CHAPTER VII

THE AVIATION INDUSTRY BEFORE THE

LAMPERT COMMITTEE AND MORROW BOARD

            While the United States Navy entered this controversial period largely with a single voice and purpose, leaders of the aviation industry appeared before the two investigative bodies with varied purpose and many voices.  The large firms competed with the small, and each other, the established with the new comers, and all offered their opinions on the proper course for aviation to follow.  Even the idea  of increased spending, which one would suspect all of the industry could rally behind, proved divisive, with some industry representatives pointing to inefficiency rather than insufficient funds as the true cause of aviation’s woes.  The Lampert Committee, and to a lesser extent the Morrow Board, was confronted by representatives of a disjointed and chaotic industry intent on placing blame for the perceived failure of American aviation on Congress, the military, other companies, or literally anybody but themselves.

            Both the Lampert Committee and Morrow Board heard testimony from the aviation industry, but the atmosphere fostered by the two panels differed considerably.  The Lampert Committee allowed the witnesses considerable leeway in their testimony and almost unlimited time to make their cases.  Witnesses were also allowed to play to the audience, with testimony routinely interrupted by applause from the gallery.  In contrast, the Morrow Board maintained much tighter control of the witnesses, keeping the proceedings on topic and establishing time limits for each witness.  The number of appearances made by each witness was also more limited by the Morrow Board.  While a number of witnesses made multiple appearance before the Lampert Committee, not a single industry representative appeared more than once before the Morrow Board.

             Aircraft industry leaders spent a great deal of time rehashing the events of the First World War, but also presented a number of common grievances affecting current development to the two investigative bodies.  First, the government was not spending enough money on aviation to allow the industry to fully develop.  The American aviation industry had to compete with subsidized European firms.  To compensate for this advantage, the industry wanted not only increased purchases of aircraft by the various government agencies, but also direct subsidies of commercial aviation.  Second, the money which was being spent on aviation came too infrequently for the industry to establish any consistent business strategy.  Third, many industry representatives felt that the procurement laws under which the military operated severely inhibited the development of companies because the design and production contracts were let separately.  Fourth, the industry still objected to perceived competition from the Naval Aircraft Factory and proposals to create other, similar factories.

            In addition to the general complaints, both investigative bodies were bombarded with a wide variety of grievances specific to various companies or inventors.  The larger aviation companies felt that because of the limited number of contracts available, the contracts should only be let to those companies best able to fulfill them.  The smaller companies insisted that the current system favored the larger companies and inhibited competition.  Investors came forward to demand direct government support, subsidies, for the nation’s fledgling airlines.  Finally, a number of inventors paraded before the committees, each charging that he had invented the only device or airplane design capable of revolutionizing aviation.  And that, of course, the military and, or, the larger companies were suppressing the invention, either through ignorance or malice.

            The American aviation industry’s dependence on the United States government, particularly the military, for its sales remained at the heart of the industry’s problems.  The dreamed of post-war expansion in the civilian market had never materialized and military contracts continued to represent more than 80% of total sales for most years, see Table 7.

Table 7

Aircraft Sales, 1919-1925[1]

For aviation supporters, the reality represented by Table 7 was staggering.  The total production for the seven years since the First World War ended equaled a mere 26% of 1918’s peak production of 14,020 aircraft, and only 23% of the total war production of 16,168 aircraft.  Aircraft production in the years 1920, 1922, and 1924 even fell below 1916’s pre-war production total of 411 airplanes.  Even worse was the inconsistent nature of the orders, with production increasing by one-third from 1920 to 1921 but then falling by 40% the following year, 1922.  Military orders followed a similar pattern, more than tripling from 1922 to 1923 but then being cut in half for 1924.  Commenting on similar figures, C.M. Keys, the president of the Curtiss Aircraft and Motor Company, said “As you can see if you care to follow the figures through that has been its history.  Anyone who knows the least thing about industry, anybody who has ever handled the affairs of a company, whether industrial, public utilities, railroad, or anything else, knows that that necessarily means destruction.  It can not help but mean destruction to an industry.”[2]

            For any industry, dealing with such fluctuation in demand from the industry’s largest customer would have been difficult.  In the case of the aircraft industry, this was made even worse because of two additional problems.  The first was the almost complete lack of any other customers.  The domestic civilian market remained saturated with First World War aircraft available for less than a quarter of their original value.  Competing in the foreign market was difficult for American firms because of the European subsidies and protectionist trade practices.[3] 

The second problem was the unique nature of the work force at most aircraft factories.  Unlike the automotive and many other developed industries, most aircraft were still manufactured largely by hand out of wood and cloth.  There were no assembly lines into which men could be inserted to perform a relatively simple task with little training.  Instead, most aircraft factories were staffed by a small number of highly trained employees who commanded above average salaries.  Most companies could not afford to pay these workers without substantial contracts and often saw their work force disappear during idle periods.[4] 

The lack of substantial government spending was one of the few problems that all of the industry could agree upon.  From George E. Barnhart, president of the Barnhart Aircraft Company, a small aircraft company in California, to Charles M. Keys, president of the nation’s largest aircraft manufacturer, the Curtiss Aircraft Company, to Richard F. Hoyt, chairman of the Merchants Association of New York, almost every industry representative called for additional government spending on aviation. Lorriland Spencer, Chairman of the New York Board of Trade and Transportation, argued that “...the government should give very liberal support...”[5] to aviation.  As the president of the nation’s largest aircraft manufacturer, Keys urged Congress to appropriate more money, not only for its direct effect but also “...to show some sincerity in its interest in aviation.”[6] 

Consistency of spending became the next most agreed upon item for industry witnesses.  In order to establish some semblance of industrial planning, the businessmen required a steady supply of orders.  George Barnhart, the small businessman from California, explained the current situation and its effect on the industry to the Lampert Committee as follows:

The Government requires a factory which will be able to produce a large quantity of airplanes and handle a large force of men in order that their contracts may be expedited and delivery made on all their requirements in a short period of time.  But the manufacturer can not maintain this factory under production at all times.  The factory may be out of work from six months to a year and a half, and then be given an exceptionally large contract.  It is impossible to organize and reorganize factories for these big contracts hurriedly to be filled under special Government orders.[7]

            Grover Loening, an early aviation pioneer and owner of his own small aircraft company, and others buttressed Barnhart’s testimony.  The industry suffered from a chronic shortage of capital because of the inconsistent orders and the constant reorganization of factories.  Borrowing, the normal solution to such a problem, was not always an option, as Loening explained, “We can not borrow money [from] banks, because there is no confidence in aviation.”  He did not see this situation improving until “...we can get rid of the risk—the financial risk, as this is a business....”[8]  Spencer added that regular government contracts would make “...attractive to capital the aircraft industry as an investment.”[9]

            Before the Morrow Board, R. H. Fleet, president of the Consolidated Aircraft Corporation, spelled out thirteen recommendations for government action to improve the aviation industry.  Fleet’s ten minute presentation was perhaps the most concise and comprehensive summary of the industry’s needs.  Most of his recommendations dealt with developing civil aviation in terms of airfields and aids to navigation, but the first three dealt directly with government aircraft procurement.  Without supplying any additional arguments, Fleet introduced his recommendations as:

  1.  Adoption and announcement of stable peace-time policy of aeronautical development and procurement for the next decade by all Federal departments dealing with aircraft.

  2.  Legislation legalizing definite continuing appropriations for aeronautical projects which may require several successive years for development and for completion.

  3.  To insure a stable aeronautical industry, necessary to the Government in peace and war times—and to reduce the cost of production of aircraft—all Federal departments requiring aircraft should be directed to follow the practice of placing orders at such times and in such quantities that continuity of production is possible in factories the existence of which is jeopardized by each lapse in production.[10]

Clearly, all of the industry felt that increased government purchases spread over a longer period of time would bring stability to the industry and provide aircraft manufacturers and civil aviation with the firm foundation needed for their development.

            The next major complaint, which most of the industry could agree upon, dealt with the military’s system of awarding contracts.  Both the Army and the Navy awarded contracts by a competitive bid process, with the lowest bid receiving the contract.  They also awarded two different contracts for most aircraft, the first being a contract for the design and the second for production.  Finally, unlike war-time procedures, most aviation contracts were awarded on a fixed price, rather than a cost-plus, basis.  These factors served to irritate the industry in a number of different ways and accounted for great deal of the resentment.[11]

            The initial problems came from the divided design and production procedure and the competitive bid requirement.  The cost of designing a new aircraft can often be quite expensive and most companies anticipate recouping that cost through production of the product.  Under the military’s bid system, aircraft companies faced a unpleasant decision.  If they submitted a bid for the true cost of developing a new aircraft, often hundreds of thousands of dollars, then they stood little chance of actually winning the contract.  If, however, they intentionally underestimated the cost of development and did not receive the production contract the company stood to lose hundreds of thousands of dollars.  For many fledgling companies this decision could literally decide the fate of the company.[12]

            Once the design contract had been completed, the Navy owned the design rights to the airplane and by law was required to submit production to a separate bid.  In most cases the Navy attempted to justify awarding the contract to the company which had designed the aircraft, not only to reward the company for a successful design but also to expedite construction.  The Navy assumed that the company which produced the design had an inherent advantage in beginning production and dealing with any production difficulties.  However, this was not always possible and the Navy was occasionally forced by the procurement regulations, which bore the weight of law, to award the contract to another company.[13]

            The best example of this problem occurred during the design and production of the Curtiss Scout, CS-2, in 1923.  Curtiss submitted a bid of $175,000 for the design contract for a proposed Navy scout aircraft which could also fulfill the additional roles of torpedo and dive bomber.  After being awarded the contract, Curtiss began experiencing difficulties with constructing its first all-metal aircraft, “In the building of these ships hundreds of unexpected problems were encountered;  great delays were incurred by changes in both material and in methods of construction to meet new and unexpected difficulties.”[14]  At the completion of the design contract, Keys informed the Lampert Committee, Curtiss found that cost overruns had reached $180,000.  These cost overruns, according to Keys, were “...not uncommon in design work” and the company expected to recoup the loss during production.[15]

            When the Navy and Curtiss began discussion of a production contract, the Navy informed Curtiss that it only intended to purchase forty of the new planes.  As Keys informed the committee, “We thought that on 40 ships, after a very complete analysis of our costs and trying to reduce them to what they would be over a string of ships, we could not get out under $32,000 and make 10 per cent or so on the turnover.”[16]  Navy auditors and constructors concluded that Curtiss’ cost was too high and that the plane could be built for $28,000.  The Navy offered Curtiss the contract at that price, but Curtiss declined.[17] 

The contract was then offered up for competitive bid, a bid which Glenn L. Martin’s company won for $23,000.  Martin was in financial difficulty at the time and desperately wanted any sort of contract.  Taking a basic set of plans, Martin redesigned the SC-2 and began production of what many considered an inferior version of the plane.  Still, the plane proved highly successful in its Navy role and the service eventually ordered 223 of them.[18]

            Keys insisted that Martin had to be losing money on every plane.  Keys knew that his own company had earned very little money on government contracts, telling the committee that:

We have done a total volume of business with the Army and the Navy in five years of $8,271,000.  Our net earnings were $94,538 from the Army and the Navy in five years.  In other words, we have just broken even.  That speaks for itself.  There is certainly no money in it.[19]

From his own experiences, the only conclusion he could draw was that Martin was producing them in a desperate attempt to obtain further orders.  According to Keys,

We did not see how he could do anything but lose money if the cost was what we expected it to be, unless our figures are all wrong, which they generally are not, at least in the direction of being too high.  We are afraid that Glenn Martin will join the rest of the companies that have had very heavy losses on competitive contracts.  We hope he will not, however.[20] 

Keys need not have been concerned, after losing $96,095 in 1924, Martin produced a profit of $297,200 in 1925 and then $499,571 and $406,201 in 1927 and 1928 respectively.  Martin produced those profits largely off the SC-2, despite having some of the highest overhead costs in the industry.  Glenn Martin eventually became notorious for charging expensive extravagances to his company.  At one time these included a twenty-five room mansion in Los Angeles and a eighty-five foot yacht.  Keys also complained at one point that his company had developed a reputation for being difficult to work with that had influenced the Navy’s decision.  Glenn Martin, however, was presumed to be homosexual by most military officers, he displayed effeminate mannerisms and lived with his mother until her death in the 1950s, and would have seemed a more likely candidate for personal discrimination.[21] 

            Keys used the SC-2 experience to illustrate what he perceived to be failings of the Navy’s, and the Army’s, procurement system.  Keys felt that the combined effect of the divided design-construction and the competitive bid system was destroying the industry.  To support his contention he provided a stark assessment of the industry by comparing the status of each company in existence at the conclusion of the war and its status at the beginning of 1924.  In every case he found that where the company still existed, and many were no longer in business, it was in a significantly reduced capacity.  For Curtiss alone, Keys estimated that the company’s capacity had fallen from 8,500 planes to 1,750. The industry was a shell of its former self, and Keys placed the blame squarely on the government’s aviation policy.[22] 

            As Keys saw it, that policy was to obtain the best aircraft possible for the cheapest price possible with no regard to the effect of that policy on the industry.           He declared:

            The outstanding reason for the condition of the industry is undoubtedly the fact that the distribution of the money spent by the United States Government with the industry has not been spent with any thought to keep the industry in being.  It has been spent only with the thought of getting ships for the service as cheaply as possible, no matter whether that was below cost of production or above.[23]

While such a policy might appeal to those interested in efficiency, Keys argued that in the long run it would deny the United States the industrial base it needed to fight future wars.  Further, it directly penalized those companies which were attempting to advance the science of aviation.  Such a policy might save the government money in the short run, but would be disastrous over the long term.[24]

            The change from cost-plus to a fixed price contract system only served to aggravate the industry’s other problems with the procurement system.  Where the cost-plus system had provided a measure of comfort, and the potential for abuse, the fixed price introduced cold reality to the industry.  The industry complained extensively that it was almost impossible to adequately estimate the true costs of a production run until production was underway.  This was due to a number of factors, increases in the cost of materials or labor and additional changes in design mandated by the military.  While the system allowed the company to appeal the price, the appeals often proved futile and the company was again faced with the dubious choice of producing planes at the military’s price or not at all.[25]

            The Naval Aircraft Factory attracted a number of complaints from aircraft industry leaders.  The Navy had created the NAF for two purposes, to produce aircraft for the Navy and to establish a “yardstick” for aircraft cost.  The “yardstick” was an idea proposed by Progressives for a number of industries to insure that the government and the people were not being over charged for goods or services.  The Progressives argued that for many industries it was almost impossible to determine the true cost of production, and hence the profit, without some means of external comparison. Conditions in the NAF never duplicated industry however, and the concept lost support among the pro-business Republicans who controlled Congress after the First World War.  Hence, the tasks assigned to the NAF had been greatly reduced by the Navy to appease Congressional opponents.[26]

            While the Naval Aircraft Factory had largely been relegated to experimental and repair work after the war, it still came under fire from many industry proponents.  The industry regarded the NAF as patently unfair competition since it did not have to generate a profit.  In the scramble for the limited funds available, most industry representatives deeply resented any of them being spent outside the industry.  As Keys noted of contracts to refurbish the Navy’s H-16 patrol planes completed by the NAF,

Every one of those contracts would have been very excellent business, would have cost the Government less and would have served to keep continuous production in whatever plants the Navy thought deserving of support, and that would naturally be the plants that maintained engineering divisions and created the thing that the Navy wanted.[27]

            As a final industry wide complaint, the payment system came under fire.  During the war, advances had been made to companies to offset initial start up costs.  The government discontinued this policy at the end of the war and companies were now forced to support the entire cost of retooling their factories before production could begin, often times a substantial sum of money.  This burden fell especially heavy on the smaller companies, many of which were forced to take out large loans before they could begin production on their contracts, resulting in interest payments which further reduced the companies’ profits.  As a response, the industry advocated installment payments to be made at predetermined points in the contract.[28]

            The Navy responded to many of these complaints by pointing out the contract system was mandated by federal law not subject to the Bureau of Aeronautics’ discretion.  In many of the cases cited by the industry, the Bureau had attempted to side with the company but found that legally it could not.  To some extent, the Chief of the Bureau of Aeronautics, William A. Moffett, desired changes in the procurement laws as much as the industry wanted them.  He was attempting to maintain close relationships with companies that could supply the Navy’s specialized needs.  He preferred to direct contracts to those companies he felt most capable of fulfilling them.  The competitive bid system, however, occasionally forced Moffett to award contracts to small or new companies that he feared were incapable of completing them on time and to quality specifications.[29]

            Keys, the industry’s most outspoken spokesman, rejected the military’s explanation for the problem.  He declared:  “I think you will find, if you analyze it, that it is a matter of administration by the Army and the Navy rather than a legal necessity.  But for five years now both the Army and the Navy stated that they were legally compelled to resort to competitive bidding for airplanes.”[30]  Despite this, Keys chose not to completely blame the military for their decision to insist on competitive bidding.  He noted: 

They have got to protect themselves.  The criticism against the Government departments dealing with industry is never that the Government department has studied the industry and tried to serve it;  the only criticism that is ever heard about a Government department dealing with an industry is that it is too lenient with the industry.  So they have to protect themselves.[31]

            While competitive bidding was a major irritant to much of the industry, the other alternative, the selective awarding of contracts, angered many of the smaller companies.  These companies charged that the Navy routinely gave preferential treatment to larger, more established companies at the expense of their smaller, and more innovative brethren.  Barnhart testified that not only did his company, the Barnhart Aircraft Company, have difficulty in securing contracts but that they were often not even notified that contracts were available for bid.  He presented a series correspondence with both the Navy and the Army to support his claim.  This correspondence included one letter from the Navy informing the company that their facilities did not meet the Navy’s requirement and another which stated that since the company did not appear on a classified mailing list it could not receive notification of the contracts.  The government maintained a number of such lists for security reasons, and appearing on one of them was largely a formality but took time and effort.  Other small companies and independent designers complained of similar difficulties and blamed not only the military but also the larger companies for the creation of an alleged “favored list.”[32]

            Barnhart was not the only, and certainly not the most vocal, of the witnesses who alleged that the larger companies monopolized the industry and that in collusion with the military suppressed new and innovative ideas.  That honor went to James V. Martin, an inventor who had dabbled in aviation since before the war.  James Martin, no relation to Glenn Martin, had established quite a dubious reputation in aviation circles for his outlandish and unsupported claims.  At some point, he claimed to have invented practically every innovative device used in aviation since 1909, including the aerilon, retractable landing gear, and the first tractor biplane.[33] 

            In 1923, James Martin filed suit against aviation in the United States, almost literally.  In a lawsuit seeking $52,000,000, he named every single aviation company in the United States, and almost every officer above the rank of lieutenant in both the Army and the Navy who had any association with aviation.  Then, in a public relations move, he printed hundreds of additional copies of the suit and distributed them to every single member of Congress as well as to major newspapers and magazines throughout the United States.  He supplemented the suit with a long list of newspaper and magazine articles praising his work, many of which he had contributed to or originally authored.  Despite the fact that the suit had been dismissed rather quickly, many congressmen still identified James Martin as a leading aviation expert and sympathized with his apparent plight.[34]

            In testimony before the Lampert Committee, Martin rehashed many of the allegations made in the lawsuit.  Though not supported by proof, his calmly stated charges supported by some genuine expertise painted a disturbing picture of an aviation conspiracy that dominated the United States.  He alleged that the major companies, including Curtiss and Wright-Martin, had conspired to establish the Aircraft Manufacturers Association as a means on controlling the industry and directing profits from government contracts to a limited group of businessmen.  It is true that the AMA established a pool of aviation patents under a system of cross licensing.  Martin then charged that the AMA, through various unidentified but allegedly nefarious means, limited aircraft development to those aircraft which used the AMA patents.  They did this in collusion with the Army and the Navy who actively suppressed designs that did not utilize the AMA patents, despite the fact that such designs were superior and could have been of great service to the country during the war.[35]

            To combat the aircraft monopoly, Martin urged the creation of a panel of scientists who would review all of the patents relating to aviation and award proper credit to their true inventors, namely Martin.  This, he argued, would remove the patent bottleneck which kept other innovators from applying their talents to aviation.  He also urged the establishment of more government factories, similar to the Naval Aircraft Factory, to produce new designs which the major companies were unwilling to support.  Finally, he urged the creation of another scientific panel which would serve as sort of an appellate court for inventors dealing with the military.  If the military officers deemed a design too radical, the inventor could appeal to the panel, which would then have the power to order the military to produce the design.  The argument being that scientists were more capable of differentiating between the innovative and impractical.[36]

            James V. Martin represented everything the industry feared during the Lampert Committee hearings.  With the allegations of profiteering and collusion during the war still fresh in the minds of Congress and the nation, Martin’s allegations, no matter how ridiculous, rang far too true.  Therefore, a number of the industry leaders devoted a considerable amount of time and effort to refuting his accusations.  Curtiss’ president C. M. Keys and Grover Loening, president of the Loening Aeronautical Engineering Cooperation, led the industry’s counterattack, before Congress and the media.[37] 

            Loening, who had complaints of his own about the industry, began his testimony by demanding the time “...to refer directly, and without compunction to the outrageous charges, and statements, fabrications and untruths, presented to the committee by Mr. James V. Martin.”[38]  Loening had been mentioned by name in a number of Martin’s charges and felt that not only his honor, but also the reputation of the industry had been impugned by Martin.  This could not be tolerated by the industry because “I do not see how commercial aviation can even be started if the business foundation on which we are going to build is going to countenance for a minute any such practices as those conducted in such bad faith by this individual.”

            While Loening claimed that it would take months to properly respond to the untruths contained in Martin’s testimony, he limited his immediate comments to those fabrications he felt most egregious.  Relying on his own considerable publication record, he repeatedly demonstrated the fallacies of Martin’s claims.  He provided pictures of tractor biplanes which predated Martin’s, of airplanes featuring ailerons which predated Martin’s, and of proposals for retractable landing gear several years before Martin claimed to have invented the idea.  He declared that the purpose of Martin’s claims was “...a scheme to gain recognition and payment for patents which are not deserved, you [the committee] are lending yourselves to it forcefully, if unwittingly.”[39]

            Keys was equally incensed by Martin’s testimony, and in addition to refuting it during his testimony, he devoted nearly five pages of a fifty page memo he wrote to the committee to the topic of Martin’s testimony.  He characterized Martin in slightly more favorable terms than Loening had, declaring him to be a dreamer with delusions of success beyond his proper due, but still dismissed his allegations as laughable and relatively harmless, except that his statements and publications when presented to Congress “...appear to exercise a curious and almost amusing effect upon the minds of many otherwise serious men.”[40]  Congress needed to listen to the advice of more intelligent and realistic men while realizing that “...Mr. Martin is still suspended in the world of dreams.”[41]

            Though Loening supported Keys against Martin, he found his own reasons to criticize Keys and the aviation industry in general.  While acknowledging the inadequacies of the competitive bid system, Loening placed much of the blame on the companies themselves.  He believed that it was the aviation industry itself which made bad business decisions and agreed to produce airplanes at below cost.  In particular, he faulted Keys for his management of Curtiss, noting: 

The fact that the Curtiss factory is empty to-day is being brought up and that particular instance furnishes a great argument, but in that particular instance I would suggest to the committee that consideration be given to the fact as to whether or not the development of its work was well managed, because the Curtiss Co. has had very fine airplanes.[42]

Loening argued that rather than changing the bidding system, or even increasing its own orders, the government needed to focus on developing civil aviation in the United States.  The principal problem he saw with a true explosion of civil aviation was insurance.  The industry, and flying in general, remained such a risk that conservative businessmen, such as bankers and insurers, avoided it.  Loening felt confident that if the government would move to insure aircraft and aircraft manufacturers then civilian orders would follow.  Combined with a steady stream of military orders, this evolving civilian market would provide the continuity of orders essential to support the industry.[43] 

Addressing the question of an independent air service, Loening concluded that its creation would have little effect on the problems of the aviation industry.  The difficulties in establishing and expanding the industry did not stem from the Army and the Navy controlling their own air forces, and would not be solved by changing that situation.  He stated that he,“believe[d] if the same personnel were to run it that it would not make difference.  And I believe if new personnel and a new organization were suddenly to be thrown into the situation it would do a great deal of harm right now.”[44]  In response to questions from the committee, he expanded on his opinion and compared the airplane to the gun, noting that nobody was proposing the creation of a separate gun service even though both services and a number of other government agencies all used guns.  Both the gun and airplane were merely tools and needed to be applied to a variety of tasks by the individuals most qualified in those fields.  Later, in front of the Morrow Board, he added, “Therefore it would be possible to handle this situation as the proposition now stands, without starting a new department which would be the death blow to our little struggling industry.”[45]

In addition to Loening’s insurance idea, the investigative committees heard a variety of other ideas for improving the industry’s situation.  Direct subsidies became the most common suggestion, advocated by a number of individuals including Laurence L. Drigggs, an erstwhile airline developer, H. F. Cuntz, another developer, and Godfrey L. Cabot, President of the National Aeronautical Association.  Most individuals advocating subsidies saw such a program as the only means of competing with European firms or of establishing domestic airlines.  Surprisingly, both Keys and Loening objected to the idea of subsidies.   They were joined in this opinion by Howard Elliot, President of the Northern Pacific Railroad, and A. G. Smith, President of the New York & Cuba Mail Steamship Company, both of whom felt that support for the aviation industry would give it an unfair advantage over other means of transportation.  Neither, however, cared to address the fact that both of their industries had benefited significantly from the very same type of government support.[46]

Despite industry infighting, the picture which emerged from the two sets of hearings was pretty clear.  The American aviation industry was dependent upon the United States government, and principally the military, for its livelihood.  As long as this situation remained, the government’s aviation policy would be essential not simply for the industry’s growth, but also for its very survival.  The industry welcomed additional spending on aviation, in the form of a new service or simply additional support to the existing structure.  More importantly, the industry needed consistent, continuous, spending on aviation to insure the stability which would encourage additional investment and allow sound financial planning.  Once mainstream America developed confidence in aviation, not only the safety of the planes but also of the companies, then steady improvement would invariably follow.

Specifically, the major companies in the industry wanted to see a firm, five or ten year commitment from Congress for the purchase of airplanes.  Purchases which would not only be spread over a number of years, but over a number of companies.  These aircraft could, and would, be built for a profit and allow the companies the luxury of designing new and innovative airplanes to interest not only the military but also the civilian market.  As a corollary, the government should not permit any further dumping of surplus aircraft on the market or direct government competition in the form of the Naval Aircraft Factory or similar situations. 

Once these conditions were established, the industry assured Congress that a strong and stable aviation industry fully capable of meeting the country’s war-time needs would result.  However, if the current conditions continued then the nation would find itself deprived of a major cornerstone of economic and military competition in the modern age.  The industry had always contended that the difficulties encountered during the First World War resulted from a lack of government support prior to the war, and not industry profiteering or incompetence, and that unless Congress acted to correct the situation the conditions were being established for a repeat of the debacle.