Aircraft Industrialists

Aircraft Industrialists. Among the ever‐widening links between military and social institutions, few have been as extensive or dynamic as the relationship between the U.S. military and the aircraft industry. From the industry's origins before World War I through the early Cold War period, this relationship, though heavily mediated by Congress, was made up of army and navy officers and individual aircraft industrialists who for the most part owned and operated independent firms. These firms performed research and development for new military aircraft and also manufactured them. During the interwar years, suggestions that the aircraft industry be nationalized were occasionally heard but never really challenged the consensus that the industry ought to remain in private hands and that the military ought to relate to aircraft firms on contractual business terms kept as distant and impartial as possible.

From the first flight at Kitty Hawk in 1903 through World War I, the aircraft industry was dominated by two firms named after this technology's pioneers, the brothers Orville and Wilbur Wright and Glenn Curtiss. When the U.S. Army, U.S. Navy, and Congress pushed for large‐scale airpower during World War I, other firms entered the industry to try to meet the enormous demand. Most notable were two automobile companies, Fisher Body and Willys‐Overland. The Ford Motor Company also engaged briefly in large‐scale production of the Liberty aircraft engine. But despite the expenditure of hundreds of millions of taxpayer dollars, wartime military aircraft production proved a fiasco, mainly because of the misguided effort to mass‐produce air frames according to the automobile industry's assembly‐line manufacturing methods. Nevertheless, many blamed an “Aircraft Trust,” supposedly composed of corrupt corporate executives and military contracting officers who profited enormously but failed to produce aircraft. The U.S. Congress imposed a punishing postwar business environment for military aircraft that meant unprofitability for the industry. Worried about possible collusion, Congress also blocked efforts to streamline the industry's dealings with the military.

Throughout the interwar years, military aircraft design and manufacture remained highly competitive, despite severely limited military spending. Congress maintained easy access for new entries through price‐competitive contract laws, which military officers were obliged to follow. Low start‐up and capital costs also eased entry for the many aircraft entrepreneurs who wanted to be part of the exciting new technology despite business risks. The energies of this group of competitive entrepreneurs/industrialists, many of whom were independently wealthy and willing to absorb steady losses, were key to the industry's viability until mass demand developed during World War II. They maintained an airpower supply base that was inferior to, but at least comparable with, those of the world's leading military powers.

In this period, tiny new companies emerged to give the aircraft/aerospace industry many of its familiar names. Glenn Martin, William Boeing, Donald Douglas, Chance Vought, Charles Lawrence, and Clyde Cessna found plenty of room to compete with the two larger firms under the Wright and Curtiss names. Three other lesser‐known but significant figures also entered the industry during the early 1920s. In 1923, Reuben Fleet established Consolidated Aircraft in Buffalo, New York, and moved it to San Diego in 1935, where it eventually became an important part of General Dynamics. In 1926, Frederick Rentschler reorganized Pratt & Whitney into a major supplier of aircraft engines. The most prominent aircraft industrialist during the 1920s was Clement Keys, a Wall Street financier deeply committed to aeronautics. He bought Curtiss Aeroplane in 1920 and arranged the Curtiss‐Wright merger in 1928, which combined aircraft and engine production and became a critical airpower supplier during World War II.

Aviation companies became a focus for much of the investment frenzy of the 1927–29 stock market boom. Some aircraft firms merged, but new, independent ones also appeared. All found access to new investment capital that helped sustain a competitive industry during the early depression years. Most notable among the new entries were Leroy Grumman, John Northrop, Igor Sikorsky, Sherman Fairchild, Lawrence Bell, and Alexander de Seversky. Seversky's firm was reorganized as Republic Aircraft in 1938. North American Aviation, controlled by General Motors, was incorporated in Baltimore and moved to Los Angeles in 1935 under the guidance of James Kindleberger. The Loughead brothers established a company, but changed its name to Lockheed because it was so often mispronounced. In 1931, two entrepreneurs from Boston, Robert and Courtland Gross, bought Lockheed and made it an important innovator in Los Angeles. During the 1930s, Howard Hughes also began competing from Los Angeles. In 1939, James McDonnell established a company in St. Louis.

In the 1930s and even during World War II, the industry remained fragmented, highly competitive, and geographically dispersed. Companies pursued resolutely independent business and technological strategies. Most snubbed the industry's trade association in Washington, D.C., unwilling to suspend their separate interests for a common industry front that might alter the debilitating contracting rules they all faced in their dealings with army and navy officers. In 1940, Congress authorized cost‐plus contracts and advance payments. But even after these reforms and the massive new demand for warplanes, the industrialists remained highly independent and wary of one another and the government. Some giant aircraft corporate combines expanded or emerged during the war, such as Curtiss‐Wright and Consolidated‐Vultee (Convair), and automobile companies—General Motors, Ford, and Chrysler—entered the industry on a large scale. But aircraft manufacture still did not become heavily concentrated.

The industry's relations with the military also remained erratic, ad hoc, and unpredictable. The early aircraft industry scarcely resembled a common perception of military industries as appendages of a “warfare state” or a state‐centered military‐industrial complex. The government had no overall plan or coordinated approach for mobilizing the aircraft industry or demobilizing it in 1945. It relied on the independent strengths and abilities of the manufacturers. The military's involvement with firms rarely went beyond issuing aircraft specifications and contracts, providing financing, and selecting sites for new factories. Industrialists continued to give only nominal support to their trade association. They plotted individual competitive strategies for the postwar military and civilian market. Relations between firms and the air force and navy became more integrated only when the industry's viability seemed threatened by balance sheet crises during the late 1940s and the Korean War. Rapid technological development meant far greater complexity in aircraft design and production and also seemed to mandate more stable, predictable, and longer‐term relations.
[See also Air Force, U.S.: Overview; Procurement: Aerospace Industry.]

Bibliography

I.B. Holley, Jr. , Buying Aircraft: Materiel Procurement for the Army Air Forces, 1962.
John B. Rae , Climb to Greatness: The American Aircraft Industry, 1920–1960, 1968.
Roger E. Bilstein , The American Aerospace Industry: From Workshop to Global Enterprise, 1996.
Jacob Vander Meulen , The Politics of Aircraft: Building an American Military Industry, 1991.

Jacob Vander Meulen