General New

CVII

One of Pan American’s earliest and most effective business advantages was its close relationship with the United States Post Office. 

The first airmail had been flown in 1918. Consisting only of wartime military dispatches, the Army refused to carry civilian mail until authorized to do so after the war by the U.S. Congress. The Army few its first experimental civilian airmail routes in 1924. 

A U.S. Army airmail plane in 1918

In 1926, via the “Kelly Bill,” Congress empowered the United States Post Office to fly the mails, but the U.S.P.S. had no aviation infrastructure at all. Fortunately for the U.S.P.S. (and ultimately for Pan American Airways), the Kelly Bill not only authorized the Post Office to go into the airmail business, but it also authorized the Post Office to either create a governmentally-funded Post Office Air Service or to hire air carriers to fly the routes laid out by U.S.P.S. By the terms of the Kelly Bill the Postmaster General was responsible for assignment of the routes on the basis of competitive bidding among the various airlines. The Kelly Bill also permitted the Post Office to establish regulations for air mail handling. And despite certain restrictions written into the Bill, the legislators who wrote the law also gave the Postmaster General carte blanche to disregard any regulations if doing so made mail delivery more efficient and effective. Lastly, none of the Postmaster General’s decisions would be subject to Congressional review.

In other words, the Post Office had a totally free hand in deciding how, when, and where airmail would go, what form the transportation would take, and who would provide it. 

In 1926, the Office of Postmaster General was the busiest and most powerful seat on the President’s Cabinet. With no internet and no private carriers like Federal Express, the mails traveled in the manner the U.S.P.S. decreed and only in the way it decreed.  In 1926, the Post Office moved 15,226,000,000 pieces of First Class mail and earned a profit of almost 680 million dollars, equivalent to almost nine trillion dollars today. 

In the staunchly Republican Administration of President “Silent Cal” Calvin Coolidge (among whose few remarks was the famous, “The business of America is business”) no one was particularly interested in arguing with the man who could produce such incredible Federal revenues. 

 

One of the earliest Pan American Airways brochures featured the Fokker Trimotor. Note the route: West Palm Beach to Havana, with stops at Miami and Key West. Pan Am’s “world headquarters” in New York then consisted of a tiny three room office suite. Juan Trippe, Andre Priester and a secretary shared one room, while another was used for conferences. The third was an often-empty waiting room

That man’s name was Harry New. New knew nothing about aviation, but he did know a lot of people who were connected to the aviation industry. Virtually all of them, like himself, were graduates of Yale University.  When Harry New needed a committee to write up the Post Office’s new airmail rules and regulations, he went to his Old Blue classmates, and they pointed him at Juan Trippe.  By late 1928, Trippe was writing the very laws that regulated his airline. 

Although the word subsidy was anathema to good Republicans like New and Trippe, Trippe did ensure that the government paid for the aviation fuel and the lubricants that Pan American used to move mail. In a series of complicated formulae, Trippe had his engineers and accountants determine how much fuel was burned per pound of mail payload and how much oil was used. Trippe had them calculate how much depreciation a plane suffered per air mile carrying the mails. Trippe even enumerated the fractional percentage of what it cost in pilotage to move the mails. Pan Am then charged the United States accordingly. Plus, Pan American never entered a bid of less than the statutory maximum of $2.00 per mile to move the mail, but Harry New rarely balked. When Pan Am moved its official headquarters from Key West to Dinner Key in Miami, citing concerns about mail interruption due to hurricanes and further citing a need for larger facilities, Harry New signed off on the move even though the flight from Miami to Havana was twice as far as the flight from Key West to Havana. Just like that, the Federal Government doubled its own costs to operate FAM-2. 

 

One of Pan Am’s three original Fokker Trimotors at the 36^th Street Airport (Meacham Field) in Key West. Note the improvised conditions on the ground

If it ever looked even remotely like Pan American would lose a contract, Trippe would buy out the competitor and New would simply award the contract to Pan Am. The company’s business management practices, New said, were no concern of his. Since Pan Am was efficient, reasonably well-established (and a Yalie stronghold), New happily paid the top rate plus the extras the airline factored in. And in the bargain, New also had the singular honor of being nicknamed Boss by his former employee, Charles Lindbergh.

In large part Harry New’s indulgence was the reason that Pan Am was only a mere $1,800.00 in the red after 1927-1928, its first year of operation. Not for nothing was Pan American’s second Trimotor christened General New (the word “Postmaster” simply disappeared).  

Foreign airmail routes were managed by New’s subordinate, Irving Glover, and if anything, Glover was even friendlier to Pan American than New was. Under the dictum of making mail carriage more effective and efficient Glover awarded Pan American every foreign airmail contract that came up, even when competitors entered far lower bids.

The Clipper General New, named for U.S. Postmaster General Harry New, was Pan Am’s second airplane. Charles Lindbergh is at the controls on the ground in “Havanna” (note the caption)

Years later, although Glover did have to explain his choices to a Democrat-controlled Congressional Committee, his proffered rationale made sense and was accepted. He carefully explained that foreign airlines were heavily subsidized by their own nations. He further pointed out that having foreign countries carry U.S. Mail was adverse to interests of national security. He wound up his testimony with a flourish: “We must stand behind whatever United States domestic company is presently ready and able to advance our own national interests.”  And that company, he did not add, was Pan American.   

In reality, despite Glover's flag-waving, there was a far more pragmatic reason for Glover to favor Pan Am, and it was simply this --- he was a lazy bureaucrat. Rather than distributing the FAM routes among a dozen or two dozen airlines and then having to struggle with their intricate competing needs and problems, not to mention the difficult personalities of scores of corporate officers, Glover simplified his work life by focusing his attentions solely on Pan Am. Besides, it made his superior happy. Postmaster General New clearly preferred Pan American.

Subsequent investigations, governmental and historic, have struggled for almost a century to find direct evidence that either or both New and Glover were on Pan Am’s secret payrolls, but nothing has ever come to light. Except for a few minor indiscretions here and there over time, both men acted aboveboard and well within the admittedly very broad dictates that defined their roles in the Post Office Department. The months before the Great Depression marked the high water mark of laissez-faire capitalism, and New and Glover were just acting in character --- their own and the nation’s.  

 

Among the dignitaries asked to help christen the Clipper General New were Amelia Earhart (center), Harry S. New (black hat) and Irving Glover (light hat and eyeglasses)

New and Glover’s relationships with Pan American allowed the airline to take root and grow without interference during its first critical years. 

Pan Am would never have it so good again.