Early in 1949 the Interstate and Foreign Commerce Committee of the Senate, under the chairmanship of Senator Edwin C. Johnson of Colorado, began inquiring into the ills of the airline transport industry. Senator Johnson had sat at my table at the dinner given by the aircraft manufacturers to Congressional leaders in aviation in Washington some five years earlier. A man well informed on the whole subject, he now began directing an inquiry that promised to initiate an important forward step in the formulation of American air policy. Unlike the Finletter Commission and the Congressional Aviation Policy Board, both of which had been held under the overcast produced by the cold front of fear incident to the Berlin crisis, the Johnson inquiry, following close on the brilliant success of the Berlin Airlift, focused attention solely on airline transport.

Curiously enough, the underlying significance of the Berlin Airlift was seldom touched upon in the flood of commentary that accompanied the lifting of the blockade. While it was generally recognized as a defeat for the Soviet, and served to ease the tensions and allay the fears of war, the epochal character of the operation went almost unrecognized. Paul Fisher, in the Bee Hive, house organ for United Aircraft Corporation, in a brilliant article written on the spot, hailed the victory of air freight. For the first time in world history, commercial air transports—not combat aircraft—had spearheaded United States foreign policy in a victorious action against the swashbuckling Soviet. The very forces which had once reduced Berlin to rubble with bombs had now saved the population from starvation with air cargo.

Meanwhile, rapid progress in the development of guided missiles had raised the question of the future of the airplane as a major weapon carrier. Some strictly military manufacturers had already begun giving serious consideration to the problem of whether to continue to specialize in aircraft or to shift over to the development of guided missiles. And once experimental aircraft had exceeded the speed of sound, some began to wonder if that velocity might not one day mark the division between combat aircraft and those designed for commercial purposes. In other words the Johnson Committee began its hearings against the background of a changing weather map.

Airline testimony before the Committee revealed some wide divisions within the transport industry itself. Captain Eddie Rickenbacker for example blamed the ills of the airlines on “too much coddling and wet nursing,” while Carleton Putnam ascribed them to “slow starvation.” The individual outlook reflected the color of the financial statement. And the airline operators, in making their “policy” recommendations, seldom came to grips with fundamentals but focused their attentions on revisions of administrative procedure. In this respect they reflected their long association with government agencies to whom policy so often means the detailed management of public affairs rather than a course of conduct. If the airline operators’ recommendations seemed slanted toward measures calculated to advance the special interests of their individual companies, the fact was entirely understandable.

To us aircraft manufacturers who, five years earlier, had covenanted to cooperate in the public interest where policy was concerned, while continuing to compete with each other in operations to our own—and likewise—the public interest, it appeared that a precarious existence under government economic regulation had blinded the operators to the broad public interest, and hence, to their own enlightened self-interest. Leaning on government for a guarantee of their economic security, they competed with each other for legislative or administrative advantage, and primarily before Congressional committees or government agencies. And if some of them made forays into politics and acted more like rusty railroad executives than like jet-propelled pioneers, it was in keeping with the principles under which they operated.

Yet out of the confusion of conflicting testimony it was possible, by keeping in mind certain fundamentals learned from the history of aviation, to arrive at certain conclusions. The airline operators for all their controversies were unanimous on at least two points: they endorsed the principle of “reasonable regulation” upon which the Civil Aeronautics Act had been founded, and they condemned the administration of the Act by the Civil Aeronautics Board.

Yet in the face of the airlines’ unanimous approval of the Act, an objective study of the testimony raises a serious question as to its soundness. Sifting out the wheat from the chaff, one could not help wondering whether Solomon himself, with the aid of all of his wives, could have administered such a document. Providing as it does for economic regulation of privately owned industries by political appointees, the Act flies in the face of the fundamental fact that politics and economics function under different basic precepts; in the one the ballot box calls the turn, in the other the cold arithmetic of an inescapable financial statement. But if the airlines’ endorsement of “reasonable regulation” proved open to question, the testimony before the Committee left no doubt that recent regulation had been, in fact, wholly unreasonable.

It developed that the Civil Aeronautics Board had cut the mail rates in 1945 to a point well below the actual cost of transporting the mail. Furthermore it had authorized widespread duplication of existing services and had subsidized these duplicating services in competition with those already established. And when this action resulted in crippling losses, the Board compounded its blunder by making retroactive increases in mail which had the effect of putting the whole rate structure on a cost-plus basis. Captain Eddie Rickenbacker, of Eastern Airlines, voiced the position of the “Big Four” when he said, “The confused state of mail rates destroys all incentive for economy and efficiency—it discourages good management and high performance. It puts a penalty on accomplishment, and rewards the wasteful and inefficient.”

Another diagnosis of the airline ills was offered by Harold A. Jones, a member of the Civil Aeronautics Board itself, when speaking before the San Francisco Advertising Club. The airlines, he thought, were ill from a “mysterious disease known as ‘subsiditis,’” which disease he ranked “somewhere between bubonic plague and leprosy.” However his shotgun diagnosis lacked clinical confirmation before the Senate Committee by his boss, Joseph J. O’Connell, Jr., chairman of the Civil Aeronautics Board.

“We are not in a position,” testified Mr. O’Connell, “to give an accurate estimate as to the amount of the total air-mail pay bill which represents fair compensation for the carriage of the mail, and that portion that represents subsidy.”

Postmaster General Donaldson agreed with the Board chairman and stated that the Post Office had long held the opinion that the mail rate, if shorn of its subsidy elements, should not in any case be greater than the passenger rate. On this basis the Post Office Department would have been credited with approximately one-half its present transportation expenditures inasmuch as passengers were paying approximately 50 cents per ton mile, while the Post Office was paying more than double that amount. This over-all figure, of course, obscured the wide variations between the compensations paid airlines thought to be self-sufficient and the much larger payments to those known to be heavily subsidized.

In the absence of even the most elementary data it is difficult to see how any regulation could be called reasonable or how the government could support any subsidy charge either against the industry as a whole or against any segment of it. The situation was further obscured by the Postmaster General’s estimate of the total domestic and foreign air-mail subsidy for this year.

Using the excess of the cost of the service to the Post Office Department over the department’s air-mail revenues, he arrived at the figure of $35,000,000. The cost to the department included of course all expenses allocated to air mail including department overhead, but it did not substantiate the reasonableness of any allocation. Under questioning by one of the senators of the Committee, this all inclusive definition of “subsidy” was discounted. Under business accounting principles the figure might have been labeled “deficit” and would have been charged against the Post Office rather than pinned on the airlines as a “subsidy.” After all, the Post Office Department overhead, an item perhaps more political than economic in character, was not subject to airline control and was therefore the responsibility of the department. A subsidy is a public grant or subvention to aid an enterprise for the public convenience and not the deficit of a government department.

In the face of such fuzzy accounting the figure is interesting chiefly because of its small size. The Postmaster General, after referring to statistical exhibits, reported the total deficit incurred from the inauguration of the first air-mail service in 1918 up to 1948 as a little over three and one-half million dollars per year for the thirty-year period and added, “Probably no investment made by this government ever returned greater national benefits in commercial and cultural progress, and national security. The over-all value of air transportation system to the nation, particularly as an arm of defense, has been incalculable.”

It is interesting in passing to compare the air-mail deficit with others submitted by the Postmaster General: penny postcards, $57,000,000; fourth-class mail, $82,000,000; third-class mail, $139,000,000; and second-class mail, $237,000,000—a total of $515,000,000. And so the air-mail deficit is but one of many and the least of them all. On the basis of such approximations as have been presented by government agencies, the airlines might have argued that by absorbing a portion of the vast overhead of the Post Office Department they were actually “subsidizing” other types of mail service.

In light of the dearth of figures that would indicate an approximation to the true air-mail subsidy, if any, Carleton Putnam, of Chicago and Southern, made an exhaustive analysis of government cost records, during which he checked his assumptions with responsible persons in the government. This indicated that from the inception of the air mail down to the year 1948, the postal revenues had exceeded the added costs of air mail to the Post Office by some $54,000,000. Summing up for the Committee, in a statement which was not challenged by the government, he testified, “Hence the American taxpayer has not only gained the greatest air transportation system on earth ... plus an adjunct to the national defense which would otherwise have cost him untold millions to provide—he is $54,000,000 ahead in cash as well.”

And after charging the airlines for their share of the cost of building and maintaining the nation’s airways and airports, an expenditure which would in any case have had to be made for the Army and Navy, the airlines would still owe the taxpayer but $61,000,000, all of which relates to maintaining the national airways system. Furthermore this clear demonstration that the air mail has not been subsidized comes in the face of grievous blunders by the Civil Aeronautics Board in certifying uneconomic competing services at extravagant mail rates.

One of the most extreme cases of this kind was reported by Captain Eddie Rickenbacker. The Civil Aeronautics Board had in the past two years certified twenty-one “feeder lines,” some of which had been authorized to divert mail poundage from some stations which Eastern had served for twenty years without subsidy, and to charge ten times as much to transport the same mail between the same points. In other words, the Civil Aeronautics Board, impelled by some sense of political necessity to provide competition for the major airlines, had in effect forced them to subsidize competition for themselves. Meanwhile the government had paid such niggardly rates to others that the stockholders of the enterprises had been forced to subsidize the United States.

Such “reasonable” regulation had reduced the airlines from their once proud state of self-sufficiency to a critical status, and at the very moment when their futures should have looked the brightest.

“There can be little doubt,” stated the chairman of the Civil Aeronautics Board, “that if our airline system were today the same size as it was in 1941 in terms of routes, points served, and service provided, it would be completely independent of government support.” It was certain additions to the service, he further pointed out, and the fixing of certain “fair” compensations by the Board that slowed all airlines save Eastern down to stalling speed and all but put them into a flat spin. He shared his responsibility with the appropriation committees of Congress and thought that if funds were provided for an adequate staff the Board might do a competent job. However the fact that the Civil Aeronautics Authority and Civil Aeronautics Board already had 18,000 employees as compared with approximately 80,000 employees for all domestic and overseas scheduled airlines rather discounted this opinion.

That the damage did not end with heavy losses imposed by arbitrary rates but was multiplied by the award of retroactive payments is evidenced in the testimony of Roger F. Murray, vice-president of the Bankers Trust Company of New York.

“The Board’s thinking,” he said, “has apparently been that rates should be set so that each carrier will break even and perhaps earn some so-called ‘fair’ rate of return on it’s ‘used and useful investment.’ Under these circumstances, enlarged payments have been made to rescue some airlines in difficulties or keep others going on a subsistence basis. While this may be reassuring to creditors of the airlines, it is the poorest kind of an appeal to potential purchasers of equity securities.”

Translating this into lay language, the private investor or his agents just cannot be interested in buying stock in enterprises which are suffering economic regulation by political agencies. And once an enterprise is denied access to the highly competitive markets for risk capital, it is indeed on the verge of bankruptcy or about to crash into the abyss of nationalization. And if the government, after having reduced the market value of the airlines by its own mismanagement, then takes possession of them, it becomes guilty of expropriating the capital of private investors, some of whom had risked their savings in an enterprise they deemed secure because it was government regulated.

Now mismanagement of the airlines was not necessarily the fault of wicked or even stupid men. As Speaker Sam Rayburn had pointed out to me in the case of Congressmen, government administrators are no smarter nor more stupid than the average. But they hold their jobs by knowing which side their bread is buttered on and making the correct estimate of what action will produce the most votes.

The Civil Aeronautics Board, in light of current public opinion with respect to the profit motive, could hardly be expected to accept public responsibility for such economic regulation as would permit any airline to make a profit, especially one such as might be subject to political attack. Nor could it be expected to muster courage to defend such an apparent monopoly as its own route pattern had created, even though the law authorized it. Although the Board was directed to so administer the Act as to prevent “unfair or destructive practices,” it must permit “competition to the extent necessary to insure sound development of an air transportation system properly adapted to the needs of the foreign and domestic commerce of the United States, of the Postal Service, and the national defense.” Its decisions, predicated on an attempt to administer such complex mandates and still keep out of hot water, brought the airlines into jeopardy at the very moment when they had established their economic self-sufficiency and faced the brightest futures of their turbulent careers. In other words, economic regulation by political agency is an anachronism.

Meanwhile, with the real solution to the Board’s competition problem ready at hand, the Board even messed that up. This drama was unfolded before the Committee by a group of enterprising young veterans who, having participated in such wartime miracles as the transportation of air cargo over the Himalayan Hump, had concluded that this and other services as yet unexploited by the certificated passenger carriers offered unique opportunities for their postwar reconversion. Perhaps the gist of their testimony can be extracted from the statement of Amos E. Heacock, executive committee chairman of the National Independent Carriers, and president of Air Transport Associates.

“Let me review briefly,” he said, “the near miracles that have been wrought in the development of air transportation by United States veterans.... In the international contract air carrier field, Transocean Airlines, Seaboard and Western, Pacific Overseas Airlines, etc., have found an entirely new market for air transportation, formerly practically untouched by the scheduled airlines.... I want to point out to you an additional and perhaps the greatest air transportation feat performed by the veterans of World War II. I am referring to the amazing record of the Pacific Northwest-Alaska nonscheduled carriers.... The scheduled carriers that were subsidized to do the job of developing air transportation to Alaska were a miserable failure. The bulk of the cargo, 73.6 per cent of the northbound and 83.5 per cent of the southbound, was transported by the much maligned nonscheduled air carriers.... The records show that the non-skeds pioneered a wealth of new business.”

After referring to Section 2(d) of the Act, which provides for competition, the witness stated, “With an unprecedented opportunity to preserve competition to develop the air transportation system and so provide adequate and economical service, the Board’s actions have provided for just the reverse.”

One explanation of the Board’s action might be derived from the statement of C. R. Smith, chairman of American Airlines, one of the largest of the “Big Four.”

“If the law of the land is to be enforced against the certificated air carriers,” he said, “it should have similar enthusiasm of enforcement against the irregular carriers who compete directly for the same business of air transportation. We cannot live with economic health in an atmosphere half legal and half illegal. If this business is to be regulated, all should be regulated.” It would be interesting to know just what significance attaches to the use of the word “against” in this statement.

“If the Civil Aeronautics Act is to mean but little,” continued “C.R.,” “then let us return to the rules of the road which obtained before the Act was passed, when competition was direct and unregulated.” Had “C.R.” gone on to urge this course, he might have given a demonstration of the rugged individualism for which he is credited; instead he summed up, “We were in favor of the Act, we are in favor of the continuation of the Act, but if we are to abide by the terms of the Act, we ask that our competitors be bound by the same rules of public conduct.”

Juan Trippe, president of the Pan American Airways System, stated the issue in similarly clear terms:

“The fundamental problem, both domestically and internationally, is that although Congress intended to place the airline industry in the category of regulated public utilities, the airlines, while treated on one hand as public utilities, have, at the same time, been made subject to all of the competitive pressures proper and appropriate only in an unregulated industry. There is no precedent in American industry that I know of for such a Dr. Jekyll and Mr. Hyde arrangement.”

After developing the principles under which public utilities are regulated and financed and suggesting that Congress should make up its mind as to whether or not they want to return the airline industry to its intended status as a regulated airline industry, Juan, like “C.R.,” mentioned the alternative of eliminating the relative provisions of the Civil Aeronautics Act and exposing the airlines to the full competitive force which exists and should exist in ordinary commerce.

“There will be no real progress in the solution of the airline problems,” he summed up, “until this issue is met squarely. An airline can’t be a regulated public utility and a free enterprise at the same time.”

However, the witness did not waste further time on this alternative but, acting on the assumption that the doctrine of regulating the airlines as a public utility would be preserved, went on to develop his own case with all the unique persuasiveness that had helped him pioneer Pan American in one of the most impressive displays of self-reliance, individual initiative, and private enterprise of modern times. His discussion led up naturally to the merger of Pan American with American Overseas Airlines which he and “C.R.” had earlier submitted to the Civil Aeronautics Board. In justifying this, Juan expounded his well-known thesis of the “chosen instrument” advocating a government policy of maintaining one American-flag system—Pan American Airways—in the international field, supported with frank outright subsidies such as those paid under the Merchant Marine Act of 1936. He justified his position by citing its benefits to the stockholders of the company and argued that the higher wages thus made available to American workmen employed in international aviation would constitute a subsidy to them.

With the major certificated airlines mobilized solidly in support of the “chosen instrument” policy, the Committee received a clear statement of the opposing point of view from Raymond A. Norden, president of Seaboard and Western Airlines, Inc. One of the independents who had been characterized by Captain Eddie Rickenbacker as “irregulars,” “latecomers,” “interlopers,” “pretenders,” and so forth, Mr. Norden undertook to support Eddie’s contention that the airlines were suffering from too much coddling. In perhaps the outstanding statement to be made to the Committee, he put his finger on the crux of the airline controversy.

“The Civil Aeronautics Act of 1938,” he said, “is unusual among regulatory statutes in one very important respect. Other forms of transportation have not customarily been subjected to comprehensive regulation until the pattern of growth has been assured and until the industry has become so highly developed competitively that there is need for rigid controls and restraints in order to prevent destructive practices.” Out of the background of the airplane story to date, one might argue the other way around, namely that once the rigid controls and restraints are imposed, the growth pattern becomes stabilized. Mr. Norden went on to argue with persuasion:

“Aviation is relatively a new business. Air freight, as distinguished from other forms of aviation business, is in its infancy. Yet the entire aviation industry is hedged about with red tape, the like of which has never been encountered in any other form of American industry. One has merely to look at legal payments made by some of the certificated carriers. TWA, for example, in 1948 alone, paid a single law firm the sum of $340,000. My own small company spent in excess of $50,000 in legal expense. Sometimes I feel as though I had more lawyers than pilots.”

When the Russians blockaded Berlin in June, 1948, according to the witness, the Air Force, lacking reserve planes, called upon three certificated, subsidized North Atlantic carriers, Pan American, TWA, and American Overseas Airlines, to lift essential material between this country and Germany. Those carriers failed miserably; of the three irregular international carriers called upon to assist, Seaboard and Western lifted more than twice as much tonnage over the North Atlantic in the next six months as Pan American, TWA, and American Overseas combined. Yet under pressure from the certificated carriers, the Civil Aeronautics Board revoked Seaboard’s authority to fly under its Letter of Registration, as of May 20, 1949, along with all other large irregular airlines in this country. In his indictment of the certificated carriers the witness said, “In their zeal to keep the air transportation field to themselves and to obviate the chance that a measurement will be set up against their operational efficiency, the North Atlantic carriers are doing a great disservice to the country. To put it bluntly, they are sabotaging the development of airlift which is vital to national security.”

Mr. Norden then went on to quote from an article by J. A. Durham and M. J. Feldstein in the Virginia Law Review entitled “Regulation as a Tool in the Development of the Air Freight Industry”:

“But where an agency is charged with creating new national wealth by developing an infant industry, the consequence of permitting established interests to employ the forms of justice to obstruct the attainment of statutory objectives may well destroy the value of the administrative process.”

A less reasoned but even more revealing statement was that of Charles F. Willis, Jr., president of Willis Air Service, Inc., one of the “irregulars”:

“Consequently it is with great bitterness that we have seen ourselves singled out by the Civil Aeronautics Board for denial of a certificate of public convenience and necessity.... It is even harder to accept the decision because the only reason we are given for it is that we don’t have a million dollars. We never had a million dollars and we never needed a million dollars to perform our operations, but we do have almost all the dollars we started with. We feel that we have successfully demonstrated that an airline can be kept going, at a profit, if hard work, ingenuity, and a desire to make a profit are substituted for lavish spending of other people’s money.”

In such a sketchy review of the reams of testimony submitted to the Committee it is quite impossible to do more than attempt to summarize the major points of view and try to pan out the nuggets that reveal the vital issues. After sluicing away the rubble and uncovering bed rock, my own impression is largely one of intense sympathy for the Civil Aeronautics Board. Charged with an almost impossible task, it has been subjected to terrific forces by organizations skilled in the art of influencing public opinion. I also come away with a feeling of regret that airline management could not have approached the problem under the precepts adopted by the Aircraft Industries Association.

Most American early birds will recall with a nostalgic smile a cartoon that once adorned the walls of many a pioneer flight school. Entitled “His First Solo,” it depicted a forlorn fledgling perched out on the end of a bare limb. Near its root poised an impatient mother bird from whose beak floated the command, “Come on, kid! Give ’er the gun!”

One day, while studying the conflicting testimony of airline operators in an endeavor to predict the next twist of the slipstream, I recalled this early masterpiece of contemporary art. The fledgling on the end of the limb seemed now to have feathered out; he appeared, in fact, almost overgrown. The mother bird cocked her head questioningly, “I wonder if he’s got what it takes?”

From the days of Wilbur and Orville Wright on down to the present, aviators have groped for an understanding of the airplane’s destiny. Charles A. Lindbergh, in his book Of Flight and Life, has stated the problem:

In the closing paragraph of his book Lindbergh states, “Our salvation, and our only salvation, lies in controlling the arm of western science by the eternal truths of God.”

Igor I. Sikorsky, in The Invisible Encounter, goes back two thousand years for his solution. In a chapter called “Kingdoms of the World,” he quotes from the Gospel according to Matthew: “Again the devil taketh Him up into an exceeding high mountain, and sheweth Him all the kingdoms of the world, and the glory of them and saith unto Him. All these things will I give Thee, if thou wilt fall down and worship me.”

Mr. Sikorsky then goes on to say:

After drawing an apt parallel in current history, Mr. Sikorsky remarks, “If the world is to be controlled by spiritually dead men, it is as if an unconscious crew were placed at the controls of an airliner.”

Civilization stands today at the same crossroad. It need but accept the proffered leadership to commence an era of spiritual and material progress such as it has not yet known.

A single characteristic differentiates America from all other lands. Ours is a nation created by God-fearing men and women in search of liberty. Liberty is a force more explosive than atomic bombs. It created America. America stands today both as God’s living proof of the power of human freedom and as the negation of conflicting human doctrine.

As we have seen from the record, the airplane is one of the miraculous creations of liberty. No result of human foresight or planning, it is a Divine revelation. And though, as yet, largely prostituted to the folly of war, it embodies in itself the potential of world peace and freedom.

For always the hand on the stick has been the Hand of God. The Berlin Airlift, hastily improvised amid the rubble of war, contrived out of dire necessity, uncertainty, and fear, gave the world an American answer to that eternal question, “Am I my brother’s keeper?” The unequivocal answer came, not in a rain of destruction but on a flood of life-giving necessities.

“Yes, I am his keeper. I am the keeper of the peace!”

The triumph of the airlift was not one of men and machines but of the Christian spirit.