Bids Opened

Up to a fifth-floor office in Washington's old Post Office Department Building all one day last week trooped hopeful airline operators with sealed bids for the nation's airmail. After a two-month cycle of fury and futility they thought they were about to get back what a nervous Government had snatched from them. When the deadline for receiving bids came and went, an underling scooped up 45 thick envelopes, tied them into a bundle, stuffed them into a vault.

Next day, just before noon, the precious package was carried downstairs to the large, unlovely office of the Superintendent of Airmail. There, tense and expectant, some 200 airline executives, newshawks and Government officials jammed around a long table. At the head sat baldish Postmaster General Farley slightly ill-at-ease, surrounded by a pack of assistants. Spectators mounted chairs and desks to see and hear better.

Promptly at noon a postal official slit open the first bid and read it aloud. Others followed, to the scratch of an accountant's pen writing down their contents. Most of the old-line companies blossomed out with a minor change in name--part of the Farley program for corporate reorganization. Eastern Air Transport became Eastern Air Lines. Transcontinental & Western Air put three new periods into its abbreviated title. American Airways switched to American Air Lines. Only Western Air Express made a major change by becoming General Air Lines. Because its previous contracts were held under the names of its operating subsidiaries, only United Air Lines bid under its old corporate title.

But altogether new was the character of bids offered by these oldtime operators for mail contracts. The crowd broke into a long whistle of surprise when bids of 17 1/2-c- and 19-c- per airplane mile were read off for routes on which "General" Farley had specified a maximum of 45-c-. The companies, it seemed, were ready to cut their throats and bleed to financial death rather than die of slow starvation without any airmail contracts.

Loudest whistles of all came from the crowd when the bids of American Air Lines' inscrutable Errett Lobban Cord were read off. On the set-up presented by Mr. Farley, Errett Cord had been expected to underbid the field, capture a virtual monopoly of U. S. airmail. Instead, he bid so close to the maximum on eight routes, that he was heavily underbid on all but the Newark-Boston run. He stood to lose even his old southern transcontinental route, having overbid his nearest competitor for half the run by 10-c-. Obviously fear of Cord competition had caused other lines to hack down their rates to a level where they could not possibly make their operating expenses.

Likeliest explanations of Cord's high bids: 1) loud cries of "Wolf" had put him on his best behavior; 2) possibility that no contracts would be awarded under Mr. Farley's temporary (three-month) plan because of the imminence of legislation providing for one-year contracts (with an entirely new set of bids) as suggested by President Roosevelt and reported favorably by the House Post Office Committee last week.

Of all the major companies, United Air Lines* came out of the bidding most favorably. Uncontested was its 38-c- bid for its old northern transcontinental route. Likewise uncontested were the bids for its old Pacific Coast routes.

Besides going through the motions of corporate reorganization, each major bidder reshuffled its personnel and de-titled those officials who participated in the airmail "spoils conference" of 1930. United's President Philip G. Johnson stepped down and out and Vice President W. A. Patterson stepped up and in. New president of Eastern Air, T. W. A. and General Air Lines was North American Aviation's President Ernest Robert Breech. Dropped from the lists were famed Pioneers Thomas B. Doe (E. A. T.), Richard W. Robbins (T. W. A.) and Harris M. Hanshue (Western Air).

If "General" Farley appeared relieved last week at the prospective return of the airmail to its old status, he was far from conceding that the Administration had erred. In Newark, whither he went to lay the cornerstone of a new $6,000,000 post office, he repeated his charge that canceled contracts had been "conceived and executed by fraud and collusion," and loudly decried "hostile propaganda" and "political sniping."

Last week the Senate Committee investigation of the airmail passed into the "minority phase" with Senator Austin, Vermont Republican, in command. Called to the witness stand was big, jovial, double-chinned First Assistant Postmaster General William Washington Howes who testified that he had been "proud" of the service under private contractors, that cancellation had been actively pushed by lobbyists who "came in hosts, like a cloud of grasshoppers." Astute questioning by Senator Austin forced him to admit that at a meeting with airmail contractors last autumn--a meeting not unlike the "spoils conferences" which cost them their contracts--he had sought their "advice and consent" before cutting appropriations under a reduced budget. It was, he thought, the "wise and decent thing to do." Of mail operations under the Brown regime he said: "It was a very high record of service and I wanted to continue it."

Onetime South Dakota lawyer and Democratic National Committeeman, William Washington Howes came into the Farley official family as Second Assistant Postmaster General in charge of airmail. When First Assistant Postmaster General Joseph C. O'Mahoney resigned to become U. S. Senator from Wyoming, indications were that his place would go to an outsider. Then William Washington Howes made a speech at Newburgh, N. Y., in which he hailed James Aloysius Farley as "the greatest postmaster general since Benjamin Franklin." Short time later William Washington Howes succeeded Joseph C. O'Mahoney.*

Only less sensational than the Howes testimony was the testimony that the "friendly cooperation" of Mark L. Requa, Republican National Committeeman from California and close friend of Herbert Hoover, had been enlisted by Cord's Century Air Lines in 1931 in a campaign to obtain airmail contracts. Placed in evidence was a letter in which Cord had written to his able First Lieutenant Lucius Bass Manning: "Requa seems to think ... it is a cinch that Postmaster General Brown is going to bow to him and definitely says he has the power and will call Brown on the carpet. . . ."

* United's four subsidiaries' last week brought suit in the District of Columbia Supreme Court under the "due process" clause of the Constitution to have cancellation of their old contracts annulled and damages awarded. As the U. S. Government may not be sued without its consent, able Attorney William Joseph ("Wild Bill") Donovan directed the suits against Mr. Farley as an individual, not as Postmaster General. Said Post Office Department Solicitor Karl A. Crowley: "A weak effort to evade the law. .

* Fourth Assistant Postmaster General Sillirrmn Evans, whose name has frequently been linked with Errett Lobban Cord's because of his onetime position as vice president of American Airways, resigned last week to become vice president of Maryland Casualty Co.

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