I wonder if you could tell me what law of Congress provides that the use of the mail, whether by airplane or railroad, shall be denied to newspapers for mailable matter where such newspapers do not use the mails for dissemination of information to the great American public of the results, say, for instance, of the Irish sweepstakes. I know of no law of Congress setting forth that a newspaper that does not use the mails for that purpose should be denied the use of the mails for other mailable matter. Mr. CROWLEY. The second-class privilege of newspapers is administered directly by the Third Assistant Postmaster General. The Third Assistant Postmaster General submits to my office a paper, a newspaper, with the mere request to be informed whether or not that paper is mailable, containing such-and-such matters. I advise the Third Assistant Postmaster General whether or not that matter is mailable. Now, the Third Assistant Postmaster General administers the service that you are talking about, and just upon what theory he attempts to control the distribution of newspapers that do not go through the mails, I am not familiar enough with that to tell you, because that question, that specific question, has never been presented to the Solicitor's office. The Third Assistant does feel this way about that second-class privilege which is granted to newspapers, and that is that the entire circulation, that the entire issue or circulation, of a paper must be considered in determining its right to the second-class-mail privilege. That generally is a regulation which I believe has been in effect for about 70 years; and it is something that has not been submitted to the Solicitor's office, and I know very little about it. Mr. KENNY. I am just trying to get the information, and appreciate your statement that you had nothing to do with that ruling. But what I am getting at is on what the Third Assistant Postmaster General now bases his action. I would like to know what law of Congress permits any official in the Post Office Department to deny the privilege of mailable matter, mail that is not objectionable in any newspaper, to deny the use of the mails to such matter where, because through some other agency, they give certain information that might not be permitted to go through the mail. Is there any such act of Congress or any law that goes so far as to permit the Department to make any such ruling? Mr. CROWLEY. Mr. Kenney, you have asked me a question on the spur of the moment, and a question that has been causing a lot of trouble in the past months. Mr. KENNEY. I am very much interested in it, and I have not been able to find any such law. Mr. CROWLEY. I have no difficulty with the question where a lottery is being operated, and the publishing of a paper that carries, for instance, the Irish sweepstakes, but I had rather look into that a little further, Mr. Kenney. Mr. BULWINKLE. There is a statute now against carrying any advertisement of a lottery. Mr. CROWLEY. Yes; it cannot go through the mail. Mr. BULWINKLE. I am talking about through the mail. Mr. CROWLEY. Yes; it cannot go through the mail. Mr. BULWINKLE. And Mr. Kenney's question is what would be the situation if it were carried by an express company; the Government says that it is denied the use of the mail. Mr. CROWLEY. Yes, sir; if the other goes through the mail. Mr. KENNEY. The official in the Post Office Department, you say, that has jurisdiction over that is the Third Assistant? Mr. CROWLEY. Well, the Third Assistant has jurisdiction over the question of newspapers that enjoy the second-class privilege, and the Third Assistant Postmaster General feels like the Department does have some control over it. However, it is a little too early for me to answer your question, because he is making up some matter on that very thing now. Mr. KENNEY. Well, I would like to express the opinion that I do not think there is any such law; and I do not think the Post Office Department has the right to deny the use of the mails to the newspapers of this country and by so doing stifle and interfere with the freedom of the press. I do not believe the Department has the right to suppress this information-not advertising information, but information of the results of drawings of winners or prizes legally awarded in Ireland on a sweepstakes legally run in England, information which the American people want; and I think the Post Office Department goes out of its way when it undertakes to put any such interpretation upon the laws of Congress. I believe Major Bulwinkle agree with me on that conclusion. will Mr. ELLENBOGAN. I have a further question, Mr. Chairman. Mr. ELLENBOGEN. I was interrupted when I was asking you about the policy of the Post Office Department. As far as the air mail is concerned, it is the policy of the Department not to give to two people air-mail contracts between the same points? Mr. CROWLEY. In general, that is true. Mr. ELLENBOGEN. And that is in accord with existing law. Mr. CROWLEY. There is nothing that prohibits the giving of contracts between two competing points to competing companies? Mr. ELLENBOGEN. I think it directs Mr. CROWLEY (interposing). There is no restriction. Sometimes we have competing service between several cities. For instance, there is competition between here and New York. Mr. ELLENBOGEN. All these air lines were established when the present law was passed and, generally speaking, without taking specific instances Mr. CROWLEY (interposing). Yes. Mr. ELLENBOGEN. That was the policy of the Department, not to give competing companies contracts between the same points? Mr. CROWLEY. That is right. Mr. ELLENBOGEN. And I believe the cause of that policy is the fact that air-mail lines have been operating at a loss; and the Post Office Department, in giving a subsidy, does not desire to increase that loss. Mr. CROWLEY. That is right. Mr. ELLENBOGEN. Now, if that policy exists as to the air-mail contracts, because of the financial conditions of the companies, why would it not also be a good policy in regard to the transportation of passengers? Mr. CROWLEY. Well, the passenger rates will very nearly regulate themselves with this infant industry because of the competition between fast trains and because of competition of other air lines. Mr. ELLENBOGEN. Well, you do not think we should have, for instance, two air lines, between Pittsburgh and Washington? Mr. CROWLEY. I doubt if the traffic is heavy enough. In fact, the difficulty with these two lines that we have is that they were not only operating on regular mail schedule, but they vied with one another in competing with their rates, to the point where they have both gone broke, or were going broke fast. Mr. ELLENBOGEN. Where you have two competing air lines it reduces the efficiency of the operation in which they are engaged, does it not? Mr. CROWLEY. In some instances. That is because of this off-line provision that got into the bill it was amended over in the Senate. But if that had been left as it was we would not have had that difficulty. Mr. ELLENBOGEN. But generally speaking, where lines ply between two points-and I am not talking about others Mr. CROWLEY. Yes. Mr. ELLENBOGEN. That is true. Mr. CROWLEY. Yes; that is the way I feel about it, that, generally speaking and there may be exceptions-but, generally speaking, there should not be competing lines until the lines do not need subsidies. If you are going to subsidize them, there is no reason why you should give Government money away to set up other direct competing lines. Mr. ELLENBOGEN. Well, that would apply to transportation of passengers as well as to transportation of mail, would it not? Mr. CROWLEY. I do not think so. I think the air lines will find a rate for passengers that they feel the public is willing to pay for that kind of transportation. Mr. ELLENBOGEN. Yes; but Mr. CROWLEY (continuing). But that is something they will learn from their experience in operation; I think they will know more about what rates to fix than the Interstate Commerce Commission or any other bureau official could know without actually operating an air line. Mr. ELLENBOGEN. Where it is not possible for one line to be operated at a profit, and two lines are going to be operated, that naturally affects the efficiency of the operation, does it not? Mr. CROWLEY. Well, your question is based on that Pittsburgh line, and that was a very unfortunate case. There two companies fell out with one another; and to use an old expression, they went licketysplit to see which one could outdo the other and which one could operate the most service and which one could run their planes at the lowest rate. The CHAIRMAN. We thank you, Mr. Crowley. Mr. CROWLEY. Thank you. The CHAIRMAN. Mr. Mulligan. STATEMENT OF DENIS MULLIGAN, SOLICITOR'S OFFICE, Mr. MULLIGAN. Mr. Chairman and gentlemen of the committee, my name is Denis Mulligan. I am from the Solicitor's office, Department of Commerce. The Department of Commerce wishes to be heard with regard to H. R. 5234, and desires to leave with your committee a written statement concerning the bill. (The statement above referred to is printed in the record, as follows:) Hon. CLARENCE F. LEA, DEPARTMENT OF COMMERCE, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: Reference is made to H. R. 5234, a bill 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 is identical with the amended S. 2, bearing calendar date March 3, 1937, which, as successively modified, originated about 2 years ago. The Department of Commerce has previously reported upon S. 2, as amended, and its predecessors. With respect to such prior reports, your attention is invited particularly to Department's letter of December 16, 1936, devoted to S. 3420, Seventy-fourth Congress, draft of July 29, 1935; Department's letter of January 11, 1937, addressed to Senator Pat McCarran in reply to his inquiry of December 19, 1936, in which he forwarded mimeographed copy of bill bearing the same title; Department's letter of March 6, 1937, devoted to S. 2, dated January 6, 1937; and comment made by the Department on the amended S. 2 at a hearing before a subcommittee of the Senate Committee on Interstate Commerce, March 11, 1937. Copies of this material are to be found on pages 77-90 of record of hearings before a subcommittee of the Senate Committee on Interstate Commerce, part I, March 8 and 11, 1937. H. R. 5234 and S. 2, as amended, would add a new part (part III) to the Interstate Commerce Act. Considered together with H. R. 4652, a bill to promote the safety of scheduled air transportation, and S. 1760, it would, in addition to other purposes, transfer the present jurisdiction of the Department of Commerce over air lines to the Interstate Commerce Commission. The Department takes cognizance of the primary intention of the bill to vest in the Interstate Commerce Commission the economic regulation of the transportation of passengers and property by air carriers in interstate, overseas, and foreign commerce. While it is in accord with the aim to eventually consolidate the activities of the Federal agencies dealing with transportation, this Department is unable to give its approval at this time to the enactment of the legislation proposed in H. R. 5234. Regarding the purport and scope of the provisions of the bill relating to overseas and foreign commerce, it is pointed out that the control provided for is dual in nature and extent. Under the prevailing law, the authority in the matter of foreign air lines operating, or seeking to operate, an air-transport service over, into, or away from United States territory is exercised by the Secretary of Commerce in virtue of section 6 of the Air Commerce Act of 1926, as amended. The bill does not attempt to repeal that authority. It does, however, place in the Interstate Commerce Commission broad authority over United States air lines now operating, or which will seek to operate, in overseas or foreign air commerce. In this connection, emphasis is given to the factor that when foreign air lines seek to establish air routes and services in United States territory in exchange for similar privileges to be granted to United States air lines, such privileges are negotiated for on the basis of reciprocity. It would seem to be highly desirable that the responsibility for such negotiation should be centered in one organ of this Government. Likewise, it would appear desirable, from the standpoint of organization, that the proper regulation of all for eign air commerce affecting the United States, whether by foreign-flag air lines or United States air lines, should be vested in one head if unity of command is to result. In the Department of Commerce there is a specialist aviation organ, the Bureau of Air Commerce, which has been administering these matters for an appreciable period. In this regard, it is apparent that the foreign air commerce of the United States greatly exceeds that of any other nation. Incidentally, in advancing this view, the Department takes note of the fact that the policy of the Government has been to permit considerable independence of action to United States air lines operating in foreign territory in obtaining and continuing their air-navigation rights or privileges in such territories, from which there does not come to the United States foreign air-line services. A detailed consideration of several of the provisions concerning the regulation of overseas and foreign air commerce will better reveal the attitude of this Department toward this aspect of the bill. Section 305 (a), among other things, provides that no air carrier shall engage in overseas or foreign transportation unless there is in force a certificate issued by the Commission authorizing such carrier so to engage. In its long administration of our foreign water-borne commerce this Government has not seen fit to require such certificate. Is it necessary now to require such certificates in a mode of transportation that is only emerging from the experimental stage? Section 305 (e) contains the proviso: "That a certificate issued under this section to engage in foreign air transportation shall designate such points only insofar as the operation is to take place within Territories or Territorial waters subject to the sovereignty or authority of the United States and otherwise shall designate only general trade route and the foreign market to be served." This proviso is objectionable for a number of reasons. The proviso would appear to be in conflict with not only the existing Federal law but with international policy and practice. The Secretary of Commerce, according to the Air Commerce Act of 1926, as amended (44 Stat. 568), is authorized to designate and establish civil airways, which are routes in the navigable air space suitable for interstate or foreign air commerce. The most important single body of law governing this question, to which most of the world powers have adhered, is the International Convention for the Regulation of Air Navigation, signed at Paris on October 13, 1919. The last paragraph of article 15 of that convention provides: "Every contracting state may make conditional on its prior authorization the establishment of international airways and the creation and operation of regular international air navigation lines, with or without landing, on its territory." Moreover, it is to be recalled that in the Habana Convention on Commercial Aviation, which is the only multilateral convention on public international air law ratified by this Government, the "fixation" or designation of routes has been provided for. From this it is to be inferred that the idea of a definite location of airways is well established in law. There are also practical reasons why the airway should be definitely located and its location, in some measure, be agreed upon, not only in our own territory but in the foreign territory over which the United States air line operates. It is understood that one of the basic rules in fixing mail-pay aid is that the mail be carried by the shortest, most direct route. No doubt this criterion would be followed, no matter what scheme of subsidy be adopted, so long as a subsidy is necessary. It will also be necessary to know such locations if proper authority is to be granted to United States air lines to carry American passengers and goods safely in foreign or overseas air commerce. It may be, for example, that this Government would find it desirable to certify only a particular kind of equipment for operation over certain routes in foreign or overseas territory. In these remarks it is comprehended that a government can exercise sovereignty only over its own territory or territorial waters, and that the fixing of air routes between any two or more points within a territory of a state is ultimately a matter for decision by that state; but if the proviso proposed were to be written into the Federal law it is felt that a certain amount of the influence now exercised by the United States in determining the route to be traversed by the reciprocal services operating between this country and other countries would be foreclosed by this proviso. In short, the liberty to bargain, even in a matter where the sovereignty of the other country is controlling, would be negatived by such a statutory provision, a liberty which has already appeared to be of value, and may be of very great value in the future establishment of our foreign air routes and services. It is thus to be seen that where reciprocal international air services are to be established, the countries concerned agree to establish routes over their ter |