The Air Capital of the World: The Depression

The stock market crash in October 1929 thrust a knife into the heart of America’s economy and put Wichita’s thriving aviation industry into an unrecoverable tailspin.

The ramifications of Wall Street’s disaster were both cruel and inevitable. Across the United States, banks began to fail as people rushed to take out their money and borrowers increasingly defaulted on their loans. The people gradually lost whatever ability they had to buy goods and services, and that led to businesses being forced to close their doors. Next, unemployment soared upward.

As the early months of 1930 passed by and the stock market continued its downward slide, the nation’s aviation industry was rapidly entering a deep stall. Orders for new airplanes decreased dramatically. Wichita, once hailed as the “Air Capital of the World,” witnessed its factories slowly succumb as stacks of cancelled orders threatened to starve them to death. By mid-1930, the flood of orders received a year earlier had slowed to a trickle. In addition, prices for new aircraft took a nose dive, falling almost as fast as the value of company stock. For example, Curtiss-Wright Flying Service, which had a contract with Clyde Cessna’s company for fleets of monoplanes, slashed prices for a new Model AW from $7,200 to $3,340, but found no buyers. The situation was the same over at Walter Beech’s Travel Air factory and Lloyd Stearman’s facilities north of town. For a majority of Wichitans, December 25, 1929, proved to be anything but merry.

It is, however, interesting to pause for moment at this point in the story to note that between 1920 and 1931, Wichita was home to more than 30 aviation businesses, including but not limited to:

1. E.M. Laird Airplane Company

2. Swallow Airplane Manufacturing Company

3. Travel Air Manufacturing Company

4. Cessna-Roos Aircraft Company

5. Laird Aircraft Corporation

6. Stearman Aircraft Company

7. Swallow Airplane Company

8. Continental Aircraft Corporation

9. Knoll Aircraft Company

10. Lark Aircraft Company

11. Lear Aircraft Company

12. Metal Aircraft Company

13. Swift Aircraft Company

14. Yellow Air Cab Company

15. Associated Aircraft Corporation

16. Okay Airplane Company

17. Sullivan Aircraft Manufacturing Company

18. Supreme Propeller Company

19. Watkins Aircraft Company

20. Wichita Airplane Manufacturing Company

21. Yunker Aircraft Corporation

22. Buckley Aircraft Company

23. Curtiss-Wright Airplane Company

24. Jayhawk Aircraft Corporation

25. Mooney Aircraft Corporation

26. Poyer Aircraft Motor Company

27. Aircraft Supply Company

28. Schilberg Airplane Company

29. Straughn Aircraft Company¹

At the end of 1929, there were at least 16 airframe and six engine manufacturers still operating in the city, and investors had poured more than $10 million into the town’s most famous industry (by 1932, only a few of these companies still existed). As it became increasingly clear that demand for new aircraft was evaporating, the Travel Air Company, Stearman Aircraft Company and Cessna Aircraft Company were forced to begin laying off loyal, hard-working employees, not by dozens but by hundreds. Lloyd Stearman was among the first to lay off workers and in January 1930, 97 people were cut from the payroll and further reductions were forthcoming. Walter Beech quickly realized he could not keep 650 skilled laborers busy building nonexistent airplanes, and massive cuts were implemented. As for Clyde Cessna and his once-promising enterprise, just when he was on the cusp of great success, Wall Street clipped his wings. The new factory was slowly ramping up production to meet demand and the future looked bright. By the end of 1929, the company had delivered about 37 Model AW monoplanes, four DC-6 and three DC-6A cabin ships to the Curtiss Flying Service, and Cessna was under contract for hundreds more of these aircraft.

Unfortunately for Clyde, in January Curtiss Flying Service cancelled its contract with the pioneer aviator, citing the poor economic situation as its chief reason. Cessna had suddenly lost a strong and effective nationwide sales and marketing operation. Despite selling more than $700,000 worth of new Cessna airplanes and $300,000 of stock, the company ended 1929 a whopping $100,000 in the red. To make matters worse, stock prices tumbled from more than $100 per share to only $12, then dropped to only $10. Desperate for operating capital, Cessna sold the empty factory at First Street and Glenn Avenue for about $50,000.

As the new year began, prices for factory-fresh aircraft continued to plummet as Cessna dealers and distributors sought to unload inventory and hoard whatever cash they could muster. Finally, Clyde Cessna found himself the target of his stockholders. They filed a petition in Wichita District Court to place the company into receivership, citing mismanagement. A judge dismissed the petition, but Cessna faced an uphill battle to retain leadership of his own company. As 1930 came to an end, less than 20 airplanes had been sold, and angry stockholders were calling for Cessna’s resignation.

The company, however, was building new aircraft. Clyde’s son, Eldon, and engineer Frank Dobbe had designed an inexpensive glider dubbed the CG-1 they hoped would sell in a severely depressed market. Priced at only $398, the CG-1 quickly evolved into the CG-2 and was sold to small flying clubs that had sprung up across the Midwestern United States. Soon production reached one glider per day, but sales remained soft and company records indicate that only 84 were built. In addition to the CG-2, in March 1930 the company also offered the CS-1 sailplane designed by factory engineers to have a glide ratio of one foot down for every 30 feet of forward flight. The CS-1 boasted a generous wingspan of 47 feet, and an empty weight of only 150 pounds. Only one was built.

During the first six months of 1930, a series of unusual Cessna airplanes designed by Eldon Cessna took to the skies over Kansas, including the CPG-1 (essentially a CG-2 glider modified with a 10-horsepower Cleone, two-cylinder engine), the EC-1 (25-horsepower Cleone) and later the EC-2 (30-horsepower Aeronca, two-cylinder engine). Other one-off aircraft built that year include the FC-1, CG-1 and CG-2 racing ships.

In June 1930, Clyde and his associates took a hard look at how well the company was performing and they did not like what they saw. Only 10 DC-6s had been built and about 25 gliders had been delivered. By comparison, Travel Air’s sales organization had managed to sell 119 airplanes, Stearman Aircraft sold 28 and the Swallow company delivered 32.

As 1931 began, angry stockholders in the Cessna Aircraft Company were demanding that the factory be closed. As the situation grew worse the Board of Directors finally took action. After much discussion, members decided that in view of the poor overall sales situation coupled with no hope of generating any profit that year, the factory would be closed. Despite Clyde’s strong opposition, the motion carried. C.V. Cessna had made his “last stand” and lost the battle. Suffocated by an economy that stifled sales, attacked from all sides by grumbling stockholders and outgunned by his fellow board members, the president of Cessna Aircraft Company watched helplessly as the doors of his factory were padlocked. During its relatively brief period of operation from September 1927 until June 1931, the company had manufactured 240 airplanes, with 75 of that number sold to the Curtiss Flying Service.

Anyone visiting Wichita, early in 1931, could see that the once bustling “Air Capital of the World” had been brought to its knees. At least 14 airframe manufacturers in the city had ceased to exist. Stocks that were “sure-fire money-makers” had become nearly worthless scraps of paper. Worst of all, it seemed that America’s love affair with personal and business flying had crashed and burned. Despite that bleak reality, there were unique opportunities if one knew where to look, and Clyde Cessna soon realized that there was money to be made in air racing.

In September 1931, Clyde and Eldon formed the C.V. Cessna Aircraft Company and leased a small facility on South Oliver Street. Assisted by engineer Garland Peed, the three men designed the first of two diminutive, single-seat, retractable-gear racing monoplanes powered by seven-cylinder Warner Scarab static, air-cooled radial engines. By any standard of the day, the CR-1 racer was small. The fuselage measured a mere 12 feet and the full cantilever wing spanned only 16 feet. First flown in January 1932, the CR-1 proved to be unstable longitudinally and was quickly modified into the CR-2 by increasing fuselage length to 14 feet and the wingspan to 18 feet. Flown by Roy Liggett, the CR-2 was capable of speeds of 220 mph and won a number of races until it crashed in September 1933, killing Liggett.²

The second racer, built in the spring of 1933, resembled the CR-2 but was modified to the requirements of famed air racing pilot Johnny Livingston. His brightly painted red and yellow Monocoupe was almost unbeatable, winning race after race during the summer and autumn of 1933. Clyde and Eldon completed Johnny’s racer, dubbed the CR-3, in June. The little monoplane won every race it entered until August, when Livingston was forced to bail out of the ship when the manually-operated landing gear failed to extend (Livingston had decided that risking a belly landing was too dangerous).

By 1932, the Travel Air factory had fallen silent after the Curtiss-Wright organization, which absorbed the company in August 1929, had closed its doors. The few employees still on the payroll had been dismissed by September 1932, except for Roy Edwards, who remained behind to sell manufacturing equipment no longer needed by the company. All airplane manufacturing was relocated to Curtiss-Wright’s facilities in St. Louis. Walter Beech took up his responsibilities as Curtiss-Wright’s vice president of sales and split his duties between corporate offices in New York City and St. Louis. In its five years of existence, Travel Air had built more than 1,400 biplanes and monoplanes, and in 1929 had claimed that 25 percent of all registered airplanes in the United States bore the Travel Air name.

The nation’s ongoing economic tragedy already had claimed two of Wichita’s major airframe manufacturers, and as 1933 arrived only the Stearman Aircraft Company remained in operation, albeit by the slimmest of margins. In the past three years a number of key changes had occurred that would make a major impact on Wichita’s aeronautical future. First among these was the merger in August 1929 of Lloyd’s company with United Aircraft & Transport Corporation (UATC) – a gigantic aviation conglomerate headquartered in Hartford, Connecticut.

The second important change occurred in June 1930 when UATC officials decided to build a new, modern factory complex on South Oliver Street. Six separate buildings were planned, with the largest structure encompassing 84,000 square feet. Costing about $330,000, the installation would be built by Austin & Company, a major construction company that specialized in designing and building manufacturing facilities. The third significant change was the resignation of Lloyd Stearman in July 1931. His announcement stunned Wichitans. He planned to return to California and after a well-earned rest, would investigate new business opportunities in aviation. In the July 7, edition of the Wichita Eagle newspaper, he was quoted as saying, “The growth of aviation may be slow in the next few years, but it will be consistent and steady. I believe there is no question that it will shortly become one of the great industries of the nation. Because of Wichita’s natural advantages as to climate, and because it is easily reached from the eastern and western airplane markets, this city will always be an important factor in the growth of aviation.” Stearman’s words would prove prophetic.³

Although the “Peerless Princess of the Prairie” con-tinued to reel under the weight of the Great Depres-sion, there was a glimmer of hope on the horizon. It would fall to a few brave and determined entrepreneurs, both men and women, to resurrect Wichita as the “Air Capital of the World.”

Notes:

1. Murphy, Daryl E: “The Planes of Wichita – The People and the Aircraft of the Air Capital;” iUniverse, Inc., New York, 2008.

2. The accident devastated Clyde Cessna and led to his decision to withdraw permanently from aviation. He returned to farming in Kansas. Cessna died in 1954. His son Eldon died in 1988.

3. Lloyd Stearman and his family bid a final farewell to Wichita in October 1931 and drove west to Piedmont, California. In 1932, Lloyd joined forces with Robert Gross and Walter Varney to acquire assets of the Lockheed Aircraft Company – a division of the defunct Detroit Aircraft Corporation. At age 34, Stearman was elected president of the reborn Lockheed company. He was largely responsible for the inception and preliminary design of its first new product, the Model 10 “Electra” twin-engine business/airline transport. During his half-century in aviation, Lloyd Carlton Stearman had witnessed the evolution of airplanes from the elementary “Swallow” to the sleek, supersonic “Concorde” passenger jet. He is remembered as one of the great statesmen of American aeronautics, whose place in the annals of aviation history is secure.