by Nevil Shute
George Stainforth was killed in the second world war flying a Beaufighter in the Western Desert, a great loss to the R.A.F. and to his country.
The Courier went to Martlesham for trials, which were extended, because this first machine to have a practical and a reliable retracting undercarriage was to exercise a considerable influence on the design of military aircraft. The Air Ministry got all the leading aircraft designers in the country down to Martlesham while the machine was in their hands, presumably to rub their noses in it. At Portsmouth we were completing the last Ferry for Mr. John Sword and commencing the production of a batch of six Couriers, but the finances were again in a serious condition. By the middle of May the guaranteed overdraft was £8,450 and there was an unsecured overdraft above this limit, making the total debt to the bank well over £10,000. We also owed about £1,700 in the form of trade invoices, some of them going back to January. In spite of our considerable technical successes a cautious man might well have hesitated to support such an unfinancial company further. Yet in the middle of May Lord Grimthorpe turned up, unasked, with a cheque for £1,000 to take up a thousand more shares.
In spite of the financial picture the prospects of the company were encouraging, because when the official performance figures came through; the Courier was seen to be a technical success. With an Armstrong Siddeley Lynx engine of 240 horsepower the machine had a maximum speed at sea level of 163 m.p.h., about eight miles an hour faster than our forecast, when carrying a pilot, five passengers, and three and a half hours’ fuel. About 20 m.p.h. of this speed was probably due to the retraction of the undercarriage. In its day this was an outstanding performance, and the prospective orders for the machine were promising, a promise tempered by the fact that most of the small airlines that were then coming into being had little or no money.
By the end of August the overdraft had risen to £12,847, over £4,000 of which was unsecured, and the bank manager was getting very unpleasant. Trade creditors, too, were showing signs that their forbearance was near its end. In these circumstances Lord Grimthorpe came forward again with a personal bank guarantee of a further £5,200, and by this act produced a situation amongst our working shareholders which deserves a record.
These shareholders got together in the office without consulting either Tiltman or myself to debate the financial situation of the company which employed them on their trivial salaries. Most of them had access to a little more money, and they came forward after consultation between themselves with a proposal to support the company further to the extent of £12,000 between them, in the form of 6% debentures or bank guarantees. This offer from officials of the company who were not members of the Board was generous and a great encouragement to the directors, for these men, led by Tom Laing, knew all the seamy side of the business and could not be deceived about its prospects. Accordingly the company took powers to issue the debentures, and with this encouragement went cracking on.
By the beginning of September we had delivered the first production Courier as a demonstrator, paid for, to the Aircraft Exchange and Mart Ltd, to whom we had given the selling agency for the British Isles, and the machine had already made a very fast return flight between London and Edinburgh to demonstrate the possibilities of internal airlines. We must have paid a lot of invoices, because debtors and creditors were about equal at £3,000. Having got the financial situation more or less under control a prudent Board might well have hesitated before a further expansion, but both Board and shareholders were of one mind; the company must get big quickly or it must inevitably perish. It was resolved at the beginning of September to double the floor area of the factory, making the best hire purchase deal we could with the Corporation, to lay down Couriers in batches of not less than six, and to press ahead with the design of a new twin engined machine based upon the Courier.
This new machine was the result of sales experience. In the provision of aircraft for the little airlines that were coming in to being our chief competitors, as always, were our old friends the de Havilland Company. Their Dragon and Dragon Rapide machines were slower than the Courier and, I think, less economical in operation by virtue of the high performance of our aircraft, but they had twin engined reliability to offer as well as low price and a first-class servicing organisation. Price we could argue about because all speed costs money, and we were making every effort to provide a first-class service for our aircraft, but already the single engined aeroplane was becoming out of date for airline use; already legislation was in sight to restrain operators from flying paying passengers over sea routes in single engined aeroplanes. We therefore set ourselves to consider whether we could not develop a twin engined version of the Courier using the extension planes and many of the other components of the single engined machine to lower the development costs of the new aircraft, later to be christened the Envoy. We specified Wolseley A.R.9 engines for this machine, a very promising new engine of modern design backed by all the resources of the Nuffield organisation.
That autumn Sir Alan Cobham was hard at work on his refuelling experiments, using one of the old Handley Page W.10 biplanes from National Aviation Day Ltd as a tanker. Squadron Leader W. Helmore was normally his co-pilot on these flights and was to go with him on the projected flight to India, but on one or two occasions I flew with Cobham upon these experiments. The Courier was provided with a hatch in the top of the fuselage which the co-pilot could open in flight and stand up in, his body above the waist exposed to the air stream at about 90 m.p.h.; a hose was then let down from the tanker flying a hundred feet above the Courier to pass the fuel.
The chief difficulty lay in making the first contact between the machines. The hose could not be lowered at once, for it waved frantically and could have whipped the tail off the Courier if it had hit it. The first method tried was to lower a little bag of sand on the end of a light cod line; Cobham would fly the Courier so that Helmore (or myself) could reach out and catch the line. The cod line was then pulled in to the Courier, pulling down a heavier rope, and finally the hose was pulled down, the nozzle poked into an appropriate funnel leading to the Courier’s petrol system, and the juice was turned on. All this demanded very accurate formation flying by Cobham, impossible in bumpy weather, but it worked fairly well till one day the little bag of sand jammed between the aileron and the wing of the Courier and put the machine out of control, and gave Cobham and Helmore a great fright. After that they used a child’s toy balloon filled with water as the weight, which would burst if anything of the sort happened again, and it was on the basis of this system that they set out for India early the following year. I shall always remember standing up half out of the Courier trying to catch this thing as we flew in formation below the Handley Page, and how frightened I was; my respect for Air Commodore Helmore has not diminished with the passing of the years. Now, of course, a totally different system has been developed by Cobham’s organisation for the refuelling of aeroplanes in flight.
These Courier refuelling flights were valuable to us, because all aeroplanes have initial teething troubles to be rectified by modifications to the design, and with the first Courier operating in Cobham’s hands upon short local flights in this way we were able to get through this stage of the development with the minimum of trouble; this was not the least of the many benefits that Airspeed owed to Sir Alan.
That autumn two of our £5 per week working shareholders, Lord Ronaldshay and R. D. King, formed a small selling company to take the agency for Airspeed and other products in India and Burma. They bought a Courier as a demonstrator fitted with a more powerful engine to improve the take-off of the machine in tropical conditions, an Armstrong Siddeley Cheetah Mark V of about 300 horsepower, and Ronaldshay flew this out to India to set up a sales organisation for us in New Delhi while King remained on as our sales manager. In England the Aircraft Exchange and Mart had produced a number of dubious orders for Couriers, most of which were from optimistic newly created airlines with little money who required a hire purchase deal
. In the end most of the aircraft that we sold upon these terms found their way to the war which was to break out two and a half years later in Spain.
The second annual general meeting of the company was held in December 1933, and a further loss was announced. This produced no crisis, because the meeting was held in my office in the works at Portsmouth and was attended only by the directors and officials who were working in the company; there were still very few other shareholders. The Air Ministry had just ordered a Courier for experiments with the retractable undercarriage, an earnest of better things to come. The new factory extension was well under way by grace of the Portsmouth Corporation, but already we were talking of another one. Twelve Couriers and six Envoys were under construction at the end of the year.
During that winter both Tiltman and I were elected Fellows of the Royal Aeronautical Society. This is the highest technical distinction that British aviation has to offer and we got it, I think, primarily for the production of the Courier with its retractable undercarriage, though in my case my work upon the R.100 had something to do with it as well. The company, too, was marching on to technical distinction. At that time the firms composing the British aircraft manufacturing industry were grouped in a very tight organisation, the Society of British Aircraft Constructors. After the first war when government orders were few and most aircraft firms were running at a loss, an agreement had been reached between the government and this trade Society that, in consideration of the firms remaining in being, when bulk orders came to be placed again no orders would be given to newly created firms until the firms in the existing industry were full to capacity with work. This was a reasonable agreement in 1923 when it was made, but ten years later it bore hardly upon us. For years we were to see less competent firms receiving bulk government orders while we struggled on upon the edge of liquidation. The Society was conscious of this position and were not unfriendly to us; first they made us associate members and permitted us to show the Courier at their annual display in 1933, and after several years we broke into their ring and became full members of the Society.
About this time we engaged our first regular, whole time test pilot; previously we had made do with whatever pilots we could find at the time we wanted a machine flown. Now, however, the work had grown to a point when a full time pilot was justified. We could not pay more than a poor salary, however, and we were lucky to get so good a man for our £400 a year. When delivering the second Ferry to John Sword at Inverness six months previously I had met F/Lt. C. H. A. Colman, a retired young R.A.F. trained officer who was joyriding for John Sword with a Fox Moth. Colman was a merry, apparently irresponsible young man and I would have classed him with a hundred other lighthearted benders of aeroplanes but for one thing. He was flying his little aeroplane out of a pasture field, and before taking off I saw him deliberately pace out the distance to the far hedge to make quite sure that he had enough room to get off. I questioned him about the distance and found he had a very clear and accurate idea of the room that he required to get off safely with varying conditions of load and wind and height of obstacles. In these days this approach may seem elementary, but it showed an attitude of mind that was by no means common amongst ex-R.A.F. pilots in 1933. When he applied for a job with us it seemed to me that our aeroplanes would be safe in his hands, and I was not disappointed. He was killed in 1941 over Northern France, flying a Beaufighter.
In January and February 1934 the question of an issue of shares to the public began to be discussed by the Board. In our continuing quest for fresh capital we had made contact with a City firm who seemed to think that they could place a public issue for us, and in our financial condition the prospect of sixty or seventy thousand pounds of new capital was not one to be treated lightly, whatever the source might be. It was much too early for a public issue. Such orders as we had in hand were mostly from dubious operators on tenuous hire purchase deals; if civil airlines went ahead and these operators prospered the aeroplanes would be paid for in the end, but if the operators failed the aeroplanes would be back on our hands, unsold. It will be understood that the financial houses in the City who announced that they could float us on the public were not the most conservative houses that the City could produce, and even they found our continuing losses something of an obstacle to a successful issue. Our needs, however, were urgent, for the finances of the company had grown to such a scale as to make it impossible for our early loyal supporters to carry the company much further.
Negotiations for this difficult issue dragged on slowly, but I can find no evidence that the lack of money impaired our resolution to forge ahead. We should get nowhere without building aeroplanes and getting them on to airlines, and at the end of February we negotiated a second extension to the factory, again on a hire purchase agreement with the Portsmouth Corporation, still our staunch supporters. We must have had a nerve, because by the end of March the guaranteed overdraft was again exceeded by £2,267 and the salaries for March were still unpaid. One small airline, as unfinancial as ourselves, had ordered six Couriers and had paid the princely deposit of £5 on each; another had ordered one machine and had defaulted on the first hire purchase payment. There was, however, a prospect that the Air Ministry would place an order with the company for the design of a fighter; we lived mainly on prospects in those days.
Airspeed, however, was now beginning to attract the attention of more conservative City houses. One in particular, a concern of good standing which specialised in shipbuilding and ship-operating finance, had already agreed to advance money to us on firm orders for aeroplanes during construction, though owing to the peculiar character of our orders we had some difficulty with them over a definition of the word ‘firm’. This concern was closely linked with the well-known shipbuilders Swan Hunter and Wigham Richardson Ltd, a great and powerful concern established on the Tyne and with ramifications in many other shipbuilding districts. At that time shipbuilding was depressed and many of the slips were empty, and there was a good deal of unemployment in the shipbuilding cities of the North Country. A proposal that they should take an interest in an aircraft manufacturing concern seemed reasonable, especially as flying boats were then in the ascendant for the major commercial airlines of the world and seemed likely to grow rapidly in size, so that the construction of the hulls, at any rate, seemed to be well on the way to similarity with the hulls of ships.
Negotiations with Swan Hunter, who proved to be directed by hard-headed business men, resulted in an offer of finance in April 1934 which involved writing down the value of our shares to 25% in view of the unsatisfactory nature of our company’s finances. This came about the middle of the month when we were two months in arrear with salaries and trade creditors for £2,750 were threatening us with writs. I persuaded my Board to turn this offer down flat, though they did not need much persuasion; better to go into liquidation, for such an offer never could have formed a basis for a harmonious partnership. I think it was difficult for the shipbuilders to understand our point of view, which was still one of lighthearted adventure and not wholly monetary; their own concern had been established for over a hundred years and was as stable as a bank, and was administered by directors who had much of the mentality of bankers as is proper to such an organisation. I doubt if any of them had personal experience of working up a business through its early difficulties, as we had no personal experience of running a large scale business to show a commercial profit.
Company finance could only occupy a small part of my energies in those weeks, for we were starting up an organisation, which was to prove abortive, to sell Couriers in Canada, and we were starting up sales concessions in China, Siam, Malaya, and Australia. Any spare time left on my hands was spent in analysing the letters from our creditors, some of which were clearly drafted by solicitors, and doling out what money we had to stave off the writs. I found the City house who were the intermediary between Swan Hunter and ourselves to be both helpful and constructive at this time; they were impressed by our technica
l achievements and appalled by the condition of our business. The passage of the centuries has made shipbuilding and ship-operating a solid and a predictable business, very different from aviation as it was in early 1934.
By the beginning of June an agreement had been reached with Swan Hunter and Wigham Richardson for a public issue of shares in Airspeed Ltd under their auspices. They would acquire control of the company through an ordinary shareholding, the existing shares would be transferred at par into ordinary shares, the nominal capital of the company would be raised to £220,000, and an issue of £100,000 in preference shares would be offered to the public. This arrangement was acceptable to us. It meant the formation of a new Company to be known as Airspeed (1934) Ltd. After three years substantial capital was at last in sight, and one might say not before time. Our unsecured overdraft was again about £5,000 and the trade creditors totalled no less than £19,712; again the directors led by Lord Grimthorpe came to the rescue with yet another joint and several guarantee for a further overdraft of £5,000. It must be remembered, however, that at this time I was increasing production to the limit of the finance that was in sight; as the prospect of more capital became concrete I was manning up the shop and buying materials to the very limit in order to get our costs down by an increased turnover. If we were to get in capital from the public it was essential that our first year’s working under the new conditions should be profitable if humanly possible, and this could only be achieved by pressing on with output. As the new capital drew closer, therefore, our debts mounted up, including the debt to ourselves, for at that time our salaries were two months in arrear.
In the month of June I was a great deal in the City, drafting the new prospectus with our friendly intermediaries and with the issuing house for the new issue of shares to the public.