The certification of air routes under provisions of the Civil Aeronautics Act of 1938, as amended, is not justified in most of the areas herein considered because, when restricted to air mail bearing the air-mail postage rate, the volume would not be sufficient to warrant the high cost of conventional certified service. On the other hand, if the service were obtained for all classes of mail at a competitive contract rate, the cost might be reasonable and fully warranted. Aside from the greatly improved mail service under contemplation, in some instances the cost of service by light aircraft flying the direct route of the skyways might compare advantageously with the cost of slower surface transportation plying tortuous and circuitous routes. The limitation of compensation to 20 cents per airplane-mile should be eliminated. This rate, established in 1938, is out of line with present-day costs, and precludes the Postmaster General from availing the postal service of this modern medium of transportation regardless of the postal needs of an area of difficult terrain. The limitation to five on the number of contracts which may be awarded should be eliminated. Doubt has arisen as to the authority of the Postmaster General to award any further contracts under this limitation inasmuch as this limit has already been reached in the periodical readvertisement of a single route. Starroute service by aircraft, if justified at all, should be available wherever required regardless of the number of contracts awarded. The contract arrangement would be especially advantageous in cases where requirement exists for transportation of mail only, including all classes of mail, by aircraft and where there is little or no requirement for passenger service. In such cases the star-route method of providing mail service by aircraft would have the advantages of economy and flexibility. It could be inaugurated where needed without the costly and involved procedures for certified carriers, and could be discontinued at the discretion of the Postmaster General. In cases where the service required is purely for mail, the contract method might be better for all concerned, where there would be no conflict with or penetration of the functions of the Civil Aeronautics Board. The amendment herein proposed would enable the Postmaster General to make full use of the inherent advantages of air transportation wherever the needs of the postal service require, on the basis of bids which would be determined to be reasonable as a prerequisite to award of contract. The Bureau of the Budget has advised this Department that there would be no objection to the presentation of this proposal to the Congress for its consideration. Sincerely yours, J. M. DONALdson, The Civil Aeronautics Board has no objection to this legislation. CHANGES IN EXISTING LAW In compliance with paragraph 2a of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill, as introduced, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, existing law in which no change is proposed is shown in roman): ACT OF APRIL 15, 1938 [SEC. 6. Whenever he shall find it to be in the public interest, because of the nature of the terrain and the impracticability of surface transportation, the Postmaster General may award contracts for the transportation of any or all classes of mail by airplane upon star routes not over two hundred airplane-miles in length by direct flight between termini, payment for such service to be made from the appropriation for inland transportation by star routes: Provided, That all laws and regulations not in conflict with this section governing star routes shall be applicable to contracts made under the authority of this section: Provided further, That the base rate of pay which may be allowed in awarding such contracts shall not exceed 20 cents per airplane-mile for a load not exceeding two hundred and fifty pounds of mail, and not exceeding 1 cent per airplane-mile for each twenty pounds of mail carried in excess of the two hundred and fifty-pound limit, except that in the discretion of the Postmaster General a higher base rate of pay may be allowed in awarding contract for carrying mail over circuitous routes of less than seventy-five miles in length: And provided further, That the provisions of the Act of June 12, 1934 (48 Stat. 933), as amended by the Act of August 14, 1935 (49 Stat. 614), shall not apply to the transportation of mail under this section: And provided further, That the Postmaster General shall not award more than five contracts for the transportation of mail under the authority of this section.] SEC. 6. Whenever he shall find it to be in the public interest, because of the nature of the terrain, or the impracticability or inadequacy of surface transportation, and where the cost thereof is reasonably compatible with the service to be p. ovided, the Postmaster General may award contracts for the transportation by aircraft upon star routes of any or all classes of mail (including but not limited to air mail and air parcel post), payment for such service to be made from the appropriation for inland transportation by star routes: Provided, That all laws and regulations not in conflict with this section governing star routes shall be applicable to contracts made under the authority of this section: Provided further, That the provisions of title IV of the Civil Aeronautics Act of 1938, approved June 23, 1938 (52 Stat. 973), as amended, shall not apply to the transportation of mail under this section: Provided further, That prior to advertising for bids for the transportation of mail by aircraft on any star route, except as authorized by the Act of October 14, 1940 (54 Stat. 1175), entitled "An Act authorizing special arrangements in the transportation of mail within the Territory of Alaska" the Postmaster General (1) shall publish in the Federal Register a notice describing the proposed route, and (2) after such publication, shall obtain from the Civil Aeronautics Board a certification that the proposed route does not conflict with the development of air transportation as contemplated under the Civil Aeronautics Act of 1938, as amended: Provided further, That any such contract made under authority of this section shall be canceled upon the issuance by the Civil Aeronautics Board of an authorization under title IV of the Civil Aeronautics Act of 1938, as amended, to any air carrier to engage in the transportation of mail by aircraft between any of the points named in such contract: And provided further, That no bid for a contract under this section shall be considered unless the bidder (1) if an individual, is a resident of a State within which. or of a State adjoining a State within which, one or more points to be served under such proposed contract are located; or (2) if a corporation, company, association, partnership, or firm, is actually engaged in business in a State within which, or in a State adjoining a State within which, one or more points to be served under such proposed contract are located. As used in this section, the term "State" includes the several States, the Territories of Alaska and Hawaii, and the District of Columbia. CONTINUING THE AUTHORITY OF THE MARITIME COMMISSION TO SELL, CHARTER, AND OPERATE VESSELS May 11, 1949.—Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. HART, from the Committee on Merchant Marine and Fisheries, submitted the following REPORT [To accompany H. J. Res. 235] The Committee on Merchant Marine and Fisheries, to whom was referred the joint resolution (H. J. Res. 235) to continue the authority of the Maritime Commission to sell, charter, and operate vessels, and for other purposes, having considered the same, report favorably thereon with amendment and recommend that the joint resolution do pass. The amendment is as follows: Page 1, after line 9, add the following new section: SEC. 2. Any charter in effect at the time of the enactment of this joint resolution shall be terminated by the Commission at the earliest date permitted under the terms thereof after June 30, 1949, unless the charterer enters into an agreement with the Commission that each vessel delivered or retained under such charter shall not be redelivered to the Commission, at the option of the charterer, within less than six months for liner services, except coastwise services, or four months for bulk services and coastwise services, or for the remainder of the period ending June 30, 1950, if such period is less than said periods of six or four months, respectively. No charter shall be made by the Commission under authority of this joint resolution or after the date of enactment thereof unless the charterer enters into an agreement with the Commission that each vessel delivered or retained under the terms of such charter shall not be redelivered to the Commission, at the option of the charterer, within less than six months for liner services, except coast wise services, or four months for bulk services and coastwise services, or for the remainder of the period ending June 30, 1950, if such period is less than said periods of said six and four months, respectively; provided, however, that no vessel so chartered may begin a new voyage after June 30, 1950. The purpose of this resolution is to extend until June 30, 1950, the powers and authority of the United States Maritime Commission to sell, charter, and operate merchant vessels, which authority was heretofore extended to June 30, 1949, by Public Law 12, Eighty-first Congress, approved February 28, 1949. In addition, section 1 also has the effect of extending the authority of the United States Coast Guard to grant waivers of inspection and navigation laws for vessels under American registry until the same date. Moreover, the proviso which was added at the end of subparagraph (b) of Public Law 423, Eightieth Congress, by Public Law 12, Eighty-first Congress, to provide for the chartering of vessels for use in the interisland commerce of the Philippines, in accordance with the Philippine Rehabilitation Act of April 30, 1946, continues in full force and effect. Your committee had before it several proposed resolutions and other suggestions prescribing some form of limitation or restrictions on the use of vessels chartered from the Maritime Commission. The purpose of these proposals was to hasten as much as possible the return of the American merchant marine to full private ownership and private operation. Your committee has noted, however, that the number of Maritime Commission-owned vessels has decreased substantially since 1946, so that there are now only 368 war-built vessels chartered by the Maritime Commission pursuant to the Merchant Ship Sales Act of 1946, as amended. The distribution of chartered vessels as of April 15, 1949, is as follows: Total number of vessels under charter_____ 1 Employed principally in the transportation of coal and grain to recipient nations under ECA. Consistent with the policy of the Congress, the Maritime Commission is not chartering any of its vessels so long as there is a privately owned vessel on the market awaiting business. The committee approves of this policy of the Maritime Commission and strongly recommends its continuance. However, all of the available information indicates that there is not a sufficient number of privately owned vessels now available to transport the current foreign and domestic commerce of the United States, now being transported with the aid of the 368 vessels chartered from the Commission. Furthermore, the withdrawal as of June 30, 1949, of the 311 chartered ships which are engaged in foreign commerce would undoubtedly create such a shortage of ships that freight rates would rise on foreign-flag vessels as well as United States flag vessels. Such a situation would be most unfortunate at a time when it is expected that additional United States-flag dry-cargo vessels will be required under private operation to meet the 50-percent minimum participation in the transportation of ECA cargoes, which has been assured under the newly announced policies of the ECA. Also it appears essential that the vessels now chartered to provide adequate service to Alaska and in the coastwise and intercoastal trades of the United States should be continued, since the operators in these trades do not at the present time own sufficient vessels of suitable types to successfully reestablish adequate operation and service of privately owned vessels in such trades. In view of the foregoing and other persuasive considerations, your committee is of the opinion that the Commission's charter, sale, and operating authority under the Merchant Ship Sales Act of 1946, as amended, should once more be extended. On the other hand, it is felt that despite the prospect of a continuing need for chartered vessels for another year, the foreign and domestic shipping situation has stabilized sufficiently to permit the imposition of some restrictions on the Commission's charter authority. Accordingly, section 2 of this resolution provides that any charter in effect at the time of the enactment of the resolution shall be terminated by the Commission at the earliest date permitted under the terms thereof after June 30, 1949, unless the charterer enters into an agreement with the Commission that each vessel delivered or retained under such charter shall not be redelivered to the Commission, at the option of the charterer, within less than 6 months for liner services, except coastwise services, or 4 months for bulk services and coastwise services, or for the remainder of the period ending June 30, 1950, if such period is less than said periods of 6 and 4 months, respectively. Similar provision is made. with respect to any new charters made after the enactment of the resolution. Section 2 also provides that no chartered vessels affected by the provisions of the resolution may begin a new voyage after June 30, 1950. It is intended by this section to assure operators of privately owned United States-flag vessels of a minimum of competition from Government-owned chartered vessels and at the same time keep available for private operation sufficient Government-owned tonnage, to the extent found necessary, in order to provide transportation at reasonable rates for the foreign and domestic commerce of the United States and to meet the needs of the coastwise trades, including the Alaska trade, while they are attempting, in the transition period, to reestablish adequate service therein. Subject to the particular limitations prescribed in section 2 of this resolution it is contemplated that the Maritime Commission will continue to sell, charter, and operate ships in accordance with existing procedures and without any change in its present policies. Various proposals were suggested to your committee to establish ratios of chartered vessels to be allocated on the basis of the number of privately owned vessels of a particular operator. These suggestions were considered by your committee but it was felt that except for the restriction of minimum charter periods no other limitations or changes should be made which would alter the policies and procedures presently pursued by the Commission. The statement of the Maritime Commission relative to the extension of charter, sales, and operating authority under the Merchant Ship Sales Act of 1946, as amended, is incorporated in the following letters of May 2, 1949, from the Vice Chairman of the Maritime Commission to the chairman of this committee: Hon. S. O. BLAND, UNITED STATES MARITIME COMMISSION, Chairman. Committee on Merchant Marine and Fisheries, House of Representatives. MY DEAR CONGRESSMAN BLAND: In reference to our conference with you in your office on April 26, 1949, you requested certain information regarding the size of the United States flag merchant fleet as of July 1, 1946, showing the number of vessels owned by the Maritime Commission that were in operation under |