ABSTRACT
It was the Contract Air Mail Act of 1925 that enabled scheduled air transport services to become a permanent feature of the US scene for the first time. The Act introduced a system of contracts for the carriage of mail by air so providing the necessary stable financial environment for the development of such services. An
amendment of the Act in 1930 gave considerable power to the Postmaster General who was able to use this to restructure the industry into a small number of trunk carriers operating transcontinental routes. However, the method used by the holder of this office to allocate air mail contracts was the subject of considerable controversy and resulted in a national scandal and the revocation of all existing contracts.' The Air Mail Act of 1934 was the outcome of this debacle and introduced a highly bureaucratic system of control involving no fewer than three separate regulatory bodies.2 As Levine (1975) comments, given this dispersion of responsibilities carriers were able to abuse the system by submitting very low bids in the certain knowledge of having them later made profitable by the Interstate Commerce Commission. A number of fatal crashes in the three years following this Act led to strong pressure for the establishment of an organisation that was to be devoted exclusively to matters of air transport.
