Slide Rule (22 page)

The result of the Tern flights, however, was that shareholders started to appear. A trickle of outside applications for a few shares each began to come in and were eagerly grabbed, and one of a number of internal shareholders appeared with a proposal to take up a substantial number of shares with a job in the company. I am not going to detail the names of these gentlemen, who formed a very loyal and, on the whole, a very competent team; Tom Laing was the first, and he may stand for all of them.

We worked very fast in the autumn of 1931. I had finished writing
Lonely Road
in the early summer and had packed it off to Watt, who secured American publication for the book with William Morrow Inc., who have been my friends and publishers ever since. Thereafter I gave up writing novels and wrote nothing more for five years. Work was too strenuous in Airspeed Ltd; I had encouraged shareholders to trust their money to us and it was up to me to see that their money was not lost. It did not seem fair to them to be doing another job in the evenings; if the venture were to fail it must not be said that it failed for any lack of effort on my part. Another compulsion was to grow as the swift months went by. In 1932 and 1933 there was a great deal of unemployment in England, but our working hands grew steadily in number. There was a balcony above the stores where we stored lumber, and sometimes when things were very bad financially and I could see no avenue to raise the next week’s wages, I used to go up there and look down at the fifty or sixty men working on the floor below me, and
reflect that if I failed to pull the rabbit out of the hat within the next few days all those men would be without a job and on the dole. I cannot recollect that I was worried about myself; Frances was a doctor and I could always get a job of some sort, so we were all right, whatever happened. The men worried me a great deal more than the shareholders in those years.

Quick as we worked, our debts piled up more quickly. At that time I was meticulous in paying the month’s trade invoices promptly in order to build up a good name; we swung all our debt on to the bank. The bank, however, was quite capable of looking after itself. In Lord Grimthorpe they had a man of means to guarantee our overdraft. In the prospectus shareholdings had to be paid up in the form of calls extending over six months, so that from the earliest days a joint and several guarantee of the overdraft by the directors was necessary. At first this was a real matter for we could all pay if called upon to do so; later this guarantee rested principally upon Lord Grimthorpe. All I had personally to throw in to the pool was my liquidation in bankruptcy, for what that was worth.

By October our bank overdraft was £1479.

By the beginning of December the design work upon the Ferry was tailing off, so well and quickly had Tiltman done his job, and construction of the first machine was coming on well in the shop. It became important to decide what we should do next. The Ferry was a specialised machine got out to suit Cobham’s requirements. It was quite likely that we could sell a few of them to other operators for use on routes where speed was unimportant, and with its ability to land in any field it was perhaps the safest ten-passenger machine produced at that time. Experience, however, has taught me one sad fact—that you can’t sell safety. Everybody pays lip service to the safety of aeroplanes, but no one is prepared to pay anything for it.
A technical advance in aeroplane design can normally be expressed in various ways: the machine can be made to land more slowly, or it can be made faster for the same landing speed, or it can be made to carry more pay load for the same landing speed and cruising speed. No operator ever elects for the lower landing speed. Passengers won’t pay extra for that.

It seemed to us that the next thing for the company to do was to design a machine for the commercial market which would be much faster than the Ferry, and a good deal cheaper. Already there were signs that the private owner market was becoming satisfied, in England at any rate. The prospect was that numbers of small airlines would begin operations in the next few years, in England and overseas. Such infant airlines would not have much money and would not require, at first, machines carrying more than four or five passengers and the pilot. The aircraft must be faster than the normal run of civil aircraft at that time but must be capable of operation out of small grass aerodromes; runways were still unknown.

This specification was discussed at length between Cobham, Tiltman, and myself, and Cobham indicated that it was just possible he might be able to produce an order for the first of the new type, as he had with the Ferry. In the drawing office Tiltman and I got down to the consideration of designs. We had already arrived at the conception of a clean, low wing monoplane six-seater powered with a Lynx radial engine, when a copy of
The Aeroplane
came out showing a very early, rather indistinct picture of the new Lockheed Orion monoplane produced in America, with its retractable undercarriage housed into the wing in flight.

Up to that time no aircraft with a retractable undercarriage had been built in England with the exception of one experimental and little known Bristol type which had
been produced immediately after the first war. Various pundits had pronounced against the retractable undercarriage on the grounds that the added weight and complexity of the device would not be justified by the saving in air resistance, and at the low cruising speeds then in vogue this might well have been true. We were contemplating a big step up in cruising speed, however, and we were fascinated by this picture of the Lockheed, showing that in America this thing had really been achieved. It did not seem so difficult, moreover, when you approached the design with an unbiased mind, and there was no reason to suppose that it would be unreasonably heavy. It was certainly no more difficult than many of the novel design problems we had had to face and solve upon the airship. The whole of Airspeed was a gamble, anyway; there was no future for us in playing safe. We decided to incorporate a retractable undercarriage, hydraulically operated, in the new design.

IF I WERE STARTING a company like Airspeed over again, and had to begin again to look for risk capital, I should look first for individuals who had recently made a profit out of the sale of land. If I couldn’t find them, I should probably abandon the job as hopeless.

In such a quest, it is no good going to any organisation such as a bank, or an insurance company with large funds to invest, or even to a government office charged with the development of industry. Such organisations frequently think quite sincerely that they are putting out a portion of their resources in the form of risk capital, but their definition of a risk is different from mine. I never got any of them to touch Airspeed.

In organisations such as that, some one official has to take the responsibility on his own shoulders for hazarding other people’s money. If the money is lost, that official will have to stand up to some enquiry by the owners of the money, and say, “I thought this was a good thing to do with your money, but it wasn’t. I’m sorry, but it’s lost.” That official may be charged with the duty of laying out investments in risk capital, but in his own interest he will always avoid the more wildcat schemes and will invest preferably in those which, in his view, present a reasonable prospect of security. In this way he modifies and waters down his definition of the word ‘risk’ to a meaning which others might class as development capital. No man who is
responsible for other people’s money will gamble with it to the extent required by genuine risk capital.

To find risk capital, one must seek for the individual who has recently made a large profit in the nature of an unexpected windfall. Such a man, in general, will invest ninety-five per cent of his profit prudently and safely, and he will gamble with the remaining five per cent in the hope that this small investment will yield a great return and so increase the average income from his total holding. In my view, to find an investor of £1000 in risk capital one must seek for the individual who has recently made a profit or sold assets for £20,000 and has to do something with that money.

Profits of that order may be made from the sale of a business such as a shop or a chain of shops. Commercial people of that type, however, are not ready investors in genuine risk enterprises; perhaps they know too much. Such profits are, however, made every day from the sale of land in the vicinity of a growing city by landowners who are not primarily commercial people but may be farmers, or politicians, or lawyers, or country gentlemen. In my experience these are the people who will invest a little money in a genuine risk enterprise if they have it to invest, partly no doubt from ignorant cupidity and partly from a farsighted and altruistic desire to help new industry come into being. In my experience the latter motive is more common than the former, though they may be mixed.

I believe that much of the early capital of Airspeed Ltd came fundamentally from profit on the sale of land, though the money may have passed through several hands in its journey from the land to our company. Reflecting on these matters, it appears to me that money derived from land sold at a profit on the outskirts of a growing city is probably re-invested in the form of risk capital and development capital in the industries that make the city
grow. To put the matter in a simplified and elemental form, the industries of an industrial city may have been capitalised in the past largely from the profit made out of the sale of the land on which the city stands.

If this be true, any restriction on the sale of land for profit which may be imposed by a government will have the effect of cutting off the flow of risk capital and development capital from the industries of that country, and should be approached with the utmost caution. Right-thinking people of all parties will probably agree that it is unjust that the inheritor of a few fields should make a large fortune for doing no work. Yet if that fortune is prevented from passing through the hands of that inheritor, it may well be that no new company will find the capital to start on in the early days of risk. The individual gambler is an essential feature in the provision of risk capital for industry. No organisation can replace him, and without him no new industry of any consequence can come to life.

The first Ferry was finished at the end of March and had to be transported to Sherburn-in-Elmet aerodrome for flight trials. Its transport was a bit of a problem. To take it there in bits upon a truck and assemble it over there for flight would have meant weeks of very costly and inefficient work in somewhat primitive surroundings. We decided to tow it there along the road on its own wheels, less the extension planes. Being a three engined machine it had a span of sixteen feet in this condition, which meant that it had to be moved in the middle of the night with a special police escort. We got as far as Tadcaster by two in the morning, and met the rudder of the Berengaria coming the other way …

That was sorted out, and we reached the aerodrome at dawn and began assembly and final inspection for flight. I
had arranged for the very experienced pilot instructor of the flying club to do the test flying for us; I would have liked nothing better than to take it off myself, but my experience was inadequate and the financial responsibility to the company too great. Worrall made the first flight a couple of days later, and found practically nothing wrong with the machine. It was about five miles an hour slower than we had estimated but it flew, and flew well; there were virtually no modifications needed as a result of the flight trials. It was, of course, a well understood and a conservative design, as was essential to us because we couldn’t afford a failure or any long delay in getting through the trials.

Cobham’s display was already starting operations for the season, and it was essential to get the machine operating in the minimum of time. We put our case to the Air Ministry and they helped us. All new type civil aircraft at that time had to be flight tested at Martlesham Heath before a certificate of airworthiness could be issued. The Air Ministry and the R.A.F. pilots got behind the job and the Ferry passed through Martlesham in four days without any trouble, and was operating with National Aviation Day Ltd in the third week of April. In the first three months the aircraft did six hundred hours of flying and carried 36,000 paying passengers.

So far so good. We had shown that we could do what we set out to do, but the overdraft had risen to £4,223. We set to work to complete the second Ferry for Cobham and to build up two more machines for stock. That month we instituted a premium bonus system in the shop, full early, perhaps, in a concern that boasted only about forty operatives. Output went up, however. We engaged a typist and telephone girl who was a great help, a Miss Brunton.

Some months later, when the work had grown to the
point where no one girl could manage the telephone and the letters and the books, we started to look for another girl. Miss Brunton asked if we would consider her sister, who could manage the telephone and do simple clerical work; she had been breeding dogs but the dogs didn’t pay. The second Miss Brunton came along and presented me with a problem. Rightly or wrongly I decreed that the girls were not to be called by their Christian names in the office. The new girl was no problem to my staff of shareholders because from the first she was known as Dog-Brunton. An unfortunate extension followed, and the office heard cries of “Bitch! Where’s Bitch? Oh, Bitch, when you’ve done Mr. Norway’s letters I’ve got some for you.” Perhaps Ethel and Joan would have been better, after all.

The success of the Ferry, following on the little success that we had had with the Tern sailplane, acted as a tonic to the company. The Ferry was a sizeable aircraft for those days, and the other firms in the aircraft industry began to take note of our doings. Within the company we began to make plans for establishing the concern on a more permanent basis. Clearly if we were to go on building aeroplanes we should have to move from the bus garage in York to some location on an aerodrome, and I began to visit various cities in England that had set up municipal aerodromes to ascertain what help they would give us if we were to move the company to their aerodrome. York was, unfortunately, rather backward at that time and it was some years before an aerodrome came into being for the city.