Senator BREWSTER. I think there is no doubt that it has done good. The question is whether we would be prepared-suppose, in 5 years from today, we had jet transports ready for domestic servicewhether we could possibly handle that traffic on our airways, or

runways.

Mr. RAMSPECK. That is one of the things we hope to find out from this program that this bill provides for. We don't know what the

operating problems for jets are.

Senator BREWSTER. Well, you know some of them. You know that they have got to land.

Mr. RAMSPECK. Yes, sir.

Senator BREWSTER. Land very promptly.

Mr. RAMSPECK. We know there are problems, but there is some difference of opinion about the problems involved in that. No party has had any experience with it in a traffic situation like we have in the United States. I certainly do not agree with the gentleman you were talking with, who is in the military, that anyone can say at this time that we could not operate them in 3 or 4 or 5 years from now. don't know. That is one of the things we want to find out.

We

Senator BREWSTER. Thank you, Mr. Ramspeck. We very much appreciate your statement. We will now hear Mr. C. R. Smith, president of American Airlines.

STATEMENT OF C. R. SMITH, PRESIDENT, AMERICAN AIRLINES, INC.

Mr. SMITH. Mr. Chairman, your committee will consider several bills which have the purpose of encouraging and aiding the development of new aircraft types. They are, I believe, S. 426, S. 2301, S. 2984, and S. 3504. I will not refer here to the specific sections of any of these bills but will, with your permission, discuss the general requirement for prototype legislation and the degree to which this requirement is met by S. 3504.

There is no need for me to dwell on the reasonable requirement, in the national interest, that we stimulate and accelerate the development of more efficient transport types. I have testified before the committee on that subject before. You have also had testimony from many others on the same subject; I take it that we agree on the need for such stimulus. If so, the principal part of our discussion today should center on the method of achieving that result.

A prototype program falls logically into three basic divisions:

1. A program which will permit the accumulation of experience in the operation of aircraft powered with true jet or turbine-propeller power plants. The purpose of this is to discover and endeavor to solve the problems of high-speed, high-altitude operation, to discover the true costs of operation and endeavor to provide greater relative economy, and to make provision for the operation of these high-speed aircraft in a traffic pattern which is familiar so far with aircraft of much lower over-all speed.

2. To design and manufacture prototypes in keeping with the requirements developed by the pioneer flight test program.

3. To test those prototypes for conformity with the requirements for scheduled transport operation; efficiency, economy, comfort, and safety.

S. 3504 makes satisfactory provision for parts 1 and 3 of this threedivision program, in that it establishes the principle and potentially makes available funds for the testing programs advocated.

I am not sure that either the principles which you establish in these bills or the funds which you may provide will insure the fulfillment of the second requirement of the three-point program; that we actually design, manufacture, and make available for further test the modern prototypes which we seek.

There is a belief that if you provide funds for the two testing programs, the aircraft manufacturers will produce prototypes with their own funds and at their own risk. I am not convinced that will result from this specific legislation. I have received no such assurance from any of the manufacturers with whom I am acquainted and I am not acquainted with any irrevocable assurances on that score which have been provided to this committee. I have all along taken the view that the urgency of the situation was such, and the degree of economic risk so high, that direct participation of the Government in the design and manufacturing program would be required and was justified. I believe that time and experience will reinforce that viewpoint and that, ultimately, you will come to the same conclusion. Senator BREWSTER. This committee came to that conclusion quite awhile ago.

Mr. SMITH. I know, sir. I think you are completely right.

Notwithstanding a seeming deficiency in the program put forward by your legislation, I would advocate that you provide now for the test programs, in keeping with the general intent and detail of the legislation before you. We are not yet equipped to design and manufacture physical prototypes, and we will not be so equipped until after the completion of the pioneer test program. I am sure that we will not be ready for prototype construction during this year and it may be that we will not be ready during the coming year. In any event, we will later have time sufficient to call your attention to the second phase of the three-point program, the actual construction of prototypes, and your consideration of that part of the program need not delay passage of legislation dealing with the two phases of the test program, for both of them are essential in the over-all plan. Senator BREWSTER. You contemplate, then, testing foreign types, I suppose?

Mr. SMITH. That is quite possible. I don't think it is sure.

Senator BREWSTER. You say, we are not ready to build our own and can't produce them, anyway, and you comment on our learning from these test types, which presumably would be with foreign types. Mr. SMITH. Not necessarily. You can learn a good deal with the military-type aircraft. We can fly military type and get a good deal of information.

Senator BREWSTER. It might encourage our manufacturers to move a little, if we did start testing a few foreign planes.

Mr. SMITH. I have no objection to it, if it could be done advantageously and economically. We might learn something from it.

Senator BREWSTER. I think that it is unfortunate that they do not feel in a position to do it, themselves, but instead call for Government aid. That is a serious situation.

Mr. SMITH. Who is that?

Senator BREWSTER. The manufacturers, who have thus far been one of the important influences bucking this action.

Mr. SMITH. I don't think they have exhibited any great degree of statesmanship on the problem.

Senator. BREWSTER. It might be that, if we started in with our British friends, they would decide that perhaps they had better begin to catch up, either by welcoming a little Government assistance or by going ahead themselves. I am thinking simply in terms of the practical problem we face, but I don't ask you to compare it to sources of supply, by any comments, yourself. I don't have to worry about that.

Mr. SMITH. Well, you and ourselves were in favor of the same basic form of aid, direct aid for the construction of airplanes that, in my opinion, has been required all along and will continue to be required, and if we build any prototypes, they will be built that way.

Senator BREWSTER. I don t think there is any doubt about that. Mr. SMITH. I have taken the position before that this whole program of prototype development should be the responsibility of the air forces. That was in my previous testimony. I have been provided with no convincing reasons why that position should be changed. On the other hand, it is more important to get the program going than it is to differ about which agency of the Government shall have responsibility for it, and I am sure that if you conclude that it will be better directed by a civilian agency you will have the full cooperation of all parties, and the program which you approve will be effectively accomplished.

I am hopeful that the Congress will pass S. 3504 at this session. We are well behind, relatively, on the development of modern transporttype aircraft; no time should be lost in regaining a suitable position and this legislation will be salutary and constructive in achieving that purpose.

I have a separate statement, Senator, on S. 3507.

Senator BREWSTER. Before going to that, on this bill, S. 3504, you recognize that it does provide for the civilian testing of the Civil Aeronautics Administration. You have no objection to that?

Mr. SMITH. No objection.

Senator BREWSTER. Your comment on the military was in the development of prototypes, getting the benefit of their experience in military use, I presume?

Mr. SMITH. That is correct. It can be done either place. I would prefer the air force. Other people would prefer the civilian agency.

I would like to say a word that does not pertain to either one of these bills which Mr. Ramspeck touched on, and that is the division of air traffic between the airlines and the railroads from the Government. I had the opportunity to discuss that with some of our military people, several times, and I am sure that our position is that we are not asking for a larger piece of the Government business. We are asking for the opportunity to compete for it on an equal basis. Our position is that the Government should have the utmost freedom of choice in deciding what method of transportation they will utilize, based on its value to them, cost to them, and all the other factors which are taken into consideration.

Senator BREWSTER. What is the handicap that you have now?

Mr. SMITH. The contract between the National Defense Establishment and the railroads carries a definitely preferential clause. You can only use other forms of transportation after you have proven that the railroads cannot do the work.

Senator BREWSTER. If it is possible, shipments must go by rail? Mr. SMITH. That is correct, sir, and that has been in effect for many, many years. We are not asking that we be given any arbitrary division of the business. All we say is, we want an opportunity to compete on an equal basis.

Senator BREWSTER. What have you to say about this development of traffic control, and the prospects of jets moving in on turbo-jets? Mr. SMITH. I think, if you complete the program which has already been recommended by CAA-Mr. Rentzel testified on that—I think we will be adequately equipped to handle it by the time jets come along. I know our own traffic-control people, while they realize that there are a great many problems, I do not feel any fear about solving them. Senator BREWSTER. What do you think of it in terms of years from now; what is your present optimum or minimum?

Mr. SMITH. On the jet airplanes, themselves?

Senator BREWSTER. Yes; and the possibility of having them, in terms of years, 5 years, 10 years, 15 years?

Mr. SMITH. I think we would be equipped to handle them in 5 years, provided the airways program that you have been appropriating money for each year is continued.

Senator BREWSTER. You mean, continued as at present?

Mr. SMITH. That is correct. In other words, that the present contract which has been approved by Congress is not interrupted.

My statement pertains to S. 3507, a bill for the authorization of the Commercial Air Fleet Act of 1950. Its requirement rests upon a resolve to promote interstate and foreign commerce and to strengthen the national defense; both, of course, entirely worthy objectives.

The legislation begins by providing for the creation of a new agency of the Government, the Aircraft Development Corporation, and the first seven pages of the bill are devoted to the detail of its potential organization and the definition of its purpose and authority.

With the existing resources, ability, and authority of the Department of Commerce, the Department of Defense, the Department of State, the Civil Aeronautics Administration, the Civil Aeronautics Board, and the Federal Communications Commission, each of which has some responsibility for the direction of civil air transportation, I can think of no task or responsibility with respect to civil aviation which could not and should not be assigned to one of these existing agencies, and I can find no satisfactory justification for the creation of any new or different agency for the purposes specified in this bill. Page 8 and part of page 9 are devoted to the composition of a committee of 12 persons which will meet with and advise the management of the new Government agency. My desire is to be constructive and I have no intention of being facetious, but it is my view that the most inefficient aircraft ever constructed in this country have been devised and designed by large committees, and that the best of aircraft have been designed by smaller groups, especially groups for which there is an economic penalty if the airplane did not prove to be efficient.

Large groups take more time to get things done than do small groups and the inevitable result of large-scale deliberation is compromise, and compromise does not produce airplanes which will permit the United States to compete effectively with the other countries of the world.

Page 9 authorizes a survey of potential needs for transport aircraft. If these needs be for military purposes, it is obvious that the survey can be best directed by the agency responsible for the national defense. If these needs be for civilian operation, then those responsible for the operation of the airlines would want to assume basic responsibility for that, for it is their capital which is risked in the subsequent operation of the aircraft. If the needs be for quasi-military-civilian requirement, then the National Security Resources Board has already the responsibility for such surveys.

Page 10 provides for the purchase by the Corporation of transport aircraft; pages 11 and 12 provide for the lease of these aircraft to civilian operators, and page 13 provides that those not so utilized may be retained in a storage pool.

I can see no requirement that this agency be authorized to purchase aircraft for subsequent lease to the airlines. If the airlines have sound economic reason for acquiring aircraft, it will not be difficult for their purchase to be financed through the usual commercial banking sources. If for any reason those sources are not available, Reconstruction Finance Corporation has already authority to make loans for such purpose and has had considerable experience in doing so. You have no desire to encourage loans without reasonable economic foundation and if there is sound reason for the purchase, there is no need for an additional source of Government funds for the purpose of purchase.

Page 14 deals with authority for research and development. The National Advisory Committee for Aeronautics, the Department of Defense, the Civil Aeronautics Administration and the Civil Aeronautics Board have already been entrusted with responsibilities in this field. It is my belief that the responsibilities entrusted by this bill to the Corporation, if their purpose is sustained, would be better entrusted to an existing agency. Some of them are, of course, tended to be entrusted to an existing agency, if the legislation for prototype development is passed by the Congress. I fear that the duties of this Corporation in the field of research and development would serve only to duplicate the efforts of others and you would purchase with your appropriation a new area of confusion.

in

Page 17 deals with the powers of the President with respect to the utilization of transport aircraft in time of emergency. The powers of the President during the recent war seemed ample for the purpose. If additional powers are required it is probable that the Congress would want to authorize them more directly.

Page 18 amends the Civil Aeronautics Act, by declaring that it is the will of Congress to promote the maximum utilization of transport aircraft, with particular reference to cargo aircraft. I am sure that the "encouragement" section of the existing act, the Civil Aeronautics Act, is sufficiently broad to provide for such acceleration, if it is found to be in the national interest, for commerce, the postal service or the national defense, and it is hardly probable that this specific language is needed for that purpose.

On the whole, this bill would provide duplication of effort in nearly all of its particulars with assignments already given to existing agencies. I do not believe that its passage would be beneficial to civil air transportation. I do not believe that its passage would aid the air carriers in making a more valuable or a more direct contribution to the national defense.