will promote the public interest by enabling steamship carriers to use aircraft to public advantage in their operations and will not restrain competition. No maritime nation has ever been able to fight a war successfully without an adequate merchant marine.-Admiral Ernest J. King, March 27, 1944. REPORT The right of the merchant marine to engage in overseas and foreign air commerce is a matter of public interest. Official pride, jurisdictional jealousies, personal gain, and corporate covetousness should be subordinated to the public welfare, the national defense, and the development of our foreign and domestic commerce. No sound solution of the issue may be expected unless the Congress and executive leaders of the Government have the courage to face the facts and the integrity to make honest and equitable decisions based upon principles rather than expediency. The division of legislative authority between standing committees of the Congress, which are jealous of their prerogatives; the clash of jurisdictional rights between the Civil Aeronautics Board and the United States Maritime Commission; the bona fide interest of the State Department and the uncalled for intervention in opposition to the applications of steamship companies before the Civil Aeronautics Board by the Antitrust Division of the Department of Justice; the aspiration of Pan American Airways to secure a monopoly in overseas air commerce; the reasonable desire of our domestic air carriers to share in this business; and the determination of foreign governments, air lines, and steamship interests to participate in international air commerce, all tend to create confusion, misunderstanding, and ill will. The delay resulting from this situation may seriously impair the efficiency of our merchant marine and the future development of our domestic and overseas air commerce. The real issues are very simple. They boil down to the following propositions. 1. The United States cannot hope to have a monopoly in world aviation. To secure the right to operate to and from foreign countries we must be willing to grant to foreign applicants the right to operate to and from the United States. This common-sense principle of give and take is the sine qua non of any sound and permanent international agreement. 2. Pan American Airways desires a monopoly in overseas and foreign air commerce. It wishes to be the sole and only representative of the United States in international aviation. If the Congress is prepared to abandon the principles of free enterprise and competition upon which this country's industrial greatness has been built, and to adopt the monopolistic standards represented by European cartels then the McCarran bill S. 1950 (formerly S. 1790) which provides for a supercorporation or a chosen instrument to represent the United States in overseas and foreign air commerce is the answer to our problem. This idea is opposed by the Department of State, the United States Chamber of Commerce, and others. On August 18, 1944, Cordell Hull, Secretary of State, wrote a letter to Senator Josiah W. Bailey of the Commerce Committee of the Senate with respect to the McCarran bill which in the opinion of your committee is a complete and final answer to the proposal of creating a monopoly to represent the United States in international air commerce.1 14 3. During World War II many of our domestic air lines have operated commercial aircraft overseas. They have developed procedures and have trained ample personnel to successfully carry on commercial operations to foreign countries in the post-war period. Many of them have applied to the Civil Aeronautics Board for the right to continue to engage in overseas and foreign air commerce. Your committee can see no sound reason for denying some of them certificates of convenience and necessity. We have no disposition to oppose the legitimate aspirations of our domestic air carriers to participate in overseas and foreign air commerce if the Civil Aeronautics Board finds that the proposed operations will be in the public interest. 4. Assuming that it will be impossible for the United States to deny to qualified foreign applicants the right to operate to and from the United States and further assuming that in the post-war era Pan American will continue to operate on the routes heretofore granted to it and that additional routes will be allocated to some of our domestic air carriers, it would be ridiculous indeed for anyone to say that the granting of certificates to steamship companies to operate aircraft along the routes pioneered and developed by them would result in creating a monopoly. To illustrate how absurd such reasoning can be, the Department of Justice has filed a brief 15 opposing the application of the Matson Navigation Co. for a certificate of convenience and necessity to operate aircraft from the Pacific coast to Hawaii on the ground that this would tend to create a monopoly. Yet Pan American now has a certificate to operate to Hawaii, the Royal Dutch Air Lines (K. L. M. and K. N. I. L. M.) have an application pending with the Civil Aeronautics Board for the right to operate from San Francisco via Hawaii to Batavia, Netherlands East Indies, and it is recognized that Canada and New Zealand will also ask for certificates to operate through Hawaii to one or more Pacific ports of North America. 5. Therefore, the only questions remaining for consideration are: Is it desirable to maintain an adequate merchant marine? And, if so, is it necessary for the merchant marine to engage in overseas and foreign air commerce in order for it to withstand the competition of domestic and foreign air carriers and of foreign shipping companies which propose to use aircraft in conjunction with their steamships? In the Merchant Marine Act of 1936 16 it was declared by the Congress to be necessary for the national defense and the development of our foreign and domestic commerce that the United States should have an adequate merchant marine. It was also declared to be the policy of the United States to foster the development and encourage the maintenance of such a merchant marine. The task of creating an adequate merchant marine was given to the United States Maritime Commission,17 which was "directed to cooperate closely with the Navy Department as to national defense needs and the possible speedy adaptation of the merchant marine to national defense requirements." 18 14 R. 215-220. 13 Dated November 11, 1944, Civil Aeronautics Board Docket No. 851 et al. 10 U. S. C., title 46, sec. 1101, 49 Stat. 1985. 17 U. S. C., title 46, sec. 1111, 49 Stat. 1985, 53 Stat. 1182. 18 U. S. C., title 46, sec. 1120 49 Stat. 1989. The Commission was authorized by the Congress To investigate and determine what provisions of this Act and other Acts relating to shipping should be made applicable to aircraft engaged in this Act, and to recommend appropriate legislation to this end.1o The Commission was directed by the Congress * To study, and to cooperate with vessel owners in devising means by which (2) there may be constructed by or with the aid of the United States express-liner or super-liner vessels comparable with those of other nations, especially with a view to their use in national emergency, and the use in connection with or in lieu of such vessels of transoceanic aircraft service.20 The Merchant Marine Act of 1936 thus established beyond any argument that it is desirable to maintain an adequate merchant marine and that in 1936 it was the declared policy of the Congress to encourage the merchant marine to engage in overseas and foreign air commerce. On November 13, 1937, the United States Maritime Commission filed a report with the Congress in which it recommended that the United States should not build superliners to compete with the luxury passenger ships of foreign countries but that it should use overocean aircraft. The committee recommended that the Merchant Marine Act of 1936 should be amended to provide for the manufacture and use of aircraft in overseas passenger service. We prepared such a bill and submitted it to the Congress." Because of the opposition by members of the Rules Committee and the representations made by the proponents of the Lea bill, and a similar Senate bill which was subsequently enacted by the Congress as the Civil Authority Act of 1938, we were induced to withdraw our bill. We unqualifiedly assert that the proponents of the Civil Aeronautics Act of 1938 represented to us prior to the enactment of this measure that the equal right of the merchant marine to apply for and to receive certificates of convenience and necessity from the Civil Aeronautics Board was protected and guaranteed in this measure; and that it was upon these representations that the then members of this committee withdrew their own measure and voted for the passage of the Civil Aeronautics Act of 1938. We were deceived. The Civil Aeronautics Act has been interpreted by the Civil Aeronautics Board as rigidly limiting the right of steamship companies to engage in aviation; and, as a part of the Congress, we have been grossly misrepresented to have established a policy which was furthest from our thoughts and intentions. To illustrate, on January 25, 1943, in its decision on American Export Airlines, Inc., the Civil Aeronautics Board, without in our opinion either factual or legal justification, unnecessarily re-uttered the following dicta. In our former decision in this proceeding * * * the Board stated that "only those limited air transport services which are auxiliary and supplementary to other transport operations, and which are therefore incidental thereto can meet the conditions laid down by that proviso." In the same decision the Board also said: However, after a reexamination of the record in light of the reargument, we are convinced that a construction of the Civil Aeronautics Act which rigidly limits the participation of the older forms of transportation in the air-transport 1 U. S. C., title 46, sec. 1121, 49 Stat. 1989. U. S. C., title 46, sec. 1122, 49 Stat. 1990. "Hearings before the committee on "Transoceanic aircraft subsidies,” March 22 and 23, 1938. field is not only sustained by the language of the act itself, but is also in harmony with well established congressional policy, and will accomplish the national purpose in the particular manner which is prescribed by the second proviso of section 408 (b). On July 11, 1944, the Civil Aeronautics Board in its opinion on local feeder and pick-up air service reaffirmed its previous dicta as follows: The Board has held, with respect to the last proviso of section 408 (b) that "this proviso is extremely restrictive and only those limited air transport services which are auxiliary and supplementary to other transport operations and which are therefore incidental thereto can meet the conditions laid down by that proviso." Surface carriers are not precluded from participation in air transportation. In view of its previous and oft-repeated dicta we are constrained to interpret the last sentence as the Board's declaration of faith in the resurrection of the dead rather than as a promise of relief to the living. Your committee believes that the Civil Aeronautics Board has been honest and sincere in its decisions, but that it has erred in its interpretations of the Civil Aeronautics Act and with respect to the intent or policy of the Congress. We also believe that the Civil Aeronautics Board has unwittingly fallen into the grievous error of regarding itself as the godfather of the air lines rather than the impartial judge between all classes of applicants for certificates of convenience and necessity. In view of the attitude previously expressed by the Board and supported by the Department of Justice, your committee is considering a favorable report on H. R. 5387. In the brief filed by the Antitrust Division of the Department of Justice with the Civil Aeronautics Board in Docket No. 851, it is emphatically said: The prohibitions established by law and public policy in order to prevent the control of air transportation by surface carriers engaged in competing modes of transportation must not be ignored or neglected in this proceeding. We regard this statement as false in fact and in law. The Civil Aeronautics Act does not contain "prohibitions" against steamship companies engaging in overseas and foreign air commerce. The Civil Aeronautics Board has definitely decided (supra) that— Surface carriers are not precluded from participation in air transportation. The presumptuous utterance to the contrary by the Antitrust Division is an effort by an interloper to arrogate the duties and responsibilities of the Attorney General in rendering an opinion upon the broad question of steamship participation in aviation. Eight steamship companies have applied to the Civil Aeronautics Board for the right to operate aircraft along 11 trade routes which they pioneered and developed. Your committee sincerely hopes that the Civil Aeronautics Board will grant certificates of convenience and necessity to such of these steamship companies as are able to show that the operation of transport aircraft on these routes is in the public interest. THE UNITED STATES MUST MAINTAIN AN ADEQUATE MERCHANT MARINE While the Congress spoke emphatically in the Merchant Marine Act of 1936 with respect to the necessity of maintaining an adequate merchant marine, the events which have transpired since that time have given irrefutable proof of the wisdom of its work and of its action in revitalizing and rebuilding the United States merchant marine. On March 27, 1944, Admiral Ernest J. King, Commander in Chief, United States Fleet, and Chief of Naval Operations, said in his official report to the Secretary of the Navy: * Simultaneously with this new construction, the conversion of merchant ships was being accomplished, one of the most important of these being the escort carriers which later proved so effective in combating the German submarine campaign in the Atlantic. * * * No maritime nation has ever been able to fight a war successfully without an adequate merchant marine-something we did not have when the two-ocean Navy was authorized. The Maritime Commission therefore began a vast program of merchant-ship construction at the same time we were expanding the Navy, and the merchant shipbuilding industry, too, faced an enormous expansion. * * The carrier strength of the Navy on December 7, 1941, was seven first-line vessels and one escort carrier, a converted merchant ship. * * * The tremendous increase in the number of fighting ships and the global nature of the war required the acquisition of a commensurately large fleet of auxiliaries. These ships were obtained by construction, by conversion of standard Maritime Commission commercial hulls, and by acquisition and conversion of commercial vessels. A considerable number of conversions of standard Maritime Commission types have been accomplished under the supervision of the Maritime Commission. Probably the most important vessels produced under the auxiliary program during 1943 were those which take part in actual landing operations, consisting of attack transports, attack cargo vessels, and general headquarters' ships. The demand for repair ships of standard and special types, which increased manyfold during 1943, was met by new construction and conversion. * * The war has been variously termed a war of production and a war of machines. Whatever else it is, so far as the United States is concerned, it is a war of logistics. The ways and means to supply and support our forces in all parts of the world— including the Army, of course-have presented problems nothing short of colossal, and have required the most careful and intricate planning. The profound effect of logistic problems on our strategic decisions is described elsewhere in this report, but to all who do not have to traverse them, the tremendous distances, particularly those in the Pacific, are not likely to have full significance. It is no easy matter in a global war to have the right materials in the right places at the right times in the right quantities. * * * Although we had made some progress, and had for some months been increasing our defenses in the Western Hemisphere our armed forces and our production were not adequately expanded and developed to permit our taking the over-all offensive in any theater. The Army Ground and Air Forces and our shipping were not yet prepared to move overseas in sufficient strength for an offensive, and the Navy, even without the losses sustained at Pearl Harbor, could not alone carry the war to the enemy. We were therefore forced to assume the defensive in both oceans, while preparations for an amphibious war were intensified. On July 1, 1943, Gen. George C. Marshall, Chief of Staff of the United States Army, said in his biennial report to the Secretary of War: Approximately 8 months were required by this country, acting in collaboration with its allies, to accumulate the munitions, train the initial forces, and then to transport them to theaters of operations where they could be employed in offensive action against the enemy. This phase of the great emergency ended in August 1942 with the successful assault on the Japanese positions at Guadalcanal and Tulagi in the Solomon Islands, (map A). * * * On all the fighting fronts the Allies were in a desperate situation due to lack of adequate matériel while facing an enemy who possessed an abundance of the most modern equipment conceived at that time. The trying problem of the War Department was to meet the urgent necessities of critical fronts without jeopardy to the security of continental United States. * * * Our deployments were made in the light of limited resources in troops and equipment at the time and a continuing lack of sufficient ocean tonnage or landing craft, or both, and were influenced also by the length of turn-around required of ocean shipping and the limited docking facilities at many ports. |