SCIENTIFIC AND TECHNICAL MOBILIZATION FRIDAY, MAY 19, 1944 UNITED STATES SENATE, COMMITTEE ON MILITARY AFFAIRS, SUBCOMMITTEE ON WAR MOBILIZATION, Washington, D. C. The subcommittee met at 10:40 a. m., pursuant to the call of the chairman, in room 104-B, Senate Office Building, Senator Harley M. Kilgore, West Virginia (chairman) presiding. Present: Senator Harley M. Kilgore, West Virginia. The primary concern of this subcommittee in these hearings on scientific and technical mobilization is to ascertain what factors are advancing and retarding new technical developments. This is important to our country, both in wartime and in peacetime. Transportation by air is one of the most important technical developments of the present century. Certainly its advancement prior to this war has a bearing on our ability to wage the present war effectively. The advancement of cargo-carrying capacity and of troop-carrying capacity is a vital part of our war effort in the East and is in the present invasion. In this hearing we are concerned as to whether it has advanced as rapidly as it could have. As we know, during the present war millions of dollars have been spent in the design and construction of planes, including cargo planes. It is important for the Congress to determine whether the technical progress made during this war will be carried forward and fully applied to create higher standards of living. We have spent millions of dollars in experimental work during the war in the matter of cargo planes. It is my hope that these hearings on technological problems will stimulate measures, legislative and other, that will promote the most rapid introduction of the new technologies being made available through scientific and engineering advances in such a manner as to benefit business, labor, agriculture, the consuming public-in fact, all sections of the public. I hope that today we will have testimony on Sone of these problems and perhaps some suggestions as to how this industrial progress may best be accomplished. On February 10 Wendell Berge, Assistant Attorney General in charge of the Anti-trust Division of the Department of Justice, testified that monopolistic practices had been hindering the development of air express in this country. His testimony referred specifically to the exclusive contracts of the Railway Express Agency with American airlines and railroads. Today Calvin A. Frey, vice president of the Agency, is appearing pursuant to the request of the Railway Express Agency that it be afforded a hearing before this subcommittee. This is in conformity with the committee's practice always to hear both sides of every question which it considers. In preparation for this hearing I addressed a series of questions, in response to which the railway Express Agency prepared a statement and a series of exhibits. I would like at this point to insert the 16 questions in the record. (The questions referred to were marked "Exhibit No. 375" and appear on p. 1677.) The CHAIRMAN. Mr. Frey I would appreciate it if you would briefly summarize the views of your organization, which are covered more fully in the materials which will be printed in the record. After you have completed your summary, I would like to go over a number of points raised by the material submitted. TESTIMONY OF C. A. FREY, VICE PRESIDENT, RAILWAY EXPRESS AGENCY Mr. FREY. In the first place, Railway Express Agency, as you know, is a transportation organization handling merchandise traffic of all kinds, but largely of the lower weight brackets on passenger trains, special express trains, many motor routes, steamship routes and, since 1927, by air. The express company also, as is well known, has always used the fastest means of transportation available. That has been true throughout its 105 years of existence, and when airplanes were first flown, naturally the first thing the express company did was to endeavor to find some way to use that vehicle as a means of transportation in its business and provide a still faster mode of transportation for its customers who, as you may know, are all of the people and not certain industries and certain localities. The express business is a Nation-wide business like the Post Office, and since it handles largely the smaller shipments its customers comprise practically all of the people, almost like the Post Office. The CHAIRMAN. Mr. Frey, I believe the public generally understands express as differing from freight in that it gives speed and personal supervision of delivery; isn't that so! Mr. FREY. That is correct. The express business includes complete service including pick-up and delivery service at the customer's place of business and care in transit by express messengers on the trains. Up to the present time there has been no opportunity to have the same type of transit care on airplanes. They have not as yet been built to where messengers are required, but we hope sooner or later the business will grow to where exclusive cargo planes may be used in the care of messengers to handle the traffic en route. The express company, as I say, has been in this transportation business long enough to know just about what the public requires in the way of transportation for its merchandise traffic, and we have kept up to date with the program of aviation development at all times to determine just where we are going. Our contracts with the airlines are more or less along the same lines as express contracts in general. They provide that the express company shall do the serving of the shipper and the consignee and the rates thus far བ have been in the control of the airlines. It so happens that today is an anniversary day. I think in 1919, on May 19, if I am not mistaken, the first flight across the ocean was made by Commander Read and Commander Towers, and that same year we handled our first cargo plane with air express in it, the largest plane then in existence. I would like to read a telegram which was sent to the express company, to its general manager of public relations, on August 31, 1927, which was the day before we inaugurated air express in this country. This was a telegram from Thomas E. Lyons, Acting Chief of the Transportation Division of the Department of Commerce. Mr. Hoover at that time was Secretary of Commerce. It reads as follows: Mr. Hoover authorizes the following statement for release in connection with the new aerial express service inaugurated by the American Express Co.: I extend to you my congratulations on the initiative of the American Railway Express Co. in thus early adding to its facilities the far reaching service which air transport has to offer. In turn air transportation has the advantage of your extensive organization in beyond-terminal carriage and I am sure they will work to mutual advantage. The inauguration of air express is beyond doubt the most important acknowledgment ever made by the business world of the possibilities of aircraft in our modern transportation system, and the future will, I am certain, prove the wisdom of this step. HERBERT HOOVER. Secretary of Commerce. Mr. FREY. It must be recalled at that time there were no passenger planes. The air mail had been operating about a year. The CHAIRMAN. That was in the days of the open-cockpit plane, when freight was piled in as you load things into an open-bodied truck. Mr. FREY. That is correct, and it looked like aviation might be limited to freight and mail. But I offer that as indicating that Railway Express' predecessor at that time, the American Railway Express Co., adopted this new method as early as practicable. It was not available before. That was the date the first air lines were established. There is no foundation in fact for the allegation made by Assistant Attorney General Berge before this subcommittee that the railroads, through Railway Express Agency, have kept up air express rates and restrained the development of the air transport of goods. The agreement with the air lines under which Railway Express Agency conducts the air express business specifically provides that the air lines and not the express company shall control the rates. This agreement has been approved by the Civil Aeronautics Board. The rates are intended to cover the costs of the service as conducted and not some theoretical costs of some different type of service using some different type of airplane which some persons may claim is feasible for cargo service either now or at some future period. Air express rates in the United States are generally lower than air cargo rates in other countries and generally provide more complete, more frequent, and more expeditious service than is provided by air lines anywhere else in the world. The present return to our air lines from air express is now less than 50 cents per ton-mile, which compares with the mini mum rate of 60 cents per ton-mile for air mail as recently fixed by the Civil Aeronautics Board after exhaustic consideration of the air lines' ton-mile costs. Present air line flying costs do not permit reduction of air express rates to the theoretical figure of 8 to 10 cents per tonmile, referred to by the informant quoted by Mr. Berge. When air line flying costs are reduced the air lines no doubt will authorize reductions in air-express rates to reflect such reduced costs and Railway Express Agency will welcome such lower rates. As to the development of air cargo Railway Express Agency, and its predecessor the American Railway Express Co., have for 25 years been in the forefront of advocates of transportation of cargo by airplane. The express companies, like the Post Office, have always provided the most expeditious transportation service possible by employing the fastest means of transportation available, and the airplane has been employed in the express service ever since the inauguration of the first scheduled air-line service on September 1, 1927. Air express service was not originated by Railway Express Agency in 1936, as indicated by Mr. Berge, but was inaugurated by the American Railway Express Co. on September 1, 1927, a year and a half before Railway Express Agency succeeded to the operation of the express business. Several air lines in the 10-year period 1928 to 1937 experimented with air-cargo operations independent of and in competition with the express company, some handling shipments moving only between the few points served by them and others joining in a so-called interline system to enable handling of shipments between a greater number of points. These experiments were abandoned by the individual air lines after trials of varying periods and by September 1937, all of the commercial air lines joined in the Nation-wide air express service conducted through the air express division of Railway Express Agency, which service, combined with the Nation-wide rail express service, gives shippers everywhere a single uniform express service employing all the airplane schedules and all passenger and express train schedules throughout the country the same as the single postoffice service regardless of the number of separate carriers involved. This is express service as developed only in the United States and is in the public interest. The phenomenal development of the air express business is shown by the express-pound-mile statistics reported by the Civil Aeronautics Board for the fiscal years ended June 30, 1938 to 1943, which are as follows: 1938. 1939. 1940_. Pound-miles 4, 139, 864, 883 | 1941. Pound-miles 8, 313, 494, 765 15, 907, 098, 483 28, 700, 642, 087 For some months past the volume of air express offered has exceeded the capacity of the inadequate number of airplanes available to the air lines and as much as 500,000 pounds of air express has been deplaned or declined by the air lines in a single month because of inability of the limited number of airplanes to transport it. Statistics of the Civil Aeronautics Board show air passenger revenue miles increased 221 percent from 1938 to 1943, while air express poundmiles increased 600 percent in the same period. The allegation that the development of air transport of goods has at any time or in any way been restrained by the railroads or the express company obviously is groundless. |
