it any evidence relating to the limitation of pilots' hours, except as a matter of insuring safety.

The case entitled, "In the Matter of the Air Line Pilots' Wage Dispute", was an arbitration proceeding jointly submitted to the National Labor Board by the Air Line Pilots' Association, International, and five certain air-line companies, in which the subjects submitted to arbitration were two, viz, (1) whether the mile or the hour should be the basis unit of pay for air-line pilots, and (2) what should be the rate or rates of pay.

The Board opened its hearing of the dispute on October 4, 1933. At the proceedings held on that day, the only testimony offered concerning hours was presented in behalf of the Pilots' Association by Mr. Edward G. Hamilton. It consisted only of a summary statement of need for reducing, in the interest of safety, the then existing limit of 110 flight-hours per month, fixed by the Department of Commerce. The statement was made altogether collaterally and incidentally to a comparison which Mr. Hamilton made of the pilots' pay scale effective October 1, 1933, and previously existing pilots' pay scales. Mr. Hamilton's testimony in full concerning hours was as follows:

"Summing up the entire situation, the simple facts are that the air lines propose to concede to the pilots a slight increase in the hourly rate of pay on the faster airplanes. This increase, however, is nowhere nearly in proportion to the increase in miles which will be required by each pilot. Pilots are not so much interested in increase in monthly salary at this time as they are in establishing a uniform mileage system of pay and a limitation in miles flown per month. If the requests of the pilots are not acceded to, the inevitable result will be unemployment. The monthly salary offered by the companies at this time is not far out of line, but the pilots object strenuously to having to fly 25 to 100 percent more miles than they are flying now in order to earn this salary. "The Aero Medical Association recently in convention in Chicago passed a resolution that pilots should not fly more than 85 hours in a month and not more than 900 or 1,000 in a year. At the present time they are, on the main lines, driving a pilot to the limit of human endurance, and in many cases even exceeding the exorbitant figures of 110 hours set up by the Department of Commerce a long time ago when aircraft was averaging about 90 to 100 miles an hour. Faster speeds bring in constantly changing conditions. These conditions can only be definitely and permanently adjusted on a mileage basis” (transcript of testimony, printed, p. 10). [Italics supplied.]

At the close of the day's hearing, the Board authorized creation of a temporary fact-finding committee, which was appointed, consisting of Hon. Bernard L. Shientag, chairman; David L. Behncke; and Lester D. Seymour. The committee held hearings in New York on October 27 and 28, 1933. At those hearings, testimony and argument was presented relating to the limitation of pilots' flight-hours, and, again, no consideration was advanced in connection with the subject except with reference to safety. Mr. Hamilton introduced the subject in these terms:

* *

*

"There are three distinct problems to be solved here. The first one is the amount of maximum services to be performed by a pilot per month. "Our reasons for objecting to an hourly limitation only, are based on economics and practical considerations. They are:

"(1) THE ECONOMIC SIDE

"A faster airplane is a technical improvement which will necessitate shorter working hours, if unemployment is to be prevented. Only by the mile measurement of services will the air-transport industry be enabled to live up to the plan of national recovery, and evenly distribute the available work.

"(2) THE PRACTICAL SIDE

* *

"(a) Physical endurance.-* The only qualified authority, the Aero Medical Association of the United States, are of the opinion that pilots are today flying beyond the limit of safety. They further agree that hours of flight duty should be reduced as the speeds are increased" (transcript of testimony, pp. 8, 9, 10). [Underscoring supplied.]

Later in the day Mr. Hamilton further testified:

"The reason for putting the mileage limitation in addition to the hours, is this. The country at the present time is faced, as you know, with an economic situation which is very grave. They want to distribute work just as much as possible. The only way you can control that is to take the only suitable unit,

the mile, and limit the work to a certain number of miles and hold it there. * * * So that seems to be the only one way in which you can spread the employment amongst pilots properly, that is on a mileage basis" (transcript of testimony, pp. 93-95). [Underscoring supplied.]

On the following day, October 28 (transcript, p. 330), he reiterated his position.

Dr. Louis H. Bauer, a member of the Aero Medical Association and a participant in the proceedings at its convention in Chicago in September 1933, at which was adopted the resolution referred to in Mr. Hamilton's testimony above quoted, testified at length before the fact-finding committee on October 27 concerning the proceedings at the medical association's convention, attendant upon the adoption of the resolution (transcript, pp. 54-56). Dr. Bauer began his testimony with the statement:

"The Aero Medical Association met in Chicago on Labor Day and among other things that were considered was the number of flying hours per month that would be safe for airplane pilots."

A careful reading of his lengthy testimony discloses that the sole consideration which was before the association and which underlay its recommendation was that of safety. The text of the resolution, which Dr. Bauer read into the record, confirms the weight of his other testimony that the association's resolution was essentially a recommendation that, in the interest of safety, the existing limitation prescribed by the Department of Commerce should be reduced to a lower figure.

Director Eugene Vidal, of the aeronautics branch, Department of Commerce, appeared before the fact-finding committee on October 28, 1933, and testified concerning the limitation of flight-hours. His testimony (transcript, pp. 364– 371) likewise related entirely to safety. He stated that the Department of Commerce (a) in the interest of safety was limiting pilots' fight-hours to 110 per month, (b) had under consideration reducing the existing limit, and (c) had under advisement in that connection the resolution of the Aero Medical Association recommending an 85-hour maximum; but (d) had reasons for believing that a maximum higher than 85, though less than 110, was desirable. Moreover, in the course of Director Vidal's testimony, Chairman Shientag, of the fact-finding committee, placed himself on record as believing that, among the subjects before the committee, the matter of the limitation of hours was of inferior importance.1

When the National Labor Board next met for public consideration of this case, on December 14, 1933, it had before it the report of its fact-finding committee, dated November 29, 1933, and signed by Bernard L. Shientag and David L. Behncke. The report dealt with the limitation of pilot's flight-hours, and, again, did so only in terms of safety. The report said on the subject (pp. 1, 4, 7) :

"The undersigned as a fact-finding committee in connection with the basic rate of pay and wages to be paid to pilots in the Airplane Transportation Industry, submits the following report:

"(14) There is at the present time a regulation of the United States Department of Commerce limiting the hours of flying by a pilot to 110 hours a month. All of the parties agree that this limitation is too high. In the past, with considerably lower speeds, the yearly average number of hours per month ranged from about 72 hours to 87 hours. The Aero Medical Society has recently recommended a reduction of 85 hours. The Director of Aeronautics stated that his department has under consideration a reduction in flying hours per month.

"(15) There is now no mileage limitation per month. With the substantial increase in speed, and the tendency toward unemployment which this condition is calculated to bring about, the problem of mileage limitation is one of the most serious with which the industry is confronted.

1 The following interchange took place:

"The CHAIRMAN. You know what the controversy here between the pilots and the operators is, in large measure, do you not? It is the basic rate of pay.

"Mr. VIDAL. I have not been following it very closely, but in listening the last half hour or so it seemed to be the number of hours per month and whether it would be on a mileage or hourly basis.

"The CHAIRMAN. The first is not so important but the second is important (transcript, p. 364). [Underscoring supplied.]

"(22) The time is too short to enable us to state with any degree of accuracy what unemployment, if any, has resulted because of the increased speed, without any limitation of mileage flown per month. To counteract the unemployment which theoretically would result, there should be taken into consideration the increased popularity of faster service that in the past has attracted enough additional passengers to require additional schedules."

There was also before the National Labor Board at this juncture a brief, submitted December 13, 1933, by the Air Line Pilots' Association, International, which discussed the report of the fact-finding committee. Points 1 and 2 of this brief dealt, respectively, with "Limitation of the Hours of Flying" and "Limitation of the Mileage Flown." The argument with respect to the limiting of hours (brief, pp. 11, 14, 15) was based solely on considerations of safety of operation. In the interest of preventing unemployment, as well as of fostering the safety of the pilots themselves, other portions of the brief (pp. 15, 16, thereof) recommended the limiting of mileage to be flown. In other words, such economic limitations as they urged were asked solely in terms of miles and in no case in terms of hours.

Thereupon, the Pilots' Association introduced a new witness, Dr. Ralph Green, a medical examiner, whose testimony was directed altogether to the matter of limiting flight-hours, and who discussed that subject solely in terms of safety.

At the session of December 14, 1933, the second and last day of public hearing devoted by the National Labor Board to the pilots' pay case, most of the hearing was consumed in résumé of (1) the proceedings which had been held before the fact-finding committee, (2) the report of that committee, and (3) the Pilots Association's brief. In such of their statements and arguments as related to flight-hour limitation, neither the spokesman for the Pilots' Association nor any of the several speakers for the five airlines parties to the case dealt with any subject but safety. The last of the latter speakers, Mr. C. W. Cuthell, representing United Air Lines, made, concerning the limitation of hours, the flat statement that "this is a matter that affects safety" (transcript, p. 84).

The conclusion irresistibly follows that, being based on a record confined to considerations of safety, the part of the National Labor Board's "decision" of May 10, 1934, in which the Board (to use its own words) "set forth its views" that "85 hours of flying shall constitute the monthly maximum for air pilots", was advanced as a safety limitation. In effect, in this part of its "decision", the National Labor Board was attempting, in the interest of safety, to revise downward the 110-hour limit imposed by the Department of Commerce.

In its attempt to limit flight-hours the Board could have had no other purpose consistent with the record on which its decision was based. If the Board had desired to limit pilots' monthly services for any other purpose, such as the proposals advanced in the name of the Pilots' Association for preventing unemployment and redistributing pilots' income, it was unmistakably advised, of record, that the limitation must be applied to pilots' individual monthly mileage. It is obvious that the Board took cognizance of these proposals, and that, in point 2 of its decision (wherein it said, "Experience has not crystallized sufficiently to put a maximum on the monthly mileage of air pilots"), it declined to act upon them.

1 The argument presented was as follows:

"The foregoing report of the fact-finding committee, we believe, gives a clear picture of the pilot-operator hours and wage controversy now before the National Labor Board. We submit herewith a few additional facts, together with our interpretation of the findings of your committee.

* * **

"Fact 14 of the report * * states that the 110 hours per month limitation perscribed by the Department of Commerce is admittedly too high, and that the Aero Medical Association of the United States has recently recommended a reduction to 85 hours. *

*

"Attention is called to the fact that in July 1933 certain of the operators required their pilots to fly beyond the 110-hour limit. * * This is evidence of the direct need for stringent safety limitations, and a strict enforcement of same, both in miles and hours. The reason for this is obvious, because it is an accepted fact that an over-fatigued pilot is an unsafe pilot. A pilot who flies too many hours per month will become apprehensive and nervous, lose his flying judgment, and become less keen and show distress on slight exertion. A pilot flying too much will become inattentive and careless, and his liability to accident will markedly increase. Unquestionably the Aero Medical Association took all this into consideration, together with added strain and increased fatigue caused by faster equipment, when they recommended a drastic reduction in the present 110-hour maximum Department of Commerce flight limitation, and recommended 85 hours maximum.

*

*

"The air-line pilots are of the opinion that the issues involved in the limitation of hours and miles of flying are clear cut, because they have a direct and definite bearing on public safety, and should be dealt with in such a way as to leave no room for violations when such violations may result in loss of human life."

CHAPTER III

SUBSEQUENT DECISION AND TESTIMONY

A

On page 710, beginning at line 23, of Air Mail Docket No. 1 as printed (206 I. C. C. 675, Mar. 11, 1935), the basic decision of the Interstate Commerce Commission in air-mail matters clearly indicates that the Commission regards the Department of Commerce (not the Labor Board) as the authority lawfully authorized and directed to prescribe maximum flying hours. The decisions

says:

"Section 12 of the act authorizes and directs the Secretary of Commerce, among other things, 'to prescribe the maximum flying hours of pilots on airmail lines.' "

B

Testifying before the subcommittee of the Committee on Interstate Commerce, United States Senate, Seventy-fourth Congress, first session, on S. 2496, a bill to amend the Railway Labor Act, on May 20, 1935, Mr. Edward G. Hamilton, representing the Airline Pilots Association, International, stated as follows: Page 4 of the hearings

(a) "the air lines sought to change to an hourly system of pay."

(b) "after a long-drawn-out controversy before the National Labor Board, a compromise was proposed wherein a very complicated system of pay was adopted."

Page 5 of the hearings

"The pay recommendations of the Labor Board were made a condition on the holding of an air-mail contract."

Page 7 of the hearings—

*

"The number of hours permitted by the Department of Commerce is 1,000 a year, which averages about 83 per month, but they (the air lines) may employ them (the pilots) as much as 100 hours in any one month. * * And copilots are allowed 100 hours per month right straight through, or 1,200 hours a year."

It will thus be noted that the Air Line Pilots Association, International, even as late as the testimony of May 20, 1935, and while decision no. 83, rendered by the National Labor Board on May 10, 1934, was fresh in their minds, testified that the decision was a pay decision, and that, as to pilots' flight-hours, the air lines were free to permit service up to the limitation prescribed by the Secretary of Commerce.

OPPOSITION TO AMENDMENT SUGGESTED BY MR. EASTMAN

Mr. GORRELL. I understand that Mr. Eastman has suggested incorporating in H. R. 5234 a prohibition providing that, after the law takes effect, it shall be unlawful for any officer or director of an air carrier "to participate in the making or paying of any dividend of any operating carrier from any funds properly included in capital account."

In order to illustrate the dilemma in which such a prohibition might place an air line, I shall discuss a hypothetical case.

Assume that an air line has a net income in a taxable year of $1,000,000, derived entirely from operating profit. The normal income tax on that profit would be $148,840. If no dividends were declared by the corporation, the surtax on undistributed profits imposed by section 14 of the 1936 Revenue Act would amount to $174,487, according to my computation. If this corporation happened to have a surplus deficit, it would not be possible for it to declare a dividend under the proposed prohibition suggested for the Air Carrier Act. It therefore would have to pay a total normal and surtax of approximately $323,000, notwithstanding the fact that the declaration of a dividend would be perfectly proper and legal under the law of the State of its incorporation.

I think it is manifestly unfair to place a corporation between two statutes, one of which is designed to encourage the distribution of earnings in the form of dividends and the other of which would prohibit the payment of dividends if the corporation had a surplus deficit.

The situation I am discussing actually arose in the case of one air line for the year 1936. The corporation had a surplus deficit and also a substantial net income. A dividend was declared in order to minimize the tax on undistributed profits, but, if the proposed prohibition in the Air Carrier Act had been in effect, the corporation would have been compelled to pay the entire tax on undistributed profit.

No such prohibition appears in the Motor Carrier Act, which throughout seems to have served as a model for this proposed legislation.

COMMENTS ON AMENDMENTS PROPOSED BY JOHN E. BENTON, OF THE NATIONAL ASSOCIATION OF RAILROAD AND UTILITIES COMMISSIONERS

Mr. Benton proposed three amendments which I shall briefly consider in the order presented by him.

The first amendment, which he proposed to section 302, would add a general paragraph preserving the powers of the States. Insofar as this amendment is not directed to the purposes sought by the second amendment, which I shall consider in a moment, it is unnecessary. It seems undesirable to insert any redundant words.

The second amendment is a proposed proviso to the section giving the Commission power to fix rates which would prohibit the Commission from exercising power over intrastate rates for the purpose of removing discriminations against interstate commerce. As Mr. Benton admits, this is designed to bar the exercise of power over intrastate rates comparable to the power exercised in the case of railroads. While such a provision was incorporated in the Motor Carrier Act, it seems of doubtful wisdom. In no industry is it so apparent, as in the case of air carriers, that the interest of the Federal Government is and should be paramount. Because of the speed of air carriers, intrastate business on interstate air lines will always be incidental. This is much more true of the air carriers than of the motor carriers. To open the door so as to permit a State to require the transportation of intrastate traffic at cut rates on the same ship that carries interstate traffic would be a most serious eventuality. If State regulation prevents intrastate traffic from bearing its due share of the costs of transportation, to the detriment of interstate traffic, it seems perfectly clear that the Federal agency should be enabled to correct the situation. In any event there should not be a provision barring the Commission from taking such action. Interstate considerations should always be supreme in this industry and there should be no restriction upon the Commission's power to carry out whatever measures are necessary to the effectual protection and promotion of that traffic.

As to the third amendment proposed by Mr. Benton, which would permit the Commission to confer with and hold joint hearings with State authorities, there seems no objection. Indeed, this seems desirable. In the event the Commission ever finds it necessary to remove intrastate discriminations against interstate commerce, the suggested