Aeronautics: Postal Plums

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Last August a lean, pale-faced young man who had just taken his Ph.D. at Harvard, set out to ride the nation's airlines. He flew some 18,000 mi. over every air transport route in the U. S., talked to airline officials, poked into ledgers where he could, wound up in Washington and pored over the records of the Post Office Department. Last week the young man, Dr. John Bever Crane, 29, Harvard instructor of transportation, told the House Post Office committee that the subject of airmail subsidies was badly in need of ventilation.

Big airmail contractors had heard that before without shivering in their boots. In the last Congress they weathered an investigation by the same committee with no deeper scars than a reduction of appropriations from $20,000,000 to $19,000,000. But many a contractor felt—and "independent" operators hoped anew—that last week's events were the advance rumblings of what will become heavy gunfire; that the Democratic Congress is intent upon breaking the "airmail monopoly" which Postmaster General Brown frankly favors. A thoroughgoing study of the situation is one of the tasks imposed by President-elect Roosevelt upon his "brain-trust."

Investigator Crane's report was kept secret last week, copies entrusted only to the sub-committee appointed to study it. But this much of his findings became known:

¶ That extensions to contract routes had been granted recklessly by the Postmaster General, under terms of the Watres Bill.

¶ That "grave inequalities" had resulted from the "formula system" of establishing airmail rates, i.e.: a flat rate per mile for specified load-space (whether filled or not) plus bonuses for night flying, fog, mountains, two-way radio. On that basis the cost-per-pound of mail on the New York-Atlantic City route (operated by Eastern Air Transport) where loads are particularly small, ran as high as $22.59.

¶ That in order to bolster their subsidies, certain operators try hard to show high operating costs. One "large system" reported to its holding company earnings $1,000,000 greater than it reported to the Post Office. Pan American Airways, foreign mail contractor collecting $2 per mi., made no report whatever of profits and costs.

¶ Various airline officials accused Superintendent of Air Mails Earl B. Wadsworth of "incompetence and playing favorites," and charged that in some cases he departed from the so-called formula basis of rate-making to favor certain lines.

Dr. Crane recommended: 1) reduction of the fiscal airmail appropriation by an additional $1,000,000; 2) cancellation of some 29 route-extensions, including American Airways' southern transcontinental run from Dallas to Los Angeles; 3) limitation of the "autocratic rate-making power" of the Postmaster General, establishment of rates according to certified earnings of the carriers; 4) establishment of a system of field-auditing over domestic and foreign contractors; 5) reduction of the maximum rate paid to domestic lines from $1.25 per mi. to 75¢.

Among the busiest lobbyists in Washington last week were those of the four systems which hold 18 of the 23 domestic airmail contracts: United Air Lines, American Airways, Eastern Air Transport, and Transcontinental & Western Air.