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The Demand for Aircraft and the Aircraft Industry, 1907–1958*

Published online by Cambridge University Press:  03 February 2011

G. R. Simonson
G. R. Simonson
Affiliation:
Long Beach State College
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Extract

The invention of the airplane by Wilbur and Orville Wright in 1903 marked the beginning of an industry which has grown to be the largest single manufacturing employer in the United States. Once the airplane was invented, there was wide-spread expectation that producing aircraft would be a very profitable business.

Type
Articles
Information
The Journal of Economic History , Volume 20 , Issue 3 , September 1960 , pp. 361 - 382
Copyright
Copyright © The Economic History Association 1960

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References

1 This is according to the industrial classifications used by the Department of Labor. In February 1959 there were 756,600 workers in the aircraft and parts industry compared to 724,100 workers employed in the second-ranking, that for motor vehicles and equipment. U.S. Department of Labor, Monthly Labor Review, LXXXII (May 1959), 596.Google Scholar

2 It appears that the Wrights were not motivated to invent their airplane by an economic incentive. Orville Wright is quoted as saying: “At the time we first flew our power plane we were not thinking of any practical uses at all. We just wanted to show that it was possible to fly.” Wright, Orville, How We Invented the Airplane, ed. by Kelly, Fred C. (New York: David McKay Co., 1953), p. 78.Google Scholar

3 Note that when the Wrights were placed in a competitive situation, their asking price declined by 75 per cent. The Army also signed contracts with two other bidders, Herring, A. M. and Scott Fred Hamlin, J. F. and Thayer Miller, Eleanor, eds. The Aircraft Year Book., 1955 (Washington: The Lincoln Press, 1956), p. 386.Google Scholar

4 Eaton Manufacturing Company, A Chronicle of the Aviation Industry, 1903–1947 (Cleveland: Eaton Manufacturing Co., 1948), p. 8.Google Scholar

5 Ibid., pp. 13–15.

6 Civil Aeronautics Administration, CAA Statistical Handbook of Civil Aviation, 1957 (Washington: Government Printing Office, 1957), p. 65.Google Scholar

7 Mingos, Howard, Birth of an Industry (New York: W. B. Conkey Co., 1930), p. 15.Google Scholar

8 Mixter, G. W. and Emmons, H. H., United States Army Aircraft Production Facts (Washington: Government Printing Office, 1919), p. 7.Google Scholar

9 The principal patent holders, the Wright and Curtiss companies, were members of the association. At the outset, the patent holders received $200 for each plane of their design produced by a licensee, but the licensee included this in the price charged the government. Public indignation led to a new agreement between the Manufacturers Aircraft Association and the government which cut the patent royalties in half. Mingos, Birth of an Industry, pp. 39–40.

10 Evan Hughes, Charles, Report of Aircraft Inquiry (Washington: U. S. Justice Department, 1918), p. 137.Google Scholar

11 Eaton, Chronicles, p. 20.

12 Ibid., and Mingos, Birth of an Industry, pp. 46–47. Whether military aviation and the aircraft industry of the United States made enough of a contribution to the winning of the war to justify their expense is a subject of some controversy. Elsbeth Freudenthal's position is that government war expenditures of $1,068,637,739 for military aviation were not justified when the end product was only 196 planes at the front at the time of the Armistice. Freudenthal, Elsbeth, The Aviation Business (New York: The Vanguard Press, 1940), pp. 58–59Google Scholar. On the other hand, Howard Mingos, a former official of die industry, has pointed out that after considering what the government regained through post-war liquidation, the net cost of wartime aviation was less than $400,000. Mingos, Birth of an Industry, p. 44.

13 U. S. Statutes at Large, 43, Part 1 (1923–1935), pp. 805–06.

14 U. S. Statutes at Large, 44, Part 2 (1925–1927), pp. 368–76.

15 Ibid., pp. 764–68.

16 Ibid., pp. 784–90.

17 Freudenthal, The Aviation Business, pp. 117–18.

18 For detailed accounts concerning the numerous companies controlled by each of these organizations, see Eaton, Chronicles, pp. 45–46; Freudenthal, The Aviation Business, pp, 100–01; and Glenn Cunningham, William, The Aircraft Industry: A Study in Industrial Location (Los Angeles: Lorrin L. Morrison, 1951), p. 37.Google Scholar

19 Boeing School of Aeronautics, Air Transportation, Part One (Oakland Airport, California: Boeing School of Aeronatuics, 1938), p. 29.Google Scholar

20 Freudenthal, The Aviation Business, pp. 123–24. Profits as a per cent of costs or sales is certainly a less meaningful measure than profits as a per cent of net worth. Strangely enough, most of the literature on the industry, including government publications, considers profits on the base of costs or sales.

21 Ibid., p. 143.

22 U. S. Congress, Committee on Post Offices and Post Roads, House Report 2087, 72d Cong., 2d Sess. (Washington: Government Printing Office, 1933), p. 20.Google Scholar

23 U. S. Statutes at Large, 48, Part 1, (1933–1934), pp. 933–39.

24 Special Committee on Army Air Corps, Final Report (Washington: U. S. War Department, July 18, 1934).Google Scholar

25 U. S. Congress, Address of the President of the United States on National Defense, House Miscellaneous Documents, II, No. 751, May 16, 1940, 76th Cong., 3d Sess., (Washington: Government Printing Office, 1940), p. 3Google Scholar.

26 Aircraft Industries Association, Aviation Facts and Figures, 1945 (New York: McGraw-Hill Book Co., 1945), p. 73.Google Scholar

27 In 1932 Douglas had sales of $2,000,000; in 1937 its sales were almost $21,000,000, largely as a result of the increase in demand for its larger transport aircraft. Cunningham, Frank, Sky Master, the Story of Donald Douglas (Philadelphia: Dorrance and Co., 1943), pp. 213, 257.Google Scholar

28 Emergency facilities could be amortized over a five year period for tax purposes. Lilley, Tom, et al, Problems of Accelerating Aircraft Production During World War II (Boston: Division of Research, Harvard Business School, 1947), p. 27.Google Scholar

29 Hinton, Harold B., Air Victory: The Men and Machines (New York: Harper & Bros., 1948), p. 191.Google Scholar

30 The main reason why the government was so anxious to get the automotive industry engaged in aircraft manufacturing was to obtain mass production of aircraft by utilization of assembly line production techniques. See Stout, Westley W., Great Engines and Great Planes (Detroit: Chrysler Corporation, 1947), p. 103Google Scholar. Productivity increased markedly as assembly line techniques became more widely utilized. In 1941 the average monthly weight output per employee was 28 pounds; by 1944 it had risen to 125 pounds. See Cleveland, Reginald M. and Graham, Frederick P., eds., The Aviation Annual of 1945 (Garden City: Doubleday, Doran & Co., 1944), p. 78Google Scholar The conversion was not done without a great deal of difficulty. For example, when licensed to produce the Consolidated B-24, Ford was forced to break the task down and illustrate it in 20,000 drawings before an assembly line could be set up at Willow Run. Previously highly skilled workmen had made aircraft. Accurate details concerning standard parts, job processes, and manufacturing procedures had not been written out and the work broken down into specialized tasks which could be done by relatively unskilled personnel. Ford had to accomplish this before its assembly line became functional. Lilley, et ah, Problems of Accelerating, p. 49.

31 “Mass Production of Skilled Workers,” Automotive Industries, LXXXIV (Apr. 1, 1941), 365.Google Scholar

32 Lilley, et ah, Problems of Accelerating, p. 35.

33 These figures are based on the cost of manufacturing facilities authorized between July 1940 and June 1945. Modley, Rudolph and Cawley, T. S., eds., Aviation Facts and Figures, 1953 (Washington: Lincoln Press, 1953), p. 11.Google Scholar

34 United States Surplus Property Administration, Airplane Plants and Facilities (Washington: Government Printing Office, 1946), p. 40.Google Scholar

35 Lilley, et al., Problems of Accelerating, p. 67.

36 Administering subcontracting by the prime firms was an extremely complex operation. The 18 foot nose of the B-29, for example, had over 50,000 rivets and 8,000 kinds of parts. These parts were produced by over 1,500 major subcontractors and assembled in four different locations. Stout, Great Engines, pp. 113–14.

37 Lilley, et at., Problems of Accelerating, p. 30.

38 Lockheed had achieved a new position of prominence, while North American had ceased being a holding company and had become an operating company in the latter period.

39 This procedure would cut down the time between the government's usual submission of general purpose requirements for an experimental model and the realization of quantity output; it would eliminate all the stages in the procurement process prior to the award of production contracts. By adopting for production aircraft which were already at least in an experimental stage of development, the government saved between one and two years. Actually only two models, the P-47 and the F-6-F, on which design work was begun after 1940, were used extensively during the war, although only 4 of the 19 major airframe models were in production by mid-1940. This meant that 17 of the 19 models used extensively during the war were being developed before the entry of the United States into it. Lilley, et al., Problems of Accelerating, pp. 16–18.

40 Lee, Ben S., ed., Aviation Facts and Figures, 1958 (Washington: American Aviation Publications, 1958), pp. 71, 73.Google Scholar

41 These percentages were derived from data contained in Moody's Investors Service, Moody's industrial Manual, 1948 (New York: D. F. Shea, 1948), pp. 1114–15.Google Scholar

42 Levenson, Leonard G., “Wartime Development of the Aircraft Industry,” Monthly Labor Review, LIX (Nov. 1944), 915.Google Scholar

43 This sum equals the total value of the combined output in 1939 of the nine leading United States industries: the auto industry, steel industry, meat-packing industry, petroleum industry, cigarette companies, bakeries, smelters of non-ferrous metals, paper mills, and printers and publishers of newspapers. Eaton, Chronicles, p. 85.

44 Day, John S., Subcontracting Policy in the Airframe Industry (Boston: Division of Research, Harvard Business School, 1956), p. 148Google Scholar Coincident with the contraction were sharply declining profits in marked contrast with the almost guaranteed profits during the war. For example, Boeing, Bell, Consolidated Vultee, Piper, and Lockheed all reported losses for 1947, while Martin, Curtiss-Wright, Douglas, Ryan, and North American were reporting reduced net returns. Eaton, Chronicles, pp. 92–93.

45 Hinton, Air Victory, p. 48.

46 See President's Air Policy Commission, Survival in the Air Age (Washington: Government Printing Office, 1948Google Scholar) and Air Coordinating Committee, Air Coordinating Committee Report, 1947 (Washington: Government Printing Office, 1947).Google Scholar

47 Notable technological advance was made during the period. The conventional type fighters and bombers were being replaced with jet aircraft. There was improvement in the industry in 1949 because of increased government expenditures for research and development of jet aircraft, atomic energy, rockets, missiles, and supersonic airplanes. Hamlin, Fred, et al., Aircraft Year Book, 1949 (Washington: The Lincoln Press, 1949), p. 69.Google Scholar

48 Hamlin, Fred, et al., Aircraft Year Book., 1950 (Washington: The Lincoln Press, 1950), p. 70.Google Scholar

49 Modley and Cawley, Aviation Facts and Figures, 1953, p. 11.

50 Lee, Ben S., ed., Aviation Facts and Figures, 1959 (Washington: American Aviation Publications, 1959), p. 125.Google Scholar

51 Derived from data contained in ibid., pp. 76, 79.

52 Lee, Aviation Facts and Figures, 1958, pp. 41–42.

53 Ibid., p. 39.

54 Los Angeles Times, April 9, 1958.

55 U. S. Air Force, “The Guided Missile,” The Air Reservist, IX (Dec. 1957), 4.Google Scholar

56 Curtiss, Edward P., National Requirements for Aviation Facilities: 1956–1975, I (Washington: Government Printing Office, 1957), p. 1.Google Scholar