their respective duties, subject to the civil-service laws and the Classification Act of 1949.

The Commission has no objection to the enactment of S. 2984 so far as any matter within its scope of activities is concerned.

In accordance with established procedures, the Bureau of the Budget has advised that there would be no objection to the submission of this report. However, it has also advised us that bills now pending before the Congress which would authorize Federal financing of the design and development of prototype aircraft, including S. 2984, would not be in accord with the program of the President. It further stated that there would be no objection to a limited and temporary program of operation and service testing of commercial prototypes which may be required by the public interest, provided that a satisfactory and feasible program can be formulated, and provided further that responsibility for such a program is in a civil agency.

By direction of the Commission.
Sincerely yours,

HARRY B. MITCHELL, Chairman.

GENERAL ACCOUNTING OFFICE,

Washington, February 15, 1950.

Hon. EDWIN C. JOHNSON,

Chairman, Committee on Interstate and Foreign Commerce,

United States Senate.

MY DEAR MR. CHAIRMAN: Reference is made to your letter of February 6, 1950, acknowledged by telephone February 7, requesting a report on S. 2984, Eighty-first Congress, entitled "A bill to provide for the development and improvement of aircraft intended for industrial or personal use, and adaptable for military service."

Under dates of May 19, 1948, February 14, 1949, and August 4, 1949, this Office made reports to the chairman of the Committee on Interstate and Foreign Commerce, United States Senate, on somewhat similar bills, S. 2644, Eightieth Congress; S. 426, Eighty-first Congress; and S. 2301, Eighty-first Congress, respectively, wherein no recommendations were made with respect to the merits of the bills.

Information as to the general subject of the proposed legislation is contained in Senate Report No. 1461, Eightieth Congress, accompanying the said bill S. 2644 and in House Report No. 2320, Eightieth Congress, accompanying a similar bill, H. R. 6501. See, also, hearings on the said bill S. 2644 held before a subcommittee of your committee on May 18 and 21, 1948; and hearings on H. R. 6501 held before a subcommittee of the Committee on Armed Services, House of Representatives, on May 22, 1948. It is noted that H. R. 6501 passed the House of Representatives June 18, 1948, but failed of passage in the Senate prior to adjournment.

Other than as above indicated, this Office has no information as to the proposed legislation, and I have no recommendation to make relative to the enactment of S. 2984.

Sincerely yours,

LINDSEY C. WARREN, Comptroller General of the United States.

TREASURY DEPARTMENT,
Washington, March 24, 1950.

Hon. EDWIN C. JOHNSON,

Chairman, Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. C.

MR DEAR MR. CHAIRMAN: Further reference is made to your letter of February 6, 1950, requesting the views of the Treasury Department on S. 2984, to provide for the development and improvement of aircraft intended for industrial or personal use, and adaptable for military service.

This bill would declare it to be the policy of Congress that it is in the national interest to sponsor the design, development, construction, modification, and testing of prototypes of aircraft and aircraft components intended for industrial or personal use, and adaptable for military service. It would establish a National Civil Aviation Council and in addition an advisory committee in order to carry out this policy.

An Ad Hoc Committee on the Development of Prototype Transport Aircraft appointed by the Air Coordinating Committee is now engaged in preparing, for submission to your committee, a draft of legislation on this subject. Inasmuch as present indications are that the proposed legislation will vary in several important features from this and similar bills now before your committee the Treasury Department recommends that consideration of any proposed legislation relating to this subject matter be deferred until such time as proposed legislation approved by the Air Coordinating Committee is before your committee.

Advice has been received from the Bureau of the Budget that bills now pending before the Congress which would authorize Federal financing of the design and development of prototype aircraft would not be in accord with the program of the President.

Very truly yours,

E. H. FOLEY, Jr., Acting Secretary of the Treasury.

Our first witness this morning is Mr. Felix E. Larkin, General Counsel of the Department of Defense.

STATEMENT OF FELIX E. LARKIN, GENERAL COUNSEL, DEPARTMENT OF DEFENSE, AND MAJ. GEN. LAWRENCE S. KUTER, COMMANDING MILITARY AIR TRANSPORT SERVICE, DEPARTMENT OF DEFENSE

Mr. LARKIN. Mr. Chairman, I have a short prepared statement, if I may read it for the record.

The CHAIRMAN. Yes, just proceed in your own way.

Mr. LARKIN. For the record, my name is Felix E. Larkin, General Counsel of the Department of Defense, and I am here at the request of the chairman as the representative of the Department of Defense. I understand that your committee intends to consider today the following bills: S. 237, S. 426, S. 2301, S. 2984, S. 3504, and S. 3507all of which have to do with the problem of prototype aircraft.

The above bills, in one form or another, with the exception of S. 3504, provide for Federal Government assistance in defraying the expenditures incident to the development of prototype commercial aircraft. Several of the bills would give the responsibility for carrying out such a program to the Secretary of the Air Force. Others would create a corporation or a council to carry out the project. Several of the bills, in addition, authorize a corporation to acquire and stockpile commercial transport planes.

The views of the Department of Defense on the above type of bills have been given to this committee, as you will recall, on January 30, 1950, by former Secretary of the Air Force Symington. These views are the result of several years of consideration of prototype programs. I don't have to tell you that the objective has been to find a means of encouraging the development of prototype for commercial transport planes. The necessity for a larger number of transport planes in being arises from the deficit that is expected to result in airlift in the event of an emergency. The number of transport planes in the Department of Defense at the present time, added to the number of planes that could be obtained from commercial airlines, is probably not sufficient to meet the mobilization requirements. In other words, there is an anticipated initial shortage, and it appears that a good way to solve this shortage is to develop a plane of such economical performance that the airlines would be anxious to buy it and, thereby, would be maintaining a larger number of planes which would be available for defense use in the event of war.

The proposed solution of Government assistance was arrived at because the aircraft manufacturing industry was either unwilling or financially unable to engage in development work of this character.

In view of the anticipated deficit, a natural question is: Why does not the Department of Defense, itself, purchase a sufficient quantity of planes to insure that there will be no mobilization shortage? The answer, of course, is that Department of Defense funds (1) are not unlimited, and (2) there are other shortages within the Department of Defense which command a higher priority than the airlift shortage, and, hence Department of Defense funds must first go to meet the higher priority shortages.

I would like to interpolate for one moment in there in furtherance of that thought, Mr. Chairman, because I do not want to leave the impression that the Department of Defense is not spending a great deal of money right now on the amintenance of transport planes for military mobilization purposes. As you know, we maintain MATS, which has a large number of planes, and there are also a large number of transport planes throughout other parts of the Air Force and the Navy and other agencies. In addition to that, the Department of Defense has a procurement program of considerable proportions, which is steadily increasing the number of transport planes in being, and by 1951 we will have increased our airlift potential considerably above where it is today. That does not mean that we expect by that time to have a number large enough to take up an anticipated shortage, but we are spending great sums of money, and we are doing something in this field.

I wanted to interpolate that because, as I say, unfortunately, we cannot continue to buy such quantities that there would be no shortage at all.

The CHAIRMAN. It would be a very happy thing if we could work out a dual purpose program, one that would serve the commercial needs of the Nation and which could be used in a sudden crisis to good advantage by the War Department, and that is what we are trying to work out.

I have two questions on this point. One is, would it not be of great advantage to the military if the commercial use of airplanes would serve to maintain them and to work out whatever bugs there might be in them, at no cost whatever to the ntaional defense, and have them ready for use at the time when you need them? I don't see how the national defense can use all the planes that it might need in a crisis-how it can use them in any other way except in moth balls, and as I understand it, a moth ball operation is an extremely expensive operation, far more expensive than having them used by some commercial line where they would be earning a revenue, because today's planes are like today's automobiles, it is only a few years until they are considerably out of date. The whole engineering design of airplanes is changing so rapidly that you simply could not stockpile planes today and then close your eyes and say "Now we are all fixed up for the next 50 years," because it doesn't operate that way at all, but if the planes that were to be in reserve, that were to be held in reserve by the military, could be used in the meantime, could earn their own way and perhaps pay for themselves in commercial use, would it not be of mutual advantage to everyone concerned?

Mr. LARKIN. As far as the stockpiling is concerned, Mr. Chairman, we agree with your analysis of it. We feel exactly the same way, and if, as you say, there were larger quantities of planes in use by the airlines, that also would be of collateral advantage in the military. The problem, I take it, has been for the last 21⁄2 years to find a vehicle to accomplish that, a vehicle that is satisfactory to all the parties at interest, and that has been a very difficult job, finding a solution has been very difficult, as you well know.

The CHAIRMAN. I have one other question here. In paragraph (2) you state, "there are other shortages within the Department of Defense." I want to ask you if those other shortages are shortages which are not being satisfied at present?

Mr. LARKIN. Yes, I think they were. What I mean by that is this: we have made a caculation which compares the present airlift capacity with what would be needed from mobilization day and on, over a period of a year or year and a half to 2 years. That comparison shows the figures are classified-you will recall a presentation of that character was made to your committee in executive session-I can say, however, that comparison shows that at different times in that whole mobilization period there is or would be an estimated shortage of airlift, while at other times there would not be one. However, we are comparing present capacity against the future requirements over a period. Now, if you make that same comparison between the present capacity of personnel, combat craft, combat airships, vessels, tanks, and so forth and so on, of the present size as compared to the requirements over mobilization day, plus 6 months, 12 months, 2 years, and so forth, you would find that there are shortages against those estimated requirements as well.

We are maintaining what we conscientiously feel is the minimum. We cannot keep on a mobilization basis in peacetime, or a war footing in peacetime, either in transport aircraft or combat aircraft or any of the other thousands of requirements that the military would have. There is a certain risk that must be taken in all those various fields, so that I would like to point up for purposes of perspective that there are shortages on that kind of a long-term mobilization base in other areas within the Department of Defense, and since on a peacetime basis we have to accept the risk of shortages in different areas, we are faced with determining a priority among those shortages, and as I pointed out, the shortages in some other fields which we would experience are of a higher priority than the airlift shortage.

The CHAIRMAN. And that paragraph No. (2), then is tied right into No. (1), the funds are not unlimited, and if they were unlimited, then you would perhaps take care of all the shortages and it would not be necessary to have any priority?

Mr. LARKIN. That is right.

The CHAIRMAN. Now there is one other question I want to ask you, and I hope that it will not be in any way embarrassing. As a matter of fact, I do not have any data on this question at all myself, but I am just wondering about the trained men that you have in national defense to supply air transport, and whether by having a dual purpose program such as I have suggested, you would not be getting those trained men absolutely free, that is, the commercial lines would develop them and they would become familiar with the planes and they would be ready to go in an emergency. They would

be experts, and the reason I ask this question is that I hardly pick up a paper but what I see that some military airplane has crashed. Perhaps it is exaggerated, and I know they are not transport planes, all of them, by any means. Many of them are warcraft planes of one kind or another, but according to the newspapers you do have a great many accidents in the military forces, as compared with the commercial accidents, and I do not know whether you have any statistics on that or not, whether you have any statistics on the number of failures of one kind or another?

Mr. LARKIN. I do not have them with me, Mr. Chairman. I think we could get them. As you point out, I think the accidents you read about are almost entirely in the combat plane area and not in the transports.

As far as the training of transport pilots is concerned, that, of course, is the one final reason why we have such an operation as MATS itself. The justification for having MATS is for training purposes, having planes in being on the one hand, and the training of the personnel, and while it may be true that we do not have enough planes nor perhaps enough pilots, the size of MATS, nevertheless is fairly large and is maintained just for the purpose of keeping these people in training. General Kuter, the commander of MATS, is here with me, and I think he can throw a little more light, give a little more detail on both the training functions and the accident rate and the safety factor in operating MATS as against the counterpart, the commercial airplanes. Can you throw a little more light on it, General Kuter?

The CHAIRMAN. I want to ask General Kuter a question or two along that line, and if this is a good time to do it, we will go ahead right now. I do not know what question you wanted to refer to the general-I guess the whole suggestion that I made about the accidents, but the question I would like to ask the general is this: isn't MATS a tremendously expensive operation? Doesn't it cost an enormous amount of money to keep MATS going? Isn't it highly expensive? General KUTER. Yes, sir; the expense of operating the Military Transport Service is a substantial load on the Department of Defense, and one that is borne only because of the requirement for airlift on V-day, and the capacity of expanding that lift immediately after V-day. With regard to the training point that you raised, it is very true that additional numbers of civil commercial aircraft in economical employment do automatically carry with them the personnel that would be required on and after V-day for military purposes.

I should like to amend one item there, in that when the military are discussing airlift requirements, we are discussing requirements for airlift cargo. All of our current military interest is directed into the cargo field as opposed to the de luxe passenger service.

Insofar as expansion of the civil commercial fleet, both aircraft and personnel, are concerned, in the cargo field, there is a direct military interest and requirement for that added capacity.

The CHAIRMAN. So far as pilots are concerned, and having trained men in that service, you don't think it is feasible, then, to shift the burden of training these men to the commercial airlines, to the advantage of the commercial airlines and the military, to any greater extent than you have been able to shift it now?