"Not on your life."

CCLXI

Howard Hughes (1905-1976)

A full year after Amelia Earhart and Fred Noonan disappeared over the Pacific, another world-famous aviator stepped up to try his hand at a Worldflight. 

Howard Hughes, who had been born in Texas in 1905, was a 33-year-old wunderkind whose father, Howard Hughes Sr., had perfected a double bit for petroleum drilling in 1903, and then had had the brilliant idea of trademarking it and then leasing it, not selling it, to prospectors. Far superior to the single bit used until that time, the double bit became (and with variations remains) the industry standard for oil drilling. 

Every oil company that wanted to drill effectively and efficiently and most of all competitively used the Hughes bit. The Hughes Tool Corporation set its own leasing terms for drill bits, and since the elder Hughes was providing bits to some of the largest and richest companies on Earth, he became one of the industry’s giants and one of the richest men on Earth. Howard Hughes’ father died prematurely when Howard was only eighteen, and the son became a millionaire many times over.

 

 

Hughes in 1930 with his Boeing 100A. Aside from its smooth fuselage, the plane also boasted a supercharger

It was only 1923 when Howard Hughes Jr. came into his fortune, the dawn of the Soaring Twenties, and Hughes diversified his holdings. He became heavily invested in avant-garde areas like aviation, in the motion picture industry, in real estate, in oil, in general technology, and in early telecommunications networks.

Among Hughes’ aeronautical inventions was the fully-streamlined fuselage without projecting rivet heads. First appearing on a modified Boeing 100A in the early 1930s, fairings and wheel covers were added to the aircraft, a civilian model, which allowed it to outfly the P-12 fighter plane then used by the U.S. Army Air Corps.  He would later invent the pressurized aircraft cabin, among other innovations.

 

The New York Daily News, always known for its tabloid excesses, didn’t fail to disappoint this time either

Hughes was famously obsessive-compulsive, and his obsession in the 1930s was breaking aviation speed records.  On September 13, 1935, flying his custom designed Hughes H-1 Racer, he set an airspeed record for a civilian landplane of 352 miles per hour. On January 13, 1936, he set a new transcontinental (Burbank-to-Newark) record of 9 hours, 27 minutes, 10 seconds. On January 9, 1937, he broke his own record by making the same trip in 7 hours, 28 minutes, 25 seconds.

The Hughes H-1 Racer

No sooner had he climbed out of the cockpit of the H-1 Racer than he announced that he would circle the world at record speed, breaking Wiley Post’s solo flight time of 7 days, 18 hours, 49 minutes set in the summer of 1933.  

 

Hughes (hatted) standing next to his Lockheed Electra Model 14 with Thomas L. Thurlow, Harry Connor, Richard Stoddart, and Edward Lund.  The well-known impresario Grover Whalen (far left) christened the airplane

Hughes’ choice for the aircraft was a Lockheed 14 Super Electra. He chose the enlarged version of Amelia Earhart’s famous plane due to its larger fuel capacity, its extra space for additional fuel tanks (which Hughes made self-sealing by coating them with neoprene, a flight engineering first), and its room for a full crew. The plane was outfitted with two 1200 horsepower Wright Cyclone engines. Not wishing to share Earhart’s fate, Hughes had the most advanced radio transceiver available installed in the cockpit, and everyone aboard drilled with it. Four (not just two) compasses were installed, and the best Sperry automatic pilot was added to the mix --- allowing the pilots to rest and recuperate (though they did not much more than catnap en route). As a fallback safety measure, Hughes had the open space inside the cantilevered wings filled up with ping pong balls for positive flotation in the event of a ditching.

Unlike Post who flew solo, and Earhart who was accompanied by only Fred Noonan, Hughes took along four other men, Harry Connor as copilot and navigator, Tom Thurlow as navigator, Richard Stoddart who was the radio operator, and Ed Lund, as flight engineer.

The Hughes Lockheed Model 14 Super Electra. Larger by a third than Amelia Earhart’s Model 10, Hughes equipped it with the most advanced communications and avionics equipment available, and it carried a crew of five. Note the RDF loop beneath the fuselage rather than atop

Hughes and his crew departed New York on July 10, 1938, after a full year of preparation in flight training, jungle survival, mountaineering, ditching, and sea survival techniques. 

The Hughes Worldflight was not primarily an endurance test, but a speed test. He wanted to break Post’s record, not replicate Earhart’s seemingly endless Equatorial trek.  Instead, Hughes chose to circle the world at a much higher northern latitude, very significantly shortening the flight.

The path of the Hughes Worldflight carried the crew from Floyd Bennet Field in Brooklyn, New York to Paris, on to Moscow, Omsk, and Yakutsk, all in the U.S.S.R., then on to Fairbanks, Minneapolis, and home. The elapsed flying time of the voyage was only 91 hours (3 days, 19 hours, 17 minutes). Leaving July 10, 1938 they landed back in Brooklyn on July 15th

Despite the relative brevity of the flight it was not without its problems. Exceeding more than 25,000 pounds at liftoff, the overloaded and fully crewed plane nearly ran out of runway taking off. The tail wheel was severely damaged during the rough departure, making the landing in Paris a complicated matter. Hitting fierce headwinds over the Atlantic, the Super Electra ran out of fuel (despite the auxiliary tanks), making it to LeBourget outside Paris literally on fumes. 

Fogbound, they flew across Europe and into Russia largely without incident though on instruments, but Hughes played it cautiously when lifting off for Fairbanks, Alaska. He had planned a night flight, but his gut told him to wait until daybreak to leave isolated Yakutsk. Although Russia was largely flat steppe, mysterious mountain ranges rose up unexpectedly over the landscape, few ever properly surveyed; and though Dr. Hugo Eckener had flown the Graf Zeppelin through the fog-shrouded Stanovoys by the seat of his pants in 1929, Hughes decided to play it safe and cross the Terkhoisankoi Mountains (reported altitude 6,500 feet) in daylight. It was a wise decision as it turned out, for the mountain range was capped with snow and reached nearly 10,000 feet. Had he tried to fly it in the dark everyone aboard would most likely have been killed.

 

“Would I like to make the flight again?” he mused to reporters afterward. “Not on your life. Once is enough.”

Before The Fall

CCLX

In 1938, Pan American Airways seemed to be a winged colossus. The airline had a virtual monopoly on international U.S. air routes stretching from New York to Marseilles, and from San Francisco to Hong Kong, and from Alaska to Patagonia. The airline had built (or contributed heavily to the building of) major air facilities in San Francisco, Miami, and New York. Pan Am had a string of way stations from Hawaii to Macao. The airline and its system had terminals throughout Latin America, Europe, Asia, and the U.S. coasts. 

 

What no one but Juan Trippe knew for certain was that the airline was drowning in red ink. He had saved some hundreds of thousands of dollars by cheating Glenn Martin on the price of the Sunchasers, but he couldn’t cheat Boeing so easily. The B-314s were delivered very late. Trippe blamed the delays on production issues in Seattle, but the only issue Boeing really had was that Trippe couldn’t come up with the first payment. Boeing went along with Trippe’s cover story so as not to hurt the airline (and their chances for subsequent payments). 

Everything certainly looked copacetic, from the gleaming triple empennage of the 314s to the endlessly rotating globe at Dinner Key. The Chamorro waiters on Midway served cold drinks and iced shrimp cocktails while the gooney birds provided endless, harmless distraction to Pan Am’s visiting passengers. 

Appearances were deceiving. 

In the Pacific, the loss of both the Hawaii Clipper and the Samoan Clipper played hell with Pan Am’s Pacific revenues. The New Zealand run was over, doomed before it really began. The Orient Express was down to bimonthly flights. And there were few takers. There was the “China Incident” (as the Japanese called it), a brutal, full-blown war on the Asian mainland, and most of eastern China was coming under Japanese military control. Tourism to Asia was dead. Normal business was nearly impossible to conduct, even if you could reach Free China, and that was in the hands of C.N.A.C.  After the mysterious losses of the two clippers and of Amelia Earhart, not many businessmen wanted to risk their money, and even less life and limb, investing in a corner of the world that was ratcheting apart. Sometimes there were no passengers at all, only mail, on the runs from Honolulu to Hong Kong, but Pan Am’s hotels stayed open all along the Oriental route, fully staffed and perfectly maintained --- and bleeding greenbacks. 

The Atlantic route was almost as bad. Slow to develop due to British intransigence, by the time flights began Europe was on the brink of war. As a neutral-flagged carrier, Pan Am’s aircraft were ostensibly not in any danger, but American aircraft weren’t at war in the Pacific either and had been mysteriously lost. People were fleeing Europe in droves, so the sunset runs of the 314s were overbooked, but the sunrise runs were much less so, excepting diplomats. 

It was an extensive and expensive system to maintain, and every part of it, from the unused flying boat facilities in Macao and Charleston to the aircraft themselves needed to be kept in top condition. The United States government stepped in, raising its FAM rates from $2.00 a mile to $3.35 which helped, but Pan Am stock paid a dividend of only 3¢ per share in early 1939, and passed a dividend the next quarter. 

The Board of Directors was stymied. Juan Trippe, the master of the airline, played his cards so close to the vest that most of them were shocked when the company couldn’t pay its shareholders. The Board set up a committee to look into the corporation’s finances and what they found frightened them.

 

Pan American Airways was sunk in debt. Including all forms of leverage, the airline owed out six million dollars in 1939 ($105.7 million in 2018 dollars) against a paltry $300,000.00 ($5.3 million) cash on hand. 

The committee soon discovered for themselves what the Black Committee had discovered during the Air Mail Fiasco: They couldn’t get anywhere. Trippe had organized Pan Am as a thoroughly decentralized operation, allowing local operations centers a free hand to manage things as they saw fit. Operational budgets were localized too, allowing Trippe to plead utter ignorance as to what was going on inside the company he routinely called his own.

Pan American Airways’ corporate structure was byzantine. The corporation was made up of regional divisions. Each region was divided into a number of subregions. Each of these subregions was a quasi-independent satrapy. Each had its own budget which was folded into the regional budget, which again in turn, made up part of the total corporate budget. There was no central repository of records or budgets. Juan Trippe wanted it that way.

Pan Am had no uniform across-the-board standardized documents, no standardized reporting structure, and not even a single accounting system used by its men in the green eyeshades. It was meant to be bewildering and it was.  The corporate flow chart was labyrinthine, intentionally so, to confuse anybody who wanted to root around inside Pan Am, especially anyone who was threatening Trippe’s position as CEO. When questioned about details, Trippe would answer mostly honestly and with excruciating blandness that he just didn’t know.

What was evident was that Trippe had been playing a shell game with corporate assets. The real value of Pan Am stock was far lower than its listed price. Trippe had watered the stock to the point of edema, creating and distributing reams of many special classes of stock in answer to demands for cash. He traded stock for properties, for seats on the Board, for aircraft.  When he couldn’t avoid paying cash he begged, borrowed, stole, charged, and then surcharged subsidiary airlines in the Pan American System for every and any service imaginable, soaking the solvent airlines in his aviation empire to prop up the insolvent ones, particularly the Orient Express, which was $50,000 (nearly a million 2018 dollars) in the red in 1938.

To use a word rarely heard today, the Board was flabbergasted. Not only was the airline effectively bankrupt, it was virtually worthless too, and they themselves were far poorer men than they had imagined themselves to be. Trippe, for his part, was sphinxlike. Wasn’t Pan American the most far-ranging airline on the planet? Didn’t it provide the best service? Weren’t its planes and crews the standard --- the Pan Am standard --- for every airline in the world? Yes to all of those questions. So what was the problem? Cash flow? A simple matter to fix.

 

Except, it wasn’t. Pan Am was so heavily leveraged it couldn’t have borrowed another penny, and nobody on Wall Street or even in its own boardroom was willing to advance the airline any funds, and none of the gentlemen on the Board ever spoke openly of predatory lenders.

The world’s most experienced airline was teetering on the brink of ruin.