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Airlines and Air Mail

Airlines and Air Mail: The Post Office and the Birth of the Commercial Aviation Industry

F. Robert van der Linden
Copyright Date: 2002
Edition: 1
Pages: 368
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  • Book Info
    Airlines and Air Mail
    Book Description:

    Conventional wisdom credits only entrepreneurs with the vision to create America's commercial airline industry and contends that it was not until Roosevelt's Civil Aeronautics Act of 1938 that federal airline regulation began. In Airlines and Air Mail, F. Robert van der Linden persuasively argues that Progressive republican policies of Herbert Hoover actually fostered the growth of American commercial aviation. Air mail contracts provided a critical indirect subsidy and a solid financial foundation for this nascent industry. Postmaster General Walter F. Brown used these contracts as a carrot and a stick to ensure that the industry developed in the public interest while guaranteeing the survival of the pioneering companies. Bureaucrats, entrepreneurs, and politicians of all stripes are thoughtfully portrayed in this thorough chronicle of one of America's most resounding successes, the commercial aviation industry.

    eISBN: 978-0-8131-4938-7
    Subjects: History, Transportation Studies

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-v)
  3. List of Illustrations
    (pp. vi-vi)
  4. Preface
    (pp. vii-xvi)
  5. Chapter 1 Foundations
    (pp. 1-16)

    On the morning of May 15, 1918, a crowd gathered around a single-engined Curtiss JN-4H “Jenny” trainer parked at the Polo Grounds near the Potomac River in the nation’s capital. Thousands of spectators pressed against rope barricades hoping to catch a glimpse of the festivities as five hundred dignitaries arrived amid much fanfare. Present were Postmaster General Albert S. Burleson and Second Assistant Postmaster General Otto Praeger, Secretary of the Navy Josephus Daniels and his assistant secretary, Franklin D. Roosevelt, members of the recently formed National Advisory Committee on Aeronautics, and numerous members of Congress. At 11:15 A.M. President Woodrow...

  6. Chapter 2 The Birth of an Industry
    (pp. 17-34)

    Although the Kelly Act became law on February 2, 1925, it would take many months before private contract air carriers could begin to fly the mail. The Post Office was realistic in handling the situation. Relinquishing the routes would be done in a gradual, methodical manner to ensure the reliability and safety of the service. Because the airlines were new and unproven, the Post Office required that all potential applicants conform to rigid requirements of operation and finance. Routes were to be awarded through competitive bidding, the award going to the lowest responsible bidder. The Post Office would determine the...

  7. Chapter 3 The Aviation Industry Comes of Age
    (pp. 35-46)

    Six weeks before Boeing Air Transport opened service, a courageous twentyfive-year-old air mail pilot sharply focused the nation’s attention on the potential of commercial aviation. On May 20, 1927, Charles A. Lindbergh took off from Long Island’s rain-soaked Roosevelt Field, wrestling his overladen Ryan NYPSpirit of St. Louisinto the air and toward Paris, 3,610 miles away.

    With his single but reliable Wright J-5 Whirlwind droning faithfully onward through the night and into the next day, the young Lindbergh fought fatigue and worsening weather as he struggled across the dangerous North Atlantic. When he landed at Le Bourget Field...

  8. Chapter 4 Consolidation
    (pp. 47-61)

    Following Lindbergh’s dramatic transatlantic flight, the public’s interest in aviation as transportation and as an investment grew exponentially. Until March 1928, however, only Curtiss Aeroplane and Wright Aeronautical had issued public securities.¹ All other stock was privately owned or unissued. With the market booming in other stocks, the temptation had now become too great, and most of the aircraft companies went public in successful attempts to raise new capital and satiate the public’s newfound craving. Most stocks were highly speculative common shares of no par value, and, as a result, countless individuals entered the fray to make a fast dollar....

  9. Chapter 5 1929: The Calm before the Storm
    (pp. 62-84)

    Industry leaders were cautiously optimistic concerning the incoming administration and its new air mail chief. Immediately before the election, Clement Keys and Col. Paul Henderson attempted to predict the Post Office’s course of action under the incoming leadership, and in so doing outlined with remarkable clarity the issues facing the industry and the department. Henderson spent a considerable amount of time at the main Post Office headquarters at Eleventh and Pennsylvania Avenue, NW. He was primarily interested in the department’s plans for implementing the new Second Amendment to the Air Mail Act.

    In discussions with Deputy Second Assistant Postmaster General...

  10. Chapter 6 The Post Office Takes Charge
    (pp. 85-105)

    Aviation Corporation’s financial woes were reflective of the growing problems in the economy: the hyperactive stock market, the problems of overproduction, and the growing uneasiness with the overvaluation of the airlines and other industries. By the early autumn of 1929, most of the nation’s airlines had been consumed by the three major holding companies. It was clear to the industry’s leaders that aviation was rapidly coming of age technologically and financially and that mergers were a logical step in the growth of air transportation. These consolidations promised greater efficiencies, lower overhead costs, and greater productivity as, it was hoped, a...

  11. Chapter 7 The Watres Act
    (pp. 106-136)

    While the operators anxiously awaited Postmaster General Brown’s decision on the new rate plan, troubles were mounting in the airline industry. Aviation stocks in particular were taking a beating. By the end of 1929 the drop was catastrophic. North American Aviation fell from a high of 19 3/4 to a low of only 4. Its two major airlines, National Air Transport and Transcontinental Air Transport, fell from 48 1/4 to 10, and 33 5/8 to 6, respectively. The Aviation Corporation dropped from 20 to 4 1/2, and profitable Western Air Express sank from 78 1/4 to 15. Even solid United...

  12. Chapter 8 Realignment
    (pp. 137-150)

    While the fight raged in Congress over the future of air transportation, industry was preparing for the expected changes in different ways. Some airlines fought desperately just to survive until the new legislation passed; others sought to position themselves to take advantage of the coming reforms. It was a time of turmoil. All the airlines and air mail contractors felt the pressure, but none more so than the Aviation Corporation.

    Chaos still reigned in New York despite the recent reorganization and the creation of American Airways. The disparate operations and business philosophies of the numerous component parts of Aviation Corporation...

  13. Chapter 9 Drawing a New Map
    (pp. 151-186)

    At long last, after the protracted struggle to revamp the air mail rate structure and to enact the necessary legislation, Walter Brown was ready to take direct action. Passage of the Watres Act left him in total control of the air mail situation and the virtual dictator of U.S. air transportation. Acting as a one-man regulatory agency, Brown now had the power to redraw the air mail map to his satisfaction.

    He did so with deliberation. He totally controlled the establishment of new routes and the extension or consolidation of existing routes. The department had already created a unified system...

  14. Chapter 10 Reaction
    (pp. 187-214)

    With the tribulations of the transcontinental route awards finally behind him, Postmaster General Brown moved to continue his carefully conceived efforts to promote the efficiency of the air mail carriers. The Watres Act had given him considerable power to make changes, particularly through the implementation of rate revisions on those lines operating under a route certificate. These certificates allowed the department to make periodic alterations of the air mail payment rates. Although the carriers disliked the ever-decreasing rates, they welcomed the ten-year protection the certificates gave them over their routes and clearly understood that the department had no intention of...

  15. Chapter 11 Cord and Congress
    (pp. 215-234)

    Watching the evolving contract debate with great interest was Errett Lobban Cord. He, too, was anxious for a contract to offset his mounting losses, though his initial efforts in Illinois had been defeated. The growing controversy opened several new opportunities for him if given the chance. Cord was willing to attack the problem on several fronts: through the independents’ association, through starting another competing airline, through congressional action, and through back-door political maneuvering.

    He was persistent. In July 1931, Cord expanded his airline activities, creating Century Pacific to operate in California and Arizona, in direct competition with TWA, United, and,...

  16. Chapter 12 The Democrats Take Control
    (pp. 235-259)

    Cord’s successful takeover of AVCO and its American Airways subsidiary drastically changed the complexion of the air mail industry. The carefully crafted and well-protected system of awarding air mail contracts to the three large holding companies had been successfully circumvented by perhaps one of the most controversial stock manipulators in the country. Overnight, United Aircraft and North American Aviation found themselves confronted with a former enemy now on the inside.

    They need not have worried. Cord was content with controlling AVCO and sought only to compete with the other holding companies, not undermine them. His vested interest now was in...

  17. Chapter 13 Congress Assumes Command
    (pp. 260-291)

    Since February, Sen. Hugo Black had been calling for a sweeping investigation of all postal contracts. Black, a former police court judge, personal injury attorney, county prosecutor, and Ku Klux Klan member, and a future associate justice of the United States Supreme Court, was passionately predisposed against all concentrations of economic or political power. Growing up in poor east-central Clay County, Alabama, Black was raised in a Populist household. As a southern Progressive Democrat, Black vehemently opposed all monopolies and sought to expose their purported evil to the light of public scrutiny.¹

    Remarkably, the air mail operators failed to perceive...

  18. Notes
    (pp. 292-324)
  19. Bibliography
    (pp. 325-335)
  20. Index
    (pp. 336-349)