Farley's Deal

(See front cover) Since the Roosevelt Administration's fist shot out and smashed the aviation industry suddenly and solidly between the eyes, two months had passed and last week, its sleeves rolled down, its face still pink for the consequences of its deed, the Administration was ready to help the industry to its feet again. Chief causes of the Administration's lasting embarrassment were the interred or incinerated remains of 13 military flyers who died when the Army, on notice too short for proper preparation, was given the nation's airmail to fly. A secondary cause was the charge, pooh-poohed by the Administration but still repeated by many onlookers, that the blow was struck unfairly, before hearing all the defendants' stories, and struck at the wrong target. If airmail carriers had played a crooked game with President Hoover's Postmaster General Brown, they had only followed rules laid down by him as the umpire. It seemed fair enough to change the game's rules, not fair to knock out the obedient players. The wage of connivance, retorted the Administration, is punishment. By last week the rules of the game as it is to be played under President Roosevelt's Postmaster General Farley were not finally settled, but temporary rules were ready and an hour was at hand when the industry's altered countenance would be seen. New Rules. On orders from the President, Postmaster General Farley late last month reopened 75% of the old airmail routes to operators who would get three-month contracts which might be extended an additional six months (see map). Bids for these contracts were to be opened April 20 unless, as was most unlikely, Congress should previously pass a new airmail law.

The President's wishes for aviation's New Deal, as set forth by letter March 7 and embodied in like bills by Representative Mead (New York) and Senators Black (Alabama) and McKellar (Tennessee) were as follows:

1) Return of the airmail to private carriers under fair competitive bidding.

2) Transfer of airmail and transport supervision (from the Post Office and Commerce Departments) to the Interstate Commerce Commission.

3) Divorcement of holding companies from operating or manufacturing subsidiaries.

4) Banishment from the industry of all persons involved in the celebrated "spoils conference" of 1930, when Postmaster General Brown and the big operators redrew the airmail map, largely excluding small operators.

Early this week, back from vacation, the President suddenly summoned his congressional henchmen and told them to tear up all their scribblings and simply pass a measure empowering him to appoint a policy-making commission for all U. S. aviation, which would commence study at once, make recommendations to the next Congress. "It should be borne in mind that the U. S. has had no broad aviation policy.'' said the White House. Meantime the mails would be flown privately under Mr. Farley's new temporary contracts or under new one-year contracts authorized by Congress. New Face. President Roosevelt, as everyone knows, is an idealist. James Aloysius Farley is, as none can deny, a master politician. And master politicians should, by U. S. definition, always be watched closely, even during a New Deal and especially when they run a department of the government which dispenses large quantities of Graft's first cousins, Patronage and Contracts. It was for this reason that, despite his unquestioned loyalty to his idealistic chief, "General" Farley's resurrection of the air industry's prostrate form was eyed intently not only by injured operators but by vigilant citizens and patriots. The industry's face was certainly altered and one thing noticed, when "General" Farley announced his new contract auction, was that bids were to be opened and announced, not immediately upon receipt, as is customary, but 192 hours after receipt. Another thing: the southern transcontinental route was not included. This circumstance served to underscore a fact bigger than all: of the four major companies that had held old contracts, only one would, without firing its best men and reorganizing, be clearly eligible for new contracts,* and that one line was the line that had had the always unprofitable southern transcontinental route. That line was American Airways, controlled by that ambitious, trouble-brewing newcomer to aviation, Errett Lobban Cord. "General" Farley reconsidered and opened not only the southern route but a new northern transcontinental route to the bidding. But these bids were to be opened one week later than the rest, offering possible consolation prizes to any bidder unsuccessful in the first auction. Again the old-line companies thought they saw an advantage for Cord, who owns a fat slice of Northwest Airways, logical link in the new northern route. The old operators began a lot of bitter talking, and citizens a lot of puzzled thinking, about the sudden rise of Errett Lobban Cord to potential dominance on the airmail map. New Map. On General Farley's new airmail map (see above), with its four transcontinental routes instead of three, the new northern one extends from Newark via Buffalo to Chicago, thence westward to Seattle through Fargo, Billings, Great Falls and Spokane. The Newark-Chicago section is now operated with passengers by American Airways (------). The western section has recently been opened to passengers by Northwest Airways.

Next down the map is the great transcontinental route of United Air Lines ( qedo qedo qedo qedo qed), from Newark to San Francisco via Cleveland, Chicago, Omaha, Cheyenne, Salt Lake City. Other major routes flown by United and for which new contracts are to be let include the West Coast run from Seattle to San Diego, the Salt Lake City-Spokane "feeder" line and an important route from Chicago to Fort Worth via Kansas City. Only old United route not to get a new con tract is the Tulsa-Watertown feeder line

Next down the map is the "middle"' transcontinental route developed by Transcontinental & Wrestern Air ( ................), stretching from Newark to Los Angeles via Philadelphia, Columbus, Indianapolis, St. Louis, Kansas City, Albuquerque. This, the "Lindbergh" line, is the shortest route from coast to coast. Connecting the United and TWA transcontinental routes in two places are Western Air Express routes, one from Cheyenne to Albuquerque and the other from Salt Lake City to Los Angeles ( ). On the former route, a new mail contract will be awarded only from Cheyenne to Pueblo. Down the Atlantic Coast, from Newark to Miami and inland from Richmond to Atlanta and Jacksonville runs the Eastern Air Transport route (X qedX qedX qedX qedX qedX qedX qed), only one to have all its old contract routes included in the new setup. American Airways' southern transcontinental route extends from Newark to Los Angeles by way of Buffalo, Cleveland, Columbus, Cincinnati. Louisville, Nashville. Memphis, Little Rock, Dallas, Fort Worth, El Paso. Of the former mail routes operated by independents, new contracts will be awarded between Salt Lake City and Great Falls, Detroit and Milwaukee, Washington and Cleveland. Among independents hoping for a piece of the new airmail subsidy is the Boston-Maine Airways operated by Paul Collins and Amelia Earhart, who want the Boston-New York mail contract formerly held by American Airways. Most of the old contractors, such as United and the General Motors Group (TWA, Eastern Air, Western Air Express) are expected to bid for their old routes and nothing else, except where bids specify certain extensions which must be let in groups. Bids are expected to be very low, to forestall possible underbidding by Cord. If he bids successfully for the cream of the mail contracts, he would find himself astride the most elaborate air transport system in the world. Then indeed would the Kingdom of Cord come into its own. Preparation for Power. When the New Deal was at hand, Errett Cord, commenting on his unsuccessful efforts to get more advantageous mail contracts, was vowing to this effect: "All this is going to be changed. We are attending to that." And it was just after election that Cord's able, hard-boiled righthand man. Lucius Bass Manning, declared vaguely but grandly: "We're claiming the 48 states and everything else in sight. We mean business and you can put that down for just what it means. We know how to make money, and we're going to make it out of aviation." Cord's advance into the air transport field had begun in 1931 when its independent Century and Century Pacific Lines were started, nuclei for "the largest air passenger and express unit in the world." Unable to get mail contracts, even when he dramatically offered to accept 30-c- a mile (half the rate then paid), Cord had feinted by selling out to Aviation Corp., huge holding company for American Airways of which, after a bitter proxy fight, he soon captured control. With Avco's American Airways he got 28% of the mail. Now he was an insider instead of an outsider. The mail contract business being essentially political in nature, Mr. Cord naturally took steps to entrench himself with the coming administration. How far he went or tried to go is largely conjectural. An interesting body of legend has accumulated of which the following is a partial analysis: Legend: Cord contributed $1,000,000 to Roosevelt's campaign. Probable fact: $23,000 is nearer right. Legend: Amon Carter of Texas was Cord's prime Washington go-between. Cord stood ready to back Mr. Carter in buying the Washington Post. Fact: Mr. Carter, who sold his Aviation Corp. stock [500 shares] after Cord got control, has never been obliged to Mr. Cord, but knows him well. Legend: Silliman Evans. 4th Assistant Postmaster General, is Cord's Washington contact. Fact: Mr. Evans, onetime publicity vice president of American Airways, left the latter after Cord's advent, anticipating his greater glory in Washington. Legend: Eugene L. Vidal. air chief of the Commerce Department is Cord's ally. Fact: Mr. Vidal, when running the independent Ludington Lines, bought Stinson planes from Mr. Cord, later made a confidential airline survey for an advertising agency engaged by Cord. (Elliott Roosevelt got the agency the business through Cord's stockmarket ally, Frank A. Vanderlip.) The survey was not flattering to American Airways. Legend: James Aloysius Farley himself is Cord's good friend. Fact: Mr. Farley lately said, "I don't know Cord." Fact: Day after Cord announced he had bought New York Shipbuilding Corp. for $2,000,000, that company got contracts for some $38,000,000 worth of U. S. war-boats. Fact: Cord's bids were doubtless lowest but--Probable fact: Cord more than offset any operating losses by the resultant boom in New York Shipbuilding's stock. This operation is what prompted La Motte Turck Cohu, whom Cord ousted as president of Aviation Corp., to growl: "The air transport business will be torn away from the pioneer operators . . . and put into the hands of speculators." President Richard W. Robbins of TWA growled: "Postmaster General Farley has extended an open invitation for all the crapshooters of the vintage of 1929. . . ." It is fact that Franklin D. Roosevelt flew via American Airways to Chicago to accept his nomination (paying for ten tickets); that Mrs. Roosevelt used American Airways on her western trip last year, and Postmaster General Farley on his Texas junket to "rediscover" Vice President Garner; that the Post Office Department has been willing to hold up a mail plane for an hour or so to suit the convenience of a Cord hot-shot official. But none of these harmless facts webs with others to produce any picture other than that of an alert organization headed by an astute, scheming, self-effacing businessman who knows how and where grand parsnips can be found and buttered. His suspicious critics notwithstanding, it is impossible to read anything subtle into the grandiose interview Errett Cord gave out last year in Kansas City. Excerpts: "There is more opportunity in the world today than ever. . . . Fortunes change hands every seven years. Who gets them? Somebody else. . . . A clearheaded, hard-working young man never admits a closed frontier. . . . If he can give better service than a corporation, he succeeds the corporation. . . . Intelligent men profit by history. The intelligent young man reads back, then looks forward."* Mercury to the Masses. As leading entrepreneur of the Depression, Cord finds himself at 39 one of the most meteoric figures on the U. S. scene. Mercury to the masses, purveyor of cheap speed on land and in the air, his spectacular rise has been accomplished in the 15 years since he was a Moon auto salesman in Chicago with a $35 weekly drawing-account. So many Moons did he sell that his 5% commissions brought in about $30,000 a year, netted him $100,000 with which he bought out wobbly Auburn Automobile Co. Youngest motorcar company president in the U. S. at 30, he built up a quick fortune which he expanded by, acquiring Duesenberg and a few companies manufacturing accessories. Until he introduced the Cord Front-Drive car in 1930, his name was known to a very small portion of the public. It was about then that he bought a plane, learned to fly it, determined to make planes much cheaper than they then were. With the late Edward A. Stinson he began producing trimotored transport planes at such absurdly low prices that other manufacturers, including Henry Ford, found it prudent to retire from the field. It was to create a market for his planes that he started Century and Century Pacific airlines, made air travel popular by slashing fares to railroad levels. Slim, young-looking, with a muscular bulge in the jaw, Errett Cord presents a collegiate aspect despite never having gone to college. He rarely speaks his mind, but when he does he uses a language racy and rich with anatomical allusions, forceful expletives. Studious-looking with his glasses on, he might be taken for a young college instructor. Without glasses he is more apt to resemble a high-pressure magazine salesman. He has two sons by his first wife, who died in 1930. In 1931 he married Virginia Kirk Tharpe. With their baby Nancy (the two boys are at military school in the East) the Cords live in a fine home in Beverly Hills outside Los Angeles where he went to high school and ran a car-washing business. G. H. Q. of Cord Corp. is at No. 105 West Adams St., Chicago. In the swank Lake Shore Drive district Cord maintains a large apartment. When visiting Manhattan he lives expensively in a suite at the WaldorfAstoria. Over the U. S. sweeps the Kingdom of Cord: at Camden, his $15,000,000 New York Shipbuilding Corp.: in Kalamazoo, his $4,500,000 Checker Cab Manufacturing Corp., largest in the U. S.; in Williamsport. Pa., his Lycoming Manufacturing Co. said to be the largest motor-builders in the world; in Wayne, Mich., his Stinson Aircraft Corp.. biggest U. S. builders of cabin airplanes; in Cleveland his Smith Controllable Pitch Propeller Co.; and in Auburn, Ind., the great automobile plant where Errett Lobban Cord ten years ago got a toehold on Success.

* Especially maddening to old contractors was General Farley's shifting to them the burden of proving their innocence. He declared that, to be eligible, each company must swear none of its officers had been guilty of fraud and collusion. No company officers had been tried, all claimed they were innocent, yet General Farley reserved to himself final judgment of the truth of the companies' affidavits. Only Cord man on the Farley blacklist was R. C. Marshall, a division manager of American Airways, who was quietly detitled last week when American Airways was changed to American Airlines, in which Controller Cord does not appear as either officer or director. * Cord's natural comparative, Henry Ford, whose famed saying (often misquoted) was: "I don't know much about history, and I wouldn't give a nickel for all the history in the world. History is more or less bunk. . . . The only history that is worth a tinker's dam is the history we make today."

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