United Aircraft and Transport Corporation: The Brief Rise and Fall of a Near Perfect Monopoly

In the early years of flight, capital avoided investing in civil aviation in the United States as the nation lacked the infrastructure, technology, and profit potential to make commercial aviation succeed. That changed in the mid 1920s when new legislation created a market for flight and built a regulatory framework to enhance safety and rationalize its growth. Concurrent with the stock market boom of the late 1920s, and Charles Lindbergh’s transatlantic flight, investors poured money into the nascent aviation industry. But with little leadership, the industry could not flourish. In Seattle, William Boeing, an immensely wealthy man, realized that even his great worth was insufficient to take his small airplane construction firm to market prominence. He was the first to realize the need to consolidate the nation’s disparate small aviation interests and create a powerful vertically integrated holding company that could gain access to Wall Street capital. In December 1928, Boeing joined with Frederick Rentschler, the head of the Pratt & Whitney Aircraft Company, to form the United Aircraft and Transport Corporation (UATC), aviation’s first and largest holding company. Within months, UATC acquired a diverse list of complementary manufacturers. By March 1929, UATC controlled 50 percent of America’s aviation interests. And then it was gone. UATC thrived for six years. Because of its vast resources and good management, UATC weathered the crisis of the Great Depression producing revolutionary new aircraft and equipment, but it could not weather politics. The Air Mail Crisis of 1934, which accused UATC of corruption in air mail contracts, led to the dissolution of UATC. By the end of 1934, Boeing was left exposed and almost out of business. This paper will examine the meteoric rise and fall of this remarkable, but little-unknown holding company, and explore how politics in times of economic crisis can undermine even the best organizations.