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I am prepared to give to you, Senator Johnson, in executive session, 'the results of some extensive private research which I and a group of others have undertaken for the Cabot aviation program at Norwich University on the subject of commercial air cargo potentials, in order that you may compare them with the 5,000,000,000 ton-mile deficit in airlift noted by our military authorities, and judge for yourself how feasible it might be to relieve part of that deficit through air cargo expansion. : I believe the best bill is still Senator Johnson's original S. 237 or the somewhat modified edition, S. 3507.

However, in listening to the testimony of the many other witnesses before your committee, it seems that, even in times of overriding need for preparedness, we must bring out a compromise. Obviously, there cannot be a separate bill enacted for each type of airplane which each group appearing before you has primarily wanted.

There cannot be a separate cargo plane bill, a separate jet passenger bill, a separate feeder plane bill, a separate personal and industry plane bill, and so forth. These purposes must be joined in the national good, and such a joining can, I think, be accomplished either by adding amendments to S. 3504, by performing careful surgery on S. 237 or S. 3507, or by evolving a new and more satisfactory over-all bill. • The following are recommended as a basic outline of such a legislative approach, and those of us who have worked without compensation on this problem-including Gen. Hugh J. Knerr, Capt. C. H. Schildhauer, John Budd, Gill Robb Wilson, Mrs. L. S. Keyes, and others besides myself—will be glad to make available these thoughts in more explicit draft language, Senator Johnson, should you desire.

(1) Joint purpose: The civil aircraft on which the Government should render assistance should be adaptable for both civil and military service, a requirement which is included in the purposes of S. 237, S. 426, S. 2301, S. 2984, and S. 3507, but which is presently absent in S. 3504.

(2) Objectives: Government should have the twin objective of stimulating the development by private enterprise of improved models of civil aircraft and also of plugging the gap in our transport fleet with the best cargo aircraft presently available.

(3) Definition: Civil aircraft should be defined to include passenger and cargo planes and also personal and industrial planes, and not to exclude types of joint military and civil adaptability. At present, S. 237 relates to cargo planes; S. 2984, personal and industrial; S. 426, S. 2301, and S. 3507 use the words “transport aircraft”; and S. 3504, jet transports, cargo planes, and feeders.

(4) Administration: The Government's role should be carried out by an existing agency, specifically the Secretary of Commerce. The Secretary of Defense has thrice put away the crown and, in any event, it appears more appropriate that programs for these different types of civil aircraft be integrated by the Secretary of Commerce.

Such an arrangement would also diminish the Pentagon's fear that the transport-plane program would be saddled onto their budget, and, on the other hand, it would leave civil aircraft in the hands of civilians, which is proper, with a relationship to the military similar to that of the surface merchant marine.

· (5) Business practices: While the above represents a concession to the Aircraft Industries Association, National Association of State Aviation Officials, C. R. Smith, and others interested in having the program run by an existing agency, and involves scrapping the Aircraft Development Corporation recommended by the President's Air Policy Commission, I feel that consideration for the taxpayers requires that the public funds appropriated for any transport-plane program should be made into a revolving fund, or that the activity within the Department of Commerce should be given corporate, status-either way-so that there will be businesslike practices and the funds will come under the accounting and other controls of the Government Corporation Control Act of the Congress. · It is also necessary for the Secretary of Commerce to be able to receive money and apply it against future needs of the program, and not just spend money. A rough model for such a provision exists within S. 2212 and H. R. 5775, which are the bills designed to carry out in the Post Office accounting reforms recommended by the Hoover Commission.

(6) Cost recovery: Provision should be made for cost recovery, probably on the basis of splitting any profits in excess of 10 percent between private enterprise and the Government. Examples of such provisions are found in all the bills except S. 3504.

(7) Advisory Board: The President should be authorized and directed to appoint an Advisory Board to be drawn from representatives of the public, scheduled and nonscheduled airlines, the powerplant and airframe manufacturers, the aeronautical consumers organizations, and from labor in equal representation with management.

This Advisory Board would be wholly advisory, with the Secretary of Commerce or his representative serving as chairman ex officio, and with responsibility centered upon the Secretary of Commerce. All six bills before you recognize the need for an advisory group of some sort, and the above arrangement conforms entirely with recommendation No. 1 of the Hoover Commission's report on Federal business enterprises. : (8) Defense Department: The Secretary of Defense should have the right to certify to the Secretary of Commerce the defense features to be included in civil aircraft which is the objective of Government, financial assistance. This procedure could follow the outline of section 501 of the Merchant Marine Act of 1936.

The surveys of potential needs for aircraft now included in section 6 of S. 3507, section 3 (a) of S. 2984, section 5 of S. 2301, section 2 (a) of S. 426, section 5 of S. 237 (unfortunately no survey or study is included in S. 3504) should be amended to provide that the Secretary of Defense should transmit to the Secretary of Commerce the requirements for military reserve needs of the various types of civil aircraft. The Secretary of Commerce should remain responsible for the survey of civil potentials and for the action necessary to bring civil potentials up to military needs. I feel the survey is essential in legislation to carry out the study recommended by the Finletter Commission, as quoted at the beginning of this statement, and to keep the study current.

(9) Functions: The functions of the Secretary of Commerce should include the testing of prototypes and such research on civil aircraft as does not duplicate the work of other departments. Government should act as a catalyst, not a Socialist. Government should be involved to a minimum with private enterprise. Government should not assume the full costs of a transport-plane program, by any means, but simply that part necessary to stimulate the maximum action by private capital.

(10) Purchasing: The bill should clearly indicate that the No. 1 objective is direct purchase by private operators of civil aircraft from private manufacturers. Government purchasing of civil aircraft should be limited to transport types and leases to commercial operators should be made only upon a finding, perhaps similar to section 701 of the Merchant Marine Act of 1936, by the Secretary of Commerce, subject to the President's approval, that civil aircraft for national-defense reserve needs could not be put into commercial operation without Government help. While Government purchase and even lease has been faced by the Aircraft Industries Association in their Santa Barbara resolution, the above restrictions may allay any residual fears of socialism.

(11) Patents: There should be protection of patents, as provided in all the bills except S. 3504.

(12) The President: The President should have ample authority to direct the use of our transports in an emergency. These powers should be provided in advance, and should not wait upon the passage of a War Powers Act after the trouble has started. Such a delay might negate the whole speed value of having airlift available.

The great danger in the present legislative situation is that, if S. 3504 were to be passed, the public would be given a false sense of security, and the Government might feel that the transport-plane problem had been answered-checked off the list, so to speak—and that no further consideration need be given to supplemental proposals, at least until completion of the S. 3504 program in 1955.

Even witnesses favoring the bill have admitted it is only a partial solution, and little enthusiasm has been evident except on the part of the Civil Aeronautics Administration. S. 3504 is too timid and narrow an approach, and I do not favor it.

Maintaining world supremacy for our air transports and plugging the gap in our airlift defenses represent a serious national challenge, and I for one do not feel our democracy has lost its ability to give an adequate response.

The only limit to our realization of tomorrow will be our doubts of today. Let us move forward with strong and active faith.

The CHAIRMAN. Senator Hunt?
Senator HUNT. I have no questions.
The CHAIRMAN. Do you have any questions, Mr. Sweeney?
Mr. SWEENEY. No, sir.

The CHAIRMAN. Mr. Davis? Mr. Davis. No, sir. If I may say, I think it is a very fine paper, and particularly your timetable on the manufacturing and conversion of existing aircraft to military use. Mr. MARVIN. I appreciate that.

The CHAIRMAN. It is a thought-provoking statement, a little on the pessimistic side, but maybe that is the way to look at things these days. Mr. Marvin. Actually, Senator, I am an optimist. The CHAIRMAN. One would never discover that by listening to you.

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Mr. MARVIN. If you have the time I will tell you a little story about an optimist.

Senator HUNT. On or off the record?
The CHAIRMAN. Put it on the record.

Mr. MARVIN. This is a story about a father who had two sons. He was something of a psychologist. He thought he would give them a little task to see how they reacted. Christmas morning he prepared the stockings for the boys and for the pessimist he filled it up with the finest toys that could be found. And the stockings of the optimist he filled them with horse manure. Christmas morning the two boys came down. The pessimist arrived, grabbed his stocking full of beautiful toys. In a few minutes he was crying his eyes out. The father said, “What is wrong, son?” He said, "Father, just think, in a few days all these beautiful toys will be broken.”

Later, in comes the optimist, grabs his stocking with a whoop of joy, and said, “Father, isn't it wonderful: Santa gave me a pony, only he got away."

The CHAIRMAN. I hope your pony did not get away. Is what Santa put in the stocking S. 3504? At least you have stated your case eloquently and persuasively.

We have quite a burden in this committee in trying to meet this question, whether to meet it by a halfway measure such as S. 3504 or whether to insist upon something that would be far more effective in meeting the shortage in cargo planes that the military frankly admit exists. That is a question we will have to solve.

I regret that more Senators are not here to hear your presentation, but they will have an opportunity to read it, and I am sure they will read it before we make our decision.

We thank you, sir.

Senator HUNT. Mr. Chairman, who does Mr. Marvin represent now? I see he is former chairman of the Interdepartmental Air Cargo Priorities Committee.

Mr. MARVIN. Senator, I do not represent a soul. I am just a private citizen who spent some time and a good deal of my own money doing research on this subject of air freight and preparedness and airlift and so forth.

As to why I spent so much time and effort, with a good deal of expense on the subject, the only satisfactory answer I am able to find is something in Mark Twain. I think he said, “Young man, do the right thing; you will thereby please a few people and astonish the

rest."

I do not know if I pleased anybody, but you are the gentlemen I am trying to please, and some of the others, General Knerr and others who have been working on this.

Senator HUNT. What work are you now engaged in? Mr. MARVIN. I am principally working on the study of air-cargo potentials in the international field to see how many aircraft could be gainfully employed in the import-export trade that would constitute a reserve for the national defense. The import-export trade seemed especially relevant to this defense problem because the over-water hops will call for the long-haul-type freighters which is apparently what the military need.

Also, it will be easier to lay hands on them for war use since our foreign trade is generally interrupted in the war, than it would be to

strip the domestic lines which would be involved with supply of our industries. You could not take many away.

Senator HUNT. Are you in the employ of any government or the Government at the present time?

Mr. MARVIN. No, sir; I am not.
Senator Hunt. That is all that I have, Mr. Chairman.
The CHAIRMAN. Thank you, Mr. Marvin.
Mr. MARVIN. Thank you, Senator.

The CHAIRMAN. The statement of Maj. Gen. Hugh J. Knerr, USAF (retired), may be made a part of the record at this point.

(The statement is as follows:)

STATEMENT OF MAJ. GEN. Hugh J. KNERR, USAF (RETIRED), FORMER INSPECTOR

GENERAL, USAF Mr. Chairman and gentlemen of the committee, it is essential to the national interest that every possible delay to the development of adequate military airlift be eliminated now, in order that we may not be handicapped by inability to take advantage of the fleeting military opportunities that are certain to arise within the first few hours of a possible war, such as was the case in the last Pearl Harbor incident when the desperate need for any airlift at all could be satisfied only through commandeering airline equipment, an utterly impracticable procedure in modern warfare. The crux of the problem lies in the necessity for creating a paying industry out of the potential air-freight business not now being developed.

This cannot be done, however, until the fact is recognized that air freight requires separate regulation and control on a coequal basis with the passenger business. So long as this basic requirement is ignored in favor of current procedures, national defense will suffer, with Pearl Harbor No. 2 just below the horizon.

The CHAIRMAN. Mr. John J. Klak, Independent Air Carriers Conference, Washington, D. C. Mr. Klak, you may proceed in your own way.

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STATEMENT OF JOHN J. KLACK, INDEPENDENT AIR CARRIERS

CONFERENCE Mr. KLAK. My name is John J. Klack, executive secretary and counsel of Independent Air Carriers Conference of America.

Senator Johnson and members of the committee, the organization for which I am making an appearance represents the independents commonly known as the large, irregular, or nonscheduled air carriers. The conference does not have a presentation for this committee, but wishes to go on record in this hearing as opposing—I repeat, opposing-bill S. 3504, and in favor of the original S. 237, or better still, the modified S. 3507.

The reasons for opposing S. 3504 have been fully outlined by Commander Marvin, and in his presentation the Independent Air Conference fully concurs. That is the only statement I wish to make, Senator Johnson, and I thank you for the privilege of appearing before this committee for that purpose.

The CHAIRMAN. We are very glad to have your views, sir. I am sure Commander Marvin will be very glad to have your support. Are there any questions, Senator?

Senator HUNT. No, sir.
Mr. KLAK. Thank you very much.

The CHAIRMAN. Mr. Peter J. Papadakos, president of the Gyrodyne Co. of America.

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