CHAPTER III

THE AVIATION INDUSTRY 1914-1921

            In 1914 the United States aircraft industry ranked last among major powers, employing a mere 168 people.  It was comprised of small companies each of which produced only a few airplanes a year.  Unlike most European powers, the United States had not provided subsidies to support the industry.  American military spending on aviation before 1914 ranked 14^th in the world and did little to encourage development of the industry in this country, see Table 2.[1]

Table 2

Estimated Aviation Expenditures, 1908-1913[2]

The Wright brothers developed the world’s first airplane in the United States but not the first aircraft company.  That honor went to their contemporary and rival, Glenn Curtiss.  Curtiss was a motorcycle racer and mechanic from upstate New York who specialized in lightweight engines.  After selling an engine to a balloonist in 1905, Curtiss realized the opportunity for further sales and began attending aviation exhibitions.  At one of these exhibitions, he met Alexander Graham Bell, inventor of the telephone, and together with other air enthusiasts they established the Aerial Experiment Association(AEA) in July 1907.  Army Lieutenant Thomas Selfridge, killed in the 1908 Fort Meyer demonstration, was a founding member of the association.[3]

            The AEA established an experimental station at Bell’s Nova Scotia property and Curtiss oversaw construction of the association’s third attempt at constructing a successful airplane, the June Bug.  This aircraft won Scientific American’s trophy for the first aircraft to make a one kilometer flight in front of witnesses.  Curtiss formed his own company, the Curtiss Motor Vehicle Company, in November 1907 and when the AEA disbanded in late 1908 all of the group’s patents were transferred to Curtiss’ company.  In March 1909 Curtiss formed another company, this time with A. M. Herring who claimed to hold some aviation patents, with the intent of securing the necessary patents to begin production of his June Bug design.[4]

            Curtiss’ activity precipitated a bitter and lengthy dispute with the Wright brothers over aircraft patents which would shape development of the industry through 1920s.  The Wrights supplied Curtiss with technical data on their own experiments while he was working on the June Bug.  According to Grover C. Loening, at one time an employee of the brothers and later founder of his own aircraft company, the Wrights believed the AEA was strictly a scientific endeavor and would not have supplied the information if they had realized that Curtiss was going to establish a commercial company, particularly due to their own lack of success.[5]  

The brothers’ paranoia over patent infringement, and their firm conviction that they were at least five years ahead of any possible competition, kept them from openly demonstrating their machines for several years after their first flight;  instead they preferred closely guarded flights in front of invited witnesses.  They attempted to interest a number of governments in their designs, with little financial success, and sold the French rights to their patent for a limited time for $100,000 in 1908.  When they formed their own aircraft company in 1909, the brothers’ designs had been surpassed by Curtiss and others.  The Wright Company, with offices in New York and a factory in Dayton, Ohio, was officially capitalized at $1,000,000 and had two distinct advantages over its competitors.[6] 

            First, Wright was still the most recognized aviation name in the world.  Second, and more importantly, the Wrights and their company controlled U.S. Letters Patent No. 821393.  This patent applied to the Wrights’ means of controlling a planes flight, through bending or warping the wings insure stability and to get it to turn.  Curtiss developed a better system, a precursor to the modern airelon, but the Wrights argued that their patent covered any method which used the wings to turn the plane.  In September 1909 the Wright brothers brought suit against Curtiss and Herring for patent violations.[7]

            In 1914, a U.S. Court of Appeals ruled in favor of Orville Wright, Wilbur had died in 1912.  Great Britain recognized their patent that same year and paid the company $75,000 to settle their claim.  The next year, Orville sold the company for $1,000,000 to a syndicate of New York investors on the basis of its control of the patents.  William Boyce Thompson, a mining tycoon, headed the syndicate which included Henry Sutphen and Henry Carse of the Electric Boat submarine company.  The syndicate kept Orville Wright as a figurehead for the company, but sought a new aviation leader in Glenn L. Martin.[8]

            Martin had grown up in Iowa and moved with his parents to California in 1905.  He established his own car dealership there and used the income to fund his aviation experiments.  Like many early inventors, Martin began with gliders before turning to powered flight.  After failing with his own designs he turned to Curtiss’ June Bug as a model and managed to build a successful, if under powered, plane by 1909.  He established friendly relations with the Wright brothers, even supplying them information about Curtiss’ experiments at North Island.[9]

            Martin formed his own aircraft company in 1909, one of more than twenty formed that year, and began producing airplanes for use in aeronautical exhibitions.  These carnival like affairs where airplanes raced cars and people paid for rides served as the prime source of income for many smaller companies.  Martin sold his first training plane to Army in 1913, and by 1916 had established his company as a solid member of the industry.  In 1916, Martin’s company, the Wright Company, and the Simplex Automobile Company were merged to form the Wright-Martin Aircraft Corporation with Martin as a vice-president in charge of all aviation projects.[10]

            The Wright-Martin merger coincided with a merger of the other major companies in the industry, Curtiss and Burgess.  Since its formation, the Curtiss company had undergone a number of changes.  In 1915 the company moved from Hammondsport, New York, to Buffalo and was reincorporated as Curtiss Aeroplane and Motor Company, this move merged the Curtiss Aeroplane Company with the Curtiss Motor Company.  In early 1916 this company purchased the Burgess Company of Marblehead, Massachusetts and also added Curtiss Aeroplanes and Motors, Ltd., of Canada and the Curtiss Exhibition Company, which ran the Curtiss flying schools.[11]

            These mergers were intended to take advantage of growing purchases of aircraft being made by European nations.  Most of the U.S. companies lagged behind those in Europe in terms of design and quality control, but France, Britain, and Italy needed planes desperately.  Britain and Italy both placed orders with Curtiss for seaplanes, while France ordered 450 Hispano-Suiza, a French design, engines from Wright-Martin.  These and other orders significantly increased the industry’s production and exports(Table 3), with output doubling each year from 1914 to 1916.[12]

Table 3

Aircraft Production and Exports[13]

            The promise of European orders also led to the creation of new companies, notably Boeing in Seattle.  William E. Boeing trained at the Curtiss flight school and then consulted Naval Constructor G. C. Westervelt, a personal friend, about the possibilities of forming an aircraft company.  Westervelt assured him that it was possible and even helped Boeing design his first plane.  Boeing incorporated as the Pacific Aero Products Company in July 1916.[14]

            These new companies faced an immediate problem, patents.  The Wright-Martin company announced in December 1916 that it would collect royalties of 5% of the gross for all aircraft produced in the United States with a minimum of $10,000 per year per company.  Curtiss followed suit with a similar plan just a few days later for its patents on the aerilon and various hydroplane designs.  The two companies discussed a merger as a means of resolving their patent problems, but company lawyers felt the merger of the two largest companies in the industry would never survive a anti-trust challenge.  Instead the system added to the cost of each airplane and in particular it hindered the smaller manufacturers, many of whom regarded “the action as tantamount to forcing the ‘little fellow’ out of business.”[15]

In January 1917 leading members of the industry met to discuss formation of the Aircraft Manufacturers Association to oversee the patents.  Formed in February 1917, charter members included: Curtiss, Wright-Martin, the Standard Aircraft Company, Aeromarine Plane & Motor Company, and Thomas-Morse Aircraft Corporation.  Shortly after United States entry into the war the AMA announced its plan for managing the patents, generally known as cross licensing.  The AMA would collect $200 for each plane constructed in the United States and place this money in a pool.  From this pool, each patent holder, including the Curtiss and Wright companies, would receive up to $2,000,000 per year.  After Congressional complaints, the AMA lowered these fees to $100 per plane, and $1,000,000 per patent holder annually.  The AMA would also determine the royalties due any new patent holders.  The AMA received constant criticism during and after the war for restricting production and increasing the cost of aircraft.[16]

            The expansion from European orders still left the industry unprepared for U.S. entry into the war.  One historian noted, “Aviation was at the stage of transition from building machines and motors to manufacturing them.”[17] Most of the companies remained unfamiliar with the practice of mass production and operated in a very haphazard fashion.  A salesman for the Sturtevant Aeroplane Company told Loening of the measures he found necessary to get six of the companies planes accepted by the Navy. 

Out of 5 radiators we have only 2 that do not boil.  I have kept changing the radiators in order to get the machines accepted.  The navy does not know that I changed the radiators, as I did it at night.  This is the only way I could get the machines accepted.[18]

Navy Lieutenant John Towers reported another excellent example of the industry’s growing pains at the Curtiss factory.  In an effort to speed up production, draftsmen in the company had been drawing designs and other information directly on the walls of the office to make them easier for other draftsmen to consult.  Over a long weekend the company hired a crew to come in and clean up the offices.  The crew, seeing all the writing on the wall, decided to whitewash the walls rather than trying to clean them and promptly wiped out several weeks worth of work.[19]

            U.S. entry into the war in 1917 placed tremendous demands on the fledgling industry.  During the next year, the U.S. military placed orders for nearly 20,000 planes, at a total cost of more than $640,000,000.  Further orders from the U.S. military would follow as the war continued, as would orders from allied nations.  Not only did the industry have to increase its manufacturing space, as already noted, but it also had to train most of its new employees in the special skills needed for building airplanes.[20]

            Overseeing this expansion was the Aircraft Production Board(APB).  Prior to U.S. entry into the war a number of attempts were made to centralize and coordinate industry production on a voluntary basis, notably the Council of National Defense.  With U.S. entry, a number of specialized coordinating groups appeared to oversee various aspects of the nation’s war effort.  In June 1917, President Woodrow Wilson appointed Howard E. Coffin, president of the Society of Automotive Engineers(SAE) and an active member of the preparedness movement, to head the APB.  Assigned to coordinate aircraft production in the United States, this board would become the source of considerable controversy.[21]

            In addition to his role as president of the SAE, Coffin had also headed the Munitions Standards Board for a brief time.  There he exhibited his firm conviction that the key to production lay with standardization.  One associate noted, “If I heard Coffin talking in his sleep, I wouldn’t take the trouble to go over and listen because I would know exactly what he would be saying.  ‘Standardize!  Standardize!  Standardize!’  That’s his motto, his slogan, his creed.”[22] 

Coffin appointed as his top assistant another member of the MSB, Edward Andrew Deeds, an engineer with the National Cash Register company in Dayton, Ohio, and the Dayton Engineering Laboratories Company, or Delco.  As early as 1909, Deeds approached the Wright Brothers with idea of using a Delco starter in an airplane.  The Wrights did not adopt his starter, but Deeds maintained a close relationship with the brothers.  In 1916, Deeds consulted Orville about the private landing field he was planning and when it was completed he allowed Wright-Martin to use it for experimental work.  In April 1917, Deeds organized the Dayton Wright Airplane Company with C. F. Kettering, H. E. Talbott, and H. E. Talbott, Jr.  Orville was given the title of Consulting Engineer in return for lending his name to the endeavor.[23]

            Of the company, Deeds declared “This is an enterprise on which to spend money, not make it.”[24]  However, the investors clearly established the company to take advantage of anticipated profits from America’s entry into the war.  They were not alone, the industry recieved a sudden infusion of investment from people in the car industry and others.  In addition to the creation of Dayton Wright, John N. Willys, President of the Willys-Overland car company, for example invested in Curtiss and eventually assumed control of the company.[25]

            These automotive concerns saw that “...a new outlet is fast approaching for products made by motor, motor parts, and accessory manufacturers in America.”[26]  They approached aviation with the clear understanding that the industry would play a crucial role in the war and that there was money to be made.  In return, the nation expected the automotive industry to “make quantity production possible for the aeroplane industry just as they have for the building of motor cars.”

            Coffin and Deeds moved quickly to implement the practices of mass production in the aviation industry, perhaps too quickly.   The Bolling Commission, a group of Army and Navy officers headed by Major R. C. Bolling, toured Europe in June 1917 to determine the best course for America’s aviation policy based on wartime experience.  The commission’s report recommended that the United States focus on training aircraft and purchase both combat planes and engines from France and Great Britain.  Deeds, however, did not wait for the report and instead had already begun to put Coffin’s standardization plans into practice with the design of the Liberty engine.[27]

            Deeds, along with E. J. Hall of the Hall-Scott Motor Company and Jesse G. Vincent of the Packard Motor Car Company, modified a Packard eight cylinder racing engine in just two days.  The engine appeared to be perfect for both mass production and for powering the nation’s planes, but early praise proved premature.  The engine’s horsepower to weight ratio was too high, making it a poor aircraft engine.  In addition, while the engine was well suited for large aircraft such as bombers or flying boats, it weighed too much for use in most fighters.  Deeds insisted on continuing development of the engine despite the opinions of experts who insisted that the design would take two or more years to finalize.  Eventually the eight cylinder version was abandoned in favor of a twelve cylinder model, which in time became very successful.[28]

            Deeds’ commitment to the Liberty resulted not only from his desire to standardize engines, but also from greed.  Another engine, the Hispano-Suiza offered three advantages over the Liberty.  First, the Hispano was battle tested having been used in numerous French designs.  Second, Wright-Martin held the American patent rights for the engine rather than the AMA, saving money on patent royalties.  Finally, the engine was better suited for the fast pursuit planes the Army needed.  The Hispano, however, lacked on critical element possessed by the Liberty, the ability for Deeds’ and his associates to make money off the design.[29]

            Deeds owned more than 17,000 shares in Delco’s parent company, which he transferred to his wife during the war.  The Delco starter had never been used in an aircraft engine, but was chosen for the Liberty and would be used in more than 22,000 of them during the war.  These sales resulted in considerable profits for Delco, and ultimately Deeds.  While Delco’s exact profits are not available, Packard made an estimated $8,000,000 from its construction of the Liberty engine and Ford more than $5,000,000 from a contract for 5,000 Liberties.[30]

When the 8 cylinder Liberty failed to meet expectations, President Wilson appointed Charles Evan Hughes to conduct a Justice Department investigation into the matter.  Deeds by this time had accepted a commission as a colonel in the Army and Hughes concluded that while Deeds’ actions were not criminal, he should be subjected to a court martial.  Secretary of War Newton B. Baker conducted further hearings on Deeds activities, namely consulting with two of Deeds’ business associates, and exonerated him of any wrong doing.

            Another company in which Deeds owned stock, and which received preferential treatment during the war was Dayton Wright.  Technically, Deeds sold his stock in Dayton Wright and its parent company, the Dayton Metal Products Company, to business associates.  However, a Justice Department report noted:  “The fact is that the transfer of the shares in the Dayton Metal Products Co. which owned the stock of the Dayton Wright Airplane Co. was made to Colonel Deed’s intimate business associates on their unsecured notes, which are overdue and unpaid save to a small extent.”

            Deeds secured contracts for 4,000 DH-4 light bombers for Dayton Wright.  This contract proved controversial for a number of reasons.  First, the company was not established until after the war began and was still building its factory when it received the contracts.  Over the next five months Dayton Wright managed to deliver only 193 aircraft, many of which were defective.  In an effort to speed up production, only one in six aircraft were inspected as they came off the production line.  During the war more than 1,200 of the planes had to be condemned and the DH-4 achieved notoriety for its ongoing problems and was nicknamed the “flaming coffin” by pilots. A House committee after the war declared the type “...exceptionally dangerous to pilots and observers because of its defective construction.”[31]

Second, the DH-4 contract exposed some of the worst aspects of the cost plus contracts being used during the war.  This system guaranteed the manufacturer a 12.5% profit on wartime contracts, with the profit calculated on the “bogey,” or estimated, cost.  To encourage companies to reduce costs, the cost plus contracts also included a clause by which companies kept 25% of the difference between the bogey and final cost.  This system was subject to abuse by the company, in the case of the DH-4 the bogey price was $7,000 but Dayton Wright produced the planes for only $4,400 each.  So, in addition to the guaranteed $875 profit per airplane, Dayton Wright also earned an additional $650 on saving from the bogey price.[32]

            Not all of the difficulty with aircraft production resulted from favoritism by members of the Aircraft Production Board.  Military inexperience and indecision contributed greatly to production delays.  The Army often placed conflicting orders, or canceled contracts.  The Army’s attempt to develop a heavy bomber force using the Italian designed Caproni provides an excellent example.  “On August 9, 1917, the Caproni program called for 500;  on August 16, for 9,000;  on August 22, for 2,000,  on August 24, for 500, and there were other variations until the program appears to have settled down after September 28, 1917, to 1,000.”[33]

            Curtiss experienced both military indecision and problems with the Aircraft Production Board when it attempted to build fighter planes for the Army.  Curtiss first learned of the Army’s interest in a fighter design in the summer of 1917 and began construction of a new and larger factory at Buffalo, New York, in anticipation of obtaining the contract.  The Army placed a contract for 3,000 SPAD fighters on 19 September 1917.  The SPAD was a single seat French design using the Hispano-Suiza engine.  The Army did not have a set of plans for the machine, but instead delivered a complete, French-built model to the company.  Curtiss draftsmen were forced to disassemble the plane and develop blueprints, more than 3,000 of them, before they could begin production.[34]

            Rather than using the Hispano-Suiza engine available from Wright-Martin, the APB insisted that Curtiss adapt the design to use the 8 cylinder Liberty.  This caused a delay in design work, as the company engineers had to redesign the front of the aircraft to handle the new engine and a new machine gun, the Vickers rather than the Marlin.  The company proceeded with testing of the modified design and work on the factory until 25 October when they received verbal notification to stop work on the design.[35]

            Based on recent observations, the Army determined that it now required a two seat fighter rather than the single seat SPAD.  The Army then conducted experiments on various European two seat fighter designs, finally settling on the British Bristol fighter in November 1917.  Curtiss received formal notification of the cancellation of the SPAD contract in January 1918, along with a new contract for 2,000 Bristol fighters.  Once again the Army supplied a completed version of the fighter that the company had to disassemble for plans, and once again the APB insisted on adapting the design to use the Liberty engine.[36]

            Curtiss completed a prototype of the Bristol in March 1918.  After a few test flights, the prototype caught fire and was completely destroyed.  The Army then concluded that not only was the Bristol unsuited for the Liberty engine, but that the service once again required a single seat design.  In April 1918, the Army ordered 1,000 British designed S.E. 5s, a design comparable to the French SPAD, from Curtiss.[37]

            These multiple changes not only delayed production of aircraft for the Army, but also threatened to bankrupt Curtiss.  The company was forced to take out a $4,000,000 loan in 1917 to cover the cost of converting its factory for SPAD production.  Later the Army had to advance Curtiss money on several occasions to keep the company from going bankrupt.  Only Curtiss’ production of its own successful JN trainer design proved profitable for the company before spring 1918.[38]

            The Navy avoided many of these procurement problems for three reasons.  First, most of the aircraft purchased by the Navy were American designs which avoided the problems with trying to manufacture European designs.  Second, the Liberty engine adapted well to the Navy’s seaplane and flying boat designs.  Finally, the Naval Aircraft Factory provided an independent means of verifying aircraft cost so that bogey prices for naval aircraft were much closer to the true costs.  Ultimately, the Navy delivered more domestically manufactured aircraft to Europe than the Army, at less than a third the cost.[39]

            In spite of the many problems, the aircraft industry made exceptional progress during the war, as evidenced by Table 4.  Congress revised the Aircraft Production Board, placing it in the executive branch and making the members presidential appointees.  In addition, Congress assigned the board new powers giving it control over aviation production in the United States, rather than the strictly advisory role it had before, and placed all aviation appropriations under the board’s control.  Combined with the improved 12 cylinder Liberty engine, the new board began to maximize industry production.[40]

By the Armistice in November 1918, American aircraft production had reached a rate of 25,000 planes per year, compared to 36,000 for Great Britain and 32,000 for France.    From 168 employees in 1914, the industry expanded to employ approximately 10,000 in 1917, and approximately 25,000 in 1918.  While the industry failed to deliver significant numbers of combat aircraft-only 196 American built DH-4s reached the front-it did provide large numbers of training and naval patrol aircraft.  To some extent, the war ended too soon for the industry to make an impact.[41] 

The end of the war proved disastrous for the industry, between November 1918 and February 1919 the War Department

Table 4

Wartime Aircraft Production[42]

canceled or suspended $469,000,000 worth of contracts.  This total increased later in the month when Congress reclaimed $97,000,000 authorized for aviation from the Navy as part of the second Deficiency Act of 25 February 1919.  These cuts represented 91% of outstanding aircraft contracts and 85% of engine contracts.  Of 30,526 Liberty engines on order as of 11 November 1918, the War Department canceled 23,622 of them.[43]

            Immediately after the war industry officials were optimistic that commercial orders would replace military orders and keep the industry strong, but that optimism proved premature.  The greatly expanded wartime industry suddenly found itself competing for almost nonexistent sales.  The immediate cancellations drove a number of companies out of the business, mainly those created since 1917 or ones which had converted to aircraft production during the war.  The remaining companies were forced to lay off employees and sell assets to remain competitive.  Industry representatives reported that 90% of the aircraft factories in the country were converted to other production during 1919.[44]

            Curtiss Aeroplane and Motor Company remained the largest company at the end of the war based on its successful JN trainer and Navy flying boats.  Willys lost control of the company in 1920 due to financial problems but the company continued to secure contracts with the Navy and increasingly with the Army.  Glenn Martin left Wright-Martin in 1917 when the Aircraft Production Board closed his Los Angeles plant as inefficient.  There were also allegations of conflict between Martin and Deeds, and Martin formed a new company in Cleveland, Ohio.  Wright-Martin was reorganized in 1919 and devoted itself exclusively to developing and producing aircraft engines.  Boeing also remained in business, largely because it secured a contract to refurbish DH-4s in 1919.[45]

            Aeromarine Plane and Motor Company survived the war but then attempted to develop an airline and went bankrupt in the 1920s.  The Thomas-Morse Airplane Company developed an advanced fighter at the end of the war and seemed to have a promising future until it lost a contract to Boeing and was absorbed by the Consolidated Aircraft Corporation in 1921.  Glenn Martin indirectly helped establish another company when his chief engineer Donald Douglas left Martin to form his own company in 1920.  These companies formed the bulk of the industry for the upcoming decade with smaller companies attempting to survive with specialized products, such as the Loening Aeronautical Engineering Corporation which developed experimental designs but did not engage in full production.[46]

            The biggest problem facing the industry at the end of the war remained its continued dependence of the U.S. government as its primary customer.  When aircraft production in 1919 fell to 780 planes, down from 14,020 in 1918, it is important to note than only eight of those planes were not sold to a government entity.  The military demonstrated its awareness of this situation after the war, attempting to secure Congressional appropriations for the purchase of enough aircraft “to prevent the complete collapse of the airplane manufacturing capacity built up during the war.”  However, with revelations about the ineffectiveness of the wartime appropriations and a general desire to reduce spending, the military was unable to secure the necessary legislation.[47] 

            Increasingly, Congressional decisions determined the future of the aircraft industry.  Extensive Congressional investigations into the conduct of the war exposed the dismal results achieved with the money spent on aviation.  While the industry had delivered more than 16,000 aircraft during the war, significant numbers of American built combat aircraft did not reach the front.  Army officials confirmed that the $1,000,000,000 spent on aviation bought a mere 213 planes at the front.[48]

This facet of the air effort attracted the most attention and blinded Congressmen to aviation’s successes.  The AMA and the Aircraft Production Board received most of the blame, both from Congress and the press.  Many Congressmen found it easy to believe allegations of an aircraft trust when confronted with the meager results of wartime aviation expenditures.[49]

These revelations, and a general desire for economy, kept Congress from appropriating substantial money for aviation after the war.  Military spending remained considerably higher than pre-war levels, but was not nearly sufficient to support the expanded industry.  The military possessed a surplus of aircraft and Congress was unwilling to appropriate additional funds to purchase aircraft merely to see that the Army and Navy had the latest designs or to subsidize the aircraft industry.  Instead, Congress focused much of its attention on various means to use this surplus to recover some of the investment and complained bitterly about Army burning of condemned aircraft in Germany.[50]

            The military’s surplus of aircraft became a growing concern for the industry especially when the Navy announced plans shortly after the war to sell surplus aircraft, nominally to encourage civilian aviation.  The sale of surplus Army and Navy aircraft threatened to further reduce sales and in 1919 Curtiss purchased surplus airplanes and aircraft motors worth $2,700,000 just to keep them off the market.  Curtiss believed that “...the future development of the industry would be jeopardized by the indiscriminate selling of used material to the general public.”[51]

            Not only was the U.S. military’s surplus a threat, but in May 1920 Great Britain announced plans to sell 10,000 surplus aircraft to Handley-Page, a British aircraft company, at a significantly reduced price, reportedly 1% of their real value.  Handley-Page then indicated it would attempt to sell some of those planes in the United States.  Curtiss announced that it would stop making aircraft if Congress did not act on this matter.  The threat of foreign governments dumping their surplus aircraft on the American market resulted in Congressional action as bills were introduced to prevent it.  General William Mitchell and various industry leaders used the opportunity to appeal for a radical reorganization of the government’s aviation bureaucracy.[52]

            Industry leaders pointed to European nations subsidizing their aviation industries and wanted similar action by the United States.  France announced attentions to subsidize travel and mail routes and Great Britain offered to supply surplus aircraft to any company willing to establish a commercial route.  In response, American aviation leaders supported either the creation of an independent air force or a department of aeronautics as a Cabinet level office.  The industry hoped that such a change would result in higher appropriations for aviation, and hence an expanded and more secure industry.[53]

Aircraft production remained small and erratic throughout the period as commercial orders failed to increase to offset the decline in government contracts, see Table 5.

Table 5

Aircraft Production 1918-1925[54]

            This inconsistent production resulted directly from government purchases and disturbed industry attempts to carry out long range planning.  Aircraft companies had to build factories, train workers, and stockpile raw materials in anticipation of future orders.  Without the United States establishing a consistent aviation policy, such planning was impossible.  In addition, the industry had little incentive to develop new designs without the promise of future orders.  Army and Navy plans for expanding aviation or future orders meant little since they ultimately relied on Congress for funding.[55]

            The creation of the Navy’s Bureau of Aeronautics in 1921 did little to alleviate the industry’s difficulties.  The problems faced by aircraft companies in dealing with the Navy’s divided bureau system paled in comparison to the impact of the industry’s rapid expansion and contraction.  The industry continued to strive for consistent, and preferably increased, aviation appropriations.  To the extent that leaders thought an independent air force would stabilize orders, they allied themselves with General Mitchell but they did so cautiously, fearing additional funding could also bring too much government regulation.