Category AVIATION &ТНЕ ROLE OF GOVERNMENT

On September 2, 1940, the United States and Great Britain sealed an agreement that transferred 50 U. S. destroyer-type warships to England in return for land rights on several British possessions, including Newfoundland, the Baha­mas, Jamaica, and other Caribbean islands. This was the first move toward extending the defenses of the United States and at the same time laying the groundwork for a ferry system for the future transport of war materiel to Europe and Africa. On April 9, 1941 the Danish Ambassador (who had relocated to Washington after the Nazi take­over of Denmark in 1940) signed an agreement allowing the United States to build airfields and associated facilities, as well as placing personnel on the island of Greenland (Greenland had been a colony of Denmark since the early 18th century).

The Lend Lease Act

American public opinion was gradually changing from predominately isolationist to one of limited involvement, “as long as we don’t have to go to war.” On March 11, 1941 Congress passed the Lend Lease Act, which empowered the presi­dent “on behalf of any country whose defense the president deems vital to the defense of the United States, to sell, transfer title to, exchange, lease, lend, or otherwise dispose of, to any such government any defense article. . . not expressly prohibited.” This Act allowed the United States to legally provide war materiel to England, China, Russia, and to 35 other nations. Roosevelt had earlier announced that the United States, although not involved in the war, was to become the “arsenal of democracy.” The industrial capac­ity of the United States was about to be tapped, and a mighty force it would prove to be.

There are two types of certificates issued by the federal government to air carriers in the United States. Air Carrier Operating Certificates are issued by the FAA under Part 121 of the FARs to carriers operating aircraft for hire with 10 or more seats. The compliance requirements of Part 121 are numerous, but the two major areas addressed are the training of flight crews and aircraft maintenance programs. Air Carrier Fit­ness Certificates, also referred to as Certificates of Public Convenience and Necessity, are issued by DOT, not the FAA, and establish that the car­rier has shown that it has the financial capacity and management expertise to carry on a sched­uled airline operation. These are required only of carriers operating aircraft with 61 or more seats. While some Fitness Certificates authorize only cargo operations, the majority of such certificates apply to both passenger and cargo operations.

Charter Operations

As we saw in Chapter 18, the market for cheaper air travel had been recognized since shortly after World War II, when charter operators began to fly using war surplus DC-3s. Charter operators were definitely second class citizens in the airline world and in the view of the CAB. They not only got no respect from the scheduled airline world but they were hindered at every turn by regula­tions designed to insulate from competition the trunk air carriers who had been accepted into the system by the CAB in 1938.

Charterers could not sell individual tickets, nor could they fly published schedules. They were essentially relegated to selling the entire aircraft capacity to large, established groups by advance sales. The CAB monitored these opera­tions carefully; ever watchful lest charter opera­tions encroach on the CAB-controlled scheduled airlines’ established routes. But the charter opera­tors showed that a profit could be made with low fares, sometimes as much as 50 percent lower than CAB-mandated fares, so long as the aircraft flew filled with passengers.

The CAB then allowed the trunk lines for the first time to include a cheaper class of airfare in the same aircraft with standard fares; these were the first “coach fares” and this was the cre­ation of separate seating and amenities for sec­ond class passengers on the same flight. Still, the CAB retained its stranglehold on the economics of commercial aviation.

Intrastate Air Carrier Operations and Scholarly Publications

One of the first economic studies to question the advisability of the airline system run by the CAB was published in 1962.2 The conclusion of this study was that there was nothing inher­ently monopolistic about the airline business and there was no need for any government limita­tion or control over entry into it or exit from it. Shortly thereafter, in 1965, a Yale law student by the name of Michael Levine wrote a law review article about the largely unregulated intra­state airline business in California. In comparing the intrastate airline fares with those mandated by the CAB, he concluded that CAB policies “fostered unnecessarily high fares, encouraged uneconomic practices, and limited the variety of service available to the public.” He found that intrastate fares were about half as high as interstate airline fares, yet the intrastate carriers were making a profit and they were flying more passengers.

In 1970, Alfred Kahn, a professor of eco­nomics at Cornell University, produced a two – volume work, The Economics of Regulation, which basically postulated that the heavy hand of government regulation was inimical to the public interest, and that competition would natu­rally produce the best product for the best price for the public.

By 1971, a new intrastate carrier, Southwest Airlines, answering not to the CAB but only to the Texas Public Service Commission, began ser­vice between the three largest cities in the very large state of Texas, setting its fares far below those mandated by the CAB. It, too, proved suc­cessful charging lower fares and flying with full airplanes.

The conclusion was becoming inescapable that government regulation of air carriers was largely preventing low-fare air travel and restrict­ing travel.

The first legislation in the United States regulat­ing transportation was the Interstate Commerce Act, in 1887. This statute heralded the era of “negative” legislation, or legislation that had the effect of curbing or restricting railroads in their conduct of business.

The thrust of the Act was to prohibit the railroads from paying rebates (kickbacks), from giving unreasonable preferences to shippers, and from discrimination against any shipper. Rail­roads were required to publish tariffs, which disclosed rates and schedules, and they were required to charge according to those tariffs. The Act brought uniformity to the relationship between the railroads and the public.

The Interstate Commerce Act and its amend­ments also created the Interstate Commerce Commission, the agency assigned the role of administering the terms and provisions of the statute. It was empowered to monitor railroads to ensure compliance with the terms of the statute, to hear complaints from the affected public, and to make rules and enter orders in furtherance of the statutory mandate.

Subsequent federal enactments continued the era of negative legislation toward the trans­portation industry, including:

• The Elkins Act of 1903 (focused on person discrimination and established a system of fines and criminal penalties)

• The Hepburn Act of 1906 (set maximum rates)

• The Mann-Elkins Act of 1910 (focused on place discrimination)

The pendulum had swung too far in the early and energetic days of railroading, and the government was now catching up to balance things out in the public interest. The days of unbridled capitalism in the railroad business were over. In the early years of the 20th century, the railroads were nearing what was to be their maximum trackage (miles of laid tracks), and they were just about to experience the effects of continuing industrial and technological development (Figure 3-4 displays the emergence of U. S. cities in 1880) that would lead to alternative forms of transportation that would overpower them. The days of the internal combus­tion engine, the open road, and the machines of the air lay just over the horizon.

n 1913, the state of aeronautical advance in the United States was primarily represented by the accomplishments of Glenn Curtiss. Con­versely, leaders in Europe had invested heavily in aircraft technology. Competitions were regu­larly sponsored to encourage advances in aircraft speed, range, and altitude. Europeans had also incorporated aircraft units in their armed forces prior to the first world war. In 1913, the United States had only six pilots in the entire U. S. Army.

In July 1914, the conflict that was to become known as “The Great War” or World War I opened with the Austro-Hungarian inva­sion of Serbia, which was soon followed by a German invasion of the low countries of Western Europe, Belgium, and Luxembourg, as well as France. Russia attacked Germany. The combat­ants aligned into the Allied Powers, consisting mainly of Great Britain, France, Italy, Russia, Japan, and the United States, and the Central Powers, mainly Germany, Austro-Hungary, Turkey, and Bulgaria. The conflict ended on November 11, 1918.

As in most wars, technological advances in weapons and support were greatly accelerated between 1914 and 1918. The United States was late entering the conflict (1917) and did not partici­pate in the major aircraft innovations that occurred
during the war. European manufacturers and designers had jumped ahead in aircraft and engine design, partly out of necessity. On the Allied side, the French Nieuport, followed by the SPAD, manufactured by the French company Societe des Productions Armand Deperdussin (hence the acronym), and the English S. E. 5, Sopwith Pup, and Sopwith Camel, provided the fighter aircraft. In 1918, close to the end of World War I, Glenn Martin was responsible for contributing the only American design for combatant aircraft in the war with his MB-1 bomber. On the Central Pow­ers side, the German manufacturers Junkers and Albatros Werke GmbH produced formidable fighter aircraft, but the Fokker designs proved to be the best, particularly the D. VII, which is widely regarded as the best fighter of the war. This aircraft was flown by Hermann Goering, who was to become the second-in-command to Adolf Hitler in the 1920s and the leader of the German Luftwaffe in the 1930s and during World War II.

Although the Curtiss Aeroplane and Motor Company was the largest aircraft manufacturer in the world during the war, producing 10,000 planes by 1918, the JN-4 did not come close to matching European models in speed, power, ceil­ing, and reliability. First produced in 1916, the

Jenny mounted the OX-5 engine, 90 horsepower and water-cooled. When Curtiss improved his О model engine in 1913, he wanted to publicize its advances by designating it the “O Plus.” But neither the “O Plus” nor the “0+” designation looked particularly good when printed, and the “+” could even be confused with the letter “T.” Someone suggested rotating the Plus sign by 45 degrees, depicted as “OX,” and the new series of engines became known as the OX-2.

The Curtiss models, although behind the Europeans, were higher performance machines than those built by the Wrights. The Wright Company had fallen by the wayside in aircraft design by World War I, its designs being almost entirely based on the outmoded Flyer models.

Manufacturing in the United States upon its entry into the war was made subject to the oversight and control of the Aircraft Production Board, the creation of which was a recommen­dation of the National Advisory Committee for Aeronautics (see below) which decreed that the United States should gear up to produce 22,000 aircraft for delivery to France within a year. Iso­lated between two great oceans, America was far removed from the vast destruction war had brought to Europe just since 1914, and the world was about to appreciate how valuable the heavy manufacturing reserve of the United States could be. But America was too far behind the design performance standards of aircraft already in use in Europe, so much of the American production effort was limited to manufacturing aircraft under license from European designers.

The De Havilland DH-4, a single-engine bomber/observation plane, was the primary mili­tary airplane built in the United States during the war. The Dayton-Wright Company built the most, 3,106 planes, followed by Fisher Body at 1,600, and Boeing, which produced 150.

The Wright Company concentrated on the production of engines under license, notably the 150-horsepower Hispano-Suiza aircraft engine, much in demand by the French. Hispano-Suiza was a Spanish engine and automobile company that, in 1915, refined its V8 liquid-cooled auto­mobile engine for aeronautical use. This engine represented a quantum advance over the rotary engine, which at the time was the primary air­craft engine in use. The French government in 1915 placed orders in the United States for 800 engines, which were required to be built in the United States due to the lack of capacity in Europe during the war. The Wright Company contracted to supply 450 of these. To facilitate filling the order, the Wright Company arranged a merger with Glenn L. Martin in 1916 to form the Wright-Martin Aircraft Company. By the end of the war, the company had produced over 10,000 of the engines, known as the Wright-Hispano. Along the way, the Wright-Hispano replaced the 90-horsepower Curtiss OX-5 in the Curtiss Jenny, which was limited to training use. After the war, in 1919, the Wright-Martin combina­tion was dissolved and the company became the Wright Aeronautical Corporation. Much was to be heard from this company for its contributions to aircraft engine development during the 1920s.

With the entry of the United States into the war, the Aircraft Production Board ordered the production of 44,000 American-built aircraft engines to be used in conjunction with the ambi­tious goal of manufacturing over 22,000 aircraft. The immediate problem was, however, that the United States did not possess an aircraft engine capable of providing sufficient horsepower or speed for military airplanes. Packard Motors happened to have in its design inventory an experimental, but tested, 8-cylinder liquid-cooled automobile engine that was to prove the basis for America’s greatest contribution to the war effort. On May 29, 1917, automobile engineers at Packard began a redesign of the engine with the purpose of supplying the ordered military aircraft engine, and five days later, a revised design was presented for aircraft use. But it was still an auto­mobile engine, having battery ignition instead of magnetos, for example. It was redesigned again, this time expanding its power to 12 cylinders like the British Rolls engine, and with magneto ignition. The new design, the water-cooled Lib­erty, weighed only 710 pounds and, producing 410 horsepower, it surpassed the performance of all other aircraft engines in the world. By war’s end, some 17,935 Libertys had been produced, of which 5,827 had been delivered to Europe for use in aircraft there. The Liberty was installed in the DH-4, and by November 1918 deliveries to the Army numbered 3,431 airplanes. Of these, 1,213 arrived in Europe, but only 248 ever flew at the front.

When the Armistice was signed, so many airplanes and engines had been produced for war use that engine and airplane manufacturing liter­ally stopped cold. Surplus equipment was every­where, and it was cheap. Curtiss Jennys were so numerous that, for $500, a student pilot could receive his instruction and upon solo be awarded a Jenny in the bargain.

As peace settled once again over the world, as the railroads were returned to their owners by the government, as the automobile began hitting the open roads being built by the government, and as all of the planes appeared to be sitting on the ground, many wondered what would become of aviation in America.

Flying was not yet very appealing to travelers in the late 1920s. Forced landings, cancellations due to weather, and airsickness from the heat, noise, and sometimes-violent motion of the primitive aircraft combined to make the experience more of an adventure than a reliable mode of transport. The passenger service that was available was mostly short-haul, and there were parts of the country where there was no service at all, like between New York and Chicago, which was the heavily traveled train route through the Allegheny Mountains. The experience of the early airmail pilots over that route, as well as the subsequent trials of the contract airmail carriers, had con­vinced National Air Transport (Clement Keys), which flew the mails over the route, not to attempt passenger service. Still, Keys believed that airline service was destined to be a market­able and timesaving device for transcontinental passengers.

In 1928, Keys seized upon the idea of providing air transportation by day, then turning the passengers over to the trains for the standard luxurious Pullman service by night. He established a joint venture with the Pennsylvania Railroad in the East and the Santa Fe in the West to round out the full passage. The air carriage portion of the deal was carried out by the newly formed Transcontinental Air Transport (TAT), which had no airmail routes or subsidies, and it had to rely solely on passenger fares for its income. The westbound trip began in New York at Penn Station, where passengers boarded the Pennsylvania Railroad for the overnight run to Columbus, Ohio. Once beyond the Alleghenies, TAT took over at Columbus, flying passengers all day on the next leg to Waynoka, Oklahoma, where they again boarded a Santa Fe over­night train to Clovis, New Mexico. From there, they continued in Ford Trimotor discomfort to Los Angeles. The complete itinerary could be completed, at least on paper, in 48 hours, saving a full day over the fastest through train schedule then being operated. (See Figure 13-5.)

The operation, although highly touted by the railroads and accompanied with big-name fanfare (Charles Lindbergh himself was at the controls of the inaugural flight), was really only

a novelty. The Ford Trimotors held 10 to 14 seats, but the passenger load was usually only six or seven passengers, and sometimes just three. With no airmail subsidy, the airline lost money, $2.7 million in 18 months. The Wall Street crash of 1929 impoverished many of the potential passengers, and by 1930, TAT was barely hanging on.

Ш The Hoover Administration and Walter Folger Brown

Former Secretary of Commerce Herbert Hoover was elected President of the United States in November 1928, and took office in 1929. As we saw at the beginning of this chapter, in his testi­mony before the Morrow Commission Hoover strongly supported a robust aviation system for the country. As we also saw above, the state of commercial aviation after the passage of the

Airmail Act of 1925 was far from optimal, being perhaps better described as chaotic. It was clear, however, that the health of the emerging aviation industry at the time depended on airmail govern­ment contracts.

Hoover appointed Walter Folger Brown as his new Postmaster General in 1929. Brown, a lawyer, had served as Assistant Secretary of Commerce beginning in 1927 under Hoover. Brown had no particular affiliation with aviation prior to his appointment, but he took seriously the mandate that came with his job to “encourage commercial aviation.” The Postmaster General, since 1925, had the responsibility of making awards of airmail contracts, which under the Air­mail Act of 1925 were required to be made on a competitive bid basis.

Under the terms of the original Act, airmail carriers were paid 80 percent of the revenues derived from the postage charged. This had provided too little income for the CAM route
operators to survive, so the law was changed in 1926 to provide for CAM operators to be paid according to the weight of mail carried plus a factor for distance carried. As he immersed himself in his new duties, Brown noticed that sometimes smaller companies submitted unrealistically low bids in order to get the business, and then played games with the weights of mail carried in order to increase their income. Postage rates were not set to cover the actual cost of airmail delivery, but to encourage the use of airmail and to promote commercial aviation. The difference in revenue received by the Post Office and the amount paid to the CAM operators based on weight/distance of airmail carried was a subsidy. Unscrupulous operators were known to have mailed telephone books and machine parts to themselves, paying the upfront postage and then charging the Post Office the much higher contract rate based on weight.

Brown saw that the system in place encouraged fraud, was costly to the government, and did little to promote commercial aviation. He realized that the government subsidy for airmail was open-ended, subject to little government control. It was like an oil gusher that could not be capped.

Although the government controlled the award of CAM routes, it had little control over the operators after the award was made. Control of stock companies was subject to change and was beyond the control of the Post Office under the system in place. In fact, in 1929 a proxy fight for control of National Air Transport, which held the New York to Chicago portion of the transcontinental airmail route, had resulted in United Aircraft & Transport Corporation taking control of that company from the North Ameri­can Aviation group. This gave the United group monopolistic control of airmail carriage all the way across the nation, without Post Office approval, although the government was footing the bill.

Within a relatively short time after tak­ing office, Brown had formed well-researched and thought-out conclusions about what was wrong with the airmail service. Brown believed that the Post Office was paying too much for the carriage of mail, partly because the airline passenger business had not been developed. He believed that by developing passenger traffic, a new, untapped source of income would become available to the carriers. This new income would then be available to help offset the cost of airmail operations.

Brown thought that tying the mail contracts to the size of aircraft (bigger) and requiring on­board state-of-the-art communication equipment (radios) and instrumentation would have the effect of making airline flying safer and more acceptable to the potential flying public.

He noted that a system of illogical short routes had been created through the process of competitive bidding, and that competitive bidding had resulted in a nonsensical pay schedule to the airmail contractors with rates of pay varying from 62 1/2 cents to the maximum of $3.00 per pound. He believed that competitive bidding on airmail contracts was counterproductive and that a system of appointing qualified, well-financed, and experienced operators would render a more stable and efficient system. He felt that those operators who had “pioneered” airmail routes in certain parts of the country, and who had expended effort and money in promoting the airmail system, developing good will and encouraging aviation should be given preferred consideration in the award of airmail contracts. (See Figure 13-6.)

In the summer of 1941, Roosevelt and Churchill agreed to a secret meeting to discuss the dete­riorating military and economic situation con­fronting Britain. Using cover stories, Roosevelt boarded the heavy cruiser USS Augusta from the

Presidential yacht, Potomac, off New London, Connecticut, and Churchill departed Scapa Flow in Scotland aboard the battleship Prince of Wales for a rendezvous in Placentia Bay, New­foundland, which occurred on August 9, 1941. Although the meeting produced what was to be called the “Atlantic Charter,” no specific prog­ress was made for either getting the United States into the war or providing additional war materiel to Britain, but the “Atlantic Charter” contained eight separate points on which the two agreed, including that “Nazi tyranny” must be destroyed, a statement that was well outside the parameters of the neutrality position of the United States. It also cemented the coalition between the United States and Great Britain for the difficulties that lay ahead. Based on the totality of the agreement, it is commonly concluded that this document also formed the basis of what was to become the United Nations.

In the months that followed, Churchill con­tinued his ardent dialogue with Roosevelt for ever increasing participation by the United States in the European war theater, but it was not until December 7, 1941, that the United States became fully committed to World War II. For on that day the Empire of Japan, using aircraft launched from six aircraft carriers located to the northwest of Hawaii, carried out air strikes against the naval and air facilities at Pearl Harbor, resulting in over

2,0 servicemen deaths and the near destruction of the American battleship fleet at anchor there. Fortuitously, all American aircraft carriers, with their full complement of aircraft, officers, and men, were at sea.

Air navigation facilities include radio directional equipment and landing aids and are inspected and rated by the FAA to ensure compliance with safety operational standards. A certificate issued by the FAA to such a facility establishes such compliance.

Air Agencies

FAA regulations applying to aircraft repair sta­tions and to maintenance technician facilities, pilot schools, and training centers include the requirement of meeting certification standards relating to procedures, instructors, equipment, tools, and personnel.

Airports

Since 1982, the FAA has been charged with certificating operators of airports serving cer­tificated air carriers (Airport and Airway Devel­opment Act). FAA regulations containing the requirements applicable to such airport opera­tors are found in Part 139 and relate primarily to maintenance of minimum safety standards in airport operations.

Designees

The FAA designates individuals possessing certain skills, training, or education to assist it in carrying out its examination and inspection duties and through whom FAA certificates are issued. These individuals must first be certified, themselves, as representatives of the administra­tor and must hold that certificate issued by the FAA. These individuals include Aviation Medi­cal Examiners who are issued a Certificate of Designation, and Pilot Examiners (Flight Stan­dards Designated Examiner) who are issued a Certificate of Authority. In addition, Certificates of Authority are issued to Technical Personnel Examiners, Designated Aircraft Maintenance Inspectors, Designated Engineering Represen­tatives, Designated Manufacturing Inspection Representatives, and Designated Airworthiness Representatives.

Unmanned Aircraft Systems

There are three categories of Unmanned Air­craft Systems (UAS) now operating under FAA authorization in the National Air Space (NAS) in the United States: Model aircraft, Experimental UAS, and Public UAS.

Model Aircraft

FAA Advisory Circular (AC) 91-57, entitled “Model Aircraft Operating Standards” applies to the recreational use of the NAS by model airplane operators. Issued in 1981, these stan­dards limit the operation of model aircraft to less than 400 feet above the surface, away from popu­lated areas, and when operated within three miles of an airport, notice must be given to the airport operator or control tower.

By the 1970s, the railroad industry had been heavily regulated by the Interstate Commerce Commission for over 80 years, and the airline industry had been regulated by the Civil Aero­nautics Board for almost 40 years. The railroads were in serious financial trouble under regula­tion. Mergers entered into to stave off financial collapse, like the Pennsylvania Railroad and the New York Central, only succeeded in delay­ing the inevitable as the Penn Central entered bankruptcy in the 1970s. Six Northeast railroads were in bankruptcy. In order to preserve pas­senger rail traffic in the Northeast corridor and environs, Conrail was created from the remains of the six railroads at a cost of billions of dollars of taxpayer money. Railroad passenger service could not be sustained anywhere in the private sector, as Amtrak, subsidized by the government, was required to take over that service nation­ally. It appeared that it was only a matter of time before the airlines were going to be in the same position.

Mistrust of Government

It also seemed that the government was not trusted, nor was it respected as before, perhaps due to public disgust and unease created by the divisive issues of the 1960s and 1970s. It hardly mattered from which end of the political spec­trum one viewed the situation. On the left, the Vietnam War and Watergate, resulting in the unprecedented resignation of a sitting president of the United States, were examples of inept or corrupt leadership. On the right, the social experimentation of the Great Society programs of Lyndon Johnson, the rapid deterioration of inner cities, and civil disturbances seen nightly on the evening news were evidence of misguided governmental policy. Government seemed to be contributing to the problem, rather than offering rational solutions. Nixon had imposed wage and price controls, effectively putting the govern­ment, not the business owners or the workers, in charge of prices and wages. These efforts were ineffective, and added to the general frustration of people with government.

«I really don’t know one plane from the other. To me they are just mar­ginal costs with wings.»

Alfred Kahn, 1977

efore proceeding further into the 20th century, we need to visit the labor move­ment in the United States. This phenomenon became a force and an institution in American industry that, beginning in the middle to late 19th century, has had a significant impact on national modes of transportation.

The development of trade unionism is highly correlated to the progression of industrialization. Although trade guilds existed from medieval times in Europe, they were composed of artisans who banded together to promote their craft, and to improve their products and methods. As such, guilds had an exclusionary aspect not seen in modern trade unions, which welcome wage earn­ers of all kinds and strive to increase their mem­bership numbers and power base.

Trade unions were formed as associations of workers as a natural counter-balance to owners. Historically, the formation of such groups was illegal under the laws of most countries. These groups were seen as hostile to the order of the day, revolutionary even, and their objectives were often sought through disorderly and violent means.

Prior to the Civil War, most of what could be called “industry” was controlled by small individual owners, often families, or sometimes
small partnerships. These industries included the cotton and woolen mills of New England, iron and steel factories of Pennsylvania and New York, the various short-line railroads that served their local areas all over the eastern United States, oil drillers in Pennsylvania, and coal mining operations in the Appalachian Mountain chain. Most of the wealth of the country lay in land ownership. The United States was primarily a nation of farmers.

The Civil War spurred development in most areas of industry. The woolen mills were called upon to clothe a million men with uniforms. Boots and saddles were needed from the leather industry. Union Army contracts for pork and cat­tle created the Chicago railroad stockyards and packing plants. The manufacture of iron and steel products boomed. The railroads proved their effi­ciency during the war through the movement of troops and materiel. And the railroads demanded more coal, iron, and oil.

After the end of the Civil War, railroad con­struction exploded. Some 35,000 miles of track were laid from 1866 to 1873. Building railroads was an expensive undertaking, and the use of the corporation found favor as a means of raising money. Corporations also became the preferred
form of business ownership and operation in most other industries. The shares of public cor­porations were traded on the stock exchanges of New York and Chicago, although large blocks of stock were owned by very wealthy individuals and families. In the days before any social regu­lation, corporations determined all the rules and working conditions of employment, including the hours to be worked and the rates of pay.

As industrialization grew, so did the orga­nization of workers. Some of these organiza­tions were more like fraternal organizations than unions, although they ultimately progressed into trade unionism and condoned work actions and strikes. Some of these groups were politically oriented, being populated by anarchists, social­ists, and communists. The writings of Karl Marx, a German philosopher and bohemian, formed the basis of a philosophy of class strife (e. g., the haves against the have-nots, or class warfare), which was adopted by many groups. His Com­munist Manifesto, published in 1849, detailed the decline and fall of the capitalist economy and the ultimate triumph of the worker over the owner-class. Union leaders were usually the most aggressive of the workers.

The first railroad unions appeared in the 1860s. Their original purpose was to provide life insurance for their members, since life insurance companies refused to insure railroad workers due the high risk of injury and death. Railroads provided union organizers with the opportunity to organize workers on a national level instead of the local level usually associated with factories. Railroad unions were formed according to the class or craft of service that the employer ren­dered, whether engineer, fireman, conductor, or other.

After the Civil War, the railroads were the largest industrial employer in the United States. Money was flowing from the private sector into the railroads as they rapidly expanded and, as might be expected, the expansion rate proved to be too great. The overbuilding of the railroads, along with the great investment in money made by speculators, led to widespread economic fail­ures. First profits dried up and then credit. The first industrially induced recession, known as the Panic of 1873, resulted in bank closures and depositor losses. The crisis caused the failure of more than 18,000 businesses, and 89 of the nation’s 364 railroads went bankrupt.

The relationship between the unions and the owners of the railroads was exceedingly antago­nistic, with good cause on both sides. Although not illegal,1 unions were not recognized by busi­ness or by the government as quite legitimate. Union members often resorted to violence and civil disturbance; the railroads reciprocated with hired police forces and strike-breakers.

The economic conditions surrounding the Panic of 1873 resulted in the railroads cutting wages and terminating workers. In 1877, the first serious railroad strike of the new indus­trial age began on July 14 in Martinsburg, West Virginia, and spread along the lines of railroad into Pittsburgh and Philadelphia, then on to the Midwest, St. Louis, and Chicago, becoming more violent as it went. Railroads across the country were brought to a standstill by rioting and blood­shed. In Chicago and St. Louis, a political group known as The Workingmen’s Party, which was the first Marxist-influenced political party in the United States, organized mobs of up to 20,000 demonstrators who battled police and federal troops in the streets.

Gradually, the troops suppressed both strik­ers and rioters city-by-city and, 45 days after it began, the Strike of 1877 was over. But the unions came out of the fray empowered by the knowledge of what their combined action could produce. The unions became better organized, and their numbers and membership grew. Their leaders espoused the general belief that they were justified in resorting to any means to overcome the power of the corporations. The Strike of 1877 was to mark the beginning of a particularly vio­lent period in labor relations in the United States.

During the next decade there would be thou­sands of strikes, lockouts, and work interruptions in American industry as management-labor rela­tions deteriorated further. But railroad strikes gained the most notoriety because of the wide­spread effect they had on the transportation sys­tem of the country. The biggest of all, called the Pullman Strike, occurred in 1894.

The Pullman Palace Car Company manu­factured luxurious railway sleeper cars that were used by most railroad companies in their pas­senger trains. Due to another cyclical economic downturn (known as the Panic of 1893), pro­duction at the Pullman plant located in south Chicago was severely curtailed. As a result, the work force was reduced from 5,500 to 3,300, and the wages of the remaining workers were reduced by 25 percent. The workers at the Pull­man plant were required to live in Pullman City, where the plant was located, in houses built by the company and leased to the workers. Everything in the town was owned by the com­pany, and the company provided everything for the people, except saloons. When wages were reduced, the workers petitioned for a reduction of lease payments, but the company refused. This led to a strike by the Pullman workers in May 1894.

The American Railway Union (ARU) had been established just the year before, in 1893, by Eugene V. Debs, a former railroad worker and union officer in the Brotherhood of Loco­motive Firemen. The ARU was unlike railroad trade unions in that it included railroad work­ers of all classes and crafts. It shortly became the largest union in the United States with over 140,000 members by 1894. In August 1893, it had called a strike of the Great Northern Rail­road in response to a series of wage cuts. The shutdown of the railroad caused the company to reverse its wage decision. So when the Pull­man Company cut wages, the ARU voted to join the Pullman strikers in order to bring all of the union’s clout down on Pullman.

The largest strike in the history of the United States ensued, involving hundreds of thousands of participants and 27 U. S. states and territo­ries. One hundred twenty-five thousand railroad workers refused to handle Pullman sleeping cars or any trains in which they were placed. Thirteen railroads were forced to abandon all service in Chicago and 10 others were able to operate only passenger trains. The New York Times announced that the strike had become the greatest battle between labor and capital that had ever been inaugurated in the United States. Public senti­ment shifted against the strikers as the disrup­tion dragged on and as national transportation remained interrupted. Still, there was no federal intervention.

In July, the railroads began attaching the Pullman cars to U. S. mail cars, which then caused a disruption of interstate mail. Debs and other union officials were arrested for interfer­ing with the delivery of U. S. mail. On July 2, a federal court injunction was issued against the ARU and its leaders. On July 3, President Cleveland ordered in federal troops to end the strike and to operate the railroads. On July 4, mobs of rioters began roaming the streets and destroying railroad property. Fires set by the mobs on July 6 and 7 destroyed 700 rail cars and seven buildings. Twelve people were killed by gunfire.

Debs was arrested on July 7 for violating the court order, and the violence began to subside. Trains began to move again and the strike whim­pered to an end. Debs spent six months in prison.

These violent conflicts between organized labor and business during the latter part of the 19th century would lead to a federal legislation in the years to come designed to address the legitimate concerns of both labor and manage­ment. Eugene Debs would later be a candidate for President of the United States for the Social­ist Party of America, standing for election four times between 1904 and 1920. His best showing, 6 percent of the vote, occurred in the election of

1912, and is the highest voter result for a Social­ist Party candidate.

The disruption and violence of strikes were unpopular, and the courts routinely issued injunc­tions against unions on the basis of the Sherman Antitrust Act of 1890. This statute, while enacted primarily to eliminate corporate monopolies, con­tained language that prohibited “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.” The courts interpreted this language as prohibit­ing strikes, which did, of course, restrain trade and commerce. In 1914, Congress passed the Clayton Antitrust Act, a further enactment against corporate trusts, but which contained provisions expressly exempting labor unions from the opera­tion of the “restraint of trade” prohibitions found in the Sherman Antitrust Act.

The early part of the 20th century saw many changes in the American way of life.

• Horses and buggies were giving way to the automobile.

• Factories were going full blast, turning out production goods as never before.

• The assembly line, perfected by Henry Ford in the production of automobiles, was further aggravating the relations between workers and owners.

• The entry of the United States into World War I caused many young servicemen to be exposed to foreign culture for the first time, and to the bohemian ways of European life.

Still, America was very conservative during this time. The Bolshevik Revolution in Russia in 1917 and its aftermath raised further concerns in this country as aggressive union activity seemed to bring the United States a step closer to social­ist and communist ideology. Workers in heavy industry, such as mine workers, steel workers, and railroad workers, were highly organized and pursued a militant relationship with management.

The coming of the Great Depression during the 1930s and the Roosevelt New Deal, however, reflected a change in the way government looked at workers and their place in society. The New Deal brought a great wave of legislation directed toward fixing what was coming to be regarded as a broken economy and assisting those at the lower levels who functioned within it.

• Working conditions, hours, and rates of pay were the subjects of contention, and as the 20th century progressed, these condi­tions gradually improved due to the Ameri­can system of self-determination through legislation.

• Child labor laws and a minimum wage were enacted.

• Uaws addressing the safety of workers were put on the books for the first time.

• Broad legislation protecting the right of work­ers to organize and to strike was passed.

• National work programs, like the Works Prog­ress Administration (WPA), a relief program established by Presidential executive order, were instituted to alleviate the high unem­ployment numbers experienced due to the adverse economic conditions of the 1930s.

The postulations that Karl Marx had made with respect to the class warfare that, in his view, were inevitable were proved incorrect by the flexibility of the American governmental system. As substantial problems induced by the Industrial Revolution that affected the working popula­tion of the United States were perceived, Con­gress reacted with remedial legislation. These laws had the effect of acting like a relief valve in a pressure cooker, as workers perceived that their legitimate concerns were being addressed. Although union membership rose steadily from the latter part of the 19th century through the 1930s, it reached its peak in the 1950s. As eco­nomic conditions improved in the United States and worldwide, and as the workforce shifted from heavy industry to technology, union mem­bership dropped off, and is still in the process of falling. Negative perceptions of thug-like union activity increased among the American popula­tion. Connections between some large unions, like the Teamsters, and the underworld or Mafia, were shown to exist. Unions have been accused of misappropriating members’ pension funds, and union officials have frequently been indicted and successfully prosecuted. The good that some unions accomplished was often overshadowed by these events.

The most important observation that can be made concerning the course of labor and man­agement relations over the last century and a half is undoubtedly the success of the American sys­tem of government in coping with the often dia­metrically opposed positions of these participants in business. That system, based on the structure of the Constitution of the United States, has proven stronger than the differences that divide its population, and it has enabled a cooperative endeavor between labor and management that has benefited the world.

We will later consider specific develop­ments in the country’s labor laws and their impact on the airline industry.

Endnote

1. Trade unions were adjudicated to be legal organizations in
the 1842 case of Massachusetts Commonwealth v. Hunt.