o small air transportation companies, it was this action by the federal government which gave birth to the commercial airline industry in the United States. From this modest beginning, the air transportation operators were able to gradually add passenger carrying services, and, somewhat later, heavier freight carrying services. The result was the development of an airline industry in the United States.
Many air transportation companies were formed in the United States in the mid and late 1920s. Some of these companies merged to form larger firms, while others experienced significant growth without the necessity of amalgamation. Among the major American airlines which trace their beginnings to the early airmail contracts are American Airlines, Eastern Airlines, Pan American Airways, and United Airlines (Moskowitz, Katz, and Levering, 1986). In addition to the companies which were to later become American, Eastern, Pan American, and United, Delta Air Lines and Trans World Airlines (TWA) also got their starts in the last half of the 1920s (Moskowitz, Katz, and Levering, 1986). In the early 1990s, Eastern has disappeared as a victim of the deregulation of the industry in the 1970s and 1980s, and Pan American appears to be on its way out, following decades of mismanagement.
Several of the new airline companies flourished in the late 1920s. Most of the new airline companies, however, began to flounder soon after they were founded. At this time, Herbert Hoover (who later became president of the United States) was the Secretary of Commerce in the federal government, and was witness to the financial and operational disasters which seemed to occur almost daily in the new industry (Lee, 1984). In response to these events, Hoover's department drafted and Hoover himself pushed through Congress the Air Commerce Act of 1926 (Lee, 1984). The Air Commerce Act brought federal government regulation to the American air transport industry f...