Evening star., 1934-02-15

BY the Associated Press.
TIME text of Postmaster General
Farleys letter to Senator
Black, chairman of the Mail
Il Investigating Committee. ex-
planning the cancellation of
all airmail contracts, follows:
MY Dear Senator Black:
II have issued an order annuling
all domestic airmail contracts, and
believing that your committee would
be interested in knowing the reasons
therefore, submit the following:
These contracts were annuled
only after a most thorough investiga-
tion covering period Of several
| months. Moreover, had the benefit
Of the opinion Of the solicitor for
this department, whose conclusions of
law were personally examined and ap-
proved by the Attorney General.
Charge Few Favored.
II do not believe Congress in
tended that the airmail appropria-
ton should be expended for the bene-
fit of a few favored corporations,
which could use the funds as the basis
Of wild stock promotions resulting in
profits OF tens OF millions OF dollars
! to promoters who invested little or
no capital. Nor was it intended to be
used by great corporations as club
to force competitors out Of business
and into bankruptcy. Nor should
appropriations and contracts be given
to few favored corporations by con-
n1vance and agreement.
AT the time of the passage of the
Waures act in 1880. there were many
reasonably well established air trans
port passenger lines desirous Of OBJ
tanning airmail contracts. which re-
ceived no consideration whatever.
There we're several short, discon-
nected airmail lines. which were OPP
Grating under contracts executed dur
ing the latter part of 1925 and the
early part of 1926. Five of these con-
tracts were executed November 7, 1925,
and would have expired by operation
of law November 7. 1929, except for
an order issued on November 6, 1929,
, by Second Assistant Postmaster Gen
eral w. Irving Glover extending these
contracts for a period of six months
so as 10 make them terminate May
I, 1880.
II am satisfied that the extension
Of these contracts for said period of
six months was illegal There was
no attempt whatever to readvertise
said routes or re-award them, or en-
ergency requiring them to be let
without competitive bidding, and the
course pursued was part Of the con-
| Spiracy hereinafter mentioned. Ex-
tensions of these contracts for a Pc
| riod of 10 years, under the so-called
certificate" method, we're arbitrarily
made by Postmaster General Brown
on May 3, 1880.
Says Lines Were Built Up.
Then Postmaster General Brown
proceeded to build up, by so-called
extensions" of routes, part of the
| system of the United Aircraft and
Transport Corporation. and the great
er part of the American Airways and
| the TranSeontinental and Western Air
systems. This means, in simple terms,
that if one of these companies had a
contract for part of a through route,
| a tranScontinental system could be
built on that short line.
To illustrate, if one had a route
| from Boston to New York, it could be
extended from city to city until 1t
reached the Pacific Coast without
| competitive bidding. These great sys-
TENS were built in this manner.
Il am convinced that before any of
the airmail contracts were awarded,
those interested held meetings for the
purpose of dividing territory and con-
tracts among themselves Indeed, cer-
tain air transport operators, who had
not been invited to attend we're re-
fused admission, when they attempted
to gain entrance.
MacCracken Was Chairman.
"These conferences we're held dur
ing May and June, 1880. Some Of the
meetings were held in the Post Office
Department and were attended by
Postmaster General Brown and Second
Assistant w. Irving Glover. Mr.. Will
liam P. MacCracken. jr., OF the
Transcontinental Air Transport (now
a part of the North American Aviation
Corporation), was named as chairman
OF these meetings, and the minutes
prepared by himself list the following
as present.
United Airlines, Paul Henderson.
| Phil johnson, George Wheat, Ray Ire
| land and James Murray; Transconti-
mental Air Transport, Dan Schaeffer.
Jack Maddux, George Cuthell and
Allen J. Furlow; Western Air Express.
Harris Hanshue and James Woolley;
National Parks Airways, Alfred Frank;
Varney Airlines CUnited), Louis
Mueller; Aviation Corporation, F. C.
Coburn and Hainer Hinshaw; S. A. F.
Express (Aviation), Earle Halliburton,
William Mayo and Ted Clark: Eastern
Air Transport North American)
Thomas Doe, Harold Elliott and John
K. Ottley, jr.; Thompson Aeronautical
(Unite6, Tex Marshall and William
I. Denning; United States Airways,
Lew Holland and N. A. LetSon: Pitts
Durgh Aviation Industries, Dick Rob-
bins and George r. Ham; Clifford
Ball, Inc, Clifford Ball; Curtiss Fly
ing Service, Frank Russell and Bur-
dett Wright, and Delta Air Service,
E. V. Moore and Mr.. Woolman.
"These meetings resulted in a divi-
sion of all air mail contracts of the
United States and the practical