Air Transport

Peter J. Lyth

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781351959926
• Edition: 1
• Topic: History
• Subtopic: World History
• Index: History

Each volume in this new series is a collection of seminal articles on a theme of central importance in the study of transport history, selected from the leading journal in the field. Each contains between ten and a dozen articles selected by a distinguished scholar, as well as an authoritative new introduction by the volume editor. Individually they will form an essential foundation to the study of the history of a mode of transport; together they will make an incomparable library of the best modern research in the field.

1
Aviation and the state: the Graham-White Aviation Company, 1912–23

A. D. George

In the main exhibition hall of the RAF Museum at Hendon is displayed a Hawker Hart biplane in the yellow livery of a flying training unit. This aircraft was flown by volunteer pupils of the Civil Air Guard in the late 1930s, the formation of which was part of general defence preparations at that time. The revival of procurement for the Air Ministry after 1934 was the salvation of many struggling aircraft Firms. Lean times had of course followed the cancellations of contracts and the collapse of orders in 1919 when little thought seems to have been given to a possible fulure emergency. The purpose of this article is to examine the effects of state intervention in the aircraft industry during and after the First World War on the fortunes of one of the private entrepreneurs, namely Claude Grahame-White (G-W) of Hendon, sometime proprietor of the London aerodrome,pioneer aviator, populariser of aviation as a spectacle for the masses, and founder of one of the earliest planned manufacturing concerns in the new industry.

When the Hendon factory was being laid out in 1912, the nominal capital of the Grahame-White Aviation Co. Ltd was £200,000 though only 1,600 5s shares seem to have been taken up and G-W made up the subscription to £56,500 from his own resources.¹ (It will be seen that this was to prove totally inadequate for the equipping of an extensive production facility on the scale required by wartime production.) Although the business (like that of Henry Royce) was originally started with a small amount of cash (£400 in the case of G-W), he was under no illusion that something of the order of £1 million in government subsidies would be required to launch the aviation business in Britain and campaigned to that effect. Nevertheless a considerable amount of development was achieved at Hendon in the early days with limited resources in terms of hangars,² workshops equipped with wood working and metal working machines, plant, engines and planes. However, since it was all something of a gamble³, G-W wisely arranged that his service agreement as managing director would be limited to a term of ten years.

Starting with a few designs of his own for training and pleasure Hying machines, and assisted by unspecified amounts from the Dunlop Rubber Co. as sponsor, G-W built up the factory as well as the aerodrome business and was rewarded soon after the outbreak of the war with contracts to produce quantities of BE2Gs for the Admiralty, Avro 504s, Farman biplane trainers and others. It would seem that the labour force was recruited and plant and equipment for these contracts were built up with financial assistance from the Ministry of Munitions,⁴ and partly from overdrafts. Producing for the Services was not,however, by any means without its problems as the 1915 correspondence files indicate.⁵ There were difficulties in meeting contract dates for the Admiralty and War Office, a shortage of drawings and specifications, frequent changes in design and amendments, and an inability to obtain steel tubing. A government inspector moreover had criticised the standard of workmanship and the congestion in the workshops and the Ministry refused to authorise further capital expenditure. For his part G-W complained of the difficulty of obtaining payment for work done and the need for further bank borrowing to the tune of £20,000.⁶ °The headed notepaper announced the company as aeronautical engineering contractors to the Admiralty and the War Office and it may be assumed that this was the sole source of orders. Additional land was still being acquired in 1917 and some capital transferred to revenue but the directors’ report for the meeting of the 31 July 1917 does indicate a considerable increase in the turnover and valuation of the company. ⁷ However, G-W was conscious of the need to inject new blood or new capital or both, and was making overtures to the motor magnate S. F. Edge to join the Board.

By September 1917 the total realised from the sale of planes and engines had risen from £159,617 to £402,445. This had given a (gross) profit of £89,213, the value of plant and machinery (including stock in hand) had risen to £147,000 and total assets to £323,108. ⁸ By this time the Ministry of Munitions had taken over the functions of the procurement of aircraft for the Armed Services and was itself arranging to build three National Aircraft Factories as well as building and leasing workshops to the Airco and Handley Page companies.

G-W saw the opportunity of a further injection of capital and expansion and concluded an agreement with the Ministry ⁹ for a maximum loan of £320,000 to be used for capital works or the settlement of accounts. The Ministry usually drove a hard bargain and placed restrictions upon the companies it supported.In this case, as long as the balance of the loan remained unpaid, (a) no further capital commitments would be permitted; (b) no additional executive staff were to be appointed without prior consent and no top salary increases were to be paid; and (c) the Ministry reserved the right of access to the books.

The 1917–18 bomber offensive and boom in aircraft orders was, of course, short lived. Even by Armistice Day there was not enough work in hand for the four principal aircraft manufacturers in the North London area. The V 1500 Handley Page contract was cancelled and the Ministry divested itself of the Gricklewood factories. The giant Airco firm was soon to be sold to BSA as an asset-stripping exercise, with thousands paid off. In the case of the Grahame-White company the Ministry dithered. First of all the firm was invited to retool for the production of 500 Sopwith Snipes. Then this order was cancelled. Next instructions were given to produce another 500 Avros for stock, but this was aborted. Now there was simply not enough work for the metalworking shops.Between 800 and 1,000 men were idle (out of a total work-force of 3,000) and the company was told to pay them off. Many were laid off, including the woodworkers, fitters and erectors, but the remainder were in an ugly mood and this sudden collapse in demand placed G-W and his co-directors in a difficult position. How could they repay the outstanding £200,000 on the loan if there was no work to tide them over, especially since not all the payments for contracts had been received? There were no reserves of capital and there was the unsettled question of compensation from the War Commission for the use of the aerodrome. In desperation G-W wrote a long plea ¹⁰ to the Minister of Supply,Winston Churchill, with whom he was on personal terms and whom he hadshown round the factory in April 1915. It was very much a final appeal. G-W genuinely feared liquidation because of the outstanding government loans; he feared for the future of his work-force and he urged the government to do something to ease the transition from war to peace.

In fact the plea fell on deaf ears, but whether out of a feeling of responsibility to the work-force or a desire to meet his liabilities, G-W called an extraordinary general meeting at which the word ’Aviation’ was dropped from the name of the company and the directors authorised to turn over the factory to the production of furniture and car bodies. As the end of his contract approached G-W grew weary of the struggle and began to make preparations to sell up and withdraw from the scene. The bank’s advice had been that he should drop manufacture,sell or lease the premises, and convert his land to real estate — a course that one day both his neighbours Handley Page and De Havilland would adopt during the recession in the late 1920s and early 1930s. The first move was a letter from his solicitor, Abrahams, ¹¹ arranging a lease of the famous clubhouse. By December 1922, however, negotiations were in hand ¹² for the complete sale of the premises, properties, plant and assets (excluding the stock-in-trade) at a price of £75,000 to a Mr Tilden-Smith whose business address was Lombard Street.Apparently, Tilden-Smith had the idea of turning the aerodrome into a horse-racing course and selling the buildings not required for use to the London hospitals. The London offices and showrooms of the company were to be excluded from the sale, but the purchaser was to be required to discharge G-W’s oilier liabilities. Writing to his uncle, Lord Barnby,¹³ G-W feared liquidation if the sale did not go through. He still hoped for £50,000 from the Government by way of compensation for impressment of the airfield and to maintain a presence on the site at Hendon in the shape of the free use of a shed and its equipment for twelve months. His intention was to realise some £115,000 from the sale and, after meeting his personal liabilities, to have £90,000 clear to provide a reasonable income. Doubts remained, however, since in a further letter¹⁴ he envisaged an alternative scheme of leasing the accommodation to the Civil Aviation Department for a rent of £10,000 per annum. There might also have been something to be gained from the impending extension of the London Underground for which the railway company would require land.

Unfortunately the sale fell through. The evidence seems to suggest¹⁵ that Tilden-Smith had objected to G-W wanting it both ways and that an adjustment of the sale price based on a valuation of the retained stock would be necessary.Apparently the purchaser was against anything being excluded, ¹⁶ G-W’s legal advisors seemed to believe that the government would wish to secure Hendon for aviation and a later letter shows G-W was having second thoughts about the sale, ¹⁷ and so it turned out. Soon alter the Treasury appointed a receiver who look possession of I lendon, presumably because of the outstanding loan and the inability of the firm to meet its creditors. Indeed, as Wallace states,¹⁸ it was impossible for G-W to put up the £120,000 owed to the Air Ministry. After protracted negotiations in which G-W threatened to bring an action against the Treasury civil servants because of their inadequate offer of £250,000 for the aerodrome and factory coupled with a write-off of other claims, the matter was eventually settled out of court, but only after G-W and his allies had threatened to use the front page of the Daily Mail to blacken the reputation of the government. All claims were waived and G-W received the impressive sum of £800,000.Clearly, this much inflated figure contained elements of compensation for the impressment or seizure of the aerodrome (twice), a reward for past services to aviation and the war effort, and a recognition of the site’s future potential and value to the stale.¹⁹ All manufacture ceased and by 1925 the Royal Air Force had moved into the aerodrome and hangars and henceforth staged its military pageants and displays on Empire Air Days, where the fashionable classes of London had once thrilled to the exploits of Claude Grahame-White and his fellow pioneers.²⁰, ²¹

Notes

¹ Grahamr-While (G-W) archives, RAF Museum,Hendon, File R.77I, undated letter anil annexe referring to the position in October 1912.

² A total of twenty were already occupied, twelve new ones 50 ft × 50 It were under construction...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Table of Contents
• Studies in Transport History Series Editor’s Preface
• 1 Aviation and the state: the Graham-White Aviation Company, 1912–23
• 2 The Daimler Airway: April 1922-March 1924
• 3 The financial failure of British air transport companies, 1919–24
• 4 Imperial Airways, 1924–40
• 5 British Airways Ltd, 1935–40
• 6 The new road to the Isles: Highland Airways and Scottish Airways, 1933–39
• 7 The Bermuda Conference and Anglo-American aviation relations at the end of the Second World War
• 8 ‘A multiplicity of instruments’: the 1946 decision to create a separate British European airline and its effect on civil aircraft production1
• 9 Nationalisation and the independent airlines in the United Kingdom, 1945–51*
• 10 Trooping and the development of the British independent airlines*
• 11 Helicopter airlines in the United States, 1945–75
• 12 A short history of London’s airports