Air Mail Act

The Air Mail scandal, also known as the Air Mail fiasco, is the name that the American press gave to the political scandal resulting from a 1934 congressional investigation of the awarding of contracts to certain airlines to carry airmail and to the use of the U.S. Army Air Corps to fly the mail.

In 1930, during the administration of President Herbert Hoover, Congress passed the Air Mail Act of 1930. Using its provisions, Postmaster General Walter Folger Brown held a meeting with the executives of the top airlines, later dubbed the "Spoils Conference", in which the airlines effectively divided among themselves the air mail routes. Acting on those agreements, Brown awarded contracts to the participants through a process that effectively prevented smaller carriers from bidding, resulting in a Senate investigation.

The Senate investigation resulted in a citation of Contempt of Congress against William P. MacCracken Jr., on February 5, 1934, the only action taken against any former Hoover administration official for the scandal. Two days later Roosevelt cancelled all existing air mail contracts with the airlines and ordered the Air Corps to deliver the mail until new contracts could be let. The Air Corps was ill-prepared to conduct a mail operation, particularly at night, and from its outset on February 19 encountered severe winter weather. The Army Air Corps Mail Operation suffered numerous crashes and the deaths of 13 airmen, causing severe public criticism of the Roosevelt Administration.

Temporary contracts were put into effect on May 8 by the new postmaster general, James A. Farley, in a manner nearly identical to that of the "Spoils Conference" that started the scandal. Service was completely restored to the airlines by June 1, 1934. On June 12 Congress passed a new Air Mail Act cancelling the provisions of the 1930 law and enacting punitive measures against executives who were a part of the Spoils Conferences. Although a public relations nightmare for the administrations of both presidents, the scandal resulted in the restructuring of the airline industry, leading to technological improvements and a new emphasis on passenger operations, and the modernization of the Air Corps.

Roots of the scandal

Development of air mail

The first scheduled airmail service in the United States was conducted during World War I by the Air Service of the United States Army between May 15 and August 10, 1918, a daily run between Washington, D.C., and New York City with an intermediate stop in Philadelphia, Pennsylvania. The operation was put together in ten days by Major Reuben H. Fleet, the executive officer for flying training of the Division of Military Aeronautics, and managed by Captain Benjamin B. Lipsner, a non-flyer. Starting with six converted Curtiss JN-4HM "Jennies", two of which were destroyed in crashes, and later using Curtiss R-4LMs, in 76 days of operations Air Service pilots moved 20 tons of mail without a single fatality or serious injury, achieving a 74% completion rate of flights during the summer thunderstorm season.John A. Eney
U.S. Air Mail Service - 90th Anniversary
, reprinted at Antique Airfield.com. Retrieved 2016-01-03The first completed flight of the route was made by 2d Lt. James C. Edgerton on May 15, 1918, flying the Philadelphia to D.C. leg in s/n 38274. He brought 136 pounds of mail from New York, flown from Hazelhurst Field on Long Island to Philadelphia by Lt. Torrey H. Webb in s/n 38278, who also delivered eight pounds of mail to the Philadelphia postmaster. An identical relay flight in the opposite direction, carrying a ceremonial letter from the president to the postmaster of New York, was begun from D.C. by Lt. George L. Boyle in s/n 38262 after an embarrassing delay in front of the gathered audience when he was unable to start the engine. Boyle and Edgerton had been added to the operation by the Post Office Department for their political connections. Edgerton's father was purchasing agent for the Department and Boyle's prospective father-in-law, Judge Charles C. McChord, was an appointed official in the Wilson Administration who had kept delivery of parcel post as the responsibility of the post office. Both had just graduated from flying training at Ellington Field in Texas and had only 60 hours student pilot experience. They were chosen to replace two experienced instructor pilots hand-picked by Fleet to make the first day's flights. Boyle got lost in the fog shortly after takeoff and force-landed in a farm field 25 miles outside Washington, headed in the wrong direction. Edgerton delivered Boyle's load the next day on his return trip and eventually made 52 mail flights in the initial operation. He moved over to the post office operation later in 1918 as superintendent of flight operations under Lipsner. The less fortunate Boyle got a second chance on May 17, but even though he was led part of the way by another Jenny (depending on the account, flown by either Fleet or Edgerton), got lost again and wrecked his plane trying to land on a golf course. He was not given a third chance but did marry Margaret McChord on June 15, 1918 and went on to become a lawyer. (Eney and Glines)

Air mail operations by the U.S. Post Office began in August 1918 under Lipsner, who resigned from the Army on July 13 to take the post. Lipsner procured Standard JR-1B biplanes specially modified to carry the mail with twice the range of the military mailplanes, the first civil aircraft built to U.S. government specifications. For nine years, using mostly war-surplus de Havilland DH.4 biplanes, the Post Office built and flew a nationwide network. In the beginning the work was extremely dangerous; of the initial 40 pilots, three died in crashes in 1919 and nine more in 1920. It was 1922 before an entire year ensued without a fatal crash.

As safety and capability grew, daytime-only operations gave way to flying at night, assisted by airway beacons and lighted emergency landing fields. Regular transcontinental air mail delivery began in 1924. In 1925, to encourage commercial aviation, the Kelly Act (also known as the Air Mail Act of 1925) authorized the Post Office Department to contract with private airlines for feeder routes into the main transcontinental system. The first commercial air mail flight was on the route CAM (Contract Air Mail) No. 5 from Pasco, Washington, to Elko, Nevada, on April 6, 1926. By 1927 the transition had been completed to entirely commercial transport of mail, and by 1929 45 airlines were involved in mail delivery at a cost per mile of $1.10. Most were small, under-capitalized companies flying short routes and old equipment.

Subsidies for carrying mail exceeded the cost of the mail itself, and some carriers abused their contracts by flooding the system with junk mail at 100% profit or hauling heavy freight as air mail. Historian Oliver E. Allen, in his book ''The Airline Builders'', estimated that airlines would have had to charge a 150-pound passenger $450 per ticket (equal to $ in dollars) in lieu of carrying an equivalent amount of mail.

William P. MacCracken Jr.

William P. MacCracken Jr. became the first federal regulator of commercial aviation when then-Secretary of Commerce Herbert Hoover named him the first Assistant Secretary of Commerce for Aeronautics in 1926. During World War I he had served as a flight instructor, had served on the Chicago Aeronautical Commission, and was a member of the board of governors of the National Aeronautical Association when selected by Hoover.

MacCracken left the Commerce Department in 1929 and returned to his private law practice, where he continued to be involved in the growth of commercial aviation by representing many major airlines.

Postmaster General Walter Folger Brown sought to improve the efficiency of the air mail carriers in furtherance of a national transportation plan. Requiring an informed intermediary, Brown asked MacCracken to preside over what was later scandalized as the ''Spoils Conferences'', to work out an agreement between the carriers and the Post office to consolidate air mail routes into transcontinental networks operated by the best-equipped and financially stable companies. This relationship left both exposed to charges of favoritism. When MacCracken refused later to testify before the Senate, he was found in contempt of Congress.

Air Mail Act of 1930

Hoover appointed Brown as postmaster general in 1929. In 1930, with the nation's airlines apparently headed for extinction in the face of a severe economic downturn and citing inefficient, expensive subsidized air mail delivery, Brown requested supplementary legislation to the 1925 act granting him authority to change postal policy. The Air Mail Act of 1930, passed on April 29 and known as the McNary-Watres Act after its chief sponsors, Sen. Charles L. McNary of Oregon and Rep. Laurence H. Watres of Pennsylvania, authorized the postmaster general to enter into longer-term airmail contracts with rates based on space or volume, rather than weight. The Act gave Brown strong authority (some argued almost dictatorial powers) over the nationwide air transportation system.

The main provision of the Air Mail Act changed the manner in which payments were calculated. Air mail carriers would be paid for having sufficient cargo capacity on their planes, whether the planes carried mail or flew empty, a disincentive to carry mail since the carrier received a set fee for a plane of a certain size whether or not it carried mail. The purpose of the provision was to discourage the carrying of bulk junk mail to boost profits, particularly by the smaller and inefficient carriers, and to encourage the carrying of passengers. Airlines using larger planes designed to carry passengers would increase their revenues by carrying more passengers and less mail. Awards would be made to the “lowest responsible bidder” that had owned an airline operated on a daily schedule of at least 250 miles (402 kilometers) for at least six months.

A second provision allowed any airmail carrier with an existing contract of at least two years standing to exchange its contract for a “route certificate” giving it the right to haul mail for 10 additional years. The third and most controversial provision gave Brown authority to "extend or consolidate" routes in effect according to his own judgment.

Within days of its passage, United Aircraft and Transport Company (UATC) acquired the controlling interest of National Air Transport after a brisk but brief struggle between UATC and Clement M. Keys of NAT. The merger, begun in February 1930 to plug the only gap in UATC's cross-country network of airlines, had been amicable until three weeks before its finalization, when Keys reversed his initial approval. Ironically Brown was angered by the negotiations, worried that the specter of a potential monopoly would endanger the imminent passage of the Air Mail Act. The merger swiftly created the first transcontinental airline.

On May 19, three weeks after the passage of McNary-Watres, at the first of the "Spoils Conferences", Brown invoked his authority under the third provision to consolidate the air mail routes to only three major companies independently competing with each other, with the goal of forcing the plethora of small, inefficient carriers to merge with the larger. Further meetings between the larger carriers, presided over by McCracken, continued into June that often developed into harsh wrangling over route distribution proposals and consequent animosity towards Brown.

After what was described as a "shotgun marriage" between Transcontinental Air Transport and Western Air Express in July to achieve the second of the three companies (UATC was the first), competitive bids were solicited by the Post Office on August 2, 1930, and opened August 25. A surprise competitive bidding struggle ensued between UATC, through a quickly formed skeleton company it called "United Aviation," and the newly merged Transcontinental and Western Air over the central transcontinental route. After initial rejection of the Postmaster General's decision, final approval of the contract award to T&WA was approved by Comptroller General of the United States John R. McCarl on January 10, 1931, on the basis that United's puppet concern was not a "responsible bidder" by the definition of McNary-Watres, in effect validating Brown's restructuring.

These three carriers later evolved into United Airlines (the northern airmail route, CAMs 17 and 18), Trans World Airlines (the mid-United States route, CAM 34) and American Airlines (the southern route, CAM 33).The August 1930 bid was jointly awarded to the Southwest Air Fast Express, or SAFE Way, owned by Erle P. Halliburton, and Robertson Aircraft Corporation, like American a subsidiary of the Avco holding company. SAFE Way was acquired by American at a premium price on August 23, 1930, two days before the bids were opened, and both lines were reorganized by American as Southern Air Fast Express. Brown also extended the southern route to the West Coast. He awarded bonuses for carrying more passengers and purchasing multi-engined aircraft equipped with radios and navigation aids. By the end of 1932, the airline industry was the one sector of the economy experiencing steady growth and profitability, described by one historian as "Depression-proof." Passenger miles, the numbers of passengers, and new airline employees had all tripled over 1929. Airmail itself, despite its image to many Americans as a frivolous luxury for the few remaining affluent, had doubled following restructuring. Much of this if not all was the result of the postal subsidies, funded by taxpayers.Brady (2000), p. 177

Congressional investigation

The air mail scandal began when an officer of the New York Philadelphia and Washington Airway Corporation, known as the Ludington Airline, was having a drink with friend and Hearst newspaper reporter Fulton Lewis Jr. Ludington Airline, established and owned by brothers Townsend and Nicholas Ludington, began offering an hourly daytime passenger shuttle on September 1, 1930, just two weeks after Eastern Air Transport (EAT) began its first passenger operations between New York City and Richmond, Virginia. Using seven Stinson SM-6000B tri-motors, Ludington Airline became the first U. S. airline in history to make a profit carrying nothing but passengers. However it began operating in the red when the novelty of cheap air travel wore off as the Great Depression deepened and competition with arch-rival EAT intensified. The Ludington officer mentioned to Lewis that in 1931 the carrier could not get a proposed "express service" air mail contract to extend CAM 25 (Miami to Washington via Atlanta) to Newark, New Jersey

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