And businesspeople themselves began flying. The world’s busiest airport in 1930 was in the oil boomtown of Tulsa, Oklahoma, which served more airline passengers than London, Paris, and Berlin combined. Gary Cooper, Clark Gable, and Sonja Henie were early fliers, as much for the publicity value as for the time saved in transit. But instead of demystifying air travel, its use by public figures only added to its mystique. Mary Pickford once stepped from a transcontinental flight in Kansas City, telephoned her astrologer in New York, and announced to the assembled press that the “stars weren’t right” for her continued travel.
Airplane travel still seemed an unnatural act, and it wasn’t a good bet statistically either. People flying in 1930 were roughly 200 times more likely to be killed than the passengers of forty years later. Navigation aids were rudimentary: pilots often followed railroad tracks, until one too many of them failed to notice the approaching tunnels. The death of the beloved Notre Dame football coach Knute Rockne in a 1931 TWA crash in Kansas was a devastating setback in public confidence. There were hazards on the ground as well as in the air: before 1930 at least a dozen people were killed by walking too close to whirling propellers.
The airlines did their best to relieve the anxieties—the terrors, perhaps—and other discomforts of flying. Passengers riding alongside the mail from San Francisco to Chicago on Bill Boeing’s infant United Airlines got a parachute, a helmet, and goggles. Carriers distributed cotton balls to dull the earsplitting roar of the piston engines. Motion sickness was frightful, afflicting about half of all passengers; American gave passengers ammonia as a tonic for nausea, and some airlines hosed down their cabins between flights. Research showed that gaily colored interiors only intensified the anxiety of passengers; for decades aircraft cabins were therefore decorated in gray and other discreet tones.
No one better appreciated the challenges—and the virtues—of drawing passengers into the mail planes than Walter Folger Brown, a powerful Republican Party leader and confidant of Herbert Hoover. Brown was nothing if not an organizer. A Harvard-trained lawyer, he had headed a presidential commission that recommended creating two Cabinet agencies—the Defense Department and the Department of Health and Education—from a hodgepodge of other far-flung departments. He wore a top hat so high that his limousine required a specially outfitted roof. Brown sought and received an appointment from President Hoover as postmaster general, a position that made him czar of the airmail system.
Increasing passenger traffic, Brown reasoned, was the one sure way to wean the airlines from postal subsidies. But public confidence could be inspired only by big, financially secure carriers committed to safety, maintenance, and training, not by the fly-by-night operators abounding at the time. Brown changed the rules so that the airlines received payments based not on the weight they carried, but on the distance they flew and the volume of space they maintained in reserve for the mail. This system guaranteed the airlines a minimum payment every time a mail plane left the ground, and the bigger the plane, the greater the payment. Though an outright gift to the airlines, Brown’s scheme gave them the incentive to order the sturdier and more costly planes then in development—planes, he hoped, that would help convince a wary public that it was at last safe to fly. Brown had codified the First Rule of Airline Economics into government policy: Once the flight was paid for, any additional payload was pure gravy. Letter carriers soon began distributing promotional handbills for select airlines. “Fly with the airmail!… Fly with American Airways,” one read, promising a 10 percent discount on round trips.
Having revolutionized the economics of the industry, Brown in 1930 turned his attention to its geographical structure. An outpouring of capital, loosed by the long-booming stock market and the Lindbergh hysteria, had turned the airmail routes by the early 1930s into an inefficient and illogical labyrinth. Brown’s compulsion for order was offended. Instead of a crazy quilt of routes, he imagined clean lines running east and west, eliminating the circuitous zigzag of connecting flights by which one airline handed off mail to the next. To effect his plan, Brown went to Congress for the power to award postal contracts regardless of the amount bid. Then he called the principal airline operators to Washington and ordered them into a conference room with a map of the United States. For two weeks he cajoled them to swap routes, trade shares of stock in each other, and do whatever else it took to eliminate duplication, irrationality, and competition—in short, to divide the market to the exclusion of everyone who had not been invited to the meeting. A United official at one point turned to a lawyer and asked whether this activity might violate the Sherman Antitrust Act. “If we were holding this meeting across the street in the Raleigh Hotel, it would be an improper meeting,” the lawyer answered. “But because we are holding it at the invitation of a member of the Cabinet, and in the office of the Post Office Department, it is perfectly all right.” The Post Office, in fact, issued daily press releases about the conduct of the conference, to which no one paid much attention.
Guided by Brown at each turn, the operators emerged from their meetings with 90 percent of the nation’s airways laced into three unbroken lines running from New York to California. United Aircraft & Transport controlled the northernmost route, via Chicago. Transcontinental & Western Air, or TWA, had the center route, via St. Louis. American Airways was given the southern line, via Dallas. A fourth company, Eastern Air Transport, emerged with the routes running north and south along the Eastern seaboard.
The Big Four were born.
Everything was fine until an enterprising Democratic senator, Hugo Black (one day to become a Supreme Court justice), decided to hold hearings into the status of the airmail and learned of the postmaster general’s activities three years earlier. The meetings at the Post Office Department were now cast as a grand conspiracy, dubbed the “spoils conference.” Meanwhile the Democrats, led by Franklin Roosevelt, had seized the White House. So at 9:13 A.M. one morning in 1933 federal agents wearing synchronized watches stormed 100 airline offices around the country and carted away boxes of evidence. Roosevelt with great fanfare fired the private airlines and restored the mail routes to the army.
Roosevelt’s move to embarrass the Republicans quickly turned into a bloody spectacle, for the military pilots no longer had the equipment or training to carry out the job. Within weeks 12 army fliers perished, five in the first week alone. The demure Charles Lindbergh took time from his trailblazing on behalf of Pan Am to harangue Roosevelt publicly, setting the nation’s two most beloved public figures against one another in a conflict that would last their lifetimes. An editorial cartoon showed FDR hiding from a dozen skeletons wearing goggles and flying caps. Stricken by the first political crisis of his presidency, Roosevelt soon relented, restoring the airmail to private contractors. To save face, Roosevelt decreed that none of the previous contractors could hold any new routes—a thoroughly impractical requirement, since so much of the industry had been swallowed by the Big Four or driven from business in the wake of the spoils conference. Roosevelt therefore looked the other way when American Airways changed its name to American Airlines, Eastern Air Transport became Eastern Air Lines, and TWA added “Incorporated” to its name—all to qualify themselves as different companies. (United did not have to alter its corporate identity because subsidiaries had held the offending contracts.) The incumbent airlines preserved virtually everything they already had, although in this round of bidding two scrappy regional airlines managed to sneak into the airmail business. One, named Braniff, snared the Dallas-Chicago route. The other, named Delta, grabbed Atlanta-Chicago. It was, at least, a foot in the door.
Lawful or not, the manipulations of Walter Folger Brown prepared the airlines to handle an onslaught of paying passengers. But the public still needed convincing. It needed comforting—and a strong dose of marketing. It would get both from Cyrus Rowland Smith, the president of American Airlines.
Like Trippe, Smith was born in 1899. Like Trippe, he had learned to fly. But where Tripp
e flourished by uniting technology and politics, Smith, a drawling and hard-drinking Texan known to all as C.R., did so through a combination of technology and salesmanship.
With backing from Wall Street, American had gobbled up dozens of failing airlines around the country, including the airmail contractor that had employed Charles Lindbergh as chief pilot a few years earlier. In doing so American had built itself into the largest airline holding company in the United States, but the operation was far from seamless. When he became president in 1934, Smith’s biggest challenge was the ragtag fleet, which included practically every species of airplane flying at the time. Smith vowed to move toward a single aircraft type.
The state-of-the-art passenger airplane was the DC-2, with seven window seats on either side of the aisle (in addition to an airmail compartment). It was a perfectly good airplane except that it never seemed to make money. Smith, an accountant by training, determined that with a few more seats installed (or with berths on night flights, as a “sleeper” plane) the DC-2 could operate in the black. On Smith’s demand Douglas Aircraft in 1935 worked feverishly to make the plane wide enough to accommodate berths or 21 seats-three seats abreast instead of two. The additional seven seats made all the difference. They increased the cost of operating the plane only about 10 percent but increased the seating capacity by 50 percent. An instant moneymaker, the craft was called the DC-3 (the acronym stood for “Douglas Commercial”).
It was a sleek, futuristic airplane, a flying work of art deco with rounded edges and mirrored aluminum. It looked sturdy and was—“relatively stronger than the Brooklyn Bridge,” American boasted. The use of sleeper berths on night flights helped to demonstrate the tranquillity of the ride. American sold its first sleeper ticket to little Shirley Temple, shaming adults who remained afraid to fly. On top of everything else the DC-3, at a breathtaking 180 mph, was fast. American at one point promoted the speed of DC-3 service with a magazine ad depicting a woman in her nightgown swooning, “He still loves me! He’ll be home tonight, via American Airlines.”
By 1938 there were 250 commercial airplanes plying the skies of the United States, and their paying passengers, thanks to Smith’s DC-3, provided as much business as the mail sacks.
A new airplane was also enabling Juan Trippe and Charles Lindbergh to conduct the second phase of their three-way global thrust, this the most far-reaching of all. Pan Am was headed for China.
As soon as they brought home their first baby in 1930 (very possibly conceived during the South American trip), Charles and Anne Lindbergh began elaborate preparations to blaze the best route to the Orient. They chose “the great circle route,” from the U.S. mainland to Alaska, to Russia, and south to Japan and then China—a route mostly over land. Flying in thermal suits under the midnight sun, the Lindberghs took weeks getting to China. Treacherous fog shrouded the killer mountain peaks along the way. The route, they judged, was impractical.
Pan Am would have to fly to Asia by the South Pacific instead. The distance might as well have been to the moon.
From San Francisco, China lay nearly 9,000 miles away, with only some sandbars, coral reefs, and volcanic outcroppings along the way. The longest ocean air route in the world at the time was being flown by a predecessor of Air France over the South Atlantic from French West Africa to Brazil, and that route was one quarter the distance facing Trippe and Lindbergh. Lindbergh threw himself into the design of a new airplane capable of the flight; when Lindbergh’s son was tragically kidnapped, Trippe’s engineers completed the job. What emerged was a massive water plane with four great engines, pontoons the size of fishing boats, and ample room for airmail and passengers alike. Trippe christened the new model the China Clipper, introducing the nautical theme in commercial aviation. From that point forward, chief pilots were captains and copilots were second officers, trading in their helmets and leather jackets for officers’ hats and greatcoats bearing stripes at the end of each sleeve. Humphrey Bogart would soon star in a movie called China Clipper. And the plane itself would become a symbol for the inexorable spread of Yankee interests across the globe.
The long-range airplane solved only part of the problem. How would the clippers refuel en route? Where would the crews sleep, to say nothing of any passengers who might eventually be brought along? How would they eat? Where would they get fresh water?
In 1935, with no mail contract yet in hand, Trippe chartered a mammoth merchant ship in San Francisco and loaded it with the people and supplies necessary to create a chain of fully functioning colonies along the atolls of the Pacific. There were 74 construction workers, 44 airplane technicians, a quarter-million gallons of airplane fuel, food and fresh water to last for months, and five entire air bases, assembly required. Blasting away the reefs at Wake Island consumed five tons of dynamite. Tons of topsoil were brought to the barren outposts for vegetable gardens. A second expedition delivered pillows, lightbulbs, lounge furniture, beach umbrellas, teaspoons, and everything else needed for the new layover stations that Trippe was constructing; these outposts were the beginning of the Inter-Continental Hotels chain.
The postal contracts on which Trippe had gambled were soon forthcoming; the threat of Japanese hegemony in the Pacific made the United States government eager to foster the development of such strategically located islands as Midway and Wake. At the same moment in 1935 that C. R. Smith was preparing to roll out the first DC-3 at American Airlines, Juan Trippe watched a China Clipper soar past the half-completed Golden Gate on its maiden flight to China. In the dedication speech, the postmaster general said the achievement “rivals the vivid imagination of a Jules Verne.”
The third arm of the Pan Am empire would extend across the Atlantic, to Europe; once again Lindbergh was there to help blaze the trail. The North Atlantic was a mere puddle jump compared with the Pacific, but in this case the challenge involved political instead of geographical barriers. Unlike the undeveloped continents to the south and west, Europe had a bustling airline industry of its own. For the first time the specter of economic protectionism cast a shadow over international aviation. It would take years for Trippe to break into Europe.
But meanwhile his strategy had bifurcated the airline industry in America. While grabbing every route outside the United States, Trippe had renounced any claim to fly within it. What happened inside the borders of the United States was somebody else’s problem—nobody’s more so than C. R. Smith’s.
A moment of panic, if sufficiently frightening, can cloud the judgment of the best executive. Unfortunately, these misjudgments can have lasting consequences, as happened to C. R. Smith and a few of his colleagues when circumstances conspired to create America’s first great fare war.
The outrage generated by exposure of the spoils conference had caused Congress to institute a radical reform: contracts would go to the lowest bidder, regardless of other considerations. Quickly bids plunged.
In one case, when the Roosevelt administration offered an airmail contract between Houston and San Antonio, Eddie Rickenbacker, eager to push west in order to diversify Eastern’s north-south service, vowed to get the route even at a steep loss. Texas-based Braniff, intent on defending its territory against the Big Four, caught wind that Eastern was planning to bid less than a cent a mile. When the postmaster general opened Braniff’s bid, he stunned the room by reading the figure of $0.00001907378 a mile. As everyone shook his head, he opened another envelope. “Eastern,” he said, “bids zero-zero-zero cents.”
“That’s illegal!” cried Tom Braniff.
“The hell it is!” cried Eddie Rickenbacker.
Because Congress had put a time limit on every airmail contract, the incumbent airlines were forced continually to defend their routes against the encroachment of upstarts, intensifying the downward spiral of rates. On occasion C. R. Smith had to gamble in the commodity markets with his meager postal payments in order to make the payroll at American Airlines.
The major airlines were trapped in a conundrum. How could they buy
more of the DC-3S that had so captivated the public (at a cost of nearly $100,000 per plane) unless they were assured of protection from rate wars? Yet how could they avoid rate wars when buying these costly new machines required them to defend their routes from upstarts and interlopers? The only answer, C. R. Smith and his colleagues insisted, was government administration of rates and routes. The irony of their pleading for protection from their own behavior did not deter them. Without regulation, industry’s chief lobbyist declared, “There is nothing to prevent the entire air-carrier system from crashing to earth under the impact of cutthroat and destructive practices.”
The timing of their plea was propitious. Roosevelt was in the throes of erecting government regulation on a scale unseen in American history. Congress had just been stricken with grief and outrage over the death of a beloved member, Sen. Bronson Cutter, in a plane crash and was eager to intensify safety regulation. Riding this momentum, the airlines got precisely what they wanted. The Civil Aeronautics Act of 1938 was readily adopted; it preserved all existing airmail contracts in perpetuity. The airlines had turned themselves into public utilities.
The price paid for this sinecure was the involvement of the federal government in every financial aspect of the industry’s business—every route, every rate—through a new bureaucracy, eventually to be called the Civil Aeronautics Board. The Big Four had exposed themselves to the full weight of an old-fashioned statist controller, which established its headquarters in a pillared edifice directly across Constitution Avenue from the Washington Monument. C. R. Smith and his peers had yielded this authority precisely when their businesses were poised to take off in an exciting new direction, with passengers at last beginning to overtake airmail as the majority of the business. In their panic they had traded the future against the past.
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