CHAPTER NINETEEN

Necessity, the Mother of Creation

When, shortly after the first of January, 1930, Tom Hamilton took me up to Milwaukee to look over the Hamilton Aero plant there, the stock market crash had already enveloped the country in a cold chill. Along the Northwestern Railway’s right of way, cold smoke stacks pointed dead fingers toward leaden skies and fear gripped the land. However, we found Tom’s modern factory still bright and cheerful for it had been well equipped and was now well run by Arvid Nelson, its manager. While the civilian demand for propellers had collapsed with the boom, military business had continued firm under the five-year Army and Navy building programs.

It was when we went down to Pittsburgh to look over Standard Steel that I got a jolt. The plant, located across the river in Homestead in a former cap-pistol factory, was as drab and cheerless as Pittsburgh itself. With many of the steel mills down as a result of the market collapse, there was less smog than usual along the Monongahela, but the grime of the past still clung to treeless slopes. After a look over the situation there it was clear we must cut the consolidated propeller company back to a size suited to the reduced demand.

While the plant in Milwaukee appeared the better of the two, the State of Wisconsin had a heavy corporation income tax that would have to be included in costs; and besides, Milwaukee lay off the main east-west line of rail communication. At Pittsburgh, Harry Kraeling had just completed a new three-story loft building in which we might concentrate the machinery of both companies, and the plant had a siding to the main line of the Pennsylvania. Here, about halfway between Washington, D.C., and Dayton, Ohio, was a situation that offered such advantages that we decided to consolidate the best equipment and the most skilled workmen there. We would then abandon all excess facilities and endeavor to set up a plant with a break-even point calculated to keep us in the black even with the greatly reduced military production level.

In calculating this setup, I had help from the head office in New York and in the person of Joseph F. McCarthy, controller of United Aircraft. Mac, I found, was the sort of wizard who could glance at columns of figures and read in them signs and portents such as could be made clear to me only after I had reduced them to engineer’s language of graphs and charts. From him I discovered that a financial statement is not just the cold record of past mistakes or triumphs, but also a weather map from which to forecast future trends and to take decisions calculated to reap the abundant harvest.

Using the figures available, we calculated the size of the facility with which we might expect to continue to break even during a period of slow demand but still retain the flexibility essential to reaping a profit when the tide turned. United Aircraft was frankly not in business for its health; it was in business for a fair profit and each of the subsidiaries was expected to stand on its own two feet. By consolidating the financial resources of all its subsidiaries in the parent company, it had in effect broadened the resources of each. Any company in temporary need of funds might look to the parent company without going outside to borrow, but over the long pull it must contribute its share to the over-all income.

Having had no training whatever in accounting or finance, but having been schooled by Dr. Lucke to search for fundamental principles, I now began digging down to bedrock and in J. F. McCarthy, himself, discovered a rich nugget. Profit, it seemed, was not just the excess of receipts over expenditures, a sum to be divided among a few insiders and squandered in riotous living. Profit was, among other things, the great regulator and controller of trade, and trade was the foundation of human existence. Under the free play of natural competitive forces, the compelling need to make a profit or go out of business and starve was what drove men to cut costs of production. If they could reduce costs enough to make the product available to more people they could increase the demand and expand the volume of production. Out of their profits, or the anticipation of profits, they could attract new money with which to buy new machinery designed to cut costs further and expand volume further. All this was a delicate, living process that required good judgment and great skill to nurture.

Profit, it appeared, was like the governor on a steam generator. Increased demand for power would slow down the engine and reduce the voltage were it not for the fact that the governor, sensitive to small changes in speed, now opened the throttle wider to admit the extra steam required to meet the new demand. Contrariwise, when the demand fell off the engine might overspeed and destroy itself, save that the eversensitive governor now reacted quickly to close the throttle, and save the machine.

Profit was therefore no devouring ogre, as some would have us believe, nor was it just the regulator or controller of costs. Men, in seeking to make a profit—and correspondingly to avoid a loss—were ever on the alert to create new devices and new products. If one of these turned out to be useful, or desirable, and if its price proved reasonable, then the device would come into general use and its production and use would become profitable for both its creator and its user, to say nothing of the workmen who manufactured it. If, however, the device or idea failed to measure up to the customer’s expectations, or failed to satisfy his tastes, then it would just fade out; nature, it appeared, was highly selective. She believed in enterprise.

When natural law was permitted to function according to principle, corrective forces maintained a degree of equilibrium. To each action there was an opposite and equal reaction and the action contained the germ of the reaction, to the end that the pendulum could not swing too far. It was only when man-made law began hampering natural law that the violent swings took place. No man could understand the workings of the natural law well enough to anticipate the future nor, were he able to do so, could he control the future. Least of all did he have wisdom enough to incorporate the germ of a corrective action in his plans.

As I studied this matter of profit and business cycles, I began to get hold of a truth that seemed to be the answer to a lot of questions about the place of the machine in the economy. Men were beginning to argue that labor-saving machinery would bring about technological unemployment, and as the world-wide depression deepened, the facts seemed to confirm the opinion. However, there was another side to this coin: in a technological age when some engineers were engrossed with the task of cutting costs with machinery, other engineers were busy creating new devices to sell. And when these new devices clicked, they called for the creation of new enterprises, the employment of new money—even the creation of new wealth—and best of all the creation of new jobs for workmen. The automotive industry was one of many brilliant examples of this fact.

Now no man or group of men could possibly have enough wisdom to control the operations of this law. The free play of natural forces was the only intelligent controller. Like the slipstream of an airplane, this process might appear to be turbulent and wasteful, but again, like the slipstream, it was one of the most efficient processes in nature. The best men could do was try to maintain a healthy climate in which the process could flourish, and since the key lay in the incentive for the human spirit, men’s chief contribution must come out of faith in the natural process.

All this was a revelation to me in more ways than one. Like most naval officers I had absorbed something of the point of view of the professional man who tends to look down his nose at the tradesman. Overimpressed by the sins of a few profiteers, we considered businessmen mere money grubbers inclined to wink at sharp practices, if not downright dishonesty. To the professional man, especially one in public service, whose compensation does not clearly reflect the results of his own efforts, the real reward lies in his knowledge of a job well done. To some, this provides all the incentive required, but to most it furnishes an excuse to sit on the beach and watch the ebb and flow of the tides. The military man is prone to forget that some hard worker must create the wealth necessary to support him in the honorable estate to which he has become accustomed and that if comparable salaries make his appear modest, Uncle Sam is lavish with the perquisites.

When I sought to probe these matters with J. F. McCarthy, I found a kindred spirit. From the inception of the company, Fred Rentschler had brought Mac into every business discussion and decision; it had been his idea that finance should walk hand in hand with operations rather than bring up the rear with a truck load of old ledgers. He had, therefore, given Mac a high degree of autonomy in financial matters especially in the subsidiaries and Mac had used this so skillfully that everyone in the organization respected his business judgment and admired his integrity.

As time passed, and my responsibilities in United widened, Mac and I expanded our viewpoints together. Shortly after completing the physical consolidation at Pittsburgh, I was made president of the Sikorsky company at Bridgeport. A year later, after Chance Vought had died suddenly, I became head of his company in East Hartford. In less than a year, I, the least experienced businessman in United had fallen heir to its three problem children. As the depression deepened, and vast social changes began to take place, I sensed the far-reaching responsibilities that attach to the head of a manufacturing organization. Aside from the normal headaches incident to managing a competitive enterprise during a period of world-wide depression, there were heavy responsibilities imposed by strange forces unleashed by politicians prying open Pandora’s Box. This was an era when American business was placed on trial for its very life.

Our difficulty at Pittsburgh sprang primarily from the fact that the consolidation of the two manufacturers of metal propellers had created a potential monopoly; and there is no business more vulnerable than a monopoly. Our two steady customers, the Army and the Navy, wasted no time in slapping us down; they turned their propeller business over to fly-by-night competitors, and worse still, to government arsenals. My first venture in business was now threatened by unfair competition from sources that contributed nothing to engineering and development and charged their overhead to a government appropriation.

It was somewhat as if Uncle Sam had pirated a manuscript of a best seller and had had it printed in the Government Printing Office or a sweat shop at public expense, and then left the author to starve. The policy is hardly designed to advance the writing art and, in the long run, is sure to prove bad medicine for the government, that is the people, itself.

This fact we endeavored to point out to both Army and Navy, urging that it was to their interest that we continue to live. After all, we were the only organization in the world capable of continuing the development of metal propellers; foreign aircraft still clung to their archaic wooden props, and foreigners were still convinced of their superiority. We tried to point out that the consolidation had been forced by patent considerations and for no other reason, that the new management had been drawn from Army and Navy and had no intention of monopolizing anything but was determined to foster progress in new design. Their reply was to ask to see the color of our new designs.

With survival dependent upon the creation of something new and better, I went upstairs to the engineering department to put the problem before its chief, Frank Caldwell. Frank, a big cinnamon bear of a fellow with a slow Tennessee drawl, had forgotten more about aircraft propellers than most engineers would ever know. While Chief of the Army Propeller Branch at Dayton, he had suggested to Harry Kraeling, then a salesman of the steel alloy Vanadium, that he give up trying to build propeller blades out of welded-steel sheets, and use instead the new aluminum alloy, duralumin. When I put the problem up to Frank, he hoisted his bulk out of his chair and ambled toward a drawing table in the corner of his office. Pushing aside a T square, he peeled the cover back from a large drawing and looked at the black lines with modest pride.

At that time, the Hamilton-Standard duralumin blades were clamped into the sockets of steel hubs in such a way that when an airplane stood on the ground, the blades might be adjusted to whatever setting was desired. However, once set, the blades were not adjustable in the air. This gave the airplane a handicap such as a motor car would have if deprived of its gearshift. The propeller shown in Frank’s drawing, however, had a mechanism for adjusting the propeller blade setting in the air. The pilot might use one setting, corresponding to low gear, when taking off, and another corresponding to high, for cruising. Frank visualized his “controllable pitch propeller” as the “gearshift of the air.”

The idea of such a propeller was not new. Many people had tried the device and found it sound in conception; the problem was that no one had been able to build one of the things strong enough to stand up under the extremely high centrifugal and vibratory stresses found in propeller blades. The novelty of Frank’s design lay in its simple hydraulic control mechanism, in which oil pressure on a piston rotated the blades and locked them in either of two positions, the best setting for cruising or for take-off. Judged by the old engineering adage, “to be good it must look good,” Frank’s propeller looked to me like the answer to a maiden’s prayer.

Now Frank Caldwell was no overenthusiastic salesman. The best he would say for his brain child was to express the quiet hope that it might amount to something some day—provided we could make it hang together. But to me there was no use fooling around; here was just the kind of gadget we needed to pull us out of the hole. I gave orders to shoot the works and rush the development of the “gearshift of the air.”

Fifteen years later, after we had become more conscious of the need for corporate social security and after we had got ourselves all bound up in our own red tape, I doubt if United Aircraft would ever have undertaken such a project.

For the problem was not so simple as I have so far stated it. The new propeller must of necessity prove more costly than the old type, and there was no proof that the increase in performance would justify the increased costs. This question did not lend itself to precise calculation, nor could we solve it by trying the propeller on an existing airplane. In order to realize the advantages of the new type we must build a new airplane designed to exploit it, and in those days people just didn’t haul off and build airplanes to sell other people’s propellers.

The point is that at the moment the controllable-pitch propeller, one day to be recognized as the most revolutionary device in aeronautics, was not then something that men demanded. In fact, current opinion was bearish on the idea just as it had been on the air-cooled engine and still was on reduction gears. In the judgment of the wise men, such devices were bound to be so heavy or so costly that their advantages might at best balance out their disadvantages, so why bother with the complication? Frank Caldwell had thought it through, but, being modest and conservative, he did not try to sell the device to me. My own reaction was intuitive rather than rational.

Though I reported my decision to Fred Rentschler at the New York office, he naturally took little notice of it until our financial statement began showing red ink. Lacking profitable production to support an expensive development, we had begun to show serious losses. Since there was no flight experience available to support my venture, Fred was all for canceling the project to avoid further losses. The sole argument I could bring to bear was the fact that I had installed an experimental prop equipped with magnesium blades in one of the small Sikorsky amphibians, an S-39, which had astonished me with its quick take-off and improved cruising characteristics. Behind my decision, however, had lain the whole background of aviation development. One device after another had been proposed and rejected on the basis of engineering judgment, only to be later perfected by some zealot who refused to recognize handicaps. I expressed confidence in the outcome and offered to gamble my job on it. Fred shook his head in doubt.

“Well,” he said sourly, “it had better pan out or it will be just too bad for you.”

Now there remained one process by which I might recover some of our investment. The propeller had been developed to the point where we might offer a few of them to the Army and Navy at experimental prices on experimental contracts, a practice long used to foster new and expensive developments. But when I went down to BUAERO I ran into a cold front that iced me up like nothing I had ever before seen. The Plans Division of BUAERO seemed now to have usurped the functions of the Engine Section in developments of this kind, and the head of that division was now Comdr. Richmond Kelly Turner, USN, a Naval Academy classmate of mine and a friend of long standing. “Spuds” Turner was a tough egg, something the Japs were to learn at Tarawa and other South Pacific actions some fifteen years later; I didn’t have to wait that long.

Kelly Turner seemed to think that controllable-pitch propellers were no good in general, and to suspect that the one I was trying to sell was probably the least useful of them all. If I had wasted my company’s money chasing a will-o’-the-wisp, he had no intention of sending any of Uncle Sam’s hard earned cash on a wild-goose chase to try to bail me out of my business mistakes. “Spuds” did not confine his opinions to me in a confidential chat, but took pains to broadcast them all through the corridors of BUAERO in a loud stentorian voice.

Meanwhile, after taking over the Sikorsky job, I had felt the need of a new assistant in Hamilton-Standard and had learned through George Wheat, our public relations counsel, that Raycroft Walsh, a former major in the Air Corps who had resigned to go into business, might be interested. Ray had had an active Army career and, during the Mitchell controversy, had served in the Office of the Chief of Air Corps, Maj. Gen. Mason M. Patrick, as Finance Officer where he had performed some of the functions I had performed for Admiral Moffett. I liked him the moment I met him, and immediately recommended that he be brought into the company.

When Ray took the new propeller to the Army, he encountered a similar lack of interest. Even though he carried his case to the Assistant Secretary of War for Air, Mr. F. Trubee Davison, and finally to his friend Pat Hurley, Secretary of War, stressing the fact that refusal to help develop the new propeller would prove disastrous to the Army and fatal to Hamilton-Standard, he made no more progress than had I with my friend “Spuds” Turner. It was a kind providence which, taking us by the hand, led us out to Cheyenne, Wyoming, and a new milepost in history.

For prior to the crisis in the affairs of Hamilton-Standard, United Aircraft and Transport Corporation, having in mind the need for building new transport aircraft designed to carry passengers and mail on a profitable basis, had initiated a joint airplane development headed up by Boeing. Based upon the performance of the Boeing “Monomail,” a single-engined low-wing monoplane itself partly derived from the earlier work of Jack Northrup, Boeing had taken in hand its new ten-passenger, twin-engined, low-wing monoplane to be called the “Boeing 247.” Designed around a new Pratt and Whitney Wasp engine and equipped with Hamilton-Standard propellers, it was intended as a replacement for all other assorted models in use on the line. Boeing, confident of its engineering ability, had released for production a full order of some sixty airplanes without first testing out a prototype. This procedure, if successful, would put the airplane company far ahead of any competitor and would give the transport company a big jump on other airlines such as it had earned by creating the earlier model, 40-B.

At first everything had gone swimmingly, but the day the first ship to fly over the lines essayed to take off with full load from the high-altitude field at Cheyenne, serious trouble developed; the airplane just could not handle full load satisfactorily from such elevations. At first, Boeing had been inclined to blame Pratt and Whitney and the Wasp engine for insufficient horsepower, but when that attempt failed, both parties shifted the blame onto Hamilton-Standard propellers, claiming faulty propeller design. This was the old Indian game of passing the buck around the eternal triangle of engine, propeller, and airplane. When we sent Frank Caldwell to Cheyenne to investigate he went quietly about a demonstration that, we hoped, would prove convincing.

First he adjusted the duralumin blades at best setting for take-off to show how well the ship would perform even at high altitude. This setting, however, was so inefficient at cruising speeds that the nearby mountain peaks echoed and reechoed the whining complaint of whirring blades. To meet this defect, Frank reset the blades to the best angle for cruising, where the airplane, its load having been reduced for take-off, performed perfectly. After this convincing demonstration, he unwrapped his drawings of a controllable-pitch propeller for the 247. While no such prop had yet been air-tested, Boeing brushed the objection aside, confident now that between the two companies, the airplane could be salvaged.

So it was that Frank Caldwell’s controllable-pitch propeller not only saved the whole string of Boeing 247’s, but in doing so, it opened up the new era of “three-mile-a-minute” air passenger travel and started air transport on its way. After that, even the Army and Navy began to recognize the potentialities of the new propeller; it paved the way for low-wing monoplanes with their high-wing loadings and thus marked the passing of the biplanes.

But prior to the Cheyenne demonstration, Hamilton-Standard propellers dragged bottom. Ray Walsh, who had taken over its management, closed the Pittsburgh plant, reduced the organization to a handful of the ablest men, and moved the shop into a corner of Pratt and Whitney’s ample building in East Hartford. Later, when success acclaimed the genius of Frank Caldwell, Ray began expanding his organization to meet new demands and finally built an additional wing on the Pratt and Whitney building to house his new shop. Still later, we moved Chance Vought Aircraft down to Stratford to bunk in with a much deflated Sikorsky, and turned the whole Vought shop over to Hamilton.

Meanwhile, when Ray undertook to sell the rights to manufacture the new propellers in England, he encountered problems both at home and abroad. The British Air Ministry, like our own services, discounted the propeller—this was a time when most Britishers discounted everything American—and our own armed forces threatened to refuse us the right to license them under our patents. Since our government had contributed precisely nothing to the development, and especially since my classmate, Kelly Turner, had broadcast his decision to the whole aeronautic establishment, they were hardly in position to claim much equity or any right to control a device of such obvious interest to commercial air transport.

However, it was in a totally different role that the Hamilton-Standard controllable-pitch propeller attained immortality. The manager of the propeller branch of the de Havilland Aircraft Company, Ltd., our English licensees, was John Parkes, himself a fighter pilot, an Englishmen who retained some of the ancient enterprise and love of innovation. Today he is managing director of Alvis Limited, Coventry, but then he was the moving spirit in the adaptation of the Hamilton-Standard propeller to the British Spitfire fighters, the planes that helped win the Battle of Britain. The Germans had developed their own controllable-pitch propellers and, save for the curious chain of circumstances outlined here, would have hopelessly outclassed the British. When Mr. Churchill paid tribute to the “so few” to whom Britain owed so much, he probably had in mind the courageous fighter pilots but behind them stood, among others, Ray Walsh, Frank Caldwell, and John Parkes.

And so we trace the living process through which our struggle to survive created new devices and exercised profound influences that no human mind could have imagined. The miscalculation of one engineer saved the creation of another engineer just in time to give air transport the necessary fillip, and to provide British fighters with the winning punch. And there is a final point to keep in mind: it was the performance of Hamilton-Standard’s controllable-pitch propellers in Boeing transports copied by the Germans that impelled them to develop their own propellers. The moral seems to be that leadership in scientific research and technological development is the key to military security. A laggard faces extinction.