New Deal—The. Roosevelt. Administration

Ш A New Broom Sweeps Clean

The Great Depression was getting seriously underway in 1933, at the time that the Republi­can Hoover Administration was vacating office and the Democratic Franklin Roosevelt Admin­istration was sweeping in with reform on its mind. Big business had ruled during the Roaring Twenties. The stock market increasingly through that decade had reflected in price the explosion in commerce and development, much money had been made and people were happy. But in 1933, the bread lines were long and were filled with disillusioned and angry men. The majority of vot­ers had voted, in effect, to “throw the bums out.” And so it was that the Democrats arrived in town with an agenda, a mandate even, to begin to set things straight. In the process, a rare opportunity was seen to make a little political hay and find out who and what was to blame for the mess the country found itself in.

Hugo Black came to the U. S. Senate in 1926 as a Democrat from Alabama, where he had enhanced his political career by winning local judicial elections and with membership in the Ku Klux Klan. While a lawyer there, he mostly sued corporations representing personal injury
claimants. He considered himself a populist, and was re-elected to the Senate in 1932. He was a supporter of Franklin Roosevelt’s bid for the presidency, and after Roosevelt’s election, he was an ardent supporter of New Deal (anti­corporate) initiatives.

In fact, the 1932 election gave the Demo­crats the control of the Senate, the House of Representatives, and the White House. Control of the entire government was theirs. In February 1933, Black proposed a resolution to establish a special investigatory committee to inquire into the government’s system of awarding ocean mail and airmail contracts, claiming that dur­ing the Hoover Administration they had become government giveaways to Hoover’s friends and associates. The tension between the Democrats and Republicans was only heightened during the last days of the Hoover Administration when the Democrats requested the Postmaster General to defer awarding any further mail contracts. Black had been tipped off by a reporter that the Post Office Department was planning to sign an ocean mail contract with Philadelphia Steamship Company before the Democrats had a chance to replace the Postmaster General. Walter F. Brown awarded four new contracts anyway.

The Committee began its investigation on March 4, 1933, and for four months plowed through documents and testimony without uncovering much in the way of skullduggery. In fact, it was shown that all contract awards had been approved by the guardian of the national purse, Comptroller General McCarl. When Black started digging into the airmail awards, he thought he had finally struck pay dirt when he learned of the 1930 meetings in Brown’s office with the Big Four. The press, who Time Maga­zine reported was feeding the questions to Black,1 quickly labeled those meetings “the spoils con­ferences.” The label stuck.

Small airline operators told of being excluded from the bidding process, or having their lower bids thrown out in favor of higher bids from larger carriers. Black cast his net wide. He sent out Interstate Commerce Com­mission agents with synchronized watches, armed with subpoenas to swoop down on the aviation companies without warning. When it was learned that Republican William P. Mac – Cracken (the former head of the Bureau of Aeronautics) was present at the 1930 meetings, he was subpoenaed to produce his personal files for examination. On MacCracken’s refusal, he was held in contempt of the Senate and ulti­mately jailed for 10 days by the Committee. But the main object of scorn was Walter F. Brown, whom Black saw as the author and architect of the whole scheme.

To Black, what the hearings produced was confirmation that the air carriers had exploited the public through inflated contract rates charged to the government, that the airlines’ manufac­turing arms had made huge profits from mili­tary procurement contracts, and that speculation in airline stocks had profited them all. It was not fully explained how these conclusions com­pared with the undisputed fact that the cost to the government of airmail delivery under Brown’s administration had been cut in half, from $1.10 per mile to $.54 per mile, in four years. But such are the hazards of credibility in politically motivated pursuits. Nor was it appreciated that the air carriers were stable, growing, and though still formative, rendering an air transportation service. Of what interest were airlines to a popu­lace that did not have enough to eat? This was a relevant, if short-sighted, question.

James Farley was appointed Postmaster Gen­eral in the new Roosevelt Administration. To him fell the duty of carrying out the verdict of Black, sanctioned by the president by way of presidential order, that all of the existing airmail contracts held by the airlines then operating were to be can­celled forthwith on the basis that they were fraud­ulently procured. The airmail, decreed Farley, would be carried by the Army Air Corps. All this was made official on February 9, 1934 by Execu­tive Order 6591, signed by President Roosevelt. On February 11, 1934, Charles Lindbergh sent a letter to the president that stated, in part:

“Your action of yesterday affects funda­mentally the industry to which I have devoted the last 12 years of my life. Therefore, I respect­fully present to you the following considerations. The personal and business lives of American citizens have been built up around the right to a just trial before conviction. Your order of can­cellation of all air mail contracts condemns the largest portion of our commercial aviation with­out just trial. The officers of a number of the organizations affected have not been given the opportunity of a hearing and improper acts by many companies affected have not been estab­lished. . . . Your present actions do not discrimi­nate between innocence and guilt and place no premium on honest business. . . . The United States today is far in the lead in almost every branch of commercial aviation. In America we have commercial aircraft, engines, equip­ment, and airlines superior to those of any other country. The greatest part of this progress has been brought about through the airmail. Cer­tainly. . . this development has been carried on in cooperation with the existing government and according to law. If this is not the case it seems the right of the industry and in keeping with

American tradition that facts to the contrary be definitely established. Unless these facts leave no alternative the condemnation of commercial aviation by cancellation of all mail contracts and the use of army pilots on commercial airlines will unnecessarily and greatly damage all Ameri­can aviation.”

Army pilots were basically untrained in cross-country flying and had neither knowledge of nor experience in flying the routes that the mails took across the country. Their airplanes were all open cockpits and contained few of the instruments that had become standard in just a few short years due to Brown’s enticements to the airlines. By the end of the first week of fly­ing, five pilots had been killed in accidents and six were critically injured. The Army pilots began flying only in daylight hours, thus delaying mail delivery. Within five weeks, 12 Army pilots had died. It became clear that a major mistake had been made. New bids to reinstate private carriage of the airmail were called for, but under a revised set of rules.

A temporary arrangement had to be put in place immediately, pending adoption of leg­islation. Postmaster General Farley called a meeting of airline representatives, like Wal­ter Folger Brown had done. But this time, none of the airlines involved in the “spoils conferences,” nor any of the executives who attended them, could participate in the new round of bidding. Neither could a bidding air­line be involved in the manufacture of aircraft designed to be used in the airline business, like the Boeing-Rentschler combination at United. Vertical holding companies that exercised con­trol over the actual airlines were disallowed. Rectitude reigned supreme in public, but in private, practicality ruled the day. Cosmetic name changes by the Big Four were accepted as serious compliance with the new rules, changes like American Airways becoming American Airlines and Eastern Air Transport becom­ing Eastern Air Lines. In fact, after the bids were opened on April 20, 1934, the commercial airline industry looked very much the same as it did before Black started his quest for justice the year before.

Two significant changes did occur. An upstart airline named Braniff Airways beat out United on the Dallas-Chicago route, and the crop dusting С. E. Woolman, operating as Delta Airlines, had secured the Dallas to Charleston,

S. C. route. Each of these new airlines would ulti­mately make the most of their opportunity.

Walter Brown would continue unrepen­tant and dignified amidst the righteous alarms of Black and other politicians who sought to capitalize at the expense of his reputation. The airlines whose contracts had been terminated, although back in the airmail business within a short time, had lost a significant amount of money by continuing operations in the interim, but only United Air Lines resorted to litigation against the government because of the contract cancellations. That litigation would drag out for another 10 years. And, when finally concluded, it would uphold the government’s right to terminate the airmail contracts.2 The court did, however, award money damages to the United group for contract payments earned prior to the cancella­tions. The opinion, which is 104 pages in length, is a detailed chronology of the events that trans­pired after passage of the Watres Act.