58, inclusive. Very truly yours,
KARL A. CROWLEY, Solicitor. Mr. ELLENBOGEN. Will you send me a copy? Mr. MARTIN. Mr. ChairmanThe CHAIRMAN. Mr. Martin.
Mr. MARTIN. I would like to ask one question. I want to remind Mr. Crowley that about a half an hour ago he started to make some statement, at which time he was interrupted. I just want to remind him that at some future time the committee would like to hear that statement; but I want to ask him one question.
Mr. CROWLEY. Yes, sir.
Mr. MARTIN. In your opinion, would section 311 empower one corporation, whether or not that corporation is a mail carrier, to acquire control of all of the air-mail lines in the country; that is, section 311 (a)?
Mr. CROWLEY. Well, it is a perfect vehicle for just such a situation; and monopoly, of course, is bound to result under this bill.
Mr. WITHROW. Mr. Chairman-
Mr. WITHROW. I am very much interested in your testimony relative to those sections of the present law that are repealed under this bill. You touched on section 15 and you were going on to other sections when you were questioned about something else.
Mr. CROWLEY. Yes, sir.
Mr. WITHROW. And I would suggest that if you do not have the opportunity to do that today, that you cover it by extension of your remarks.
Mr. CROWLEY. I can stay longer if you gentlemen wish. What time do you expect to adjourn?
The CHAIRMAN. You mean adjourn this morning?
Mr. CROWLEY. I can come back, and, as a matter of fact, I want to get that point cleared up, because we feel in the Department that we might be able to throw some light on the history of the enactment of these acts that are repealed—those that will allow monopolies and freeze the Air Mail Service where it is, and so forth, and I would like to come back.
The CHAIRMAN. Can you come back next Tuesday morning?
Mr. CROWLEY. I am to appear before Senator McKellar's committee, I think, on Tuesday. I could come back on Wednesday, if it is agreeable to you.
The CHAIRMAN. Well, I assume that we will not be able to finish with your statement today, so I presume we better figure on having you back Wednesday, then.
Mr. CROWLEY. That will be fine.
The CHAIRMAN. In connection with the question of monopoly, however, I would like to call attention to the fact that this bill has the general scheme of mergers and consolidations that is embodied in the present railroad legislation, which has been there for a good many years and, I think, with which the country is generally satisfied.
Regulation of utilities always involves monopoly. There would not be any justification for regulation were it not for the fact there is monopoly.
The Post Office Department is given a monopoly now in the transportation of mail from city to city. It is not practical to throw the transportation of mail open to everybody who wants to carry it. I think that there could be no question about that.
This bill attempts to give the same control over this subject that we have in the Railroad Act. There may be some variation in the language, but there is nothing startling or no proposal here to open the door for unrestricted monopoly. No mergers can be made and no interlocking directorship can exist, or in any other manner can these operating companies be controlled by concerted action without the approval of the Interstate Commerce Commission.
I do not think any false impression should be presented to the country about that situation.
So the committee will stand adjourned until next Tuesday morning at 10 o'clock.
(Thereupon, at 12:01 p. m., the committee adjourned to meet at 10 a. m. Tuesday, Apr. 6, 1937.)
TUESDAY, APRIL 6, 1937
HOUSE OF REPRESENTATIVES,
Washington, D. C. The committee reconvened, pursuant to adjournment, at 10 a. m., Hon. Clarence Lea (chairman presiding.
The CHAIRMAN. The committee will come to order, please.
I have a communication dated April 3, 1937, from Hon. Harry H. Woodring, Secretary of War, which will be inserted in the record at this time. (The letter above referred to is as follows:)
Washington, April 3, 1937. Hon. CLARENCE F. LEA, Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D. C. DEAR MR. LEA: The Governor of the Panama Canal has called my attention to bill H. R. 5234, "To amend the Interstate Commerce Act, as amended, by providing for the regulation of the transportation of passengers and property by air carriers in interstate, overseas, and foreign commerce, and for other purposes."
This bill, which is so worded that if enacted into law its provisions will extend to the Canal Zone, does not adequately provide for the special conditions which exist there. In order to obviate the enactment of legislation which does not take such conditions into consideration, the Governor of the Panama Canal has recommended that, if the bill is to be considered, it be amended as follows:
On page 6, lines 7 and 8, strike out the last clause of section 303 (L), which reads: “including, for the purposes of this part, the Canal Zone.", and in lieu thereof insert the following:
“Provided, however, That nothing herein contained shall be construed in any way to impair or affect the jurisdiction which has heretofore been, or may hereafter be, granted to the President to regulate air navigation in the Canal Zone."
The Governor has also recommended that, if any similar bill is to be considered by the Congress, it contain the provision recommended for inclusion in this bill.
The following is quoted from the statement of the Governor relative to the proposed amendment:
"The proposed proviso parallels the provisions of section 320 of the bill. Its purpose is to save to the President the necessary authority to regulate or restrict air navigation in the Canal Zone consistently with the character and purposes of, and treaty obligations affecting, the Canal Zone; at the same time permitting application of the act to the Canal Zone to the extent permitted by the President. It is contemplated, for example, that certificates to air carriers involving the Canal Zone will be subject to approval by the President or by his authority." I concur in the recommendations of the Governor.
You are advised that there are no objections on the part of the Bureau of the Budget to the submission of this letter. Sincerely yours,
HARRY H. WOODRING,
Secretary of War. The CHAIRMAN. Mr. Benton.
STATEMENT OF JOHN E. BENTON, GENERAL SOLICITOR, NATIONAL
ASSOCIATION OF RAILROAD AND UTILITIES COMMISSIONERS, WASHINGTON, D. C.
Mr. BENTON. Mr. Chairman and gentlemen of the committee, my name is John E. Benton. My office is in the Earle Building, in this city. I am general solicitor of the National Association of Railroad and Utilities Commissioners; and I appear here by direction of the exective and legislative committees of that association.
I may say that the association represents, in its membership, the regulatory commissions of the several States of the United States, except the State of Delaware, which has no commission, and the State of New York, the commissions of which are not actively affiliated with the association. The association also embraces in its membership the members of the Federal regulatory commissions, but the association is an agency of the State
commissions, maintained by them, and on matters of legislation the Federal commissions never assumé to take any part in determining what the position of the association shall be, and the association never attempts, in any way, to reflect the position of the Federal commissions. If they have any recommendations to make to the Congress it is their duty to make those recommendations directly. The association undertakes merely to reflect the recommendations and the attitude of the State commissions on legislative matters.
On the 26th of March the executive committee of the association and the committee on legislation held a joint meeting here in Washington for the purpose of considering various pending matters of legislation. Among other matters discussed was the matter of aviation legislation, and after discussion a resolution was adopted which I ask permission to read, and have inserted in the record.
The CHAIRMAN. Very well.
Mr. BULWINKLE. I would like for you to tell us just what the resolution is.
Mr. BENTON. It is a short resolution, and with your permission I will read it.
Resolved, That the National Association of Railroad and Utilities Commissioners favors the enactment of Federal legislation vesting jurisdiction in the Interstate Commerce Commission to regulate transportation of passengers and property by aircraft in interstate and foreign commerce, including the granting of certificates of convenience and necessity to carriers engaged in such transportation, and the regulation of their accounts, rates, service, and issuance of securities.
Resolved further, That said association endorses H. R. 5234 provided that the same be so amended that the powers of the States to regulate intrastate transportation of passengers and property by aircraft, whenever such regulation shall be necessary in the public interest, shall not be impaired.
For the purpose of meeting the last provision of the resolution certain amendments have been prepared. I will present them, and ask leave to have them inserted in the record at this point, if I'may. Later I will refer to them. May they be inserted ?
The CHAIRMAN. Very well.