still being carried on in the press by Army and Navy over the problem
of “integration” and “unification.” Behind its façade, the battle
was still the same jurisdictional dispute that had agitated Admiral
Moffett and General Mitchell back in the early ’twenties. From the
industry point of view, the dogfight tended to neutralize our efforts
to develop a public understanding of air power in its broad aspects,
and the board of governors now asked me to confer with Army, Navy,
and Air Force with a view to relieving the situation.
Since the industry had always refrained from participation in the old
feud, this mission posed a problem. To me, the arguments against the
organization of a separate air force had always outweighed those for
it, but I now realized that I had been influenced against the project
by the Army’s insistence on trying to grab off naval aviation. The
record of what had happened in England under the Air Ministry had
always stood out in my mind. But now, with commercial air transport
coming of age, and with the brilliant record of military and naval
air transport in the war, I began to see the problem in a different
light. Air transport had opened up a new frontier. If the mission
of the ground forces was the defense of the land frontier, and the
mission of the seaborne forces was the defense of the sea frontier,
then, logically, the mission of the air force must be the defense of
the air frontier. The key to the problem was the advent of commercial
air transport.
Pursuing this idea further, I came to the conclusion that our
thinking had been confused by two unsound concepts. First, we had
tended to organize the military on the basis of types of weapons
or vehicles, and second, we had looked at the airplane as a weapon
instead of a vehicle. Clearly, if the ground, sea, and air forces
were to be held responsible for the defense of their frontiers, then
each must have the implements essential to the discharge of that
responsibility, and must have full authority over their design,
development, and use. The ground, sea, and air forces must each have
the aircraft necessary to the discharge of their responsibilities.
The air is an ocean that gives uninterrupted access to every corner
of the land and every reach of the sea. The air force is charged with
responsibility for keeping the airlanes open to aerial commerce and
should be provided with the ground or sea transport necessary to that
job, but by the same token the ground and sea forces must develop and
control all the instruments they require to perform their functions.
And aside from the sound basis for this concept that lies in logic,
the record is clear that it is equally sound in practice.
With this idea clarified in my own mind, I called on Vice Adm. de
Witt C. Ramsey, Vice Chief of Naval Operations, and later on Gen.
Carl Spaatz, Commander, United States Army Air Force, to sound them
out on this concept as a solution to the conflict. In the Navy, Vice
Adm. Forrest Sherman, when called in by Admiral Ramsey, pointed out
that this was the traditional position of the Navy but that they had
been forced to fight to retain their own aviation. However, Vice Adm.
Arthur Radford, the Deputy Chief of Naval Operations for Air, looked
at the matter somewhat differently. He saw the Naval Air Force as a
mobile air force, one, to quote Admiral Moffett, “able to go anywhere
on the backs of the fleet.” The Army Air Force, anchored as it was,
to the ground, was less mobile. From the Army’s point of view, the
vulnerability of the carrier to submarine attack compromised its
usefulness. And here, I found, lay the nubbin of a great conflict of
opinion. For my part, this difference of opinion was not one to be
resolved on theoretical grounds alone. Our whole experience showed
how dangerous it was to take decisions, especially those involving
the national security, on the basis of prejudice or partisanship. The
only safe course was to pursue both developments with an open mind
and be ready to adapt either or both in support of national policy.
General Spaatz, after our interesting discussion, suggested that I
call on Mr. Stuart Symington, Assistant Secretary of War for Air, and
lay these ideas before him, in the hope of contributing something to
the solution of the ancient dispute. I did so, but was disappointed.
Mr. Symington, recalling my old Navy background, apparently
recognized in me a trojan horse, a partisan bent on dividing the
Army and its Air Force so that the Navy might defeat both in detail.
Wholly unprepared for this novel reception, I was forced to retire in
disorder. As time passed, however, it became clear that my one-man
foray in the role of interservice peacemaking had not been without
result. After my visit with “Duke” Ramsey, Secretary Forrestal
abandoned his opposition to autonomy for the Air Force and supported
reorganization along lines recommended to him by Ferdinand Eberstadt.
That my visit may have helped tilt the scales in favor of unification
is indicated in a letter to me from Jim Forrestal dated August 4,
1947, in which he said, “Your thinking and mine has had an evolution
which has been more or less in phase.”
A few months later, prior to the publication of the report of the
Finletter Board, I discussed with the secretary some of the problems
he faced in his effort to get agreement among the military with
respect to a long-term program for aircraft procurement, development,
and research. He expressed deep concern over the implications of
the many major decisions he was called on to make in areas where no
precedent or experience existed and asked me if I were in a position
to help him.
To men like Jim Forrestal who understood the principles of war,
catch phrases like “strategic bombing” and “unification” aroused
deep concern. The first phrase overemphasized that doubtful tactic
of indiscriminate bombing of nonmilitary objectives, and obscured
the decisive character of such real strategic bombing as the assault
on the Ploesti oil fields which brought German transport to a
clanking halt. The second phrase screened a dangerous drift toward
such a national general staff as had cost Germany two wars. Earnest
students, fearing a dominant Air Force, leaned toward the opposite
idea that the Ground Forces, like the Navy, must control its own air
arm. Civilians like myself hoped to see such fundamental questions
of national policy resolved by an informed public opinion through an
air policy commission, but such was not to be. What might have been a
decisive moment in history proved but another victory for the Douhet
doctrine.
Even though Congress had supposedly integrated the armed forces by
the time the Finletter Commission convened, the interservice feud
raged worse than ever. The Board was unable to draw from Defense
Secretary Forrestal any concrete program for aircraft procurement;
the Chiefs of Staff had not been able to agree on one. Thus died the
first objective of the manufacturing industry’s air-power program.
However, when the Air Force took the stand before the Board, Stuart
Symington, now its secretary, moved swiftly and decisively to
the attack with a concrete recommendation for a “seventy group”
air force. Out of his forceful presentation came ultimately
appropriations by Congress which proved to be the salvation of the
aircraft manufacturing industry. Congress, fully alive to the role of
the aircraft industry in national security, was largely motivated by
considerations of preservation of the establishment.
The air-transport people, shoved into the background by superior
showmanship, made a sorry presentation. It had fine leadership
in Adm. Jerry Land, its president, and in two vice-presidents,
Bob Ramspeck and Milton Arnold. But its membership was torn by
dissension over that time-worn conflict, the “chosen instrument.”
President Juan Trippe, whose creation of the great Pan American
Airways system is one of the shining examples of inspired leadership
in private enterprise, favored the policy of a single overseas
American-flag airline, as the only means of competing with foreign,
government-owned, or subsidized air lines. Other operators strongly
opposed this concept as constituting a monopoly, and favored the
system of “reasonable regulation” as practiced with domestic airlines.
This fundamental issue, long bitterly fought behind the scenes, had
previously burst into the open at Chicago during the first meeting
of the International Civil Aviation Conference. The United States
State Department, ably represented by Adolphe Berle, had fought hard
for the “five freedoms,” a modern counterpart of the old doctrine
of freedom of the seas. Against the powerful opposition of certain
foreign governments, notably that of Great Britain, the United
States, weakened by the inner controversy, had been forced to settle
for three of its five freedoms. This same issue now confused the Air
Transport Association’s presentation before the Finletter Board. On
this rock, a second great objective of the inquiry, an investigation
of the reasonableness of regulation, was scuttled.
After exhaustive inquiry, the Finletter Board recommended numerous
improvements as to policy in its report “Survival in the Air Age.”
The Congressional Aviation Policy Board, after waiting for this
report, issued its findings on March 1, 1948, in a joint-committee
print entitled “National Aviation Policy.” But with echoes of
Hiroshima still ringing in the ears of the investigators, air force
displaced air commerce in top billing. The Congressional Board held
frankly that a strong, stable, and modern civil aviation component
is essential to air power for national security and that domestic
and foreign commerce of the United States should be promoted by
whatever means appear most practical until it reaches such stature in
passenger and cargo capacity as to constitute in a crisis an adequate
logistical arm of the national defense establishment. In other words,
air commerce exists to support the armed forces. We in the aircraft
industry had naïvely insisted that it must be the other way around.
With the Congressional Committee’s profound observation on the place
of civil air transport in air power, and its denial of the first
premise of the aircraft industry’s air-power policy, we lost our
third great objective.
While appropriations for military aircraft served momentarily
to preserve the manufacturing industry and keep the military
establishment from further deterioration, funds were forthcoming only
on a hand-to-mouth basis. So long as Stalin continued pressure on
Europe, Congress would appropriate; the moment he eased up, Congress
would revoke. The essential long-term continuing program so necessary
to technological progress went by the board. Even Representative
Carl Vinson, whose vision had built the Navy of World War II and
whose leadership had implemented the aviation programs, seemed unable
to formalize a program to put into effect this generally accepted
principle. Adding up the results of five years’ effort, the Aircraft
Industries Association had to admit failure to reach its goal. To
me the reason was abundantly clear. We had failed to enlist the
cooperation of the armed forces and airline transport operators under
the basic precept of cooperation in public policy and competition in
operations.
CHAPTER THIRTY-TWO
The Hand on the Stick
Early in 1949 the Interstate and Foreign Commerce Committee of
the Senate, under the chairmanship of Senator Edwin C. Johnson of
Colorado, began inquiring into the ills of the airline transport
industry. Senator Johnson had sat at my table at the dinner given by
the aircraft manufacturers to Congressional leaders in aviation in
Washington some five years earlier. A man well informed on the whole
subject, he now began directing an inquiry that promised to initiate
an important forward step in the formulation of American air policy.
Unlike the Finletter Commission and the Congressional Aviation Policy
Board, both of which had been held under the overcast produced by
the cold front of fear incident to the Berlin crisis, the Johnson
inquiry, following close on the brilliant success of the Berlin
Airlift, focused attention solely on airline transport.
Curiously enough, the underlying significance of the Berlin Airlift
was seldom touched upon in the flood of commentary that accompanied
the lifting of the blockade. While it was generally recognized as
a defeat for the Soviet, and served to ease the tensions and allay
the fears of war, the epochal character of the operation went
almost unrecognized. Paul Fisher, in the _Bee Hive_, house organ
for United Aircraft Corporation, in a brilliant article written on
the spot, hailed the victory of air freight. For the first time in
world history, commercial air transports—not combat aircraft—had
spearheaded United States foreign policy in a victorious action
against the swashbuckling Soviet. The very forces which had once
reduced Berlin to rubble with bombs had now saved the population from
starvation with air cargo.
Meanwhile, rapid progress in the development of guided missiles had
raised the question of the future of the airplane as a major weapon
carrier. Some strictly military manufacturers had already begun
giving serious consideration to the problem of whether to continue
to specialize in aircraft or to shift over to the development of
guided missiles. And once experimental aircraft had exceeded the
speed of sound, some began to wonder if that velocity might not one
day mark the division between combat aircraft and those designed for
commercial purposes. In other words the Johnson Committee began its
hearings against the background of a changing weather map.
Airline testimony before the Committee revealed some wide divisions
within the transport industry itself. Captain Eddie Rickenbacker
for example blamed the ills of the airlines on “too much coddling
and wet nursing,” while Carleton Putnam ascribed them to “slow
starvation.” The individual outlook reflected the color of the
financial statement. And the airline operators, in making their
“policy” recommendations, seldom came to grips with fundamentals but
focused their attentions on revisions of administrative procedure. In
this respect they reflected their long association with government
agencies to whom policy so often means the detailed management of
public affairs rather than a course of conduct. If the airline
operators’ recommendations seemed slanted toward measures calculated
to advance the special interests of their individual companies, the
fact was entirely understandable.
To us aircraft manufacturers who, five years earlier, had covenanted
to cooperate in the public interest where policy was concerned, while
continuing to compete with each other in operations to our own—and
likewise—the public interest, it appeared that a precarious existence
under government economic regulation had blinded the operators to
the broad public interest, and hence, to their own enlightened
self-interest. Leaning on government for a guarantee of their
economic security, they competed with each other for legislative
or administrative advantage, and primarily before Congressional
committees or government agencies. And if some of them made forays
into politics and acted more like rusty railroad executives than like
jet-propelled pioneers, it was in keeping with the principles under
which they operated.
Yet out of the confusion of conflicting testimony it was possible,
by keeping in mind certain fundamentals learned from the history of
aviation, to arrive at certain conclusions. The airline operators
for all their controversies were unanimous on at least two points:
they endorsed the principle of “reasonable regulation” upon which
the Civil Aeronautics Act had been founded, and they condemned the
administration of the Act by the Civil Aeronautics Board.
Yet in the face of the airlines’ unanimous approval of the Act,
an objective study of the testimony raises a serious question as
to its soundness. Sifting out the wheat from the chaff, one could
not help wondering whether Solomon himself, with the aid of all of
his wives, could have administered such a document. Providing as
it does for economic regulation of privately owned industries by
political appointees, the Act flies in the face of the fundamental
fact that politics and economics function under different basic
precepts; in the one the ballot box calls the turn, in the other
the cold arithmetic of an inescapable financial statement. But if
the airlines’ endorsement of “reasonable regulation” proved open
to question, the testimony before the Committee left no doubt that
recent regulation had been, in fact, wholly unreasonable.
It developed that the Civil Aeronautics Board had cut the mail
rates in 1945 to a point well below the actual cost of transporting
the mail. Furthermore it had authorized widespread duplication of
existing services and had subsidized these duplicating services in
competition with those already established. And when this action
resulted in crippling losses, the Board compounded its blunder
by making retroactive increases in mail which had the effect of
putting the whole rate structure on a cost-plus basis. Captain Eddie
Rickenbacker, of Eastern Airlines, voiced the position of the “Big
Four” when he said, “The confused state of mail rates destroys all
incentive for economy and efficiency—it discourages good management
and high performance. It puts a penalty on accomplishment, and
rewards the wasteful and inefficient.”
Another diagnosis of the airline ills was offered by Harold A. Jones,
a member of the Civil Aeronautics Board itself, when speaking before
the San Francisco Advertising Club. The airlines, he thought, were
ill from a “mysterious disease known as ‘subsiditis,’” which disease
he ranked “somewhere between bubonic plague and leprosy.” However
his shotgun diagnosis lacked clinical confirmation before the Senate
Committee by his boss, Joseph J. O’Connell, Jr., chairman of the
Civil Aeronautics Board.
“We are not in a position,” testified Mr. O’Connell, “to give an
accurate estimate as to the amount of the total air-mail pay bill
which represents fair compensation for the carriage of the mail, and
that portion that represents subsidy.”
Postmaster General Donaldson agreed with the Board chairman and
stated that the Post Office had long held the opinion that the mail
rate, if shorn of its subsidy elements, should not in any case be
greater than the passenger rate. On this basis the Post Office
Department would have been credited with approximately one-half its
present transportation expenditures inasmuch as passengers were
paying approximately 50 cents per ton mile, while the Post Office was
paying more than double that amount. This over-all figure, of course,
obscured the wide variations between the compensations paid airlines
thought to be self-sufficient and the much larger payments to those
known to be heavily subsidized.
In the absence of even the most elementary data it is difficult
to see how any regulation could be called reasonable or how the
government could support any subsidy charge either against the
industry as a whole or against any segment of it. The situation was
further obscured by the Postmaster General’s estimate of the total
domestic and foreign air-mail subsidy for this year.
Using the excess of the cost of the service to the Post Office
Department over the department’s air-mail revenues, he arrived at the
figure of $35,000,000. The cost to the department included of course
all expenses allocated to air mail including department overhead,
but it did not substantiate the reasonableness of any allocation.
Under questioning by one of the senators of the Committee, this all
inclusive definition of “subsidy” was discounted. Under business
accounting principles the figure might have been labeled “deficit”
and would have been charged against the Post Office rather than
pinned on the airlines as a “subsidy.” After all, the Post Office
Department overhead, an item perhaps more political than economic
in character, was not subject to airline control and was therefore
the responsibility of the department. A subsidy is a public grant or
subvention to aid an enterprise for the public convenience and not
the deficit of a government department.
In the face of such fuzzy accounting the figure is interesting
chiefly because of its small size. The Postmaster General, after
referring to statistical exhibits, reported the total deficit
incurred from the inauguration of the first air-mail service in 1918
up to 1948 as a little over three and one-half million dollars per
year for the thirty-year period and added, “Probably no investment
made by this government ever returned greater national benefits in
commercial and cultural progress, and national security. The over-all
value of air transportation system to the nation, particularly as an
arm of defense, has been incalculable.”
It is interesting in passing to compare the air-mail deficit with
others submitted by the Postmaster General: penny postcards,
$57,000,000; fourth-class mail, $82,000,000; third-class mail,
$139,000,000; and second-class mail, $237,000,000—a total of
$515,000,000. And so the air-mail deficit is but one of many and the
least of them all. On the basis of such approximations as have been
presented by government agencies, the airlines might have argued
that by absorbing a portion of the vast overhead of the Post Office
Department they were actually “subsidizing” other types of mail
service.
In light of the dearth of figures that would indicate an
approximation to the true air-mail subsidy, if any, Carleton
Putnam, of Chicago and Southern, made an exhaustive analysis of
government cost records, during which he checked his assumptions with
responsible persons in the government. This indicated that from the
inception of the air mail down to the year 1948, the postal revenues
had exceeded the added costs of air mail to the Post Office by some
$54,000,000. Summing up for the Committee, in a statement which was
not challenged by the government, he testified, “Hence the American
taxpayer has not only gained the greatest air transportation system
on earth ... plus an adjunct to the national defense which would
otherwise have cost him untold millions to provide—he is $54,000,000
ahead in cash as well.”
And after charging the airlines for their share of the cost of
building and maintaining the nation’s airways and airports, an
expenditure which would in any case have had to be made for the Army
and Navy, the airlines would still owe the taxpayer but $61,000,000,
all of which relates to maintaining the national airways system.
Furthermore this clear demonstration that the air mail has not been
subsidized comes in the face of grievous blunders by the Civil
Aeronautics Board in certifying uneconomic competing services at
extravagant mail rates.
One of the most extreme cases of this kind was reported by Captain
Eddie Rickenbacker. The Civil Aeronautics Board had in the past two
years certified twenty-one “feeder lines,” some of which had been
authorized to divert mail poundage from some stations which Eastern
had served for twenty years without subsidy, and to charge ten times
as much to transport the same mail between the same points. In
other words, the Civil Aeronautics Board, impelled by some sense of
political necessity to provide competition for the major airlines,
had in effect forced them to subsidize competition for themselves.
Meanwhile the government had paid such niggardly rates to others that
the stockholders of the enterprises had been forced to subsidize the
United States.
Such “reasonable” regulation had reduced the airlines from their once
proud state of self-sufficiency to a critical status, and at the very
moment when their futures should have looked the brightest.