1st Session No. 751 PERMITTING THE FURTHER EXTENSION OF THE AIR MAIL SERVICE MAY 4, 1937.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed Mr. HILDEBRANDT, from the Committee on the Post Office and Post Roads, submitted the following REPORT [To accompany H. R. 6628] The Committee on the Post Office and Post Roads, having had under consideration the bill (H. R. 6628) to permit the further extension of the Air Mail Service, report the same back to the House with the recommendation that the bill do pass. The pending bill is recommended so as to authorize an increase of 3,000 route-miles and 7,000,000 airplane-miles annually. This recommendation is made because the Air Mail Service has been so developed that under the present limitations new routes and extensions are needed and additional schedules on some routes are needed. This additional service will not be commenced except in cases where it is found necessary in the public interest and where such additional service can be provided within the appropriation. Our committee has held hearings on this subject and been informed that the Post Office Department strongly urges the passage of the suggested legislation. COMPARISON WITH EXISTING LAW In compliance with paragraph 2a of rule XIII of the rules of the House of Representatives, changes in air-mail laws made by the bill H. R. 6628 are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, existing law in which no change is proposed is shown in roman): AIR MAIL ACT OF 1934, AS AMENDED FIRST SENTENCE OF SUBSECTION (F) OF SECTION 3 (U. S. C., 1934 ED., SUPP. II, TITLE 39, SEC. 469a (F)) (f) The Postmaster General shall not award_contracts for air-mail routes or extend such routes in excess of an aggregate of [thirty-two] thirty-five thousand miles, and shall not pay for air-mail transportation on such routes and extensions in excess of an annual aggregate of [forty-five] fifty-two million airplane-miles. GOVERNMENT INSURANCE MAY 4, 1937.-Committed to the Committee of the Whole House on theate of the Union and ordered to be printed Mr. COCHRAN, from the Committee on Expenditures in the Execu dive Departments, submitted the following REPORT [To accompany H. R. 6635] The Committee on Expenditures in the Executive Departments, to whom was referred the bill (H. R. 6635) to dispense with the necessity for insurance by the Government against loss or damage to valuables in shipment, and for other purposes, having considered same, report the bill back to the House without amendment and with the recommendation that it do pass. According to the Treasury Department the enactment of this legislation will save the Government between $200,000 and $400,000 a year. The bill was referred to the committee by the Speaker of the House, who received the following letter from the Acting Secretary of the Treasury: TREASURY DEPARTMENT, The SPEAKER OF THE HOUSE OF REPRESENTATIVES. SIR: There is transmitted herewith a proposed bill, to be known as the Government Losses in Shipment Act, designed to provide a feasible means of handling the problems of losses of Government property while in transit. It is estimated that this bill if enacted will save the Government annually between $200,000 and $400,000 which is now being paid to private insurance companies as insurance premiums. For many years it has been the practice to take out insurance with private companies in order to obtain protection against losses in transit on shipments of public moneys, securities, and other valuables. For the fiscal year 1937, as for some years prior thereto, such insurance was taken out on behalf of the United States, the Secretary of the Treasury, the Treasurer, the Comptroller of the Currency, the Commissioner and collectors, deputy collectors, and other field officers of Internal Revenue, similar officers of Customs, the Director and various other officers of the mints and assay offices, various disbursing officers, the Secretary of the Interior and various officers in that department, the Secretary of State, the Administrator and other officers of the Resettlement Administration, the Federal Reserve banks, agents, and branches acting as fiscal agents or depositaries of the United States, the Farm Credit Administration and various officers and banks under its jurisH. Repts., 75-1, vol. 2-10 diction, the Federal Home Loan Bank Board and related officers and banks, the Home Owners' Loan Corporation and its affiliates, the Federal Housing Administrator, the Federal Savings and Loan Insurance Corporation, the Federal Emergency Administration of Public Works, the Federal Emergency Administrator of Public Works, the War Finance Corporation, the Reconstruction Finance Corporation and its agencies, and the Export-Import Bank of Washington. During the past 15 years the liability assumed was approximately $70,000,000,000, for which the Government paid out in premiums $3,500,000. On this, however, the total losses paid by the insurance companies amounted only to $200,000. Within recent years no large losses have been sustained and in fact losses reported are usually in large part recovered through the efforts of the Government's own agencies. Moreover, the greater part of such shipments are handled by the Government's own facilities, such as the Post Office, special messengers, armed convoys, etc. For the fiscal year 1935 the volume of insurance amounted to $12,000,000,000, at a cost of $370,000 in premiums, and the risk was underwritten by 15 direct writing companies and several reinsuring companies. The total assets of the direct writing companies were $496,000,000 as of December 31, 1934. The maximum risk on the policy does not exceed $10,000,000 in any one shipment to one addressee at one time by one shipper; any loss in excess has to be borne by the Government. It will be seen that as between the United States and these companies there can be no doubt that the risks would be better borne by the former than by the latter. This Department views this situation as undesirable. The Government does not insure its buildings against fire or its naval vessels against marine disaster. The theory of insurance is inapplicable to losses to the Government. Insurance is, in essence, a device whereby persons with limited resources pool these resources in order to be better able to survive losses which would otherwise be too great for them to bear. The Government, obviously, is not in a comparable situation. The difficulty, however, has been that it is necessary for the efficient operation of the administrative machinery of the Government that in case of loss there should be available a means of prompt duplication or reimbursement, and the existing appropriation machinery has been inadequate to that end. It is therefore proposed to discontinue the insurance system completely and to substitute therefor two methods of prompt duplication or reimbursement for such losses: The one provides for a credit to accountable officers where that is feasible without loss to the Government, and the other sets up a revolving fund under the control of the Secretary of the Treasury to cover losses not reimbursable by the credit device. The fund is to commence with an appropriation of $500,000, but to this amount there is to be added annually $200,000 until in 10 years the fund reaches $2,500,000; $200,000 is, approximately, the equivalent of the total insurance premiums that have been paid annually in recent years. Should the sum of $2,500,000 prove to be inadequate, or should there in any particular year before that total sum is reached be a need for additional appropriations, provision is made therefor. In view, however, of the necessity to reduce the risks of loss that might be inherent in disorganized shipments by various governmental officers it is proposed that regulations shall be promulgated by the Postmaster General with the approval of the President and that reimbursement shall be allowed only when shipment has been made pursuant to such regulations. In view of the fact that wholly owned corporations do not operate on annual appropriations but are intended by Congress to operate on the original capital contributed by the Government and the profits made thereon, provision is made for the reimbursement to the fund by such wholly owned corporations of amounts paid to them on account of losses. The rate of reimbursement is fixed at between 21⁄2 and 5 percent in the discretion of the Secretary of the Treasury, unless the corporation and the Secretary of the Treasury shall agree otherwise. The rate of reimbursement is thus one which should not prove excessively burdensome to the corporation while at the same time the fund will generally be reimbursed over a period between 20 and 40 years. However, should the corporation so desire it may accelerate reimbursement by making payment in larger installments. The administration of the fund is placed in the Secretary of the Treasury in view of the Treasury's long experience in the handling of the annual insurance contract not only on behalf of itself but also on behalf of all Government departments and agencies. The Postmaster General is given the function of prescribing regulations as to shipments, with the approval of the President, because the Post Office seems the most suited of the Government departments to coordinate shipments so that risks of loss may be minimized. In addition to the foregoing, the proposed bill also contains two sections (9 and 10) relating respectively to relief on account of lost, stolen, and destroyed bonds |