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idea. You debated that in your bill of 1938. There is nothing new that can be added.

I desire to suggest that the bill that this committee brought out in 1942, which is known as Public Law 766, Seventy-seventh Congress, providing for the instruction of students in meteorology be made a part of the permanent law. Also, your suggestion about workmen's compensation is a wise one. In reference to the proposal in H. R. 1012 to give the pilot authority to issue orders on board an aircraft in flight, I suggest that you change "pilot" to "person in charge of the aircraft," because, as you know, aircraft are now flying where we have captains aboard who need not necessarily be active pilots.

In reference to liability, I shall suggest that the proposal be extended to cover liability to persons and property on the ground.

In reference to the Railway Labor Act paragraph, which is the last paragraph in H. R. 1012, I would like to invite the attention of the committee to the foresight of your associate, Congressman Crosser. It was my pleasure to ask him when that bill was proposed in 1936 what he thought of it. He told me at that time something that has proven quite true, namely, that it is a wise bill and that we would like it if it were to be enacted. It has turned out very well. It is wise legislation.

The proposal in the last paragraph of H. R. 1012 simply makes it clear as in the definition in title I that all employees of air lines are under the same Federal labor body.

The CHAIRMAN. We would be very glad to have that. In this connection, I might say, Colonel, something which you are aware of: What we are trying to do here is to provide legislation that will encourage and protect the advancement of aviation to perform all the necessary and legitimate functions and we will be glad to have your suggestions as to the improvement of this legislation.

We would want you and the industry to feel that we will be glad to consider any constructive suggestions for additions to this bill that you think would contribute to the advancement and proper protection of the public and to the carriers.

So, we welcome any suggestions you have for the improvement of this bill.

Colonel GORRELL. Mr. Chairman, we thank you, and we also welcome the opportunity you gave to us to make some suggestions on draftsmanship.

Mr. BULWINKLE. Mr. Chairman.

The CHAIRMAN. Mr. Bulwinkle.

Mr. BULWINKLE. I would like to know just for my own information, about this provision in the first section of the bill which reads:

The Civil Aeronautics Board and the Postmaster General, respectively, are empowered and directed to investigate and report to the Congress within 1 year from the effective date of this Act concerning the feasibility and advantages of transporting by air all classes of mail.

Is that a joint meeting or not?

Colonel GORRELL. Mr. Congressman, as I read that section it means that the two of them are each charged with the responsibility. It would presumably envision two reports. It could be under the language a joint report if they saw fit to get together on it, but as worded, it would seem to envision two reports, unless they did voluntarily get together.

Mr. BULWINKLE. It does not distinctly state clearly whether it is or not?

Colonel GORRELL. That is correct, sir.

The CHAIRMAN. So the purpose that you would suggest there would be accomplished by each of those men or officials submitting their reports?

Colonel GORRELL. Were I to be in charge of that decision, sir, I would have two reports.

The CHAIRMAN. Yes. Now, Colonel, we will of course be glad to have you extend your remarks as you suggest.

Colonel GORRELL. With your permission, I will hand them to the reporter later this morning.

The CHAIRMAN. Very well.

Now, recognizing the propriety of the suggestions you have made as to the general purposes indicated by the changes proposed in this bill, what is your judgment as to the usefulness of those suggestions, in

other words?

Colonel GORRELL. Mr. Chairman, I consider the purpose of this proposed legislation timely, foresighted, and necessary.

You have always been forehanded. I trust you will keep on being forehanded and foresighted.

The CHAIRMAN. Well, our committee wants to be, and it does occur to me, and I think probably to a good many members of the committee, that if there are some of these things that should be solved; some of these problems should be taken care of in advance of the trouble that is sure to occur if they are not taken care of, and probably it is better to do it at this time than to wait.

Colonel GORRELL. This bill tends to remind me of what is supposed to be true of a Chinese doctor. He tries to keep you well instead of trying to cure you after you have gotten sick.

The CHAIRMAN. Before you retire, maybe some of the other members of the committee would like to ask some questions.

Mr. HOLMES. Mr. Chairman.

The CHAIRMAN. Mr. Holmes.

Mr. HOLMES. Colonel, I listened very intently the other day when you were discussing subsidies. Well, I take it that your interest and the interest of the industry is, when this war is all over, you still want the air lines to be independently free from Government control and operation.

Colonel GORRELL. I trust America will keep the air lines, both domestic and overseas, in the hands of private management.

Mr. HOLMES. And that same thing is true of the manufacturing of airplanes?

Colonel GORRELL. By all means, sir. America has been built on the principle of private management.

Mr. HOLMES. And, the stress you laid on subsidies was to the effect that the Government could well afford to appropriate money for the development and study of aircraft engines and other paraphernalia and that may also be of benefit to the Government and at the same time useful to private aviation.

Colonel GORRELL. Absolutely so, sir.

I am afraid maybe I overstressed the subject of aid to engineering. It would be only a small drop in the Nation's bucket. The results would be usable mainly by our armed forces.

Such action would also make possible the air transport airplanes that operate with the armed forces.

May I make one more point there, sir?

Mr. HOLMES. Yes.

Colonel GORRELL. Assuming that civil aviation lagged so far behind that civilian planes could only fly 100 miles an hour and our military planes would be able to fly 400 miles an hour, it would be impossible for the men in the military combat planes to throttle down enough to protect the convoys of troops being carried by aircraft. You must keep your troop-carrying air transports, which are your merchant marine of the air, on a level of performance comparable with your fighting airplanes.

If you had to slow battleships down to perhaps 8 knots an hour in order to protect the surface troop carriers which were with them your Navy would be greatly handicaped should it meet an opposing fleet at the same time.

Mr. HOLMES. Well, that is true; but I just wanted to get your opinion on that.

Colonel GORRELL. On subsidy, there is one other word that I would like the privilege of saying, sir. I personally am a believer—and I do not man to start an argument, sir-in the theory announced by Mr. Eastman some few years ago on the subject of subsidy. This is really not so much a subsidy to the recipient as it is to the users of the service.

If you wanted to get down to the cheapest mode of transportation you could send everything by water, we will say, or by the canal boats; but if you ran a railroad alongside the canal and its rates were 50 percent higher than the canal boats, somebody might care to ship and take advantage of the savings in time by rail and would be willing to pay the extra charge. That is not a subsidy to rail. It is straight clear business practice to charge a fair rate for the medium involved, also the cash you pay for flying the mail returns a profit to the Post Office Department. As I said yesterday, the profit is 40 percent greater per letter than the Post Office Department gets from the highly profitable first-class mail so, on the one hand Uncle Sam gets the profit I just mentioned, and on the other hand the user gets something more precious, namely, the savings in time.

The so-called extra money is subsidy if there be any subsidy to the user rather than to the recipient.

Mr. HOLMES. I wanted to bring that out, because at the time you laid considerable stress on Government subsidies, and that I was quite sure you wanted to have independent airlines after the war was over; have them free and independent.

Colonel GORRELL. I think it is fundamental to our whole mode of life.

Mr. HOLMES. And, the same way with the continued manufacturing of airplanes.

Colonel GORRELL. By all means, sir.

Mr. HOLMES. And when this thing is over and we get back to postwar conditions, the lines will depend upon the revenue they themselves create and the money they make in order to carry on, the same as they have done before, without any Government interference or control of operations.

Colonel GORRELL. Absolutely, the future should see an extension of the principle you have been using right along.

Mr. BROWN. Colonel, you would want that policy to extend to the international traffic as well as the domestic?

Colonel GORRELL. By all means, because you cannot divide the two. With aviation there are no shore lines. I am speaking now of the American flag international traffic.

Mr. BROWN. That is right; that is what I mean.

Colonel GORRELL. I repeat, sir, that the air is the greatest of all oceans and you cannot draw dividing lines through the air any more than you can through the ocean out in the center of the deep waters.

Mr. HALL. Mr. Chairman.

The CHAIRMAN. Mr. Hall.

Mr. HALL. Colonel, Mr. Pogue in his testimony said that it was his intention to offer an amendment to give his Board some controlI cannot be specific about the type of control; that is not clear in my mind yet-over the financial structure of airplane companies.

I am just wondering whether or not you would like to comment on that, as representing the industry.

Colonel GORRELL. I answered Mr. Newsome on that on Thursday and said that I was sorry but I had to differ with my friend, Mr. Pogue.

I do not know of any mode of transport where the securities are lodged in two Government departments. When the Securities Act went through, it exempted from the act those modes of transport covered in section 20 (a) of the Interstate Commerce Act. I think it would be wrong, especially at this time, when you cannot foresee the future, to put securities of this mode of transport in two Government bodies.

Mr. HALL. Do you not think it may have the effect of stopping investments in airplane companies?

Colonel GORRELL. I think it might, and I am none too sure that those who sit as judges would be quite as familiar with the problems as would management and as would be the directors of the companies who must finance our future progress after the war.

Also, the business is still hazardous and will remain hazardous for a while. You need foresighted directors to use their best judgment as to how they are going to handle the tremendous financial problems that we will face.

Mr. HOLMES. Mr. Hall, have you finished?

Mr. HALL. I have finished.

The CHAIRMAN. Mr. Holmes.

Mr. HOLMES. I just wanted to make a little comment on that very phase. That would be another method of Federal control that the industry does not have now.

Colonel GORRELL. That is correct, sir.

Mr. HOLMES. And so far as you know, so far as the present method of approving the procurement of aviation financing, so far as the securities are concerned or raising money, there has been no serious handicap that has prevented the industry from going along under the present statute?

Colonel GORRELL. No, sir. Your 1938 act cleared that point.

Mr. BROWN. I think you will admit, Colonel, the less Government control the better, over business, will be the best method.

Colonel GORRELL. Always, sir. Incidentally, Mr. Congressman, aviation is progressing so rapidly that no one can foresee the future in all respects.

I can remember 30 years ago when I went into aviation my commanding officer and his wife both ordered me not to do so. My associates agreed with them. They said that it was dangerous and nobody should go into it. So far as my personal experience is concerned, time has proven them to have been in error.

We have got to have people who are willing to do things in order to start any new industry. Also, I would not be in favor of putting any form of regulation in any two Government bodies.

Mr. HALL. Somewhere along the line we have got to put a stop to this belief that every activity must be controlled by some bureau in Washington. You need not comment on that. That is my statement. Mr. REECE. Mr. Chairman.

The CHAIRMAN. Mr. Reece.

Mr. REECE. In that same connection, only last evening I heard a gentleman who had pioneered and developed a new and great industry reflecting upon his experience and he says, "Do you think I would do it, undertake to do the same thing today?" He says, "No." "Neither I nor probably any other man would undertake to do it, because of the restrictions."

Colonel GORRELL. Mr. Congressman, there was an excellent principle laid down in the Civil Aeronautics Act of 1938. It follows the principle of the Interstate Commerce Act, that the Government is not given. control over management; management is responsible for its own management. That was discussed by this committee in 1938. It was debated here. Debates took place in this room when that feature was passed upon. Mr. Eastman was the chief witness on the subject recommending that the Government keep out of management.

The CHAIRMAN. Colonel, will you briefly state what has been the situation as far as the air lines or commercial aviation is concerned in the last 4 years?

Colonel GORRELL. When the Civil Aeronautics Act was passed, the industry was broke. It could not borrow a dollar anywhere. When it became effective in August of 1938, the same situation continued for maybe a week or so until the people of the country woke up to the farsighted legislation that had been passed. A representative of our industry arranged for a $1,000,000 loan and offered it to the air lines. It was taken by one of the air lines. As soon as that was taken, other banks saw it and wanted to get into the business. The insurance fraternity wanted to get into the business of loaning. So far, the industry has been able to borrow whatever it has needed. It has repaid its loans on time and its financial condition is a healthy one. In one of the recent Board decisions-I think it was the Northwest Airlines decision of not long ago-the Board made the statement that the industry is now in a financial condition that will permit it to face whatever extension may be required by our country.

The CHAIRMAN. Could you state in brief on what terms the industry can secure money, in recent months?

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