Senate Select Committee on Presidential Campaign Activities, November 15, 1973. Testimony of George Spater
Senate Select Committee on Presidential Campaign Activities, November 15, 1973. Testimony of George Spater
Senate Select Committee on Presidential Campaign Activities, November 15, 1973. Testimony of George Spater, American Airlines. Lloyd Cutler is his attorney Washington, DC
Senate Select Committee on Presidential Campaign Activities, November 15, 1973. Testimony of George Spater
Senator Sam Ervin (D - North Carolina). Isn t it fair to say that if there s any industry in the United States which is peculiarly susceptible to express or implied pressures from people exercising governmental powers it s the airlines? George Spater, American Airlines. Yes, Sir. Senator Sam Ervin (D - North Carolina). Is it an exaggeration to say that the federal government through the various agencies including the White House has virtually the power by their decisions one way or another to determine the economic life or the economic death of an airline? George Spater, American Airlines. Absolutely right Sir.
Senate Select Committee on Presidential Campaign Activities, November 15, 1973. Testimony of George Spater
Senator Sam Ervin (D - North Carolina). The inner supplement to a memorandum that was supplied by Mr. Cutler at the request of the Committee it is generally recognized that American Airlines is a member of an industry subject comprehensive federal regulation. At any particular time, officials of American Airlines estimate that the company may be directly interested in approximately twenty or so important matters pending before the civil aeronautics board or other federal agencies. To give the committee an idea of some of the number and range of the regulatory matters before the CAB, attached is a recent list of matters in front of the CAB in which American Airlines is participating. The most important matters before the CAB during the period from 1969 to 1972 include the following. Implementation of the award to American of a route to Australia. Second, the proposed American Airlines - Western Airlines merger. Third, the general investigation of passenger fares. Fourth, the mutual aid agreements among the airlines. Fifth, the capacity limitation agreements among the carriers. And sixth, investigations in proposed regulations relative to commission and other payment to ticket agent tour packages. In addition the company had several applications pending through this period to serve destinations in the Orient, and Europe and provide service to important markets in the United States such as Miami, Des Moines, and Omaha. Is that a correct statement? George Spater, American Airlines. That is a correct statement. Senator Sam Ervin (D - North Carolina). This statement, I ve already put in the record the Economic Regulations Department exhibit, and I will put this statement in the record and have it marked as exhibit.
Senate Select Committee on Presidential Campaign Activities, November 15, 1973. Testimony of George Spater
Senator Sam Ervin (D - North Carolina). American was very much interested in continuation of a merger agreement it had with Western Airlines at the time of this contribution, wasn t it. George Spater, American Airlines. Yes, Sir. That s right. Senator Sam Ervin (D - North Carolina). And that was a matter that was subject to the unreviewable decision of the President himself. George Spater, American Airlines. Yes, Sir.
Senate Select Committee on Presidential Campaign Activities, November 15, 1973. Testimony of George Spater
Senator Sam Ervin (D - North Carolina). And Mr. Herbert Kalmbach, whom you knew to be the personal counsel of the President, and a man very close to the President, contact you as you ve described and he stated that he d like to have a contribution of $100,000 for the Committee to Re-Elect the President. Now did you draw the inference from what he said that he was trying to get the $100,000 from you personally? George Spater, American Airlines. It never entered my mind that he was because I simply don t have the capacity to do it, but that s a subjective evaluation. Senator Sam Ervin (D - North Carolina). Well as a matter of fact, facing the realities where the tremendous, almost confiscatory nature of federal income taxes in this state, it is not reasonable that there can be very many $100,000 contributions obtained without resorting to corporate funds, isn t that true? George Spater, American Airlines. That s right, except possibly from major stock holders. I don t happen to be one of those. Senator Sam Ervin (D - North Carolina). There re are not very many people with income tax rates on a joint return pulling from 55% up on as much as $64,000 with all the other living expenses and obligations they have that can give such things as $100,000. To use a North Carolina expression, that s about as scarce as hen s teeth aren t they? George Spater, American Airlines. Yes, Sir.
Senate Select Committee on Presidential Campaign Activities, November 15, 1973. Testimony of George Spater
Senator Sam Ervin (D - North Carolina). Now here under these circumstances, Mr. Kalmbach came and said he wanted a contribution of $100,000 and that he had hopes that it would be received and all those that made a contribution as much as $100,000 would be put in some kind of a select class. George Spater, American Airlines. Yes, Sir. Senator Sam Ervin (D - North Carolina). Well didn t you interpret that as implied promises, as far as Mr. Kalmbach could make one, that people who had made contributions of $100,000 would have superior consideration to people who were not able to make contributions of that much? George Spater, American Airlines. Well, there was the other possibility and that was a negative one, which was one very much in my mind. And it s, I think as a result of the hearings before this committee it probably might be something, and that is you would be regarded as persona non grata if you didn t. I mean there are two aspects, would you get something if you gave it or would be prevented from getting something if you didn t give it. Senator Sam Ervin (D - North Carolina). In other words, to use a vernacular expression, a request of this kind has the tendency to instill a fear that if you don t comply, you might get it in the neck from some government agency. George Spater, American Airlines. That s right. Mr. Kalmbach is lawyer for our principle competitor who was opposing us in this merger case. I didn t believe giving him the money would help us in that case. Senator Sam Ervin (D - North Carolina). But you did feel that if you didn t give the money there might be some adverse consequences. George Spater, American Airlines. Yes, Sir. I was worried.
Senate Select Committee on Presidential Campaign Activities, November 15, 1973. Testimony of George Spater
Senator Sam Ervin (D - North Carolina). Departing from the normal use of language, wouldn t it be fair to say that requests from people of high authority who control great governmental power or who have direct access to those who control great governmental power, when they ask for contributions there is a sort of unspoken coercion in the request, isn t there? George Spater, American Airlines. Unspoken what, Sir? Senator Sam Ervin (D - North Carolina). Doesn t the request for campaign contributions from industries or the officers of industries that are subject to government regulation have the effect, although there s no coercion spoken, but they have the effect of some kind of an implied coercion, don t they? George Spater, American Airlines. Yes, Sir. I explained it when I was talking to Counsel staff, it s something like the old medieval maps that show a flat world then what they call terra incognita, fierce animals laying around the fringes of this map. You just don t know what s going to happen if you get off in there. I think that sometimes the fear of the unknown may be more terrifying than the fear of the known. This is a very large element in the picture. Senator Sam Ervin (D - North Carolina). Well I think that s a very apt illustration on the points that you made.
Senate Select Committee on Presidential Campaign Activities, November 15, 1973. Testimony of George Spater
Senator Sam Ervin (D - North Carolina). Now must of these regulatory agencies which have to do with the regulation of airlines are headed by men who are Presidential appointees, aren t they? George Spater, American Airlines. Yes Sir.