Evening star., 1934-03-30
A|RL|NES DELAY
C0NTRACTSSTAND
Question of Reorganizing to
Bid on Airmai| Under
Discussion.
nv tte Associated Press

whether they would reoreanize, pend
ing a glimpse of specifications for new
contracts.
There were arguments on both sides
of whether the airlines would shake
up their organizations and seek new
bids, or continue as they are without
airmail aid
The Post Office Department has
ruled that companies cannot bid until
they have ousted officers who par
ticipated in the 1880 conference on
which collusion charges are based and
until they have divorced themselves
from holding companies and affiliated
firms.
Some of the factors entering into
the arguments are:
Contracts to put the mail back in
commercial planes will be for tempo
rary routes marked out pending en-
actment of permanent airmail legis-
lation.
Large Owners Involved.
Many Of the officers involved are
large stock holders who might balk
at voting to eXpel themselves.
Discharge of the officials might be
interpreted as an admission of ad-
ministration charges the old contracts
were obtained through colusion.
Members of the Senate Post Office
Committee. which reported the per-
manent airmail bill yesterday, ex-
pressed the opinion, however. that
companies probably would elect to
make themselves definitely eligible
bidders by reorganizing.
Some committee members pointed
out the possibility that a company
making low bid, but denied a con-
tract because of past collusion charges,
could prevent an award of this con-
tract by getting a restraining order
putting decision on the alleged COL
luslon up to court.
Addition of two new aIrmail routes
was announced today by the Post
Office Department.
One runs from Chicago to New
Orleans by Peoria. Springfield, Ill.,;
st. Louis. Memphis and Jackson,
Mlss.-approXimate 920 miles.
The other runs from Cheyenne.
Wyo to Pueblo. Colo. by Denver and
colorado Springs, approximately POI
miles.
They will be submitted to private
companies for bidding
This brings the number proposed
ny the department to IT.
Specifications will be announced
shortly and the bids are to be re-
turnable within Is days.
Given Thirty Days.
The bidders will be required to take
over the mail within 80 days after the
4o-oay period has expired
This is part of the Governments
plan to return airmail transportation
to private companies.
The department said it expected a
report from the War Department
shortly on the costs of flying the mail.
The report Will be used as a guide in
passing on the bids which are being
solicited.
In the past about S1,l0O, 900 month
has been available for airmail pur-
poses. Possibility that some of the
routes proposed might have to be
pared to enable the department to
keep within this approximate figure
was pointed out.
The administrations revised perma-
rent airmail bill, heralded as providing
honest compensation for honest serv-
ice" formally was reported to the
Senate yesterday by Chairman Nc
Kellar of the Post Office Committee.
1t precipitated a further denuncia-
ton by Senator Fess. Republican, of
Ohio of cancellation of old contracts.
Fess defended the aviation COM
panies against charges of collusion in
obtaining contracts, and termed the
special Airmail Investigating Commit
tee little more than smearing
body"
The bill would provide for competi-
tive bidding on contracts. with COM
panies which participated in any COM
bination to prevent competitive bid
ding on former contracts barred.
No mention was made of represent
alton at the 1880 airmail conference.
although previous draft had barred
companies whose officers had attended
the meeting However, the clause
which requires companies to drop Off
GERS held to have engaged in collusive
practices remained.
Subject of Speculation.
BY dropping the clause concerning
the Washington conference. an at
tempt to establish fiat distinction be-
tween these eligible and those not
eligible was abandoned and the ques-
ton of how past collusion would be
determined remained a subject Of
speculation.
Members of the Post Office Commit
tee who had been critical of the ad-
miniStration bill expressed the belief
that if company, bidding low, was
denied contract on the ground OF
past collusion it could obtain a re-
straining order forcing the Postmaster
General to hold up contract awards
until the charge had been settled in
court.
They added that as a practical mat
ter aviation companies probably would
choose to effect reorganiZatiOns. which
would render them acceptable as
bidders
In the final draft "at least four
trdnScOntlnental routes would be au-
thorized. Subsidy would be dropped
at the end of four years. One pro-
vision would allow companies to sue
for cancellation of former contracts,
but the ban on intercorporate affilia-
tions remained rigid
The committee is of the opinion" ,"
Mcclellan said in presenting the re-
port, that the bill as reported will
correct the faults in the present sys-
tenn. provide a plan which will build
up the aviation industry and will
furnish a comprehensive and efficient
method of handling airmail, and that