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the delivery would be speeded and it would go by some other means if delivery were speeded that way. That is one of the purposes of the study, to find out how it can be done. It is a matter that needs considerable study. Mr. HALLECK. Now, in making that study, would the facilities of the rails and their efficiencies and economies necessarily have to be considered? Colonel GoRRELL. Oh; certainly, sir; because it brings in the question of which is the speedier delivery. The words of the paragraph are to oport all classes of mail by air wherever delivery will be speeded. Mr. HALLECK. Then, that would not take into consideration just the carriage of mail by air? Colonel GoRRELL. No, you would have to look into the pony express, the canal boats, and every other mode of travel, sir.

POST-WAR PLANNING

Mr. Chairman, the next point I wish to take up is paragraph 1 (b). Before getting into paragraph (b), which calls for the Civil Aeronautics Board to make a study, may I tell you the story that Marshall Joffre said to me in the spring of 1917. I had the job of working out how large we were going to design our wartime installations for aviation. In April of 1917, I went to Marshall Joffre when his mission landed in this country and asked him some questions. Among others, I asked him how big he thought our school in France should be; how big he thought our warehouses should be; and so on. After a few moments he looked at me and said, “Young man, when you think of the air, dream your fondest dream, multiply it by 10, and you will still be too small.” That statement has held true in all I have seen in aviation. Everything we did in the last war, everything we have done in this war, has been too small. Everything we do in aviation in civil life, is too small. We put up a hangar of a certain size to take care of an airplane, and the first thing we know the next type of airplane will not go inside the hangar. And so in looking upon this subject, I think our country's progress will be limited only by our dreams and our dreams of today will be modest in comparison with the real requirements of tomorrow.

SECURITIES REGULATIONS

Mr. NEwsoME. As the representative of the transport industry, would you care to comment upon the desirability of lodging in the Civil Aeronautics Board some control over future financing of the industry?

Colonel GoRRELL. I am afraid that I am going to take exception to the views of my friend, Mr. Pogue. I am not a lawyer, sir, but I do not know of any form of transportation in which the securities are subject to regulation by two Government bodies.

For example, when the Securities Act went through, it provided that the securities of those transportation carriers, common carriers and contract carriers, that are mentioned in section 20a of the Interstate Commerce Act, would be exempted. I know of no mode of

CIVIL AERONAUTICS ACT OF 1938 117

transportation where the securities are subject to regulation by two government bodies It seems to me that you are running the chance of duplicate regulation. I do not think that we should have duplicate Federal bodies on any subject. In 1938 when the Civil Aeronautics Act was being considered, the securities question was discussed before this committee. You considered at that time that it was desirable not to place the regulation of securities in a second Government body. Mr. NEwsom E. Under such control, if they were placed there, would not that have a tendency to freeze competition? Colonel GoRRELL. Well, I do not know about the freezing of competition, because it would probably deal with the types of securities and the wisdom of the company in issuing the securities. When this war is over, aviation is going to need all kinds of money. Some of the companies will have to go out and raise millions of dollars. Aviation is still speculative. I believe it would be wise at least for the time being, to leave that subject in the hands of management to use its own ingenuity to obtain the large quantities of money from appropriate places and by appropriate Securities. Some companies would have to finance, let us say, with a certain type of stock. Somebody will buy them. Perhaps, had the Board said some other type of stock, maybe nobody would buy them in appropriate times and quantities. The financial demands of this country for aviation to meet world commerce when this war is over are going to be great. I would not be surprised to see some of the transcontinental lines and the large North and South lines each raising $100,000,000 to buy new equipment and things like that as soon as the war has ended. Today, with the type of act you have at this minute, the industry can raise this money rather easily. The insurance companies which have hundreds of millions of dollars to loan are interested in the propCsition. The banks around the country are interested in the proposition. If we put two Government bodies on the same subject, I do not know what the effect will be on management or on the people who have the cash to loan. Mr. NEwsoME. In other words, the regulation of the capital would not seem desirable, if the Government should try to protect the people taking such risks as are necessary to expand the business. Colonel GoRRELL. If you did that— Mr. BoREN. Mr. Chairman. The CHAIRMAN. Mr. Boren. / Mr. BOREN. Colonel, of course in the Securities Act of 1933, section 214 of that act, Congress did exempt railroad securities from regulation by that commission because it was giving that supervision to another commission, and there is no question, I am sure, in the minds of this committee but what there should not be two bodies having jurisdiction over the subject. The point that I want to nail down is this: Is there any reason from the industry’s viewpoint why there should be any change in the present practice with reference to air-line securities? Colonel GoRRELL. No. In our discussions of this bill, and in the light of the events over the last 4 years, we think your action of 1938 was probably correct, at least for the present.

Mr. Boren. Would you go strong enough to say that in relation to present problems, that you would recommend definitely against any change in it? Colonel GoRRELL. I would recommend that that phase of the law be left alone and that we take another look at it in the future. Mr. BOREN. I wonder if at this point Colonel GoRRELL (interposing). It is not any great problem right now, because the industry cannot get planes and no one is going to be seeking securities of any consequence at the present time.

NEED FOR LEGISLATION IN RECENT PAST

Mr. BOREN. I wonder if this is the proper time for me to refer to a little more general question. It seems to me that I recall when you were before this committee on the Transportation Act of 1940 that at that time you made a definite, a positive recommendation to this committee that no new legislation with reference to civil aviation be enacted at that time. That was on the Transportation Act of 1940. Now, speaking from memory, of course, am I correct in that recollection? Colonel GoRRELL. Yes, sir; we appeared before you in the hearings on what was called the omnibus bill, and later became the Transportation Act of 1940, and pleaded with you to give us no legislation. We told you that we had had in the previous 14 years 12 different acts of Congress, and that 12 changes of Government policy by legislation in 14 years was enough to ruin anything, and we asked you to give us a breathing spell in order to get our feet on the ground. Mr. Boren. Have you felt that up to now, that now is the first time that there has been any reason for new legislation? Colonel GoRRELL. Yes; I have talked to your chairman over a period of several years on the subject of legislation. I think the first time I talked to him about it was a couple of years ago, on the need of covering the subject of liability. I talked with him last fall on the need for getting busy on some of the things we need in the future, with the turn of the year, after our industry got out of its system some of the military problems we were then handling. Mr. Boro N. Congress has constantly given considerable thought to the legislative situation, past, present, and prospective future, with reference to aviation, and I remember in a casual way that in the Transportation Act of 1940 you made a rather strong statement in that direction and I wondered if to that extent you felt it will contribute to our hearings in connection with this subject, if when you revised your statement you would add any portion of that former statement that you feel will contribute to this question. Colonel GoRRELL. I would be very glad to look it up, sir. Mr. BOREN. I thank you very much. The CHAIRMAN. At this time the committee will recess until 2 o'clock this afternoon. - Mr. BoFEN. Mr. Chairman, before making that decision, there is a caucus this afternoon. Mr. WolveRTON. Would it be appropriate to have the Colonel state what he expects to cover in his statement this afternoon? Colonel GoRRELL. If I am permitted to do so, I would like to take up paragraph 1 (b) of the bill under “Post war planning.”

Mr. Wolverton. I think that is a matter the whole committee will be interested in. -

The CHAIRMAN. I hope that the members will be here to consider that important subject.

(The excerpt requested by Mr. Boren is as follows:)

ExTRACT FROM THE TESTIMONY OF EDGAR S. GoRRELL, PRESIDENT, AIR TRANSPORT ASSOCIATION OF AMERICA

[Before the House Committee on Interstate and Foreign Commerce, House of Representatives, 77th Cong., 1st sess., on H. R. 2531 and H. R. 4862—vol. 2 of the printed hearings, pp. 1482, 1483, and 1484]

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Colonel GoRRELL. This committee knows that the industry sought and supported the Civil Aeronautics Act, despite the fact that that act places upon air transport, in full flower, all the strict obligations which our country has evolved for fully developed transportation services. The reason for this unprecedented stand on the part of the industry was the experience it had endured for the past dozen years, and the conviction that if there were not adopted a stable, permanent legislative charter we might be swept from the airways by unbridled competitive forces and by the stress created through vacillating policies. We had reached a point where investors had lost hope, and we required at least the fighting chance which a stable and permanent regime would give us.

Between 1925 and 1934 there were, for domestic air transport, four separate measures, adopted by the Sixty-eighth, the Sixty-ninth, the Seventieth, and the Seventy-first Congresses, respectively, each of which represented a vital change in the Government's policy toward the economics of air transport (Public, No. 359, 68th Cong. ; Public, No. 178, 71st Cong.). Then came the air-mail contract cancelations, and the companies were shaken up, reorganized, and relocated in the most severe manner. The Air Mail Act of 1934 was adopted with radically new provisions. And the following year there came the far-reaching 1935 amendments, after a message from the President in which he said that in legislating for the industry “any profits at all by such companies should be a secondary consideration” (S. Doc. No. 15, 74th Cong., 1st sess., p. iv.). And in 1936 the industry was placed under the elaborate regulation of the Railway Labor Act (Public, No. 487, 74th Cong.). The Air Commerce Act of 1926 had also been adopted and amended during this period (Public No. 254, 69th Cong.: Public, No. 846, 70th Cong.: Public, No. 418 and 420, 73d Cong.), as had been an Air Mail Act for operators in overseas and foreign commerce (Public, No. 107 and 904, 70th Cong.).

AIR TRAN sport OVER-REGULATED

By 1936 important powers concerning civil aeronautics were vested in the Post Office Department, in the Interstate Commerce Commission, in the Department of Commerce, in the Department of the Treasury, in the Department of Labor, in the Department of Agriculture, in the National Mediation Board, and in the Federal Radio Commission and along the way the National Recovery Administration, the National Labor Board, and the Federal Aviation Commission had all had their say. Moreover, the State Department, the War Department, and the Navy Department had at all times been vitally interested in civil aeronautics and had exercised important influences. We were also subject to regulation by the Federal Trade Commission and by the Securities and Exchange Commission. With all this division of control, with administrative policies changing first here and then there, the Congress itself was constantly changing its mind and making in one year radical departures from policies laid down the year before.

AVIATION SUFFERED SERIOUSLY FROM CONFLICTING AND CHANGING CONGRESSIONAL t Polic IES Probably at no time in the entire history of our Government has any single industry passed through such a period of confusion and such a maze of conflicting and changing policies. It is hardly to be wondered, therefore, that during this time the mortality rate of air carriers was something over 80

percent and that half of the private capital which had been hopefully devoted to the future of air transportation was irretrievably lost.

Beginning, then, with the Sixty-ninth Congress, each one, to date, except the Seventy-second Congress and the present, Seventy-sixth Congress, has adopted at least one new and vitally different statute. affecting air transport. (The 77th Cong. adopted the Civil Aeronautics Act.) In the 14 years beginning with 1925 and ending last year, there had been at least 12 fundamental legislative changes.

It is not altogether a coincidence that during the period when civil air transport was so badly crippled by a mercurial Government policy and by divided jurisdiction, the Air Corps of our Army had been reduced almost to impotence by similar tinkering and changing, vacillation and indecision, on the part of those in authority. Nor is it altogether a coincidence that during the same period the Air Corps of our Navy reached a pinnacle of power, efficiency, and prestige enjoyed by no other nation, because years ago a policy had been set forth and adhered to with singleness of purpose. Nor, again, is it altogether coincidental that, when the plight of the Army Air Corps was fully realized, our President took a firm stand that a policy should be laid down for the Army and should be unswervingly adhered to in the future until our military air arm had achieved its proper strength.

These developments in the field of military and naval aeronautics are not, I say, altogether coincidental, for the highly technical character of civil aeronautics, like that of military and naval aeronautics, demands a regime of stability and of single purpose if progress is to be made. Just as a recognition of this fact led the President to insist on such a regime for military aeronautics, so it led him to support and to approve the Civil Aeronautics Act.

And it is, indeed, high time that the air-transport industry be permitted to settle down and consolidate its position. We are working out our problems under the new act. Do not, we pray of you, send us once more on the disheartening trek from one governmental agency to another. Give us the opportunity to repair past damage, to build a new foundation, and to secure some conception of what our powers and our capacities really are.

The CHAIRMAN. The committee will stand in recess until 2 o'clock.

(Thereupon, at 12:01 p. m., the committee took a recess until 2 p. m. of the same day.)

AFTER RECESS

(The committee reconvened, pursuant to the taking of recess, at 2 p. m.)

The CHAIRMAN. The committee will come to order. You may proceed, Colonel Gorrell.

STATEMENT OF COL. EDGAR S. GORRELL, PRESIDENT OF THE AIR

TRANSPORT ASSOCIATION OF AMERICA, WASHINGTON, D. C.Resumed

Colonel GORRELL. Mr. Chairman, before taking up paragraph 1 (b), may I suggest the insertion in the record of a newspaper clipping giving a statement by General MacArthur as to a conception of the use of air transport in war?

The CHAIRMAN. Very well, we will be glad to have it. (The article referred to is as follows:)

[From Washington Post, January 25] MACARTHUR SEES AIRPOWER AS KEY TO VICTORY

SAYS CORRECT USE OF PLANES MADE FOR PAPUA SUCCESS

By the Associated Press

ALLIED HEADQUARTERS IN AUSTRALIA, January 24.-Gen. Douglas MacArthur, Allied commander in chief in the Southwest Pacific, said today that in his forces,

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