Profit and loss among aviation pioneers. From big company dreams to SME pragmatism (1890-1913) Jean-Marc Olivier To cite this version: Jean-Marc Olivier. Profit and loss among aviation pioneers. From big company dreams toSME pragmatism (1890-1913). EBHA European Business History Association 21ST Annual Congress, Aug 2017, Vienne, Austria. halshs-01829781 HAL Id: halshs-01829781 https://halshs.archives-ouvertes.fr/halshs-01829781 Submitted on 4 Jul 2018 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. EBHA Conference in Vienna (2017-08) “Profit and loss among aviation pioneers. From big company dreams to SME pragmatism (1890-1913)” by Jean-Marc OLIVIER University of Toulouse – Jean Jaurès FRAMESPA CNRS Labex SMS The beginning of the aeronautics industry provides a unique opportunity to perceive the profit motive in a new industry at a time when historical sources were abundant. Correspondance by industrial pioneers reveals that making a profit was as much a spur as daring sports exploits in the design of the first flying machines. In the mid-19th century, in the wake of the work done by the Englishman George Cayley (1773-1857)1, his compatriots John Stringfellow (1779-1883)2 and William Henson (1812-1888) dreamt of setting up an air transport company flying to Egypt and China. In the 1890s, increasing numbers of inventors convinced themselves that the time was fast approaching for fortunes to be made from heavier-than-air machines. Models powered in a variety of ways were up and flying from the mid-19th century onwards, inspiring creation of increasingly efficient gliders, such as those designed by Otto Lilienthal in Germany and Octave Chanute3 in the United States. Before commercial gain became an incentive, there was a whole range of prizes to be won, leading competitors to risk life and limb along with their capital. Lilienthal paid for his innovative spirit with his life, killed in an accident in 1896 during final trials of his latest glider before an engine was installed on it. There were two main approaches to the activity, the first being to put large sums of money into making major technical breakthroughs in spectacular fashion, with huge, complicated machines built by teams of engineers. In parallel, a good many craftsmen were busy carrying out experiments with prototypes they were developing in their workshops. Many of these “do-it-yourselfers” were self-taught and some, such as the Pole Jan Wnek, were even illiterate. Any study of the profits made by aviation pioneers must enquire into which of these two very different approaches was the more effective. 1 DEE Richard, The Man who Discovered Flight. George Cayley and the First Airplane, Toronto, McClelland & Stewart Ltd., 2007. 2 PENROSE Harald, An Ancient Air. A biography of John Stringfellow of Chard. The Victorian aeronautical pioneer, Washington, Smithsonian Institution press, 1989. 3 SHORT Simine, Locomotive to Aeromotive. Octave Chanute and the Transportation Revolution, Uraban, University of Illinois Press, 2011. 1 – Large-scale projects vs SMEs Efforts towards progress were stepped up in the 1890s, with great hopes too often disappointed and synonymous with colossal losses: there was no question of any profit being made during the decade. 1.1 – Timidity on the part of large industrial concerns and the shattering of over- ambitious dreams Well set-up entrepreneurs such as the Japys and Peugeots of Pays de Montbéliard were well aware of the possibilities of mechanical engineering and internal combustion engines, and showed no particular interest in heavier-than-air machines. Investment seemed too risky for such well-established companies. The Peugeot brothers were already wary of turning their hands to development of automobile production, and project promoter Armand, viewed as a crank likely to endanger the company’s financial health, was invited to set up his own firm if he wanted to continue with his projects4. Most large industrial concerns were equally cautious. But there were a few exceptions among the captains of industry. The most striking initiative was due to Hiram Stevens Maxim, who was one of the first industrialists to diversify into development of heavier-than-air machines5. He invested large sums of money acquired from the machine-gun that bears his name. The weapon was a global bestseller, acknowledged as the best performing and most reliable of its kind, and had made him a fortune. Although American, Maxim had lived in London since 1881, where he nurtured a passion for aviation. His father had already designed a helicopter, but had been unable to find a powerful enough engine to fly it. In 1889, Maxim set himself to achieving his ambitions and started on construction of a 44-metre-long multi-wing aircraft weighing three and a half tons, propelled by a pair of 360-horsepower steam engines. As a measure of caution, he prevented his machine from taking off before time by adding a third wooden safety rail. Unfortunately, launched at full speed, the machine ripped through the rail and had to be repaired. The experiment was finally abandoned as the machine proved to be unstable and near impossible to control. Prospects of sales and possible profits faded to nothing. Maxim lost a considerable amount of money over the venture, in excess of 100,000 gold sovereigns (the equivalent of over 20 million euros today). He tried to recover some of it by designing fairground rides featuring captive flying machines; this new venture was moderately successful and brought him in a little money, but not remotely enough to make up for his initial investment, which contributed to the Maxim company’s final difficulties. Other less wealthy enthusiasts sought aid from States interested by prospects of putting their inventions to military ends, an approach adopted by Clément Ader and Samuel Pierpont Langley. 4 LOUBET Jean-Louis, La Maison Peugeot, Paris, Perrin, 2009. 5 HAWKEY Arthur, The Amazing Hiram Maxim. An intimate biography, Staplehurst, Spellmount, 2001. Clément Ader was a contemporary of Maxim’s. Although he came from the world of SMEs and small industry, he had the means available to undertake a large-scale project thanks to financial aid from the Military Chiefs of Staff, and therefore cannot really be regarded as a simple SME director. The Ader family seems typical of the late 19th century’s highly industrious local society, in the days when numerous commercial establishments were in full swing alongside the Toulouse region’s rivers, producing flour, fabrics, leather goods, shoes, case-hardened steel tools and furniture. The Ader family had been woodworkers in the Muret region for four generations when Clément was born in 1841. As a boy, he was introduced to mechanical engineering by his maternal grandparents, the Fortanés, who ran a linen-weaving mill in Le Fauga by the Garonne, six kilometres from Muret. The young Ader went on to study at the Assiot Institute in Toulouse between 1857 and 1860, graduating from its “industrial school”, a section imbued with the “Applied Arts and Crafts” spirit. Pierre Lissarrague gives a detailed account of the Muret hero’s career, confirming that he had not attended a great school, but started his working life early, joining the Compagnie des Chemins de Fer du Midi in 18626. Ader was fascinated by the many technical advances of his day and set about improving on them: velocipede, telephone, light steam engine, and so on. Logically enough, his attention progressively turned to aircraft after witnessing various kites being tested out in the Toulouse region in 1870; he obtained aid from the army, which kept a close eye on the experiments he carried out on the city’s Polygone, which had been made available to him for the purpose7. Later on, trials of his three motorised flying machines – Éole, Zéphyr and Avion II – were carried out in the Paris region between 1890 and 18978. But his aircraft did not have powerful enough engines for their weight and, above all, were next to impossible to control when in the air. Nonetheless, Ader’s experiments were provided with considerable financial support from the Ministry of War under Charles de Freycinet, including a 300,000-gold-franc subsidy (the equivalent of 4 million euros today) in 1892 to build a machine capable of flying at an altitude of over a hundred metres. The final result was disappointing, in no way living up to expectations and with zero return on investment. At one point, Chanute considered purchasing Ader’s latest aircraft and giving it to the Wright brothers, but these latter declined his generous offer, reckoning they were already well ahead of it in technical terms. In point of fact, Kitty Hawk’s two independent craftsmen were concentrating on their competition with the famous scientist and academic Samuel Pierpont Langley, who enjoyed financial support from the army. Langley was a well-known American physicist and astronomer who had taught at several universities9. He was keenly interested in heavier-than-air machines and flew 6 LISSARRAGUE Pierre, Clément Ader Inventeur d’Avions, Toulouse, Privat, 1990, pp.19- 29. 7 ARIES Lucien, Clément Ader en Lauragais. Terre d’essais aéronautiques, Baziège, ARBRE, 2011, pp.119-133. 8 ADER Clément, La Première Etape de l’Aviation Militaire en France, Paris, Lavauzelle, 1907; CARLIER Claude, L’Affaire Clément Ader.