American Airways.

How Washington is Curbing Pan American Airways.

Disclosure of "Scheme" Behind Occupation of Howland and Jarvis Islands.

By John Williams.

NOW that more flights have been made between New Zealand and Hawaii by the American international com pany, Pan American Airways System, it is time the record of trans-Pacific avi ation is kept straight by the telling of a story tucked away behind the scenes.

It reveals the long-sightedness of Uncle Sam’s watchdogs and why certain Paci fic Isles, mere dots so long out of pub lic mind, were hurriedly taken by Ame rica; it reveals, too, the tactics and technique of interlocked U.S. aviation in terests.

Maybe the story will have a moral for Australasian statesmen, if they will read close enough between the lines.

The story starts early in 1934. Cer tain directors of Pan American were be coming privately interested in trans pacific air routes. Outstanding among them was Donald W. Douglas, manufac turer of the aeroplanes which bear his name. Douglas and others on the Pan American board then had stock and in terests in other American air companies.

This was not unusual. There was so much overlapping of these interlocked interests that President Roosevelt “dis ciplined” the industry and the bringing to the light of astonishing facts caused the U.S. press to dub the story “the air mail scandal”. The scandal incidentally reyealed that directors hatched schemes privately among themselves and then sold out options to the companies concerned —an old, old capitalistic trick.

Well, in 1934, certain Pan-American stockholders as a sideline had a scheme for the Pacific so nicely worked out that it was set down on paper, and it is upon a copy of this Proposal or Scheme that this story is based. (It had hardly been compiled before it fell into the hands of U.S. Federal agents, always on the alert in the most unexpected places.)

Plan For Landplanes.

THE Scheme discussed two routes: One from San Francisco to Sydney, via Honolulu, Jarvis Island, Pago Pago, Suva, and Auckland; and the other from

Honolulu to Tokio, via Midway, Wake, and Marcus Islands, with a detour to Guam and Manila.

Landplanes, to be built by Douglas, were to be used, and the costs of the Scheme were based on the operation of Douglas landplanes, DC2’s to be exact. (All the successful Pacific flights up to that time had been in landplanes).

Because landplanes were to be used (the crews actually had been picked, on paper, for the surveys and service) is lands suitable for them had been chosen.

Hence Jarvis and Marcus. The men who compiled the Scheme, incidentally, ad mitted in writing that Jarvis belonged to Britain. Marcus belongs to Japan.

The Scheme went into great detail: Pro moters always are careful not to over look selling points. The Scheme, in a few words, was to be an American in vasion of British Colonial air routes, and, by getting in first, to establish monopo lies. It held out such promise that, to quote the Scheme’s own words: “Mr.

Douglas would personally be willing to

form a syndicate to carry out the sur veys and to pay all costs of same with the understanding that, for the loan of a DC2 for the work by Transcontinental and Western Air (a major company in terested in Douglas operations), they (TWA) would be given an option of tak ing over the work of the survey on com pletion at cost, plus a profit commensur ate with the initial risks and outlay in curred The Scheme foresaw that the aerial invasion of Australasia would be more complete by inviting U.S. steamship com panies, the Matson and Dollar interests, into the scheme. (To-day the Matson Line has $500,000 in the Pacific division of Pan-American.) It also foresaw even tual competition from Australian or Brit ish airlines.

So the Scheme said; “. . . The first company, however, to commence effici ent operations on the routes will have a distinct advantage over a later competi tor, by the leasing of the most advantage ous intermediate points. . . It would

seem logical to commence operations all the way to Australia and, when compe tition seems likely, then to assist a com petitor who will be interested in the pre vention of the duplication of ser vices. . .

The Scheme introduced an interesting personal touch: . The proposed syndicate consid ers that for his efforts, Harold Gatty be granted an interest in the syndicate.

Gatty is still an Australian citizen, ideal ly situated to render valuable assistance in the development of the American line and, through his strong political con nection in Australia, to later carry out the above programme”.

Whoever was responsible for the avi ation details of the Scheme did not sus pect actual Pacific conditions. One item alone reveals this. The Scheme claim ed: “No icing conditions exist anywhere along the proposed Pacific routes”. The man who wrote that should do a bit of flying over the Pacific and learn about Polar fronts, nightmare icing conditions that have been discovered by aviators al most on the Pacific equator, and espec ially between Hawaii and California.

That covers the highlights of thie Scheme, the final draft of which bears the date of June 26, 1934.

Check From Washington.

NOW let us see what happened to the Scheme. First of all, the U.S. Gov ernment agents got busy. U.S. de fence was the primary point. Army-navy officers ordered that Marcus Island would have to be excluded: it is Japanese-own ed, and too near vital outlying U.S. de fence points like Midway and Wake to be developed by a foreign power like Japan to aid private American interests. (The Scheme had unimaginatively said that Japan could be persuaded to oper ate in conjunction with the syndicate’s plans.) So Uncle Sam squashed the route from Wake to Tokio via Marcus.

Next, U.S. army forces were sent sec retly, in a U.S. coastguard cutter, to Jar vis, Howland, and Barker, the equatorial islands, which, last had been occupied by British interests. Uncle Sam was deter mined that such handy islands to the Ha waii defence scheme would be his. So in March, 1935, U.S. army units occu pied them.

However, this was done without the knowledge of the syndicate behind the trans-Pacific air Scheme. The syndicate, meanwhile, formed the Dr. Dana Coman Oceanographic Expedition in mid-1935 (he was with the First Byrd Antarctic Cir cus) and equipped the schooner “Kinka jou”, and parties of youths, with Pan- American Airways portable radio equip ment.

The scheme was that the youths would be placed on Jarvis, Baker and Howland in the name of Dr. Coman, acting as a

blind for the syndicate. Then the syn dicate was to obtain leases of the islands.

But Washington emphatically said “No!”

This angle gives the lie to the flaring newspaper stories about American “rac ing” Britain in the occupation of the is lands. Uncle Sam simply forestalled these certain U.S. citizens. (The full inner history of this dramatic occupa tion of the islands must be kept, for the present.) At this time, too, Pan-American was planning trans-Atlantic dreams, which crashed—temporarily, for political reasons —and so the Martin clippers which were being built for the Atlantic came in handy for the Pacific Scheme. Washington had notified the syndicate, incidentally, that it would not accept Douglas landplanes for the proposed Pacific Scheme. The full Pan-American company, too, got wind of the Pacific syndicate’s plans and as a result of financial moves behind the scenes the company acquired the syndi cate’s ideas. Pan-American, incidentally, has acquired a cut-and-dried technique for absorbing potential rivals, details of which are familiar to detached observers of the expansion of airlines about the Americas.

Change-Over To Plying-Boats.

FORCED to use flying-boats, Pan-Ame rican agents lorthwith poo-hooed the idea that the company had ever in tended to use Jarvis, Baker or Howland.

Government permission was obtained to use Pago Pago, and long-range flying boats meant that Suva could be cut out on the way to Auckland. Uncle Sam, too, stepped in and placed Midway and Wake Islands under navy jurisdiction, just to curb the private air dreams. And in Hawaii, Uncle Sam is creating a flying boat port which the company must use.

Uncle Sam believes in discipline.

John Bull’s family followed suit, with an Empire agreement which forestalled the company’s dream (see “P.1.M.”, Oct., 1937) of flying into Australia. More discipline!

The Scheme was being shot to pieces, although in 1935 the company’s agents were claiming that clippers would be fly ing into Auckland by 1936. Those were very confusing years. If the Scheme had been aired in 1934, all the Governments concerned might have got together and had clippers flying on the route long ago.

THAT is what is irritating official Wash ington: paid agents of a private en terprise attempting to commit foreign Governments like New Zealand to schemes which, would create dangerous monopolies and precedents. One result has been that, eventually, British planes •will duplicate the route from America to New Zealand; and this fact has greatly angered the Pan-American board, which dreamed of a fat monopoly.

In a few words, the 1934 Scheme un imaginatively took too much for granted, with the result that there is plenty more discipline going on behind the scenes in Washington to-day. It will dovetail to make still another story.

Meanwhile, the U.S. post-office has not granted a subsidy for the Auckland route.

Of course, Pan-American, including the men behind the 1934 Scheme, carry on with the route because they possess valu able “first in” assets on the route.

What have the Australasian Govern ments got to say about it, and about Em pire solidarity? At least they might try to be as alert as Uncle Sam! He’s a streamlined horse-trader!