Evening star., 1934-09-30
Policy Commission, !. c. c.
and Foreign Carrier
Probes Listed.
DOMESTIC FIRMS ASK
BOOST ON CONTRACTS
Post Office Counsel Says I. c. c.
Has Not Right to Revise
Pay Rates Upward.

AIIlcTlCdn alt u idIlSpOTJ 1dCeS
this week its most serious trial since
the cancellation last Winter of the
airmail contracts.
Tomorrow, while the Federal Ayia-
ton Commission continues its near
ings with view to fixing the perma-
nent air policy Of the Nation, the
Interstate Commerce Commission will
begin series of hearings on airmail
rates which are expected to develop
into a battle between The Post Office
Department and the Nations airmail
contractors over the competitive bid
ding method of awarding airmail
contracts.
Next Thursday, by order of Presi-
dent Roosevelt all holders of foreign
airmail and ocean mail contracts will
be required to appear before Fost-
master General Farley and postal cffi-
cials "to show cause why the contract
covering their respective mail routes
should not be modified or Cancelled"
13 Ask Higher Rates.
Thirteen of the 20 air transport
companies now holding domestic air
mail contracts, it is understood, nave
filed petitions with the Interstate
Commerce Commission asking that
their rates of Federal pay for carry
ing the mails be increased.
The petitions wilr be opposed ito
the last ditch" by Postmaster General
Farley and his subordinates, on the
ground that to decrease the rates
would, in effect, destroy the entire
principle of competitive bidding, which
is the heart of the new airmail law
and would work as grave injustice
to every airline which lost service when
the airmal system was thrown on
the open market last Spring.
1t is understood by postal officials
that number of the airlines. particu-
larly Errett L. Cords American Air
lines, which submitted the lowest bids
in airmail history, ranging down to
cents per mile, did so upon advice
OF counsel that the Interstate Com
merce Commission has the right un-
der the new airmail law to revise rates
upward as well as downward
Branch to Represent U. S.
Second Assistant General Harllee
Branch, in charge of airmail. who is
expected to lead the Governments
fight in person against any increase Of
the rates bid by the companies, is ex-
pected to contend that the I. C. C.
rate-making powers are confined
solely to revisions downward.
Branch contends that if the COM
panies bid for airmail in good faith,
their bids should represent the lowest
rate at which they feel they can afford
to carry the mail. If they bid below
that rate in the hope they would beat
out their competitors and then have
the I. G. c. increase their rate of pay.
disregarding their bids entirely, postal
officials feel the low bids to all in
tents and purposes will have been
fraudulent and the whole purpose of
the bidding will have been defeated.
Companies which submitted honest"
bids, only to lose to companies which
bid in services at rates which were
financially suicidal will be defrauded
morally if the low rates are increased.
postal officials are expected to contend.
Made Plea Last Week.
Branch, appearing before the Fed
eral Aviation Commission during the
past week, asked that body to aid the
Post Office Department in its fight
to preserve the competitive bidding
principle for airmail contracts.
These companies are supposed to
have submitted honest bids and they
should be held to the terms of their
bids" he told the commission.
Branch told the commission that if
the l. c. c. should order an increase
in the low airmail rates. the Post
Office Department will 60 to Congress
with request for amendment of the
airmail law to restrain the I. c. c.
from increasing the rates in the fu-
ture, at least for a period of two or
three years after the awarding of con-
tracts. This is necessary to insure
honest bidding, he said.
The Post Office Department feels
morally bound to fight for the prin-
ciple OF competitive bidding in the
light of President Roosevelt's action
last Winter in cancelling all exist
ing alrmail contracts, on the ground
there had been collusion and fraud
which prevented honest competitive
bidding
The I. C. C. hearings will begin at
10 am. tomorrow, probably in hear
ing room A, on the first floor of the
new I. G. c. Building Branch is
expected to be one of the first wit
nesses called. The hearings will con-
tinue for an indefinite period Rep
resentatives of every airmail con-
tract holder will be heard.
The Post Office Department, in
preparation for its hearings on the
proposed modification or cancellation
of foreign air and ocean mail con-
tracts, has summoned representatives
of 80 holders Of ocean mail contrac-
tors and four foreign airmail con-
tractors, chief among them the great
Pan-American Airways System, which
serves 80 American nations.
The officers of these companies
have been officially notified to "shcw
cause why the contract covering for
eign ocean Cor air) mail route held
by you, should not be modified or
cancelled" They have been notified
that such evidence as may then
seem pertinent concerning your con-