Since 1921, Donald Douglas and his father had controlled the funds of the Douglas Company and had reinvested all but a small amount of the profits. By the fall of 1928, the net worth of the company had grown to $2.5 million. This was an extraordinary achievement, considering that Douglas had needed a $15,000 loan just seven years earlier to get started. In November 1928, the company reorganized and became the Douglas Aircraft Company Inc., a publicly traded company. Some of the cash that was received went into building a new plant in Santa Monica. The company, thus, became the first of the aircraft manufacturers to choose southern California as its permanent residence, as so many aircraft companies would in the future. In January 1932, Douglas bought just over a half share of John "Jack" Northrop's El Segundo operation to create the Northrop Corporation as a partially owned subsidiary of Douglas Aircraft.

Douglas' successful round-the-world flight in 1924 brought huge orders for the Douglas Company, including an order from the Army Air Service for 27 C-1s, the military transport version of the Douglas World Cruiser. This plane was similar to the DWC but could carry six to eight passengers or, if the seats were removed, cargo instead. The first C-1 flew at Santa Monica on May 2, 1925. Douglas also built a series of mail planes in the mid-1920s that flew millions of miles across America for several small airlines that carried the mail. The company also built a series of observation planes in the mid-1920s, the O-2, for the U.S. Army Air Service.

In 1929, Douglas combined his love for the sea with aviation and built his first flying boat—the Sinbad, a prototype of the Dolphin series, which he designed for the luxury commercial market. But the stock market crash and the resulting depression virtually eliminated the commercial market and meant that most of the 58 Dolphins ended in military hands. Military orders during the next few years kept Douglas financially sound when so many other U.S. companies had to close. In 1930, the Army bought seven Douglas gull-wing B-7 bombers and five O-35 observation monoplanes, and the series of observation biplanes that had begun in 1924 remained in production until 1936, with almost 800 built. This steady income allowed Douglas to take more of a risk with a commercial airliner.

On March 31, 1931, Knute Rockne, the famous football coach, was killed when a wooden Fokker trimotor crashed. It had suffered a structural failure partly because of its wood construction. Consequently, the Civil Aeronautics Authority grounded the plane and insisted on so many modifications that the Fokker was taken out of service, leaving the company to return to solely European production. The industry realized that it had to come up with a safer plane—an all-metal plane. United Airlines turned to its companion company, Boeing, which came up with the highly successful Model 247. But Boeing would not commit to providing planes to one of United's competitors, Transcontinental and Western Air (TWA), so in 1932, TWA vice president Jack Frye turned to the other aircraft companies.

Frye decided that TWA would issue its own specifications for a passenger airliner. On August 2, 1932, he invited five aircraft companies to submit designs for his plane. His specification called for a three-engine all-metal monoplane. One of his requirements was that the plane be able to take off fully loaded with only two of the three engines operating out of any airport TWA used. This was a rigorous requirement because TWA flew out of some airports at high altitudes or where the temperatures were high.

Although Douglas hesitated at first because he anticipated the need for fewer than 100 of these planes—a risky investment considering the development costs—he responded with a much more advanced design. It was a twin-engine plane that would incorporate features of Jack Northrop's strong tapered wing and a floor that wasn't divided by a spar. Douglas received the DC-1 prototype contract on September 20, 1932. The DC-1 flew on July 1, 1933. Calling on the expertise of a talented Douglas team, Douglas had built an all-metal monoplane with tapered wings, retractable landing gear, and two 690-horsepower (515-kilowatt) Wright nine-cylinder air-cooled radial engines that drove its variable-pitch propellers. It sat 12 passengers and had a large lavatory, a small galley, and a soundproofed cabin with heating ducts. After 200 test flights and ironing out some problems, including carburetors that had been installed backwards and caused the engines to cut off when climbing, the plane was approved for service. TWA officially accepted it in December 1933.

Only one DC-1 was built, but it was enough to get TWA to order 20 production aircraft, which were designated the DC-2. They had a larger engine and seated 14 passengers as opposed to Boeing's 10. The plane first flew on May 11, 1934 and began service with TWA on May 18. Douglas was ready to go on and build what many consider to be one of the greatest planes ever—the DC-3.

—Judy Rumerman

References: