In the early 1930s, the United States was experiencing a surge in commercial aviation. As air travel became more accessible, the need for efficient mail delivery by air grew. During this time, Congress passed the McNary-Watres Act, a law granting Postmaster General Walter Fogel Brown significant authority to award airmail contracts. At a meeting dubbed the “Spoils Conference,” Brown chose to allocate the majority of the nation’s airmail business to three newly formed airlines: United Airlines, Trans World Airlines, and American Airlines. These companies, which had recently merged smaller airlines and begun operating larger aircraft, became dominant players in the U.S. aviation industry. This process of awarding airmail contracts to private airlines was marred by allegations of corruption and political favoritism, culminating in the infamous Air Mail Scandal of 1934.
The scandal centered around the actions of Postmaster General Walter F. Brown, who President Herbert Hoover appointed. Brown was accused of awarding lucrative airmail contracts to airlines that had political connections to the administration. Critics argued that these contracts were not based on merit or competitive bidding but rather on political patronage.
One of the key issues that contributed to the scandal was the method used to determine airmail rates. Initially, rates were based on the weight of the mail. This system, while seemingly straightforward, had several drawbacks. One of them was that the airlines started to padlock individual pieces of mail to increase their weight.
Recognizing the limitations of weight-based pricing, the postal service began to explore alternative methods. One such approach was to base rates on the volume of the mail. This would account for the fact that some items, despite being lightweight, could occupy a significant amount of space in an aircraft. By charging based on volume, the postal service could more accurately reflect the costs associated with transporting different types of mail.
The transition from weight-based to volume-based pricing was a significant development in the history of airmail. It helped to create a more equitable system that encouraged the transportation of a wider range of items. However, the implementation of this new pricing model was not without its challenges. There were concerns about how to accurately measure the volume of irregularly shaped items, and there were also questions about the potential impact on the profitability of different types of mail. This change was incorporated in the Air Mail Act of 1930.
Brown, who had almost dictatorial powers over the nationwide air transportation system, on 19 of May 1930, during the first of the “Spoils Conferences”, invoked his authority to consolidate the airmail 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.
The air mail scandal started when an officer from Ludington Airline told reporter Fulton Lewis Jr. about the airline’s failure to secure an air mail contract despite submitting an extremely low bid. Ludington, struggling financially due to the Great Depression and competition, was eventually forced to sell to Eastern Air Transport. Sensing a story, Lewis investigated and brought his findings to Senator Hugo Black, who initiated a Senate inquiry into the mail contracts. The investigation uncovered allegations of fraud and collusion between the Hoover Administration and certain airlines. This led to public hearings, and ultimately, President Roosevelt ordered the cancellation of all domestic air mail contracts in 1934. After the cancellation of the contracts, Roosevelt transferred the responsibility of mail delivery to U.S. Army Air Corps.
The decision was met with both praise and criticism. While some saw it as a necessary step to address corruption, others argued that the Army Air Corps was ill-equipped to handle the task.
Unfortunately, the Army Air Corps struggled to meet the demands of airmail delivery. A series of accidents and fatalities highlighted the challenges faced by the military in this new role. The public outcry and the Army’s inability to deliver the mail efficiently forced the government to re-award airmail contracts to private airlines. The Army Air Corps used inexperienced young pilots, despite their promises to use pilots with experience in night flight and bad weather conditions. They also didn’t have a network of private companies to deliver large amounts of mail. During the first months, they used small biplane aircraft to deliver mail, but this was impractical due to weight distribution and the quantity of mail delivered. Moreover, the U.S. Army did not have enough Directional gyros, Artificial horizons and radio transceivers mounted on their aircraft, making night flight very hard. They also had some bad luck due to a snowstorm during their first months and all of these resulted in 66 major accidents, ten of them with fatalities that resulted in 13 crew deaths, creating an intense public furor. Only five of the 13 deaths actually occurred on flights carrying mail, but directly and indirectly, the air mail operation caused accidental crash deaths in the Air Corps to rise by 15% to 54 in 1934, compared to 46 in 1933 and 47 in 1935.
In the end, the government returned the service to the commercial airlines but added new conditions in the Air Mail Act of June 12, 1934. These conditions restored competitive bidding, closely regulated airmail labor operations, dissolved the holding companies that brought together airlines and aircraft manufacturers, and prevented companies that held the old contracts from obtaining new ones.
The vertically integrated United Aircraft and Transport Corporation (UATC) appeared to be its particular target and broke up on September 26, 1934, into three companies: United Air Lines Transportation Company, United Aircraft Manufacturing Company, and Boeing Aircraft Company.
Ironically, United Airlines, the only major carrier not involved in collusion, lost its routes after the “Spoils Conference,” while other airlines, such as American Airlines, gained new routes due to political connections. The scandal had significant consequences for the industry, pushing it away from mail contracts and towards passenger operations. William Boeing, disillusioned by the scandal and government interference, retired early rather than continuing to deal with federal regulations. The fallout from the scandal forced airlines to focus on passenger transport as mail contracts became unprofitable, accelerating the development of modern airliners and a shift towards passenger operations. Although allegations of corruption were never fully investigated, the Air Mail Act of 1934 restructured the industry, setting the stage for a regulated, integrated airline system that emphasized passenger service—a direction that ultimately fulfilled Brown’s original vision for the industry.
During the air mail scandal, the Air Corps was struggling for greater independence from the War Department, bolstered by advances in multi-engine aircraft that supported their case for autonomy. The scandal, however, severely damaged the Air Corps’ reputation, with critics questioning its capabilities. The Baker Board, formed to assess the situation, upheld the status quo, rejecting the idea of an independent air service and limiting expansion. Despite this, the Air Corps saw some improvements, including better training, enhanced communications, and modernized aircraft development. The scandal also led to the forced retirement of Chief of the Air Corps, Foulois, following accusations of mismanagement during the mail operation.