to air mail is that it seems to me that there is a specialized class of users, because of the added expense or added cost of the stamps.

I wonder if the cost of air mail would not be greatly reduced if this idea of speedier service were so utilized as to send all first-class mail by air or all of the additional mail load that the lines could carry. Would it have anything like the effect of bringing the cost of air mail down? Colonel GORRELL. It would have an enormous effect, because your ground costs would be shared by the increased number of schedules that you then would fly.

Mr. BOREN. If 6 cents per letter will actually pay the transportation costs on a letter now by air mail, perhaps if all first-class mail were carried by air, that would extend the principle of speedy service down to the poorest farmer in the Nation, I wonder if there is any way to analyze and see if it would bring it down to make it a 2- or 3-cent rate for everybody.

Colonel GORRELL. That, I imagine, is one of the things that you would learn from the study if you adopted section 1 (a) of your bill. Mr. WOLVERTON. Mr. Chairman.

The CHAIRMAN. Mr. Wolverton.

Mr. WOLVERTON. Colonel, I think we are all interested in the point you are making as to the future possibilities of the use of the air for the carriage of mail.

I merely want to call to your attention and call it to the attention of the new members on our committee who may not be familiar with what this committee has already done in that respect. Two years ago an act was passed as a result of legislation that originated in this committee that provided for experimental air-mail service to develop safety, efficiency, and economy, and for other purposes, and under that legislation which we passed 2 years ago, the Postmaster General was given authority to utilize certain services that were then in existence, and such others as he might wish, to determine the practicability of the very matter that you are now speaking of. I mention that in order that it may be understood that this committee is forward looking in the suggestions that it makes in matters of aviation. Colonel GORRELL. I thank you, sir.

It will not be long after the close of the war, if we plan wisely, before the air transport industry is physically able to transport all, or a large share, of mail by air wherever delivery would be speeded. And there is surely no reason that our citizens should be denied the benefits of such speedy transportation when it becomes feasible. Air mail has long since passed the experimental stage. It has been abundantly proved that the transportation of mail by air contributes immeasurable value to the users of the Postal Service. But unless someone starts soon definitely to survey the possibilities and to work out a plan, the ultimate accomplishment of an admittedly desirable objective may be needlessly and too long delayed. And we may be sure that other nations are not overlooking the desirability of accomplishing this advance in their postal service, both for the purpose of promoting their internal economy and for the purpose of furthering their international interests. Indeed, as you know, even before the war Great Britain had taken positive steps toward achieving air transportation of all letter mail throughout the Empire without surcharge. And I understand they had planned in the future, when the war broke out, to expand it further than simply letter mail.

Mr. BOREN. The House is now considering the Treasury-Post Office appropriation bill, and in reading that bill I was surprised to notice that the amount appropriated for air mail, domestic air mail, was reduced by about 214 million dollars. I am just talking about the domestic figures. There was a comparable reduction in the appropriation for offshore mail; but I can understand why the situation in the world at large might affect the loads and so forth on the offshore problem, but on the domestic problem, I was terribly surprised even in view of the probable decrease in the cost, when this committee and the Congress heretofore had established a policy of building the Air Mail Service, projecting it on an ever-increasing scale, to notice that decrease in the appropriation, and I wonder if the industry or you representing the industry have given thought to the effect of this appropriation bill and care to make a comment on that particular subject.

Colonel GORRELL. Mr. Congressman, I presume that those who pass upon the appropriations thought that the lines were becoming more self-supporting. On the other hand, this is no time for the Government to start cutting things in an industry that is so vital now in national defense and is going to be so vital to us for travel and trade when this war is over and for prevention of other wards.

Mr. BOREN. Well, if we reduce it 214 million dollars, the effect of it is to maintain static the present Air Mail Service, so to speak, and if they can save 24 million dollars on the basis of present cost of maintenance, in that appropriation, could not that actually be utilized in expanding services?

Colonel GORRELL. I think you can well afford to maintain the current appropriation because you are going to need it anyhow. The mail loads are growing by leaps and bounds. The volume is getting larger and larger every month. Mail is taking up so much space that when given priority, which will probably happen soon, you will have to be throwing off other things and carrying mail, and you will then need that money which you are taking out of the bill now.

Mr. BULWINKLE. Did you not say a little while ago, Colonel, that some of the lines were abolishing, temporarily, the carriage of air mail?

Colonel GORRELL. No, sir. What I said is this. We are throwing off mail from time to time and putting on priority materials as established by the War Department, because we do not have enough planes to carry all of the mail at all times.

Later on we try to pick up that mail on another schedule or sometimes it goes on by train.

But, to answer Mr. Boren, I think the sooner America gets itself in shape to fight the battle that it is going to face for commerce and for other purposes when this war is over, the better off we are going to be. Other people are not asleep. You cannot fight the post-war battle by making your air lines financially weaker. You are going to need bigger and better planes. You are going to carry larger cargoes. You are going to fly faster and you are going to fly longer distances. One of the planes we have now, for example-

Mr. BOREN. Can we now fly planes nonstop across the ocean? Colonel GORRELL. The latest experimental plane of our industry which was flown a fortnight or so ago, will go across nonstop.

Mr. BOREN. Who designed it?

Colonel GORRELL. That was designed for two of the air lines. The Army took over the contract and is now bringing it into production. Mr. BOREN. I just wanted to get the information there as to whether that was done by the industry or by the Government.

Mr. HINSHAW. Mr. Chairman.

The CHAIRMAN. Mr. Hinshaw.

Mr. HINSHAW. In connection with this air-mail business, Colonel, it is true, is it not, that through action of the Civil Aeronautics Board, certain funds that were paid into the air-line companies, probably in part for carrying the mail, has been recaptured by the Government? Colonel GORRELL. I do not think any cash has been taken away from the air lines. Rates have been reduced, but no cash has been taken away from the air lines.

Mr. HINSHAW. What about the amount that was supposed to be recaptured from the air lines?

Colonel GORRELL. The Board reversed itself. If reversed is the proper word, the Board reversed itself on that proposition.

Mr. HINSHAW. You say that the Board reversed itself?

Colonel GORRELL. The Board reversed itself on that. If I might make the remark, I do not think that the Board has the power of recapture.

Mr. HINSHAW. Was any stipulation made by the Board as to a disposition of the funds that were under dispute?

Mr. POGUE. I might answer that.

Colonel GORRELL. Mr. Hinshaw, the Chairman of the Civil Aeronautics Board is here. He can answer that more accurately than I, and if I may, I would like to suggest that you ask him.

Mr. HINSHAW. If agreeable to the chairman.

The CHAIRMAN. Mr. Pogue.

Mr. POGUE. In the American case; no, sir. The second decision, upon petition for reconsideration, stated that as a matter of broad policy under this act it would be improper to undertake to recapture any such funds and in view of the fact that the decision of the majority placed the carrier on what was determined to be a self-supporting basis, so far as mail rates were concerned, there were no strings or any other kind of limitation attached to the money, that is, to that $4,000,000, to which you refer.

Mr. HINSHAW. There were some strings attached to another similar case, I think, the Pan American or the Panagra.

Mr. POGUE. The Panagra and the Latin-American case, where the carriers' new rates do not place it upon what was termed a selfsupporting basis at the time of the decision provided that, or contained an expression of the Board's thought, that those funds labeled as excess funds should be kept in the business and not paid out in dividends until such time as the company did emerge on a self-sustaining basis, which would be determined in some future rate case when a proper showing was made. That is the only string or the only strings that were placed upon it.

Mr. HINSHAW. That was merely a suggestion on the part of the Board, and not a direction; is that true?

Mr. POGUE. Yes. We thought we had no power to compel that as a legal matter, and it was an expression of our thought as to what the

right policy should be, so far as management was concerned, with respect to those particular funds.

Mr. HINSHAW. At the same time you reduced the rates so that it would be necessary, probably, to use these funds in the carrying on of the business while they arrived at the point where they could sustain themselves on the basis of the new rates?

Mr. POGUE. No, sir; no, sir. The new rates

Mr. HINSHAW. I misunderstood you, then. That is what I understood you to say.

Mr. POGUE. I am glad you raised the point, because the new rates were based entirely on the careful estimates of what the carriers' requirements were from mail compensation and did not contemplate that any of those funds would have to be used to make up operating deficits. They are available for such use as the management finds it wise to apply them to in the ordinary business. They can purchase capital assets; they could use them for anything that is necessary. Mr. HINSHAW. Thank you.

Colonel GORRELL. The proposal in section 1 (a), H. R. 1012, simply calls for a study and a report.

The need for the study is pressing if the vision with which we must act in the near future is to be fortified by careful and informed planning. Mr. Chairman, so far as I know, transportation of mail by air is the only mode of transport of mail where the Congress has seen fit to make a surcharge. The Government apparently, previous to moving mail by air, had in mind that the poor man had as much right to use the mail service as the rich man and the poor company had as much right to use it as the rich company. But in air mail you will notice the price is doubled. It favors the rich corporation in the solicitation of business versus the poor corporation and it makes the mail service unavailable to the poor man on the same basis as the rich man.

I think that some day you will decide that there will be no surcharge in the carriage of mail by air. There is no reason why the poor person in the West should not receive or send a letter from or to his son or his daughter as rapidly as his rich neighbor receives or sends one from or to his son or daughter.

Another thing, if you move mail by air wherever possible and speeded delivery results, you place the corporations of the country more or less upon the same basis in competition. For example, if a dress manufacturing concern or wholesale house in New York decides today to offer by surface mail a thousand dresses, let us say, to the first person who wants them, and sends out surface mail making a cutprice offer on the merchandise, a man in Pennsylvania would get that offer by letter mail tomorrow morning and might buy them all before the offer by letter ever reached a man in Oklahoma. On the other hand, if the mail had gone by air, you would have had an overnight business delivery to practically every spot in the United States. By air the person in Oklahoma could bid for those dresses as quickly as might the person in Pennsylvania.

You have got a problem here of discrimination against businesses, and discrimination against poor persons. I think it deserves consideration, as it will with the adoption of that 1 (a) paragraph, which simply calls for a study of the question.

Mr. WOLVERTON. Colonel, as I mentioned a few moments ago, I thought we had passed all legislation necessary to enable the Post Office Department to make that study.

Colonel GORRELL. That legislation was limited to five-star routes. Mr. WOLVERTON. Limited to what?

Colonel GORRELL. Limited to five small star routes, sir.

Mr. WOLVERTON. Well, it was experimental and then, as I understand, a report was made that it was feasible.

Colonel GORRELL. Those routes were all short.

Mr. WOLVERTON. I know they were.

Colonel GORRELL. You have other problems that the students have got to investigate. For instance, you have the problem as to how you are going to distribute the mail en route, and other things of that nature.

Mr. WOLVERTON. You are speaking now of legislation that provides for a study.

Colonel GORRELL. That is all, sir.

Mr. WOLVERTON. I think that the legislation we passed provided a basis for a study and I think that the Post Office Department has made that study. Based on that experience, although gained on a limited number of routes, and, even though they were short routes and covered only some six different States, it was sufficient to form a basis for a favorable opinion.

Colonel GORRELL. Mr. Congressman, I have not those routes before me, but I think that those routes were in the nature of star routes, and did not deal with the problem of separating or working the mail while in flight and while crossing the country, and things of that nature. Your real problem, outside of getting equipment, is the question of how you are going to distribute the mail.

Mr. WOLVERTON. As the chairman indicated, when we have the Post Office representatives here, we will be able to inquire from them as to just what has been shown to be feasible.

Colonel GORRELL. For instance, one important question is whether you will distribute_the_mail in flight, or whether you will do it at the airports when the planes land.

Mr. HALLECK. That is what I was about to inquire about. In the mail cars, as they go along, there is a bunch of fellows working in them, putting the letters around in pigeonholes.

Colonel GORRELL. Of course, some of the airplanes will soon be larger than those mail cars.

Mr. HALLECK. Colonel, assuming and I have no quarrel with this paragraph or this section to bring about a study of this thing-but just for the purpose of discussion you have made the suggestion, as I gather, and your idea is that the transportation of mail by air is more valuable to the person who is using the Postal Service. Colonel GORRELL. Yes.

Mr. HALLECK. Now, would you, if you had the same charge for all first-class mail, getting away from this rate of 6 cents as against 3 cents, would you then have all of the mail going by air, because it is more valuable that way; or if you did not do that, how would you work out the part of the letters that would go by air and those that would go by rail?

Colonel GORRELL. That is what the study would have to determine, sir, because the proposal here is only that they go by air wher