by Chris Oakley

Part 10

Summary: In the first nine chapters of this series we chronicled British inventor William Samuel Henson’s development of the world’s first practical airplane; the establishment of his partnership with Cornelius Vanderbilt; the introduction of airplanes to modern Warfare; the role played by air power in the Union’s victory in the American Civil War; the postwar breakup of the Vanderbilt-Henson Alliance; the birth of commercial flight in America; how the Civil War affected military aviation technology and doctrine in the late 1860s and early 1870s; the birth of the famous Merlin engine; Henson’s experiments with trans-Atlantic flight in the final days of his life; and the first successful oceanic crossings by air. In this episode we’ll talk about the first major aviation company bankruptcies and recall how a pair of amateur aviation enthusiasts from Ohio made possible a giant leap forward in the evolution of the monoplane.

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At the time of William Samuel Henson’s death ATC was at the peak of its corporate and financial power; besides being the dominant aircraft firm in Europe it also held a respectable share of the North American aviation market and was starting to make its presence felt in Asia. Even in South America, which then had little manufacturing base to speak of, ATC and its affiliates were laying the foundation for a new surge of growth in the worldwide aviation industry. Technologically, ATC was the gold standard by which all other aircraft companies were measured and its automotive cousin BHCC was the acknowledged leader in the field of ground transportation.

Yet there were subtle hints that the status quo in the flying business would soon be turned upside down. Too many aircraft companies had been started up too fast and the business landscape on both side of the Atlantic was cluttered with fiscally shaky aviation concerns ill-equipped to cope with the demands which would be placed on the industry as a whole as it moved into the 1890s. There were also a few "young Turks" who felt that ATC and other big companies were now squelching innovation rather than promoting it; they aimed to take over, if not the entire aviation business, then certainly a large enough chunk of it to transform their ideas into reality.

Unfortunately for Henson’s heirs at ATC, one of the companies teetering on the brink of fiscal ruin was its main North American partner, Allegheny Flying Machines. The Philadelphia-based firm and its San Francisco subsidiary had spent a pretty penny helping ATC get the Leviathan and Titania projects off the ground¹; while that alone might not have been enough to hurt Allegheny’s fiscal health, the regrettable fact was that some of its executives had developed a sense that they were entitled to a lavish lifestyle as a reward for what they’d achieved in the aviation business, and as a consequence of that feeling of entitlement they’d begun siphoning off cash from corporate assets to fund their luxury. In a strategy eerily familiar to anyone who’s followed the Enron or Tyco scandals, these executive hid their skimming by claiming these withdrawals as legitimate business expenses; by the time the truth came to light, Allegheny was at least $9 million in the red and the company was facing federal investigation-- not to mention a long line of creditors.

And it didn’t help Allegheny’s position any when in October of 1887 the prototype of a new reconnaissance seaplane the company was developing for the US Navy crashed in a residential section of South Philadelphia just after takeoff, killing its two-man crew and setting fire to a row of houses. The crash was a public relations nightmare for the company, putting a black eye on its once-proud reputation and discouraging potential customers from buying its designs. Four short months after the crash, two of the company’s senior executives were arrested on charges of stock fraud, making Allegheny’s already precarious situation that much more dangerous.

But the final straw came in July of 1888 when the New York World-Telegram printed an exposé which illustrated in stark detail how several of Allegheny’s top executives were bilking not only their own company but also the US War and Navy Departments along with three of America’s top private airfreight services. No amount of spin doctoring could redeem the company’s good name after that, and on September 5^th, 1888 Allegheny Flying Machines went out of business; its remaining financial assets were seized by the Treasury Department and its design & engineering staffs went their separate ways to either start new aviation companies or take new jobs with existing firms. In a touch of irony that would have amused the late Cornelius Vanderbilt Allegheny, which had been founded in part to act as a rival of EACC for dominance of the US aircraft market, saw EACC lawyers acquire the patents to most of its production models.

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A few years later, EACC would be confronted with financial troubles of its own. The seeds for those troubles were planted in March of 1890 when the company’s Canadian subsidiary, Berwick Ltd. of Toronto, was commissioned by the Royal Canadian Mounted Police to develop a scout plane for the RCMP’s fugitive tracking division. Dubbed the Argus after the mythical Greek hundred-eyed monster, the plane was conceived as a two-man craft meant to be simple to operate and capable of flying from the roughest landing strips; however, busybody armchair experts at RCMP headquarters in Ottawa were under the misguided impression that the new scout aircraft would work better as a sophisticated four-man vehicle. This meant a costly eight-month delay in the Argus prototype’s debut test flight while its airframe underwent no less than five different reconfigurations.

And when the maiden voyage finally did happen, it revealed critical flaws in the wing structure that would require still more expensive design alterations. By February of 1891 Berwick had gone more than $8 million over budget on the Argus project and the auditing branch of Berwick’s corporate parents at EACC’s main office back in New York were subjecting the Berwick board of directors to increasingly harsh scrutiny.

The ripple effects from the Argus fiasco drove down the value of EACC’s stock; they also scared away potential customers and made the company’s longtime clients start to question the wisdom of doing business with EACC. In September of 1891, the company posted the first quarterly deficit in its corporate history. For those who remembered the company’s adventurous beginnings in the 1850s and its glory days between 1861 and 1885, it was a shocking turn of events. But there were even greater shocks to come: that October, an East Coast regional passenger airline sued EACC for negligence after an improperly mounted tail assembly on an EACC- built passenger aircraft caused the plane to lose control of its flight path and crash in a potato field on Long Island, killing the entire crew and most of the passengers and seriously injuring many of the survivors. The case would last more than ten months, during which time EACC’s stock value would decline still further and at least one major domestic air passenger line would cancel its contracts with the company.

The suit was eventually settled out of court, but not before EACC had been forced to sell off Berwick to a Montreal consortium in order to avoid joining Allegheny in the limbo of bankruptcy. The consortium, unfortunately, had little experience in running an aviation company and by March of 1893 Berwick Ltd. was posting average monthly losses between $800,000 and $1.5 million. Once Berwick was sold, it and EACC went in opposite directions; EACC, freed from carrying the burden of Berwick’s financial debts, set about putting its house in order while Berwick Ltd. fell into an irreversible tailspin that effectively killed the Argus project-- frustrated with Berwick’s failure to deliver the promised scout plane, the RCMP cancelled its contract with the company in August of 1893 and awarded the job to Berwick’s chief rival, Deschamps & Sons of Halifax.

Berwick Ltd. went out of business in the summer of 1895, by which time a leaner and meaner EACC had returned to the top of the US aviation market and consolidated most of its manufacturing operations into four factory plants in the Midwest.

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One of those plants was located in Dayton, Ohio; just a few blocks away from the plant stood a bicycle shop belonging to two brothers who’d been amateur aviation buffs since the age of five. Their names were Orville and Wilbur Wright, and together they would produce the next great milestone in aviation history. It had long been their aspiration to invent a workable all-metal monoplane; even though expert aviation science opinion at the time held that such an invention was still at least fifteen or twenty years away from becoming reality, the Wrights were highly confident they could create it much sooner.

And indeed, they’d been working on it steadily since 1892. Starting with rough blueprints they sketched out in their spare time, the Wrights had gradually moved up to building models of their projected all-metal aircraft, then to glider versions of same, and from there to small motorized mockups of their design, which was appropriately enough dubbed "the Wright Flyer".

By 1900 the Wrights were ready to begin construction on a full-scale prototype of the Flyer. The construction process would take over two and a half years, during which time the brothers would endure their share of technical setbacks as well as some financial hardship and the disdain of so-called "experts" like Samuel Langley, a physicist and part-time aerospace engineer who had himself made several unsuccessful attempts to produce an all- metal monoplane. Undaunted, Orville and Wilbur pressed on, and on December 17^th, 1903 a crowd gathered at Kill Devil Hill, North Carolina to watch the Wright Flyer prototype make its first test flight.

Orville was the designated pilot for the historic test run, while Wilburn stayed on the ground to take notes on how the Flyer performed as it went through its paces. Twice takeoff had to be postponed because the Flyer’s engine had stalled; on their third try, however, the brothers finally succeeded in getting the plane airborne and Orville put it through a series of movements meant to test the plane’s maneuverability and structural integrity. The Flyer passed those tests brilliantly, and in the process set some new speed and distance records. A new chapter in aviation history had been opened.

Word of the precedent-setting flight quickly spread across the country, and the day after Christmas the brothers received an invitation from President Theodore Roosevelt to join him at the White House for a state dinner after New Year’s Day. TR had long been an avid flying buff in his own right: as a conservationist he’d enjoyed taking scenic flights over the Adirondack Mountains; as New York City police commissioner he’d pioneered the use of scout planes in American law enforcement; as commander of the famous "Rough Riders"² volunteer squadron he had led a successful air strike that sealed the American victory at San Juan Hill in the Spanish-American War; and as vice-president in the McKinley Administration he had tirelessly advocated a substantial increase in the US Aerial Corps’ annual budget. Now, as the commander-in-chief, he had what he called a "bully pulpit" from which to push for further progress in both the civil and military spheres of American aviation.

When the Wright brothers got to Washington, Roosevelt asked them if they would be interested in receiving federal support for continuing their development work on the Wright Flyer. They most certainly were, it turned out, and when they finally returned to Ohio in mid-January of 1904 they did so carrying a respectable research grant check from the National Bureau of Air Sciences³. But it wasn’t just the White House that saw the Flyer’s promise; a score of aviation firms all over the world, including EACC and Sutherland, would soon be approaching the Wrights with requests to license them to manufacture the Flyer.

To Be Continued...