Evening star., 1934-02-15
Farley Bares Reasons Behind Cancellation


some stock and q half interest in q
hangar at Tulsa, Okla, $l,399, 500,
thus providing money that American
could use to pay Halliburton. West
ern Air at this time was also flying
the Southern route from El Paso to
Los Angeles and it abandoned this
route in favor Of the other company
so that they could fly the entire
Southern route from Atlanta to Los
Angeles.
"The agreement between these
corporations was also q contingency.
1t was not to be effective unless the
Halliburton contract was awarded,
nor unless Transcontinental and
Western Air secured the route known
as the middle tranSC0ntlnental route
from New York by way of Pittsburgh,
st. Louis and thence 10 Los Angeles.
It was agreed that If Postmaster
General Brown did not give the
middle transcontinental route to
Transcontinental and Western Air,
the agreement was not to be effec-
tive. Postmaster General Brown also
awarded this contract to Transcon-
tinental and Western Air.
Excess Payment Noted.
Whereas under the bid for the
Southern route from Atlanta to Los
Angeles. American Always would
have been paid $3.338, ,675.6o; it was
actually paid s5.3O8, ,958.41, an ex-
cess over the actual bid of $780,
282.9l. During this period it was
carrying less than the minimum
the contract. There being only one
bid for the Southern route, 1t was
awarded at 100 per cent of the maxi
mum rate allowed by statute. The
middle transcontinental route (now
held by Transcontinental and West
ern Air) was advertised for bids.
There was one bid for "a per cent Of
the maximum rates and the high bid
Of Transcontinental and Western Air
was s7l5 per cent of the maximum
rates.
THE contract was awarded. ap-
parently without Justification, TO the
high bidder. which has been paid
from the starting date to November
so. 1893, the sum OF S7,578. .624 60.
II it had been let to the low bidder.
the amount paid would have been
| $4,974, 1862. There has. therefore,
been paid to the high bidder during
this period the sum of $2,603, ,937 SO
more than would have been paid If
the contract had been awarded to the
low bidder.
The contract in route No. 80 from
Pasco to Spokane TO Portland to Sc
attic. Wash, was awarded to Varney
Air Lines, Inc, owned by United Air
craft, on August 81, 1929, at a rate
OF cents per pound. This route was
consolidated with another route of
| United AirlineS July /. 1880, at n rate
of s2.43 per pound If the mail had
been carried under the original con-
/ tract, the cost to the department
would have been SCI. AZ. The esti-
mated amount paid subsequent to
consolidation was $l,0l9.500.7 .78. or an
excess on this route of the sum of
/ $685., ,908.36.
Sees s46,sOo, 900 Excess.
There has been paid to airmail
carriers for the fiscal years 1890, 1881.
| 1892, and up TO December 81, 1898.
more than S7s.o00.o0o. The airmail
carriers collectively have been given
/ contracts upon the basis of more than
/ twice as much space as was actually
needed or used. In sundry instances
this was done by a change Of the
terms actually advertised. II pay
ment had been made for the service
actually rendered the cost would have
been about 40 per cent Of the above
amount. The excess payments, dur
ing this period aggregate, therefore,
the sum Of about SAC, 10000
My investigation, based on the
records, books, papers, contracts and
documents in the department or In
troduced before your committee, or
taken from the files of Mr.. Mac
Cracken, shows that every corpora
ton whose contracts / annulled, or its
/ predecessor or its subsidiary corpora
/ ton, had representatives in the con-
/ ferences hereinbefore mentiond, which,
/ I am convinced, was contrary TO law
1T Is incontrovertible that the 1880
meeting was held, that it was confined
10 those who subsequently obtained
the contracts, that the provision Of
law calling for competition in bidding
was not carried out, and that all the
present domestic airmal carriers Sc
/ cured contracts based on conspiracy
or collusion, with the possible excep-
| ton of the National Parks AirWays