Wingless Eagle: U.S. Army Aviation through World War I By Herbert A. Johnson 2003:– In January and February 1909, the Aerial Experiment Association was dissolved and a commercial enterprise, the American Aerodrome Company, was established with Glenn Curtiss as its manager. AEA members were the principal stockholders of the new corporation. However, Curtiss’s association with the American Aerodrome Company was short-lived. Bell’s tetrahedral-powered kite failed to fly in February 1909, and Curtiss joined business financier Cortlandt Bishop and a self-proclaimed inventor, Augustus Herring, in incorporation the Herring-Curtiss Company…. The Herring-Curtiss Company field for bankruptcy prior to 1911, Glenn Curtiss continued in business formed the Curtiss Aeroplane Company and subsequently as the Curtiss Motor Company.
I’ve stumbled on a few similar historians/authors narratives pre 2003 on Alexander Graham Bell’s AEA which was a suggested plan for converting the Association into a joint-stock company on Feb. 20, 1909:— American Aerodrome Company never materialised. Within days Curtiss was in discussions with Cortlandt Bishop, Augustus Herring, incorporation the Herring-Curtiss Company.
Press Despatch New York March 4th 1909 as fallows:— An airship trust is being organized here. Cortlandt Field Bishop, present of the Aero Club of America, an one of the largest stockholders in the Chemical National Bank, announce that a syndicate of prominent member of the Aero Club has purchased the rights of the aeroplanes of A. M. Herring and Glenn H. Curtiss, two of the leading aviators of the country and that hereafter they will collaborate in the production of the heavier-than-air machines…..
BULLETINS OF THE Aerial Experiment Association Bulletin No. XXXIV Issued MONDAY, MARCH 1, 1909 ASSOCIATION’S COPY. BEINN BHREAGH, NEAR BADDECK, NOVA SCOTIA.
- Feb.19, The Plans of the A.E.A.
- Feb. 20, Suggested Plan for converting the Association into a Joint-Stock Co.
EDITORIAL NOTES AND COMMENTS.
The Plans of the A.E.A. Feb. 19, 1909:—The time for concluding the Experimental work of the Association has very nearly come, and it is obvious that we will have no more than time to complete the experiments already planned out, if indeed we have time enough for that. We must try Drome No.5, Bell’s Cygnet II, as soon as possible so as to get some idea of what we can do with an aerodrome of pure tetrahedral construction without any horizontal surfaces. The conditions unfortunately are very different from those originally contemplated. The structure itself is much heavier than would be necessary if we were to fly it as a kite. Without any engine or man it now weighs 400 lbs. What it will weigh with engine and man and all the accessories is problematical, probably more than twice as much. It is obvious that the structure, with man and engine, will be altogether too heavy to be flown as a kite in the way Cygnet No.I was flown. Besides the season is not suitable for such an experiment as we would have to depend upon natural wind unaided by the pulling power of a steamer, for the Blue Hill is frozen in for the winter. The only thing to do therefore, if we are to make the experiment at all, is to try Drome No.5 on the ice as the “Red Wing” was tried on Lake Keuka. Even here it becomes obvious that the machine is too heavy to afford much hope of success. All we can do however is to try it and see what will result.
Immediately after the trial we should push our Drome No.6 to completion as far as possible by constructing the aerial part of the apparatus on the basis of the Oionos Kite. It will take some time to make this structure and, while it is being made, we can make experiments on the ice with McCurdy’s “Silver-Dart”.
We can try the Oionos structure quite independently of the boat part, if desired, upon the ice. If the ice leaves us before we are ready, the open water will be left and we can try it upon the “Query”. This is really all the experimental work that we can contemplate, but we can utilize our time by sandwiching in experiments upon propellers upon the ice-boat, in testing various other points, and in trying toys.
The original object of the Association was simply “To get into the air”. This object has been fully accomplished even though we should meet with no further success with Nos.5 and 6. We have made four aerodromes, each of which has successfully flown, propelled by its own motive power and carrying a man. Without any further experiments therefore we are prepared to construct flying-machines that we know will fly. We have applied for patents upon these machines and upon our success in obtaining patents will depend the possibility of our getting outside capital to put our machines into commercial use.
It is obvious, however, that we could at once begin to obtain pecuniary returns by exhibitions of the two successful machines we possess, Curtiss’ “June Bug” and McCurdy’s “Silver-Dart”. The only difficulty in doing so is the fact that is very obvious to my mind that the moment we begin to make money by the construction or exhibition of aerodromes we will find ourselves involved in litigation with the Wright Brothers and others, and it would not be wise upon our part to attempt anything of the kind without having sufficient capital at command to protect us should litigation arise. I am very much averse to attempting to make money under our present organization, or under any organization that would throw the financial responsibility upon me alone, for I am the only member of the Association that could be touched in the matter. If we are to do anything immediately in a commercial way we shall have to begin without the protection of patents for it will take a long time for the Patent Office to pass finally upon our pending applications. We have no funds, as an Association, even to pay the cost of applying for patents, and without a patent, or the assured prospect of obtaining one, it is extremely unlikely that we can get outside capital into the enterprise.
I think that we better consider some proposition to submit to Mr. Charles J. Bell, our Trustee, upon this matter. It would not take any large amount of money to start exhibitions of the “June Bug” and “Silver-Dart”, and to begin the building of another aerodrome, but such work must necessarily be done under the auspices of an organized Company. The questions then arise,
- Shall we go ahead and organize a Company ourselves bringing into it a sufficient amount of capital to begin the work contemplated with the prospect of increasing the capital from outside sources when patents have been secured?
- Shall we attempt to have a special Company organized by outside parties and sell out to that Company our interests in the work of the Association for a certain number of fully paid up shares? I doubt the practicability of this so long as we have no patent.
- Shall we sell out our interests in the work of the Association to some Company already organized for shares or cash? This also seems to me to be impracticable until we have secured patents. Without patents we have nothing to sell. When we do sell anything it will be a patent.
Looking the whole matter therefore squarely in the face it seems to me we are confronted by the following conditions. We can do nothing on plans 2 and 3 until we have obtained patents; that is, upon these plans, we must wait months before beginning any commercial exploitation.
On the other hand if we decided to make an immediate commercial exploitation we are reduced to plan I. That is we must organize a Company ourselves. In other words, we, the members of the Aerial Experiment Association, including the representative of the Late Lieut. Selfridge, would constitute the Company, and we would have to sell shares to outside parties to obtain the necessary initial capital, which need not be large. It would be necessary, however, to have a large number of shares in the Treasury of the Company to be sold from time to time as capital might be required. We must face the condition that it will be very difficult to get outside capital to come in excepting in small amounts until after we have obtained patents. In the meantime we would have to risk the possibility and probability of being involved in litigation against our will, and this litigation if it arose would prevent the influx of capital from outside sources by shaking the confidence of would-be inventors.
I see no other way of doing anything practical without delay excepting through a Company organized by ourselves. Whether this is practicable or not depends upon what amount of money would be needed for commercial exploitation during the first year; what amount of money we could have taken up by ourselves and our friends; and upon what amount of money would afford a reasonable assurance against the costs of litigation during the first year.
The idea that is vaguely growing in my mind is that we should organize “The American Aerodrome Company” to exploit the aerodromes evolved by the Aerial Experiment Association and have Mr. Curtiss manage the business end of the 8 matter.
I would therefore ask Mr. Curtiss what he thinks would be the minimum amount of money required for the first year considering the fact that we have already two aerodromes completed that can be used for exploitation purposes. He should also include in the estimate the manufacture of at least one other aerodrome at Hammondsport. Then let us consider how far it would be possible to raise this amount of money and a sufficient amount more to pay the expenses of a moderate amount of litigation.
Should we find any reasonable prospect of raising this amount it would be worth while formulating a scheme to be presented to Mr. Charles J. Bell (for I very much fear that the initiative in this matter will have to come from us). Mr. C. J. Bell is a busy man, fully occupied with important business matters, and we should not rely too much upon his good will and interest to initiate a plan for us. We should decide first what we want to do; and then submit our plan to him for criticism. If, as a business man, he does not approve, our proposition may stir him up to suggest an alternative plan.
This is the best I can think of at the present time, and I do not think we can occupy the short time remaining to us as an Association to better advantage, than by discussing the question of our entrance into the commercial field. (Int.) A.G.B.
Suggested Plan for Converting the Association into a Joint-Stock Company .
Feb. 20, 1909:— At a conference held Feb. 19 the foregoing notes concerning “The Plans of the A.E.A” were read and discussed. The idea of converting the Association into a joint-stock company seemed to be received with favor and it was decided to formulate some plans for accomplishing this result to be considered at a subsequent conference. I would therefore suggest the following tentative plan as a basis for discussion:—
Let us proceed to form a company to be known as “The American Aerodrome Company”, to be organized under the laws of the State of New York with its headquarters at Hammondsport and with a nominal capital of $100,000, divided into 1000 shares of the par value of one hundred dollars, or 10,000 shares of the par value of ten dollars — the latter plan might possibly be preferable.
To this Company let the Aerial Experiment Association transfer all its property, and inventions relating to Aerodromics, receiving in return the amount of money it has expended upon experiments , in the form of fully paid up shares, at par and non-assessable.
The expenses of patenting the aforesaid inventions to be assumed by the Company. This would dispose finally of the Association. It would go out of existence and the Company would take its place. The fully paid up shares of the Company received by the Association would be distributed as follows:—
FIRST. To Mrs. Bell would be given one per cent of the shares received for every $1000 dollars she had contributed to the support of the Association; and the remainder of the shares received would be divided equally between A.G. Bell, J.A.D. McCurdy, F.W. Baldwin, G. H. Curtiss, and Mr. Selfridge (the representative of the heirs of our late member Lieut. Selfridge). The fully paid up shares of the Company would belong to the above named persons individually and they would be the first and only stockholders of the new Company. The remainder of the nominal capital of $100,000 in the form of undistributed shares, would be placed in the Treasury of the Company subject to their disposal.
At this stage the Company would exist without any working capital in the form of cash and it would be necessary to raise money by the sale of some of the undistributed shares in the Treasury. The Company (that is, the above named individuals) could then order some of the shares in the Treasury to be sold; the stockholders (that is, the above named individuals) to have the right to subscribe for the stock at par in proportion to their several holdings. Should any shareholder decline to take up his full pro rata share, then the stock not so taken up should be sold to the highest bidder, but not for less than par. The same method should be adopted in any subsequent issue of stock.
The estimate of running expenses made by Mr. Curtiss seems to indicate that we could support the Company for a year if we could raise the sum of ten thousand dollars as working capital. Then, when we have some income from any source, a portion of the earnings could be laid aside to form a sinking fund, and the remainder distributed among the shareholders as dividend. Now let us see how this would work out in practice.
Mrs. Bell has agreed to contribute a sum, not exceeding in the aggregate $30,000.
She has done this, but our Treasurer reports that m i o re will be needed to support the Association to the end of March. He estimates that total at $34,000, and this is probably a conservative estimate. Mrs. Bell has set her heart upon the success of the Association and will do her best to support it to the end of its allotted term, which will probably involve her in a total expenditure of (say) $35,000. She can do no more than this so there is no use considering a further extension of time. No other means of support has presented itself and the Association will have to come to an end on the 31st of March.
Now let us assume that the actual cost of our experiments has been $35,000 (contributed by Mrs. Bell). We organize the Aerodrome Company on a basis of $100,000, and set aside $35,000 in fully paid up shares to be given for the property and inventions of the Association. The balance of $65,000 to remain in a Treasury of the Company to be sold for cash as required.
The Association gets $35,000 in fully paid up shares, which would be distributed as follows:—
Mrs. Bell would receive 35 per cent of this amount, and the remaining 65 per cent would be divided equally among the five members of the Association giving 13 per cent of this amount a piece.
- Mrs. Bell 35% par value $12,250 A. G. Bell 13% par value 4,550
- McCurdy 13% par value 4,550
- Baldwin 13% par value 4,550
- Curtiss 13% par value 4,550
- Selfridge 13% par value 4,550
- Total 100% par value $35,000
We would own these shares individually in the proportion shown above and could sell them or dispose of them as we think best. In addition to this we would own collectively, as “The Company”, the property and inventions of the A.E.A., and have in our Treasury $65,000 in the form of undistributed shares. It would be necessary to sell some of these Treasury shares to raise cash for working capital say $10,000, and we would have the right to buy them ourselves at par in proportion to our holdings of stock. If we can personally, or through our friends, take up the shares we are entitled to buy the following would be the amount to be subscribed by each shareholder.
Amounts to be Subscribed.
- Mrs. Bell (35%) $3500
- G. Bell (13%) 1300
- McCurdy (13%) 1300
- Baldwin (13%) 1300
- Curtiss (13%) 1300
- Selfridge (13%) 1300
- Total 100% $10000.
This would require $4800 to be subscribed by Mr. and Mrs. Bell or their friends, and $5200 to be provided by the friends of McCurdy, Baldwin, Curtiss, and Selfridge. Mrs. Bell and I can undertake to find purchasers for our proportion ($4800) if the others can dispose of the remainder ($5200). Id McCurdy, Baldwin, Curtiss and Selfridge and their friends are not able to subscribe $5200 in all, it is hardly worth our while considering the formation of a Company at the present time. We cannot go to the public until we have patents, and Mrs. Bell and I do not care to go into the matter alone. (Int.) A.G.B.