“The Air Capital of the World” Part Six

By the early 1930s the Great Depression had decimated Wichita’s once booming aircraft industry, but a few courageous entrepreneurs were willing to gamble everything to put new wings on their dreams.

As the wave of economic devastation continued its sweep across America in 1931, sales of new commercial airplanes remained in a tailspin. Every airframe, engine and component manufacturer in the country was struggling to keep its doors open and its workforce employed.

A look at some statistics from the period will illuminate the situation quite clearly: According to the Aircraft Year Book for 1931, production of new commercial and military aircraft that year was only half of what it was in 1929. American airframe manufacturers built 2,684 new airplanes in 1930 compared with 6,034 the previous year. Of these, 1,937 were commercial ships and another 747 were procured for the military. The number of new and used aircraft actually sold in 1930 (commercial and military) totaled 3,125.

Wichita’s crippled aircraft industry contributed little to those numbers as demand for small airplanes continued to shrink. By 1932 the city’s only major airframe manufacturer still operating was the Stearman Aircraft Company that had managed to survive during 1930-1931 thanks to its corporate relationship with parent United Aircraft & Transport Corporation (UA&TC). Before the new Stearman factory opened for business in December 1930, Lloyd Stearman and businessman Walter Innes, Jr., hosted a meeting of the Wichita Manufacturers Club. During the event city manager Bert C. Wells, who also served as head of the town’s Unemployment Conference Committee, urged business men to “refrain as far as possible from decreasing their forces” and suggested that if “they could not work more than half a force,” to work “all the men half of the time instead of half of them all of the time.” In addition, he pleaded with members of the organization not to cut wages any further. The Stearman facility was the only active airframe manufacturer in Wichita and employed only 125 men and women. Their wages, once among the best in the nation, had been slashed in an effort to stem the flood of red ink brought on by an industry that had almost collapsed overnight. The employees, however, were happy to a job because more than 100 of their fellow workers had been laid off.

 

In addition to Lloyd Stearman and Mac Short, famed aeronautical engineer John K. “Jack” Northrop would play a minor role in the history of the Stearman company. Northrop had designed and built the “Alpha” series of modern, all-metal monoplanes.² Back in 1929, officials of UA&TC, in particular its president Frederick B. Rentschler, decided to absorb the Avion/Northrop Aircraft Corporation. In 1931 Rentschler consolidated the Northrop and Stearman companies and relocated Northrop’s operation to Wichita. Walter Innes viewed the consolidation with enthusiasm, stating to the press that the transfer of men and equipment from Burbank, California, to Kansas “would add greatly to the size and activity of the Stearman plant,” and that the Alpha and the smaller “Beta” monoplanes would be built at the Stearman factory.³

 

By mid-1931, however, sales of new Stearman airplanes were becoming increasingly difficult to achieve and the future looked bleaker than it had in 1930. It was, therefore, a great relief to Lloyd Stearman when, in June 1931, American Airlines threw the company a lifesaver by ordering seven Model 4CM-1 biplanes to supplement the five it already had in service. Building the small fleet of “Senior Speed Mail” ships kept the factory busy throughout that summer as workers labored long hours at miniscule wages to complete the contract on time.¹

Soon after the first of American Airline’s 4CM-1 departed the factory in July, so did Lloyd Stearman. His decision to resign from the company that bore his name came in the wake of a business trip to New York City. He met with officials of UA&TC and announced his plans to seek new opportunities elsewhere. His decision came as quite a surprise to many of his friends and associates, but his departure was inevitable given his independent nature and entrepreneurial spirit. The company he had founded and guided to worldwide notoriety had become just another cog in the wheel of UA&TC, and Stearmen had tired of playing a secondary role as the company’s chief consultant and technical advisor. Lloyd’s plans included a return to California where he “he will take a rest and look into various business prospects,” according to a report in the Wichita “Eagle” newspaper.⁴

 

The year 1932 marked the low point in the fortunes of the struggling Stearman Aircraft Company. With no orders for new airplanes, the factory grew quiet and only a skeletal crew remained on the slender payroll. The number of employees had plummeted from 125 in December 1930 to fewer than 25 that summer. Mac Short’s engineering staff had been reduced to himself and a few other men, and the drawing boards were gathering dust. Money for daily operations was extremely tight and the company was operating on a shoestring budget. In the wake of these hard realities, senior company officials circled the wagons and waited for better days to come.

Early in September those better days did come. The Boeing Airplane Company contracted with the Stearman factory to build hundreds of detail parts and assemblies for the Boeing Model 247 airline transport. The all-metal, twin-engine monoplane could carry 10 passengers and 500 pounds of mail at a cruising speed of 175 mph. United Air Lines had ordered a large fleet of the latest Boeing design and planned to operate the aircraft on routes between Chicago and California. The contracts proved to be a blessing and played a significant role in saving the ailing Stearman enterprise from extinction. The factory would be responsible for manufacturing landing gear, control columns, instrument panels and seats for the pilot and co-pilot.

Schaefer quickly began to hire experienced mechanics, machine operators, welders and sheet metal experts, many of whom had lost their jobs during the past three years. Soon the factory was humming once again as the work of 100 new employees filled the back shops with components for the Boeing 247. The contract would keep them all busy well into 1933. By the summer of that year, Innes and Schaefer were becoming increasingly optimistic about the future of the American economy. Business was slowly gaining momentum and the dark abyss of the Great depression seemed to be giving way to a light at the end of the tunnel. Yet, Innes and Schaefer remained keenly aware that the market for new commercial aircraft would continue to be fundamentally weak in the near term. Therefore, they reasoned that pursuing military contracts was the best path the company could seek for potential sales. In what could be described as a most fortuitous turn of events for the Stearman organization, by 1934 the Army and Navy brass were having some success squeezing more money out of a penny-pinching Congress to buy new airplanes. In addition, Franklin D. Roosevelt was in the White House, and his multi-faceted “New Deal” program convinced many Americans that happy days could return once again.

During the cold winter of 1934, there was increasing evidence that the “Air Capital of the World” was beginning to rise from the ashes. Not only was the Stearman factory busy, but over on the east side of town the Beech Aircraft Company had begun production of the Beechcraft Model B17L cabin monoplane. Walter, his wife Olive Ann and a few trusted associates from the old Travel Air organization had returned to Wichita early in 1932 and set up shop inside Clyde Cessna’s abandoned factory. The company’s first product was the Model 17R1, a big, bullish biplane with a plush cabin for five occupants, a fire-breathing radial engine pumping out 420 horsepower, and a maximum speed of 200 mph. It was an impressive machine, but its $18,000 price tag was too high for a depression economy. By contrast, the B17L was significantly more economical to operate, could cruise at 150 mph and cost about $8,000. It was the right Beechcraft for a depression economy, and sales proved it.

 

Meanwhile, southeast of the city, Clyde Cessna’s nephew Dwane Wallace and his brother Dwight were waging a campaign to wrest control of the defunct Cessna Aircraft Company from its disgruntled, obstinate shareholders. In January 1934 the brothers, with token support from their uncle Clyde, sent out a flurry of special letters to shareholders along with a proxy to hopefully gather enough votes to oust the existing Board of Directors. One of the letters is quoted here in full, and contains some interesting points:

“Dear sir:

A short time ago I mailed you a letter enclosing a proxy, which no doubt gave you a good idea of what has been going on at the Cessna plant for the past three years under its present management. I feel that I should write you more in detail of what I intend to do after I am back in control of our company.

There is no doubt but that the airplane industry could be a paying one today if handled properly. Good examples of which are represented by the Waco, Monocoupe, Douglas and Northrop airplane companies, as well as various others. Through the fact that I have been engaged in the airplane business for the past two decades, and having always been recognized as one of the pilgrims in the airplane industry, I have made many valuable contacts in the field of aviation in the last three years with various companies and large distributing agents, and with these connections I am sure that I can sell a large number of airplanes.

I intend to redesign and develop the four-place Warner ship [formerly the Model AW] to such as extent that it will develop a speed of about 185 mph and yet keep its present stability, airworthiness and other grand features that made it so popular. This ship will have many wonderful selling points, such as the low cost of maintenance and operation, upkeep and high cruising speed.

I am sure you realize that our stock is practically worthless today. A complete liquidation would pay only an exceedingly small per cent back on our original investments, while if you cooperate with me, the Cessna Aircraft Company will again be doing a good business and our stock on the market rise accordingly. I am enclosing another proxy in case you did not receive or have misplaced the other one, and I will appreciate your executing the same and returning it to me in the self-addressed envelope, which is enclosed.”

Although Cessna did not compose the letter, he did agree to sign each one, “Very Truly Yours, Clyde V. Cessna.” The Wallace boys knew they had a tough fight ahead of them. Dwane followed up the letters by visiting each person in Wichita who held more than 100 shares of stock, assuring them that the time was right for Cessna airplanes and that their support would result in profits later. It was not, however, only the shareholders who had to be convinced. Dwane and Dwight knew they had to buy thousands of shares of stock if they were going to win the battle. Wichita investor Thad Carver held more than 20,000 shares, Clyde Cessna had 12,000, and the brothers were able to buy 6,000 shares from the Clement M. Keys brokerage firm in New York City.

 

At the annual shareholders meeting held on January 17, 1934, the votes were counted and the Wallace boys had won, albeit by only a tiny margin. The two young men soon forged ahead with ambitious plans to manufacture the first new Cessna design since the DC-6 of 1929 — the Model C-34 cabin monoplane. Dwane did a majority of the engineering work, but was ably assisted by engineer Jerry Gerteis and Tom Salter. The prototype C-34, powered by a Warner Series 40/50 static, air-cooled radial engine rated at 145 horsepower, rolled out of the factory and into the Kansas sunlight on August 10, and made its first flight that day with George Harte at the controls.

Sales were slow, but the C-34 soon proved that it was a highly efficient airplane and orders increased throughout 1935-1936. The Priced at $4,985 for a standard-equipped airplane, the C-34 was affordable and 42 were built before the company introduced an improved version known as the C-37. The factory workers built 46 of those ships before production switched in 1938 to the upgraded C-38, of which 16 were built (the C-38 was the first version to be named “Airmaster”). In late 1938 the company introduced the Model C-145 and Model C-165 that remained in production until 1941. A total of 79 were built. Despite the solid success of the single-engine series, Dwane Wallace and the Board of Directors knew the company needed to expand its product line and in 1939 the twin-engine Model T-50 was flown for the first time in March 1939. Powered by two Jacobs L4MB static, air-cooled radial engines each rated at 225 horsepower, the T-50 was aimed at the business/air taxi and charter segment of the market, but was also capable of serving as a short-haul, regional airline transport.⁵

The Cessna Aircraft Company had an excellent twin-engine airplane that would sell in a depressed market, but the aviation business was still a constant struggle as Wallace fought to keep the books in the black. In the years 1935-1940, profits were razor thin and it was a never-ending battle to meet the payroll. For example, in the four months ending March 31, 1939, the books revealed a net loss of $1,123 — not bad considering the still slow heartbeat of America’s economy.

 

Walter Beech, Julius Schaefer and Dwane Wallace realized that war clouds were gathering over Europe, a mere 19 years after the Treaty of Versailles was signed. In 1918 one French general called the Treaty nothing more than a 20-year cease-fire, and his prediction was uncannily accurate. Only a few thousand miles away Europe was on the brink of another war. Germany’s Chancellor Adolph Hitler increased his saber-rattling rhetoric aimed at creating a 1,000-year Reich. On the other side of the world, Japan’s militarists were boasting of a grand strategy they called the “Greater East Asia Co-Prosperity Sphere” that was aimed at dominating the entire Pacific region. Across the Atlantic Ocean, however, America remained staunchly isolationist. President Roosevelt constantly reassured the nation that the United States would not be drawn into a European conflict.

It is important to pause for a moment to realize that the small group of aviation entrepreneurs in Wichita were a tight-knit clan deeply committed to the cause of building aircraft in the prairie city. They were also patriots and strong believers in protecting the American way of life. There was a certain camaraderie between Walter Beech, Julius Schaefer, Walter Innes, Dwane Wallace and others that helped to hold the struggling industry together during tough times. They were competitors but more importantly, they were Wichitans. All of them realized that it was in the best interest of everyone to keep Wichita at the forefront of small aircraft manufacturing in America, both in times or peace or global conflict.

Meanwhile, late in 1933 Stearman engineers Mac Short, Harold Zipp and J. Jack Clark were designing a two-place, open-cockpit biplane designated the Model 70. The airplane would spearhead the company’s efforts to win military contracts from the United States Army Air Corps and the Navy. Based on the commercial Model 6 “Cloudboy,” the latest Stearman was ready for its first flight in January 1934 under the command of company test pilot David “Deed” Levy. After a short flight he reported that the ship flew well and exhibited no bad habits. Later that month levy flew the Model 70 to Wright Field near Dayton, Ohio, where it was “wrung out” by both Army and Navy pilots. Additional evaluations were conducted at Naval Air Station Anacostia in Washington, D.C., and at the Navy’s pilot training facility in Pensacola, Florida.

The Army, still woefully short of funds to buy new aircraft, expressed no further interest in the biplane, but the Navy invited Stearman officials to provide a quotation for a trainer similar to the Model 70, but with certain modifications. Schaefer and Innes were overjoyed when, in May 1934, the Navy ordered 41 airplanes designated NS-1 (Stearman Model 73). In addition, the contract specified spare parts sufficient to build another 20 ships. Schaefer was quick to share the good news with the people of Wichita. The “Eagle” newspaper recognized the importance of the contract to the city: “Drama lies behind the simple, business-like announcement of the [Stearman] factory, for Wichita, metropolis of the Plains, is accorded a large part in the up building of the nation’s sea forces more than a thousand miles away. Despite determined work on the part of Wichita’s plane builders and air enthusiasts, few large military contracts have been awarded factories here. The big order accorded the Stearman plant is thought to have broken down this barrier and to point the way to national recognition of Wichita as capital of the air whether in peace or war.”

 

The first NS-1 for the Navy was completed early in December, and the Army Air Corps evaluated an upgraded version of the Model 73 known as the Model X75. In February 1935, the Army issued a specification and a request for bid to the Stearman Aircraft Company. That summer the federal government placed orders for 46 Stearman primary trainers — 26 for the Army and 20 for the Navy. Schaefer could not agree more that, “Happy days” were here again. These orders were part of an expansion program by the Air Corps to increase its strength to more than 2,300 aircraft from the existing 1,800. In 1935 Congress had appropriated $23 million for new armaments, but the Army and Navy brass knew that the money fell woefully short of what the services needed to train for and fight the next world war.

By 1936 the Stearman factory was bursting at the seams with orders for new training airplanes worth $450,000. The company had never experienced such a high level of activity, which dwarfed the halcyon days of the late 1920s. Employment skyrocketed to 400 people, and as the late 1930s evolved, more contracts for Stearman trainers arrived on J. Earl Schaefer’s desk. Wichita was experiencing a revival that was benefitting not only the Stearman factory but the city’s entire aviation industrial base. A reporter for the Wichita Eagle wrote in December 1936, “It is estimated that perhaps $2, 500,000-worth of business was put on the books here during the year, some of it yet to be filled but a substantial part of it has been produced. It was the best year since the boom days of 1928-1929.”

Five miles east of downtown Wichita, the Beech Aircraft Company was enjoying its best year since operations began in 1932. As 1936 drew to a close, the company had more than doubled sales compared with 1935, and 1937 promised to deliver more orders for Beechcraft airplanes. Walter Beech informed the local press that his workers had built twice as many commercial Model 17 biplanes in 1936 as they had in 1935, and more than 300 people were working in the back shops and on the production line. In addition, chief engineer Ted Wells and his staff were in the midst of designing an all-metal, twin-engine cabin monoplane that would become the legendary Model 18.

 

Over at the Cessna plant on Franklin Road, general manager Dwane Wallace reported that sales of the popular C-34 monoplane were on the rise, and that the factory was operating at nearly full capacity. According to Wallace, more than 50 aircraft had been built in 1936 (three times the number manufactured in 1935). He predicted that the company would double its business in 1936 chiefly because of rising demand for the affordable and economical C-34. The years 1937 and 1938 proved to be even more bountiful for all three of Wichita’s major airframe companies. Cessna Aircraft introduced its C-37 and C-38 monoplanes, and Beech Aircraft was achieving good success with its Model 17 series and the new Model 18.

 

Early on the morning of September 1, 1939, orders were received from the military high command in Germany’s capital of Berlin to commence an attack on Poland. The German army, with its modern weapons and well-trained troops, easily swept across the Polish borders and descended upon the capital of Warsaw from the north, south and east. The bloody but brief campaign against Poland gave the world its first glimpse of “Blitzkrieg,” or “Lightning War.” After Herr Hitler ignored an ultimatum demanding that German forces withdraw from Polish soil, England and France declared war on the Third Reich.

The ramifications of that declaration would soon reach across the deep, cold Atlantic Ocean to the coast of America and all the way to Wichita, Kansas. The city on the Plains was about to play a vital, indispensable role in the worst conflict yet to strike the human race.

 

Notes:

1. Many Stearman enthusiasts believe the Model 4CM-1 was the zenith of Lloyd Stearman and Mac Short’s seven years of cooperation on advanced biplane design. It was, however, the final collaboration between the two men at the Stearman Aircraft Company.
2. The “Alpha” and its successors would have a profound impact on the design of the all-metal Boeing 247 and the Douglas DC-1 in the mid-1930s.
3. Despite Innes’s enthusiastic report, the Stearman factory did not build any Alpha or Beta monoplanes, but did provide modifications, maintenance and overhaul support services for the Alpha series into the late 1930s.
4. In California, Lloyd Stearman joined forces with Robert Gross and Walter Varney to acquire the assets of the defunct Lockheed Aircraft Company. Stearman was elected president. He had been working on a new design that evolved into the Model 10 “Electra.” Airlines bought the twin-engine, all-metal cabin monoplane for service on short-haul passenger routes.
5. The T-50 was destined to become one of the best multi-engine trainers of World War II.