The Assistant Secretary of Commerce for Air, William A. M. Burden, developed no enthusiasm for the idea, and when Don Douglas, Bob Gross, and I called on him one day, he explained why. He felt that the existing legislation on the subject of air commerce was adequate and feared that a protracted public inquiry might hamper things already in the works and thus retard progress. But the big complication we faced came from the Army Air Forces.
The ancient Army-Navy rivalry had not died down under the impact of war but had flared anew and on many fronts. At heart it was the same old dogfight that had engaged Billy Mitchell and Billy Moffett twenty years earlier. The Army Air Force still battled for control of all military aviation, and the Navy scratched gravel to hang onto its own. Within the industry itself, whatever might be our private views, we took no position on the matter. After all it was a private grudge fight between two customers. We had hoped that the Air Force, now that it had won its battle for autonomy and demonstrated its decisive character, would welcome an opportunity to plead its case before a public tribunal. Instead, it resorted to the same tactics Billy Mitchell had used and thus confused the whole matter of air-power policy. The fact was that the Army Air Force, for all the miracles performed by the military air-transport services—managed as it was by personnel from the commercial air-transport lines—still remained blind to the significance of air transport.
In an effort to overcome this resistance we now asked the National Planning Association to study air power, hoping that this distinguished organization might support us with a recommendation for a national air policy board. For the National Planning Association, a private organization comprising men in all walks of life and of all shades of opinion had been organized to study just such problems as ours, namely those of vital import to national policy. Before a matter could be studied at all it must first be passed upon by a tough board of trustees who carefully screened out all subjects not included in its charter. Then after a problem had been accepted for study, it had to be debated by a selected panel in an open forum before which the burden of proof lay upon the proponents. The association finally accepted our request for study and numerous meetings were held under the supervision of competent moderators. Some of the labor representatives on the panel were especially keen, and since the industry’s position safeguarded the working man and the public as well as the industry, we found ourselves on the strongest possible grounds.
Our problem lay with some of the many government agencies on the panel, for aviation concerned a whole flock of such agencies, many of whom were naturally more concerned with protecting their vested interests than with advancing the art of aviation as a whole. Debates before the panel helped us to crystallize our own ideas and to adjust them to practical circumstances. When, for instance, the representative of the Director of the Bureau of the Budget questioned the soundness of our view as to the fundamental economics of air power, he started me off on an expedition the results of which startled even our research group.
Having in mind, from my youth in the Northwest, the story of the land-grant railroads, I had begun a search for a factual basis with which to support the air-power theme. I knew that, following the Civil War, the whole force of the United States government had been placed behind the expansion of the railroads as a means of opening up the great West, providing jobs for discharged war veterans, and developing a vast area of rich territory. To encourage this expansion the government had given some 180,000,000 acres of undeveloped land to certain roads and in return had passed legislation requiring the railroads to rebate to the government a percentage of the charge for hauling government freight and passengers. The balance sheet on this project, if one could be found, might prove interesting to the air-transport situation.
Inquiry among railroad operators disclosed no record of the transaction and little interest in it, but research in the government records produced the surprising information that the roads had repaid their debt to the government however one might figure the original land values. If the figure selected was $1.00 per acre, the estimate at the time of the gift, the roads, having at the time of inquiry rebated some $640,000,000, had paid the debt back threefold. If the figure selected was $3.00 per acre, a fair average of the selling price the roads had received for the land, then they had still broken even. In other words, the government had not subsidized the roads with this grant; it had made instead a profitable investment. A short while after this inquiry was made, Congress revoked the land-grant rebates.
Similar inquiry into the air-mail situation now revealed an even more startling figure. At the time of the inquiry, the airlines were still making money. Having lost half of their equipment to the military air-transport services, and having supplied a large part of the operating leadership, they had stepped up their utilization of equipment, and reduced their costs, to the point where they were earning satisfactory profits from mail and passengers without yet having exploited the possibilities of air cargo. Had they been “reasonably regulated” as required by law, they might have continued their record instead of running into serious losses as they have since done. But at the moment of the inquiry, the Post Office Department could make the proud boast that receipts by the government from the sale of air-mail stamps alone had already exceeded payments made to the operators for carrying the mails, even after a heavy loading of Post Office Department overhead. The United States government was not subsidizing the airlines with mail pay; it was taking a nice profit from that operation. Post Office subsidies were granted for several different classes of mail by palpably low rates but the special air-mail stamp carried its own freight.
And so, out of the need for justifying our theory of air power, we discovered the greatest possible justification of it, namely, its economic soundness. The Post Office Department, like all government departments subjected to the handicaps of political patronage, was notoriously uneconomical, yet the air-mail operation could support a large slice of this excessive overhead and still show the department a profit on the operation. The railroads argued that the hidden subsidy of government airports and airways nullified the arguments, yet there was a long history of similar government support for highways and waterways. Meanwhile the Post Office subsidized directly the carriage of periodicals, and took serious losses on rural delivery and other classes of service. Here was a fact of profound importance to our air-power program: air mail was already self-sustaining and if subsequently the situation changed, losses could not be charged to air mail as such, but must be credited directly to inept management; that is, government regulation.
This raised the whole question not alone of the reasonableness of the “reasonable regulation” but also of the principle itself. There is nothing in the history of the railroads to support the principle; cutthroat competition could hardly have been more disastrous than the present regulation. When, earlier, the railroads had found themselves face to face with the penalties of their own mistakes, they had sought to lean on government; they had asked for regulation and they had got it. Of course they had sacrificed their birthright for a mess of pottage because, having eased the economic pressure of the struggle to survive, they had removed the chief incentive to technological development.
This point was admitted by Fred Williamson, then president of the New York Central, when he and I discussed the matter on a salmon-fishing trip to Anticosti Island. It had started as a bantering argument at a time when the New York Central was giving consideration to a suggestion that the railroad start its own airline. After I had set forth the case for air transport, Fred Williamson looked off down the Jupiter River and remarked in all earnestness: