STATEMENT OF HON. ARTHUR E. SUMMERFIELD,
POSTMASTER GENERAL

Mr. SUMMERFIELD. Thank you. I am very grateful to you, Madam Chairman, for calling the members early this morning and for the members coming in. I know it has been inconvenient for you, but I am grateful to you.

Mrs. Church, chairman, and members of the subcomittee, at the outset, permit me to express my sincere appreciation, not only for the privilege of appearing before you to support the President's Reorganization Plan No. 10 of 1953, but also for the courtesy, cooperation, and assistance which the Post Office Department has received from Members of Congress in the past 6 months while I have had the honor of serving as Postmaster General.

In April of this year, I appeared with other representatives of the Department in hearings before the Appropriation Committee of the House in support of the Post Office Department's program for fiscal year 1954. We explained to that committee that, down through the years, there have been imposed on the Department functions and duties other than the primary one of carrying the mails. As a result, the Department's financial operations have been greatly distorted. At that time, in commenting on need for congressional action, I specifically referred to subsidy, particularly to airmail subsidy. Those airline subsidies which the Department presently has to pay out of its own appropriations are estimated to exceed $79 million for the present fiscal year 1954. To that extent, at least, the present cost of postal operations is unnecessarily inflated.

We, therefore, strongly favor any program or arrangement which will remove airline subsidies from the financial picture of the postal service. That is why I appear before your committee today, to support wholeheartedly the President's Reorganization Plan No. 10. of 1953, which provides for that very thing, namely, the transfer of the function and responsibility of paying airline subsidies from the Postmaster General to the Civil Aeronautics Board. My reasons for such support are self-evident.

Furthermore, I know of no reason why Congress should not permit this plan to take effect. In fact, I have heard no opposition to the basic principle embodied in the plan. The fundamental purpose of the plan is that henceforth the Postmaster General will only pay air carriers fair and reasonable compensation fixed solely on the basis of airmail service rendered; while any additional financial aid, required in the national interest, will continue to be paid to the airlines, pursuant to the existing statutory policy set forth in the Civil Aeronautics Act, by the Civil Aeronautics Board under appropriations transferred to that agency.

The separation of such payments will enable the Department and the Congress to make a realistic appraisal of the charges for the transportation of mail by air, and of the possible improvements that might be made, both in the cost and in the movement of mail, generally. Furthermore, the results of the separation will also provide additional information to the Congress and the public for use in the formulation of any future policy in connection with the continuing support of air commerce. It is not practicable for the Department to present the economies that will result upon the separation, but it must

be recognized that the first step in effecting economies should be to isolate and bring out into the open Federal expenditures, involving 2 separate and distinct purposes, mail transportation and public grants, which are presently lumped together in 1 payment.

The results of the separation should also enable the Congress to ascertain more readily any deficiencies which may exist in the present statutory standards and policy on payments for airmail service and for subsidy, and thereby enable Congress to correct such possible deficiencies by subsequent legislative amendment.

Our twofold objective in the Post Office Department is to: (1) give the public the kind of postal service they have the right to expect; and (2) reduce the overall postal deficit substantially through economies and modern management. We know that you will agree that the Department should be developed along efficient lines into a businessand-service operation that will be as nearly financially self-sustaining as practicable. You Members of Congress can help us toward our objective by relieving us of this particular subsidy burden over which we have no control.

For these reasons, I strongly urge Congress to allow this plan to take effect.

Mrs. CHURCH. Thank you, Mr. Postmaster General.

Mrs. St. George, have you any questions?

Mrs. ST. GEORGE. Well, I have no questions. I have been in favor of this plan for a long time, I may say, and I would like to see this plan go into effect, and then I would like to see the plan go on a broader basis for all classes of mail.

I have always thought it most unfair that the Department should be saddled with expenses over which it has absolutely no control, Madam Chairman, and of course we know that this is not the only instance where that is the case. I think it is a very fine plan, and I cannot see any possible objection to it myself because it is simply putting things in their true perspective.

That is all it is doing. It is not curtailing anything.

Mrs. CHURCH. Mrs. St. George, as you know, brings to this subcommittee a wealth of experience as a member of the Post Office and Civil Service Committee.

Mrs. ST. GEORGE. He has had the misfortune of seeing me quite a lot recently.

Mrs. CHURCH. Mr. McCormack, I saw you making a note. Have you a question?

Mr. McCORMACK. Nothing in particular. I was in favor of the plan. Whether or not it goes far enough is the only question in my mind. I had made up my mind even before the President set up the reorganization plan that legislation along this line should be done. However, gentlemen, just for the record, this is simply transferring the obligation of one agency to another to pay whatever the subsidies are, and for which Congress will have to make the appropriations. In other words, instead of having the Post Office Department charged with it, it is felt that some other agency of the Government should be charged with the financial responsibility of paying subsidies, whatever they might be, from year to year. That is correct, is it not? Mr. SUMMERFIELD. They should be placed in the position where they would have to explain and justify their request for the appropriation, for the item they would have to include in their budget.

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Mr. McCORMACK. This has nothing to do with the Post Office Department. The only thought in my mind is that CAB is a sort of quasi-judicial body in determining the amount, and that they have the responsibility of paying it with all of the direct and indirect attacks or inferences or feelings, whatever you want to call it, that operate upon an agency charged with spending money, particularly coming from Congress, from the public by way of the Congress, and that might have an effect upon the exercise of their judgment in a quasijudicial capacity.

That is the only thought that I have. That has nothing to do with the Post Office Department because really it should be out of your Department. The President has just put it into CAB. He has exercised his judgment, and I am not going to contest it, but the only thought I have is the difficult position of a man sitting in a quasijudicial capacity, and when I sit that way I consider myself a judge, as we do hear occasionally witnesses under oath. I look at things differently, somewhat differently, than I do when it is a bill before a committee, because when a person is under oath submitting testimony, I consider I should sit as a judge. When a man is under oath, that witness, the situation as far as I am concerned places me in the position of being a judge, and the only thought I have is that there might be a conflict between sitting as to the facts and then paying the mony following it, and sometimes this responsibility might have an effect upon the primary one where you are judge and jury and so forth.

I do not raise that question now, except for the record, because if it develops at least it will be known that one member of the committee had that thought.

Mrs. CHURCH. Mr. Postmaster General, how do you plan to set just and reasonable postage rates for carrying the mail?

Mr. SUMMERFIELD. You mean by air?

Mrs. CHURCH. By air.

Mr. SUMMERFIELD. Well, of course up to this moment, and until some time in the future when legislation provides us the opportunity, we have nothing to do with setting the rates that we pay the air lines. That is entirely in the hands of CAB. They determine those things. Mrs. CHURCH. Completely?

Mr. SUMMERFIELD. Yes. However, I would like to have this committee know that we have had numerous discussions on the whole matter of transportation of mail by air with the air lines and their officials in which we have pointed out to them that there is room for considerable improvement in the service and probably an expansion of volume. But that could only be possible if the cost to us per tonmiles were substantially reduced. Therefore, we invited them to cooperate with us in the establishment of some pilot operations, between important parts of the country-where we might even include, in addition to the shipment of regular air mail by air, first class and possibly parcel post. We have also made our suggestions known to the Civil Aeronautics Board, asking them to cooperate with us in trying to explore in these pilot operations the possibilities of improving and expediting the delivery of mail generally.

We are faced with this condition: The railroads almost daily are removing passenger trains from their regular schedules, trains that have been carrying mail for 50 years.

Well, when that happens, the Post Office Department is forced to make other arrangements immediately. Obviously, there are only 2 places, 2 ways to go: One, to put the mail in the air, or put the mail on the already congested highways. So that is our problem.

We have carried our discussions to the trucking concerns in the country for further exploration with them for the development program and possibly pilot operations. We have also done that with the railroads. We conceive our responsibility to be to bring about a more rapid and satisfactory distribution of the mail from point A to point B at the most economical cost. We are exploring all of those areas. I believe that a Post Office Department should have some of the responsibility and the opportunity of negotiating with the airlines on the rates that we pay or are to pay for the transportation of mail, rather than have it in a department that has no responsibility to the Congress and to the people of this country for the delivery of mail.

Mrs. CHURCH. Thank you.

Mr. McCORMACK. Involved in that, General, isn't there one of the basic theories of grants or subsidies to the airlines as the other important problem of defense, the having of available trained pilots, the experienced companies that can be called upon which would be rather difficult for the Post Office Department itself to go into? You are naturally and properly concerned with essentially, not wholly, the business aspects of it, whereas the reason we pay grants, subsidies— whether correct or not-is because of the other important considerations involved.

Mr. SUMMERFIELD. I agree with you completely.

Mr. McCORMACK. I see your point, and I am not challenging it, but the other consideration is of primary importance, has been in the past-to Congress-is now and will be, I suppose, for some time, in connection with keeping alive as good an air system or systems, as we can because of the benefits that flow to our country in case of emergency or war, and in that case those benefits in peacetime become primary benefits in time of war in that we have the trained personnel; we have the experience, like the hump during World War II, when the Government took planes to transport material to Nationalist China when the Japs had taken the Burma Road and the main line of transportation, so in a broad way those considerations and others in addition enter into the theory or policy of subsidy payments.

Mr. SUMMERFIELD. As I said earlier, I agree with you completely. That was one of the reasons that we requested this type of legislation. Subsidies are distinct and separate items and should not be the responsibility of the Postal Department. Therefore, let the Civil Aeronautics Board or whatever department or commission or organization the Congress may decide in the future is to take the responsibility for the matter of subsidy

Mr. McCORMACK. But the actual amount they receive for the transportation of mail

Mr. SUMMERFIELD. That is a problem of the Post Office Department. Mr. McCORMACK. Yes. In other words, what they receive for the transportation of mail, of course, is a problem, primary problem, of your Department.

You talk about the problems that arise when cars are taken off of railroads, and I can see that, and I can understand it, and that is.

multiplied because that brings problems to the airlines; it brings problems to the trucking companies, and they are all problems, too, so it is not only the problem of the Department itself, the immediate problem, but there is the overall problem of the trucking concern and of the airlines, and their capacity to pick up and carry, and particularly in the trucking field, because that is more or less of an experimental thing now, is it not?

Mr. SUMMERFIELD. Yes; but we are getting very satisfactory results. Mr. McCORMACK. I won't say "experimental" still in the pioneer stage.

Mr. SUMMERFIELD. Yes; but it has progressed sufficiently so that we know there are great savings to the Post Office Department.

Mr. McCORMACK. Yes, that is true, I know that; but when I say "pioneer stage," it is of recent origin.

Mr. SUMMERFIELD. That is correct.

Mr. McCORMACK. That is what I mean. Valuable experience is cbtained and much more valuable experience is to be obtained in that field.

Mr. SUMMERFIELD. We try to avoid waiting until the boom drops on us in the Post Office Department. We are trying to anticipate that which is so clearly evident to us in the situations and problems we are going to be confronted with tomorrow and the tomorrows, if not today.

For instance, one day last week there were 4 trains removed in one day.

Mrs. ST. GEORGE. General, is it not also very possible in the foreseeable future that as you go more and more to the air to transport the mail, that the airlines and the Government thereby will get a great deal of benefit because the Air Force or the airlines will be so expanded by this that we will get the benefit of it in time of war or emergency? I should think that it would be bound to happen because you certainly will have to use many more lines, and you will have to use many more planes than at present.

Mr. SUMMERFIELD. There just is not any question about it. There is a wonderful opportunity here for the air industry, and together with it, of course, our whole national defense system. I have pointed out-and I think clearly and convincingly-to the airlines the absolute necessity of their getting together and taking a new look at the problem and the opportunity that there is, and I am sure they are doing it.

Mrs. CHURCH. Thank you, General. I appreciate your coming in. Mr. SUMMERFIELD. Thank you very much.

Mrs. CHURCH. I think that I might ask permission at this time to include in the record certain correspondence. One is a letter from the Government Employees Council signed by Mr. Thomas G. Waters. Would you read it, Mr. Smith?

Mr. SMITH. It is dated June 10, 1953, addressed to the committee: Yesterday the Government Employees Council unanimously adopted a resolution approving the intent of Reorganization Plan No. 10 of 1953. The Government Employees Council has never opposed the philosophy that has prompted subsidies, but we do feel that these subsidies should not be officially charged against the Post Office Department.

That is signed by Thomas G. Waters, operations director, American Federation of Labor.