San José State University
Department of Economics
Thayer Watkins
Silicon Valley,
Tornado Alley
& BB Island

For Gail

The Economic History of Seattle

The Geography

Seattle is located at Elliott Bay on Puget Sound, near the mouth of the Duwamish River. The city area encompasses a set of low hills no more than 500 feet in altitude. It is bounded on the east by Lake Washington, a fresh water lake extending 26 miles north to south. Beyond Lake Washington to the east there is the Cascade Range and on the west, across Puget Sound, there is the Olympics Range. It is a setting that could have been created by J.R.R. Tolkien.

The Founding

The territory that is now the State of Washington was once in dispute between the United States and the United Kingdom. At the time the United Kingdom was militarily the most powerful country in the world. But despite its greater power the leaders in the United Kingdom recognized its disadvantage in supplying troops on the Pacific coast of North America in any military confrontation with the United States. The United Kingdom ultimately accepted border between Canada and the U.S. which allowed the formation of the state of Washington. One wonders if the name Washington was not chosen as a slap in the face of the British Lion.

In the late 1840's however the British were still trying to discourage (unsuccessfully) the settlement of Americans in the region of Puget Sound. The story of the founding of Seattle is largely the story of a few families. Notably there was the Denny family headed by Arthur A. Denny and the Terry family headed by Charles Terry. The other families more or less lined up behind these leaders forming two social agglomerations. Arthur Denny and Charles Terry differed in many ways. Denny was a hard working, teetotaling Methodist Whig; Charles Terry was a gregarious hedonist. Both men shared a sharp business sense; an unerring eye for the profit.

The Denny Clan

The Denny clan hailed from Cherry Grove, Illinois. The patriarch of the Denny clan was John Denny who was a member of the Illinois State Legislature. He was a fellow Whig of Abraham Lincoln in that legislature. John Denny and his wife had four sons before she died in 1841. John later married a widow with two daughters and a son. The two youngest sons of John Denny eventually married the two daughters of his second wife.

In April of 1851, John Denny, his two youngest sons, his second wife, her two daughters and her son started for the West to settle in the Willamette River Valley near what is now Portland, Oregon. The next to the youngest Denny son, Arthur Denny, at age twenty nine became the leader of the party. He successfully led the party to the Willamette Valley but along the way met a man who convinced him that the Puget Sound region would be a better place to settle. Denny and his wife unfortunately fell ill with a malady called at the time ague, which involved shivering chills and was probably what is now known as malaria. It took fully a year for them to recover. The story of Arthur Denny from this point became the story of Seattle.

Arthur Denny

The Terry Brothers

The Terry brothers, Leander (Lee) and Charles, were from a farm in Oneida County, New York. They became forty-niners. They journeyed to California not by the arduous overland route but by the expensive ship route around Cape Horn. In San Francisco, the Terry brothers despaired of making a fortune there and decided to journey to the fresh new territory of the Willamette River Valley in what is now Oregon.

Charles Terry

Leander (Lee) Terry

From the Willamette River Valley to Puget Sound

Both the Denny clan and the Terry brothers set the Willamette River Valley country as their destination and both arrived there. But, as mentioned previously, Arthur Denny met a man on the way that convinced him of the superiority of the Puget Sound as place to settle and homestead. Thus when the Denny clan arrived in the Willamette River Valley it was Arthur's intention of only pausing there only until he could move on to the Puget Sound. The rest of the Denny clan needed convincing. Arthur and his wife were too ill to move on immediately and so Arthur prevailed upon his younger brother, David, to go up to Puget Sound for reconnaissance. Arthur managed to convince some others there where he was sojourning to move on to the Puget Sound. One person whom Arthur convinced that the Puget Sound was worth a visit was a cattle rancher named John Low. Arthur Denny also convinced Charles Terry and his brother Leander to move on to Puget Sound with them. Charles' goal was to open a general store for trading with the indigenous population and the American settlers. Others had already migrated to the Puget Sound region helping to establish other cities of the area such as Olympia.

John Low

Even though there were hardly any settlers in the Puget Sound area there were boats and ships traversing the Sound to take timber to San Francisco. Lee Terry, David Denny and John Low secured passage and began scouting for suitable sites to found a city. Terry and Low spotted Alki (al kee) Point as the location most advantageously situated for maritime trade. There were about 130 acres roughly ten feet above the high water line. Low and Terry staked out and claimed the land at Alki Point for themselves. Terry wanted to name their city New York because of a supposed resemblance of Alki Point to the Island of Manhattan.


When Arthur Denny received the following short message from David he packed up despite his sickness and took his family by schooner to Puget Sound. David had written:

We have examined the valley of the Duwamish River and find it a fine country. There is room for one thousand settlers. Come at once.

It was a very difficult trip, made more depressing by the sorry state of the accommodations once they got to their destination of Alki Point. The cabin that had been built was not roofed because no one had brought the device, a froe/frow, used for cutting shingles. Arthur had brought a froe because he was an organized person, always properly prepared. By nightfall he had half of the cabin roofed.

Low and Terry offered Arthur Denny a few parcels of land, but Denny wanted far more land. He wanted to found his own city.

Since the apparent best site for a city was taken, Denny searched diligently for the next best site. Meanwhile the new settlers had paying work. They could cut timber to be used for pilings along the waterfront of San Francisco. The ships plying the Sound were ready to buy all the timber the settlers could cut.

Denny explored the coast around the Sound for suitable city sites. He considered the sites where later Tacoma and Port Orchard are located today. He gave special attention to the land near the mouth of the Duwamish River. He finally chose a site on the southeast coast of Elliott Bay. He found a small (8 acre) island just off shore, but this island was only a few feet above sea level. They expected the Sound to be quite shallow there but to their surprise the flow of the Duwamish River had created a channel of thirty to forty foot depth just off shore.

Denny and the two men of his group, his brother-in-law/step-brother Carson Boren and a man recruited by Denny, William N. Bell, each staked out 320 acre parcels along the coast of the Bay. Each claimed 160 acres for themselves and 160 acres for their wives. The north parcel was Bell's, the south parcel was Boren's and the middle parcel went to Denny. The day was February 15, 1852. This was the founding day of Seattle.

Here they are from north to south.

William Bell
in later life
Arthur Denny
in later life
Carson Boren
in later life

David Denny, Arthur's younger brother, did not participate in this initial claiming because he was not yet 21 years of age and he was unmarried.

David ("Doc") Maynard

David S. Maynard left Vermont and his wife to journey west. He traveled with a party that was hit by cholera. Maynard, popularly known as "Doc," had received training as a medical doctor and therefore he ministered to the victims. He became close to the widow of one victim and they eventually married after Maynard divorced his wife in Vermont.

Maynard and the widow settled in Olympia where Maynard cut wood to earn enough money to start a store in Olympia. His store sold alcoholic beverages as well as general supplies. When he felt good and had imbibed too much of his own wares he would sometimes give away the products that other businesses were trying to sell at a profit. This was looked upon as unfair competition by the other businesses. Maynard was encouraged to leave Olympia.

Maynard was a generous man, but he led a rather disorganized life and the combination of the two made life difficult for him.

About a month after the founding of what later became know as Seattle, Maynard arrived in the settlement.

David "Doc" Maynard

Although he continued to practice medicine he wanted to do many things including being an entrepreneur. He proposed to establish a salmon-salting operation for Seattle. It was generally agreed that such a business would be good for the settlement. Maynard was given land at the expense of Carson Boren. William Speidel in his book Sons of the Profits points out Boren was away from the settlement at the time so it was Denny who gave some of Boren's land to Maynard.


Maynard went on to being one of the most avid boosters of Seattle. He served as the first Justice of the Peace for Seattle. Maynard was the first to serve Seattle in other offices as well.

The salmon salting enterprise turned out to be a disaster. Due to the inexperience of Maynard and his cohorts not enough salt was used in the process and the salmon spoiled. Somehow one would expect such things to happen to Maynard.

Another enterprise of Maynard's was a great success. He decided that his adopted town needed a new name. It had been previously listed as Duwamp or some variation of this name on the maps, a name coming from the nearby Duwamish River and ultimately from the name of tribe occupying the area. Maynard chose to name the town after Chief Seattle, the local chief who had helped the settlement survive native hostility in the Indian Wars of 1855-56. Chief Seattle demurred because in his culture the name of a dead person was not supposed to be spoken after their demise. He envisioned his eventual rest would be disturbed by a constant violation of that rule. Maynard convinced him to agree to the honor in return for an annual stipend to be paid to him by the citizens of the town. And perhaps the Chief knew that the Americans would never get the pronunciation right.


The Demise of the town of New York at Alki Point

Alki Point came under the complete ownership of Charles Terry. First the older brother Lee left to go to the real New York. John Low then sold his land to Charles Terry and moved to Olympia. For a brief period Terry's New York at Alki Point greatly overshadowed the development in what later became Seattle and rivaled that of Olympia. There were about fifty houses at Alki Point when the Seattle site had only about twenty.

The name New York did not go over too well so Terry adopted the name Alki, a local native language word for by-and-by or in a little while. This name was readily accepted.

But not everything went well for Charles Terry at Alki. The trade with the natives went well but when Terry tried to put in a dock he found that the wind and current from the north would destroy any dock and pilings. Additionally the available timber available for shipment from Alki was quickly used up. The sawmill that was built at Alki faced the twin disadvantages of diminishing supplies of timber and no secure docking facilities. It soon folded.

Terry eventually decided to sell off his businesses at Alki and keep title to the land. He used an upcoming trip to New York to explain why he would want to sell off these apparently prosperous holdings. About this time he was elected to the Territorial Legislature. Although he was bearish about the long term prospects for Alki he was still bullish about the prospects for the territory around Elliott Bay. He bought a large acreage in the Duwamish River valley and turned it into a profitable onion farm. After he sold out his business properties at Alki Point he and a partner, Edward Lander, bought 160 acres of the 320 acres which Carson Boren claimed. Terry eventually became the largest land owner of the city.

Later Terry traded his land at Alki Point for half of Maynard's parcel. After a while Maynard came back to develop the remaining half. However, Maynard had claimed that second half in the name of his first wife, the one in Vermont whom he had divorced to marry the widow. He found that he had no right to that second half. Somehow it does not seem surprising that something like that would happen to Maynard.

Henry Yesler and His Sawmill

Henry Yesler was an astute businessman who came to Seattle from Ohio. He came to the Puget Sound region to establish a steam-powered sawmill. He had the backing of a venture capitalist named John E. McLain of Massillon, Ohio where Yesler came from. McLain was willing to supply the thirty thousand dollars required to establish the sawmill.

Yesler was alerted to the advantages of the Puget Sound region by a ship captain he met in California. The ship captain was one of those who were transporting timber from the Puget Sound region to San Francisco for pilings.

When Yesler came to Puget Sound he revealed that he wanted to start a sawmill and let the people from the competitive locations court him. He probably selected Seattle very early in his search but remained coy until he induced Seattle promoters to donate the land for his sawmill site. The site Yesler wanted and got from Doc Maynard and Carson Boren had one corner at what is now the intersection of First Avenue and Yesler Way. It was a strip 450 feet wide parallel to the shore and extended up the hill to a square parcel ten blocks by ten blocks between 20th and 30th Avenues. Yesler even conned the people of Seattle into building a structure to house the sawmill equipment.

Yesler learned early that one of the most profitable exploits was to borrow money and not pay it back. McLain from back in Ohio who financed the sawmill had to hound and finally sue Yesler to get back the thirty thousand dollars required to build the sawmill.

Henry Yesler

Yesler fell into a surprisingly lucrative sideline to his sawmill business. Yesler hired both Indians and Americans to work his sawmill. He became concerned about his workforce being ready to work on time. He built a large cookhouse and required his employees to eat breakfast there. This structure proved to be the only facility large enough to hold public meetings for Seattle. He was therefore able to rent out his cookhouse, known also as the Yesler Pavilion, for such events.

Yesler's cookhouse
a.k.a Yesler's Pavilion


Yesler became a prosperous, influential citizen of Seattle and ended up being wealthier than Arthur Denny who started out with the choicest third of the land of Seattle.

(To be continued.)

David Denny

In a couple of years after the initial settlement David Denny, the younger brother of Arthur, came of age and married. He married Louisa Boren who was his step-sister and sister-in-law. He was eligible to claimed 160 acres for himself and 160 acres for his wife. He chose a parcel north of that of William Bell.

David Denny built a house for his family at the foot of what became known as Denny Hill.

David and Louisa Denny and family








How Seattle Nailed Down the University of Washington

Given the present distribution of population and economic activity it would seem that the most obvious place to locate a state university would be Seattle, but when the choice was made the distribution of population, wealth and power was entirely different. When Seattle got the university it had about twenty families and was not an obvious good choice.

Seattle got the university as a result of a complicated sequence of political deals. It started with a Federal government grant of $30,000 for building construction for the capital of the territory. The state capital was Olympia at the south end of Puget Sound, but the counties along the Columbia River saw a way to put together a coalition in the territorial legislature. With the votes of the members from Seattle, Port Townsend and Walla Walla the coalition could vote to move the capital from Olympia to Vancouver, across the Columbia from Portland. To gain Seattle's vote the coalition would give Seattle the state university. Port Townsend's vote would gain it a customs house and Walla Walla would get the state penitentiary.

The Federal government had specified that two townships (about 46 thousand acres) of Federal land should be set aside for a state university. There had been a similar grant for Oregon.

The time was 1860 and political events in the East would soon overshadow the needs of the territories of the Pacific Northwest.

With the coalition in place the Legislature on the first day of the 1860 passed a bill moving the capital from Olympia to Vancouver. The governor signed the bill. It appeared that the southwest counties had gotten the capital and the $30,000 Federal grant that went with it.

The legislators who wrote the bill giving Seattle the state university tried to make it only a token grant of the university. They specified the university was to be built without borrowing money. They also specified that the land granted to finance the university was not to be sold for less than $1.50 per acre. Since the Federal Government was selling land for $1.25 per acre this provision might make the sale of land impossible. And, as if those were not enough, the legislation called for the donation of 160 acres of land for the university site by Seattle.

There were some factors in Seattle's favor. John Denny, the father of Arthur Denny, who had been an Illinois state legislator with Abraham Lincoln came to Seattle and ran for public office. He was elected to the state legislature. In the state legislature, as a new comer, he was not given choice committee assignments. But what he was given was the chairmanship of the Committee on Education.

Seattle also had an effective lobbyist. He was Daniel Bagley, a Methodist minister, who had developed useful organizational skills in getting churches built. He managed to get the legislators to remove some of the troublesome impediments they had created. The required donation of land for the university site was reduced from 160 acres to 10 acres. The legislators also provided for the creation of a three-member commission to supervise the sale of land and the building of the university. Daniel Bagley was appointed to that commission.

The Southwest Counties representatives were overconfident about their success getting the legislation passed authorizing the transfer of the capital from Olympia to Vancouver. The supporters of Olympia got the legislature to sanction a public referendum on where the voters wanted the territorial capital to be. The referendum was non-binding so the advocates of Vancouver did not think that it would matter.

When the referendum was held the voters of Washington voted overwhelmingly in favor of having the capital remain in Olympia. At the next session for the legislators they went through a fiasco in which half of the legislators showed up in Vancouver and half went to Olympia. Ultimately some had second thoughts about moving the capital and Olympia remained the capital of Washington ever since.

Meanwhile Daniel Bagley was hard at work trying to make the University of Washington a reality. He had himself named chairman of the committee that was to oversee the creation of the University of Washington. He prevailed upon Arthur Denny to donate eight and one third acres of the ten acres required for the university site. Terry and his partner Edward Lander then donated the required remainder.

Bagley started selling land and started the construction of the university. The $1.50 per acre selling price proved not to be an impediment to sale. The Federal government was selling land for $1.25 but there was limit to how much land an individual purchaser could buy of that price. Lumber companies which needed more land were quite willing to pay the $1.50 per acre.

Bagley was creating quite a stir in Seattle with his land sales and his constructions at the site of the University. Some noticed a technicality in the Federal legislation which called into question his right to be doing what he was doing. The Federal legislation for Oregon said that two townships of Federal land were to be donated for the university, but the legislation for Seattle said that two townships of land were to be reserved for the university. Arthur Denny was by that time the Territorial Register of Public Lands. With the backing of Denny, Bagley went to Washington, D.C. where he was able to argue successfully that there could have been no intention of Congress to discriminate between Washington and Oregon in this matter. Later Arthur Denny became the Territorial delegate for Washington and was of even more help to Bagley.

The legislators in Olympia also had their doubts about what Bagley was doing. A commission was delegated to go to Seattle to investigate the matter. It just happened that none other than John Denny was chairman of the Legislature's Committee on Education. The investigative commission when it arrived in Seattle to investigate the situation found that its members were the guests of honor at the dedication of the University. Bagley and his Seattle cohorts were too fast for the doubters and the detractors.

Daniel Bagley
in later life

Bagley did have some problems with recruiting students for the new university. Bagley did find someone to fill the post of university president. His name was Asa Mercer. His qualification is that he had graduated from a college. His first job was to scour up prospective students. Since there appeared to be a dearth of students adequately prepared for college work the standards were lowered and the course content lowered to the secondary level.

Despite the impediments to creating a university in Seattle Bagley and his cohorts not only created one but they created one that went on to become one of the great universities of the world. But from one perspective it would be more accurate to consider the university having created Seattle than Seattle creating the university. It certainly played its role in building Seattle up from a town into the great metropolis that it is today.


Seattle as the Shopping and Entertainment Center
of the Puget Sound Region

A city economy may have economic base industries located in the city itself, such as aircraft manufacture by Boeing in Seattle. It may also have an economic base in serving the needs of the hinterland surrounding it. That hinterland may have its own economic base. The city may then provide a center for consumer shopping, entertainment, medical services, business services and government. These industries then provide an economic base for the city indirectly resting upon the economic bases of the region in which it is located.

In the early days timbering and later sawmills producing lumber were located within the city of Seattle, but after a few years forests were cleared and the sawmills closed. But those industries continued in the Puget Sound region. In a time when there were about one thousand people living in Seattle there were about ten thousand lumberjacks working in the woods around Puget Sound. Seattle had a good economic base catering to the needs and desires of those lumberjacks.

Other cities around Puget Sound were vying for this trade as well but Seattle had the advantage of a central location. Consumers from the north end of the Sound would not travel to Olympia when Seattle was available at half the distance. Once the central location has a greater retail offering the customers go there because of the selection as well of the lesser travel time. Olympia faced an increasingly more difficult time competing with Seattle. Retail stores such as Schwabacher Brothers of Seattle became the place to shop in the Puget Sound area.

Shopping goods were only one element of attraction for the lumberjacks of the region. Men working long hours in strenuous, danger work wanted above all else entertainment. In that day and age entertainment meant saloons, gambling dens and brothels.

A man named Benjamin Sprague tried to deliver the entertainment to the logging camps rather than have the lumberjacks journey to towns. He obtained a franchise from the Legislature to operate a ship, a floating palace, that provided the entertainment the lumberjacks wanted. Traveling a circuit around the Sound Sprague did well for awhile until he was arrested for selling liquor to the Indians. Sprague served two years in prison and his entertainment ship was confiscated.

No one took Sprague's place in operating a floating palace. A man named John Pennell moved from San Francisco to Seattle to set up a brothel. He approached the city authorities with his plans and got approval in return for paying a $1200 per year license and a promise to keep his business activity confined to a district that no other businesses wanted because it was a messy area of land fill. Pennell built his brothel, named it Illahee (a home away from home) and then set about staffing it. He went to the Indian tribes in the region and offered a trade. He would provide the tribe with provisions and trade goods and in return he wanted young women of the tribe to work in his brothel bringing comfort to the lumberjacks of the region. He promised to educate and otherwise take care of the needs of the Indian women. Pennell got the staff he wanted and he was in business.

Pennell was a very astute marketer of his business. The lumberjacks were paid with monthly checks and Seattle businesses charged a substantial fee ranging from ten to twenty percent to cash those checks. Pennell would cash the checks for free. Since the lumberjacks were earning sixty to eighty dollars a month the free check cashing was worth any where from six to sixteen dollars. With a comfort at the brothel costing two to five dollars it was to the lumberjacks as though John Pennell was giving them what they wanted at no cost to them. John Pennell became an influential member of the Seattle business community.

Seattle versus the Northern Pacific Railroad

The story of the battle between the Northern Pacific Railroad and the city of Seattle is well known. It started when the Northern Pacific Railroad decided to make Tacoma rather than Seattle the western terminus of its transcontinental line. What is not so well known is that this battle lasted over a twenty year period and during most of that time the battle was on paper rather than in the field. The Northern Pacific announced its decision but at a time when its rail line did not extend beyond North Dakota. Seattle announced its intentions of being its own connecting railroad line. For a long time that is what the battle between Seattle and the Northern Pacific Railroad consisted of; i.e., one party saying "I am going to do this!" and the other party saying "I am going to do that!" So in following the story one must not think that the events in the battle involved the laying of rail, instead the battle involved largely the laying of plans.

The initial proposal in 1870 for the Northern Pacific route is shown below. Along with it are the proposals of 1872 and 1873. Although these were just proposals and the drastic shift indicates how uncertain the choice of routes by Northern Pacific was the filing of a route proposal did have practical significance for Washington Territory. When a railroad filed a route plan the Federal government reserved a broad swath of land for the railroad to make its choice of land from. This meant that no one could file a land claim in the reserved zone.

In 1874 the Northern Pacific proposal was amended to include an extension from the Colombia River region to the Puget Sound region. Despite the generous support the citizens of Seattle pledged the Northern Pacific decided to make Tacoma the terminus of their line the better for them to capture for themselves the increase in property values the railroad link would generate. It was a selfish act, but one must realize that the Northern Pacific was not in good financial condition at the time. It was in receivership and so the managers were scratching about for any financial gains. It is not surprising that the Northern Pacific chose not to let the increase in property values go to the property owners of Seattle rather than to itself. Having said that, it necessary to point out that that the Northern Pacific president, Charles B. Wright, went way beyond merely capturing the increase in land value due to the railroad connection.

Charles B. Wright carried out a vendetta against the city of Seattle. The train schedule was manipulated for the explicit purpose of making any Seattle resident who wanted to take the train stay overnight in Tacoma. Wright went even so far as to forbid any mention of Seattle in the Northern Pacific literature encouraging migration to the Pacific Northwest.

The Seattle & Walla Walla Railroad: The Route of the Wild Goose

Seattle people created on paper the Seattle & and Walla Walla Railroad. The route of this railroad was from Seattle through Snoqualmie Pass and on to Walla Walla where it would connect with a transcontinental railroad. There was some laying of track but it was only 12 miles. This was of no benefit except as a token. The railroad effort did not become effective until Seattle secured the services of James Colman. Colman was an extraordinarily efficient organizer and manager. He started building Seattle's railroad but he was astute enough to make it useful. He built the railroad to service the coal mining areas to the east of Seattle.

Coal had been discovered early in the Seattle area. R.M. Bigelow in 1853 discovered coal on his claim on the Black River near where later William Renton built the town of Renton.

Although the Seattle Coal Company was incorporated in 1870 and operated in conjunction with the Seattle Coal and Transportation Company the logistics of the operations were so cumbersome that it had little chance of success. In that early operation coal was transported by small railcars from the mines to Lake Washington where the cars were loaded onto barges to be towed across the lake. There they were taken on a short rail line to Lake Union where they were again loaded on barges. From the south end of Lake Union the coal cars were then pulled to facilities on the bay at Pike Street.

Thus nothing much came of King County coal mining until James Colman built the rail lines that made it feasible to conveniently transport large quantities of coal to Elliott Bay where it could be shipped to San Francisco. San Francisco had sources of inferior grade coal from mines on Mount Diablo east of Oakland, but when the superior grade coal from the Renton area mines became available it captured the market.

Colman opened the rail line to Renton in 1877 and to Newcastle in 1878. By 1880 new coal seams were discovered in the Black Diamond, Franklin and Ravensdale area. The rail line of the Seattle & Walla Walla Railroad, then renamed the Columbia & Puget Sound Railroad, from Renton was extended to the new coal fields.

In the 1880's labor disputes and mining accidents reduced production but as of 1907 the level of production of coal in King County was nearly 1.5 million tons per year. After that the opening of new coal fields in California reduced the market for King County coal.

The change of the name of the Seattle & Walla Walla Railroad to the Columbia & Puget Sound Railroad involved not only a change in prospective route but also a change in control. The financier Henry Villard bought the Seattle & Walla Walla Railroad after he acquired control of the Northern Pacific Railroad. Villard feared that the Seattle & Walla Walla Railroad would siphon off rail traffic from the farmland of eastern Washington so he scotched any notion of that by the reorienting the railroad to the Columbia River and changed its name to the Columbia & Puget Sound Railroad.

(To be continued.)

The Seattle General Strike of 1919

In early February of 1919 there occurred in Seattle what was called a General Strike. It had very little significance for Seattle and could better be described as a belly bumping contest; i.e., labor was showing its strength without seeking any particular objective. However, as a result of this episode Seattle gained an undeserved reputation as a center of trade union militancy so that Franklin Roosevelt's political crony, James A. Farley, while visiting Seattle in 1933 made a remark about the forty seven states and the soviet of Washington. It was inaccurate and unjustified but ever-so-quotable so it has been passed down through the decades. While Seattle was highly unionized its unionization was more in the nature of business unionism and the antithesis of the radical political revolutionary unionism implied by the term the Soviet of Washington.

The labor leaders of era of World War I could not help being intrigued by the cases in the news of leaders of labor unions in Europe who were catapulted into positions of national leadership. In nothing else the case of Lenin and the Bolsheviks illustrated the possibilities. And there were numerous other cases.

Washington had, along with other states of the American West, seen the attempt of the International Workers of the World (IWW) to gain power among the mine workers and in the lumber camps. Although the attempt did not come close to achieving its goals it was scary enough to its opponents to suppress it violently. The violence which it was suppressed was then taken erroneously as a measure of the IWW's power.

There were vocal radicals who criticized the national leaders of the labor unions for not being sufficiently revolutionary. Labor leaders such as Samuel Gompers of the American Federation of Labor (AFL) took a strictly limited approach to labor issues. The AFL focused on wages, working conditions and such and avoided social revolutionary rhetoric.

As discontent among the rank-and-file union members increased some local labor leaders saw the appropriate strategy for preventing radicals from gaining control of the unions as increasing the level of union militancy under established leadership. One of these leaders was James A. Duncan who was the head of the Central Labor Council in Seattle.

Near the end of World War I the metal craft unions in Seattle were attempting to negotiate a new contract. Due to the war, the Federal Government had taken control of the distribution of critical supplies such as iron and steel. The Federal Government had also intervened in labor-management relations. The metal craft unions concerned with ship building delegated responsibility for negotiating a new contract to the head of the Seattle Metal Trades Council, James A. Taylor. Taylor not only had to deal with the leadership of the local companies involved in ship-building but he also had to negotiate with the Emergency Fleet Corporation in Washington, D.C. Taylor went to Washington, D.C. to deal with the authorities in the Emergency Fleet Corporation and get their approval so the agreement he planned to negotiate with employers back in the Seattle area. The federal authorities had mandated wage rates for the ship building crafts which were the same across the nation, whereas Seattle, because of higher living costs, had traditionally had higher than average wage rates for those crafts. Taylor proposed a re-instatement of the Seattle wage differentials. The Emergency Fleet Corporation authorities refused to give their approval and its director, Charles Piez, sent a telegram to the employers threatening to cutoff supplies of steel if they accepted Taylor's proposals. By mishap the telegram was delivered not to the ship-building employers Metal Trade Association but to the Taylor's Metal Trades Council. The mis-delivered telegram was incendiary. Infuriated the Seattle Metal Trades Council called for a strike of the shipyards on January 21, 1919.

Charles Piez of the Emergency Fleet Corporation in Washington, D.C. continued to try to use the control of steel supplies to prevent the ship-builders from making an agreement with the unions. The outrage against the bullying tactics of the Emergency Fleet Corporation spread to other unions.

The Central Labor Council asked their member unions to poll their membership about whether they wanted to go out on strike in sympathy with the Seattle Metal Trades council unions. The Central Labor Council at the end of January 1919 heard reports that 23 of their member unions were in favor of a strike. The established leaders were not enthusiastic about the strike and left the execution of the strike in the hands of elected members of the General Strike Committee. There were three delegates from each striking union and three from the Central Labor Council. This resulted in a committee with over two hundred members, a far too large organization to get anything done but discussion. The executive power was delegated to a subcommittee of strike leaders called the Executive Committee of Fifteen. The Executive Committee of Fifteen set about organizing the strike by providing a comprehensive set of public services which included:

Unfortunately the Executive Committee of Fifteen was not so careful about defining the goals of the strike. Without any stated objectives there could be no perception of victory on the part of the unions. The prudent established leadership of the Central Labor Council tried to have the strike set for a specific number of days to calm any fears that the intent of the strike was revolution. The proposal for a set strike length was voted down, by a single vote. Without a limit on the strike length the efforts to maintain public services looked ominously like socialism. It seemed to be the general strike that radicals had called for, and thus the execution of a general strike became the goal. More practical union leaders recognized the errors of this. Another who recognized it was a young man named Dave Beck who argued against his union of laundry truck drivers joining the general strike.

The general strike came at 10 AM on February 6, 1919. The radical activists were ebullient; they thought their day had come. The mayor of Seattle, Ole Hanson, arranged for National Guard troops to be stationed in the city and temporary deputies were adding to the police force. Conditions in Seattle were peaceful. By the third day many workers were voluntarily returning to work. Labor had demonstrated its solidarity and its ability to organize and operate emergency public services. There did not seem to be much reason to go on with the strike. The Executive Committee of Fifteen voted 13 to 2 to end the strike on Lincoln's birthday, February 12. The strike had officially extended from Thursday February 6 through February 12 but workers were returning to work on the fourth day and the Executive Committee of Fifteen had voted on the fourth day to end the strike.

Because there were no stated objectives to the general strike, its opponents such as Mayor Hansen, were able to say they had smashed the General Strike.

The Prohibition Era and
Entrepreneurial Opportunity in Seattle

Given that alcohol is a dangerous substance for all people and a life-destroying indulgence for many it still does not follow that the state can make matters better by legal sanctions. The Prohibition Era illustrated this point. In Seattle there was an additional lesson learned. When there is a bad law the more stringently it is enforced the worse the situation is.

Roy Olmstead
and his wife

The State of Washington joined several other states in prohibiting the production, distribution and sale of alcoholic beverages four years before national prohibition was instituted in 1920. This was by referendum so this was not a fluke of legislation. A majority of the voters did want prohibition, but a substantial share of the population did not see prohibition as being justified. After Washington State prohibition was enacted the state was not free of alcoholic beverages; instead the distribution and sale was taken away from legitimate business people and put into the hands of criminals who sought to survive and prosper on the basis of their ruthless instead of their efficiency. At that time there was on the Seattle police force a remarkable individual named Roy Olmstead. He had risen to the level of lieutenant as a result of his drive and talent. He became lieutenant at the youngest age that the Seattle police force had seen. He was incongruously called The Baby Lieutenant despite the fact that he was an unusually large man.

Roy Olmstead participated in the enforcement of the Washington State prohibition law. He saw the mistakes the bootleggers made and knew how they could have avoided them. He was also aware of the high profits that were possible in bootlegging. Olmstead began engaging in the transportation and distribution of alcoholic beverages. He was caught in 1920 and lost his position on the Seattle police force. The fine for violation of the prohibition laws was trivial compared the profits to be earned. He then devoted himself fulltime to the illegal alcoholic beverage industry. But Roy Olmstead was different from the other bootleggers; he was a talented individual with good organizational skills. The other bootleggers, in addition to importing liquor from areas where it was legal, engaged in attempts to highjack each other's shipments. During these highjacking attempts there were gun battles in which people were shot. Roy Olmstead did not engage in highjacking and even forbid his people from carrying firearms to defend against being highjacked. Instead he bought the fastest speed boats available so his people could outrun and outmaneuver potential highjackers.

Even during the national prohibition era there was plenty of legal liquor available in Canada. However Canada imposed an export tax of $20 per case for shipments going to the U.S. This was a substantial cost for the bootleggers. Roy Olmstead found a way to avoid this cost. Canada did not impose an export tax for liquor going to any other country except the U.S. Olmstead purchased shipments of liquor for Mexico, which had to be loaded on ships heading for Mexico with no scheduled stops in the U.S. He then arranged for these ships to make a stop at a British Columbian island where the liquor was offloaded. From there Olmstead high speed boat brought it into Washington. Olmstead was such an efficient manager-entrepreneur that he took the bootlegging business away from his ruthless competitors and sold about two hundred thousand dollars worth of liquor per month. Olmstead became something of a local hero-celebrity and engaged in other legitimate businesses. He and his wife started Seattle's first commercial radio stations. It was alleged that the Olmsteads' radio broadcasts contained a secret code giving instructions to his speed boat operators.

When the Feds took over the enforcement of the prohibition laws they were offended at the idea of an ex-police lieutenant being the top bootlegger in Seattle. They made it a goal to get Olmstead. They carried out an operation in which scores of people were arrested, indicted and offered leniency for testimony against Olmstead. The Feds used illegal wire taps of Olmstead's phone in the prosecution. Nevertheless the Feds did convict Olmstead and he received a prison sentence of four years at hard labor. With Olmstead out of the picture the illegal liquor industry fell back into the hands of the less efficient and more ruthless. So the net result of the Feds actions was to hurt Roy Olmstead and benefit the more ruthless inefficient operators. The liquor was still available but at a higher price and of more uncertain quality. The public interest was not served.

While in prison Roy Olmstead became a convert to Christian Science. He was released after 35 months in prison and led a straight life thereafter. (It was perhaps a gain for religion, but it was definitely a loss to entrepreneurship.) He visited the prison from time to time to try to convince the other inmates to follow his example. In 1935 he was given a full pardon by President Franklin Roosevelt.

Seattle During the Great Depression

There can be many arguments about what was the ultimate cause of the Great Depression of the 1930's, but one important, proximate cause was the catastrophic decline in investment purchases between 1929 and 1933. Investment purchases in 1933 were only one ninth in real terms of what they had been in 1929. Investment purchases include machinery, new houses and buildings and such things as ships. With a decline in new orders for ships the shipyards would start laying off workers. The laid off workers drastically reduced their consumer purchases and that would lead to more layoffs.

As to what caused the decline in investment purchases there can be a number of causes, but one element was the contraction of the money supply leading to falling prices and consequently higher real interest rates. For more on this topic, see Depression.

(To be continued.)

Dave Beck and Corporatist Unionism

David "Dave" Beck was born in 1894 in Stockton, California to a family that had moved there from Tennessee. When Dave was about four years old the family moved on to Seattle hoping to go from there to gold rush in the Klondike. Dave's father was a carpet cleaner and his mother did laundry. They never saved enough for the father to seek gold in the Klondike. They were just barely surviving and young Dave had to sell newspapers on street and later a paper route to help the family survive.

In his junior year of high school Dave had the opportunity to work full time as a laundry truck driver and so he dropped out of high school. This was when he was about seventeen.

At twenty two Dave Beck was still driving a laundry truck. At that time his union went on strike for higher wages. The strike lasted three weeks and gained only a small increase in wages. When Dave Beck compared the small increase in wages with the large loss of three weeks of wages he was appalled. This set Dave Beck firmly against strikes in labor disputes.

About this time he joined the U.S. Navy and did service during World War I. He came back from the Navy to his job of driving a laundry truck. He was still wearing his Navy uniform when his union was debating on whether to participate in the Seattle General Strike of February 1919. Dave Beck argued against the union's participation. He was disgusted with the labor radicals that senselessly demanded radical action without a specific objective to be achieved. Dave Beck at that time decided to gain a role in his union to promote sensible union policy.

Dave Beck was a success as a driver and as a salesman for the services of the laundry he worked for. However in 1920 he was elected as business agent for his local union. He then proceeded to educate himself. He took classes in economics and in public speaking. He dressed like a businessman and he gave speeches to business people warning of the dangers of radical labor leaders. His speeches to workers warned of the dangers of not being organized into a union. Subsequently he was elected to the top position of secretary to his union.

Beck's effectiveness as a union organizer was getting regional and national attention. In particular, Dave Beck's performance as a union organizer was called to the attention of Dan Tobin, the head of the national Teamsters Union.

In 1925 the Teamsters held their national convention in Seattle. Dan Tobin hired Dave Beck as a Teamsters organizer.

The 1930's brought economic depression to Seattle and the nation. The depression brought Franklin Roosevelt to power in 1933 and Roosevelt brought the New Deal. One pillar of the New Deal was the right of employees, under the National Labor Relations Act, to organize themselves into unions. This was a bonanza for union organizers like Dave Beck and John L. Lewis.

Dave Beck

Dave Beck became known for his strategy of organizing businesses from the top down. He courted the employers persuading them that unionization with him meant stability as well as higher wages. Dave Beck could protect the existing businesses in an industry from new competitors. For example, he used his power to protect the beer brewers of the Northwest from competition from eastern beers such as Budweiser. He could also protect the businesses from price cutting. For existing employers that was a valuable service that compensated for the higher wages they had to pay with unionization.

He was able to do this because the Teamsters controlled the transporting of supplies and the distribution of the final product. This power in the hands of anyone other than Dave Beck would have scared and panicked employers. But Dave Beck constantly preached the virtues of the "free enterprise system." However what Beck really meant was a "private enterprise system." Dave Beck was not about to allow impersonal market forces to disrupt the status quo.

Although he preached cooperation he was not above condoning strong-arm tactics to ensure that anyone who hauled goods belonged to the Teamsters. And he was no advocate of democracy in union affairs. His belief was that union members should choose their leaders and then keep their mouths shut, paying attention only to the results of their leaders' actions.

Dave Beck was not above stealing the members of other unions. There were times when his Teamster organizers tried to get members of a striking union to join the Teamsters. Dave Beck probably benefited from the episodes of violence and unscrupulous actions because it made his Teamsters Union appear to be invincible.

Dave Beck's power increased a quantum level in the 1930's when he supported the unionization of one of Seattle's major newspapers, the Post-Intelligencer. William Randolph Hearst owned the Post-Intelligencer (PI) and was just as much of an autocrat as Dave Beck. The Newspaper Guild, a major union of newspaper employees, started to organize the PI employees as was provided for in the National Labor Relations Act of Roosevelt's New Deal. Hearst reacted by firing the two employees most active in the unionization effort, but for reasons supposedly having nothing to do with their union activities. The Newspaper Guild tried to have the dismissals rescinded. The Guild went to the National Labor Relations Board for legal redress, but it went to the Seattle Central Labor Council for support from organized labor in Seattle. Dave Beck was the dominant figure in the Central Labor Council and he advocated the support of the Newspaper Guild.

A picket line was established around the PI operations and Beck ordered Teamster members not to cross the line. This cutoff the supply of newsprint and ink and the delivery of any printed newspapers. The PI was closed down and remained closed for four months.

Hearst fought back but ineffectually. Hearst's accusations of Beck being too powerful and too dictatorial, while true, were ineffective coming from a man who himself was perceived as being too powerful and too dictatorial. It made things worse that Hearst's power came not from his own talents but from inherited wealth. So the Post-Intelligencer was unionized and Hearst ended his public campaign against Beck.

This time Harry Bridges, the radical labor leader of the San Francisco Longshoresmen Union was trying to capture union control along the entire West Coast. Bridges' Longshoresmen Union was affiliated with the Congress of Industrial Organization (CIO) of John L. Lewis. Bridges and Lewis were perceived as dangerous radicals by the general public. Beck's Teamsters Union was affiliated with the American Federation of Labor (AFL), a less radical labor organization.

Seattle business people recognized that Seattle labor was going to be organized and the only real question was whether the workers would be organized under Dave Beck, the Teamsters and the AFL or under Bridges, his Longshoresmen Union and the CIO. It was clear to business people that Beck was the lesser evil. They could accept his dictatorial ways as necessary to counter the violence of Bridges' forces.

Later Beck's power went even higher as he and his Teamsters became a force to be reckoned with in Seattle politics. John F. Dore had been elected mayor of Seattle in 1932 on a platform of cutting the cost of city government and cutting taxes. This program was essentially the same as that Franklin Roosevelt in his election campaign in 1932. Roosevelt and the Democrats argued before the election that the depression was due to the government running a deficit and that the proper way to counter the depression was to cut government spending. Roosevelt abandoned this line once he was elected but Mayor John Dore of Seattle adhered to it. When Dore's cost cutting did not solve Seattle's economic problem it gained him no friends, but the layoffs of government employees and the reduction of services gained him many enemies and in 1934 he lost the next election.

In 1936 John Dore campaigned again for the mayorship, but this time he sought and received the support of Dave Beck's Teamsters. Dore won the election and announced,

Brother Dave Beck was the greatest factor in my election and I say again that I am going to pay back my debt to Dave Beck and the Teamsters in the next two years, regardless of what happens.

Beck as a result of Dore's gratitude gained the partiality of the Seattle police force in the Teamsters battles with the Longshoresmen Union. This partiality however cost Dore the mayorship in the election of 1938.

However Dave Beck had gained the image among the public and business as the reasonable, non-radical alternative to Harry Bridges' militant unionism and also to William Randolph Hearst's uncompromising anti-unionism, anti-Rooseveltism. In effect, Dave Beck became a statesman of labor.

Through the 1940's the power of the Teamster Union on the West Coast under the organizing guidance of Dave Beck increased. He proved his ability to run the Teamsters Union at a regional level and when the national Teamsters Union president Dan Tobin was ready to retire he selected Dave Beck for the national presidency in 1952. Beck's national leadership raised Teamsters Union membership to record high levels. Beck was a talented leader and widely respected. The future of Dave Beck in the Teamsters seemed assured. But in the later 1950's the U.S. Senate Labor Committee under the chairmanship of John McClellan which had been investigating corruption in American labor unions began to investigate Dave Beck and the Teamsters Union. Robert Kennedy was the Committee counsel responsible for this investigation. In 1957 Beck was brought before the committee for questioning concerning large loans which he had received. Of particular concern was a loan of $200,000 made by the Fruehauf Trailer Company of Detroit. The Fruehauf trailers were used for the long haul trucking and the company would be quite vulnerable to some teamster objection to the use their trailers. Thus the $200,000 loan might have been extorted from the company by the threat of the Teamsters Union to object to the use of Fruehauf trailers. The McClelland Committee wanted to find out what prompted the Fruehauf Company to make a large loan to the head of the Teamsters Union. The Committee did not find out because Dave Beck invoked the Fifth Amendment 65 times during his questioning.

Later in 1957 Beck refused to answer questions put to him by the Ethical Practices Committee of the AFL-CIO. This led to George Meany of the AFL-CIO expelling the Teamster Union from the AFL-CIO. Dave Beck was suddenly in serious trouble.

About the same time that the Teamsters Union was expelled from the AFL-CIO the Federal Government and the State of Washington indicted Dave Beck on a number of charges, some major and some minor. One of the major charges was that Beck owed $240,000 in back taxes. A Circuit Court later dismissed this charge and the indictment was effectively only on the relative minor charges, one of which was that Beck was responsible for the filing of a fraudulent tax return for a labor organization. People knew that the filing of such returns was delegated to underlings and although Beck was technically responsible for their supervision any errors of this sort was evidence of dereliction of duties rather than corruption. The other charge was that Dave Beck sold a Cadillac which the Union gave him for his use and did not turn the money over to the Union. There could have been any number of explanations for this action, including the retaining of the funds for the purchase of another vehicle for his use as the union president. Nevertheless Beck was tried and convicted of grand larceny concerning the Cadillac. He was sentenced to three years in prison. He was also convicted of aiding the filing of a fraudulent tax return for the union organization and sentenced to five years. He was sent to McNeil Island Prison in 1962 to serve a minimum term of two years. When he was released in 1964 he did not re-enter public life. He was given a pardon on the state conviction by the Governor of Washington in 1965 and received a pardon on the Federal conviction by President Gerald Ford in 1975. Dave Beck lived quietly in the Seattle area until his death in 1993 at the age of 99.

The severity of the sentences meted out to Dave Beck for relatively minor infractions suggests that either the prosecution was for his being a union leader perceived to have too much power or for crimes the prosecution did not have evidence to try him upon. In either case it was a miscarriage of justice but in the matter of prosecution of his having too much power consider that the removal of Dave Beck from the presidency of the Teamsters Union turned it over to James Hoffa. Whatever were Beck's faults they pale in comparison to those of Jimmy Hoffa.

For more on the career of Dave Beck see The Rise of Teamster Power in the West by Donald Garnel. This was published by the University of California Press in Berkeley in 1972.

The Symbiotic Rise of Boeing Aircraft and Seattle

William Boeing

William Edward Boeing, an entrepreneur who is closely associated with the development of the economy of Seattle, was not born in the Northwest. He came from Detroit and grew up as the automobile industry was coming of age.

Boeing moved to Seattle and became a major player in the timber industry. Boeing was interested in water sports and saw no reason not to combine his recreational interest and his business interest. This led to a boat building division in his business and ultimately to his aircraft company by way of a project to build seaplanes; i.e. flying boats.

Boeing had a close friend, Conrad Westervelt, who was a navy commander stationed in Seattle. On the 4th of July in 1914 Boeing and Westervelt took rides in a seaplane operated by a barnstormer on Lake Washington in Seattle. They did not just take one ride; their enthusiasm was such that they took repeated rides that day. Westervelt convinced Boeing that he could manufacture state of the art seaplanes. Boeing undertook the project by building a hangar and workshop on Lake Union to the east of Seattle. Boeing then bought a seaplane from Glenn Martin to learn about the operation of seaplanes. The first seaplane model built by Boeing was named B&W for Boeing and Westervelt.

Boeing B&W

The first two B&W's were completed in 1916 and Boeing formed the Pacific Aero Products Company. The U.S. Navy showed an interest in the B&W's but wanted some modifications in design. Boeing developed a new model called C and the Navy ordered 50 of that model when the U.S. entered World War I. The Boeing aircraft business was born and the company name was changed to the Boeing Aircraft Company.

Additional contracts for building seaplanes came all for military applications. When World War I ended the demand for Boeing seaplanes decreased dramatically. Boeing laid off half his workforce in his aircraft company and was hard pressed to find enough business to support the reduced operation. In 1920 Boeing Aircraft lost $300,000. William Boeing put his company up for sale but there were no takers.

The U.S. government decided to support the aircraft industry to keep a core alive in case it should be needed in the future. In 1921 the U.S. Army requested bids on a contract to build 200 planes. Boeing won the contract and made a profit on it. The U.S. government had been financing the civilian aviation industry since 1918 in the form of contracts to carry mail and this was made more definite with the passage of the Air Mail Act of 1925. This not only sanctioned the awarding of contracts to carry airmail but also provided for the U.S. Postal Service to construct airfields, navigation beacons and other infrastructure for the private air mail carriers. William Boeing participated in this program by being the first to carry airmail between the U.S. and Canada in 1919 with its Seattle-Vancouver route. But more importantly the airmail program generated demand for aircraft which Boeing could satisfy. Boeing however set up in 1927 a subsidiary, Boeing Transport Company, to carry airmail on the San Francisco-Chicago route under contract with the Postal Service. The 25 planes Boeing Transport used for carrying the mail also carried a few passengers.

In 1928 William Boeing entered the world of finance when he listed his companies on the New York Stock Exchange. In 1929 Boeing united his aircraft operation with a prime manufacturer of aircraft engines, the Pratt and Whitney Company of Connecticut. The merged company was quite naturally called the United Aircraft and Transport Company. This company acquired airlines in the 1930's and became a conglomerate of aircraft frame and engine manufacture, air transport and airlines.

The Air Mail Act of 1930 allowed the Postal Service to award airmail contracts without competitive bidding and as a result most of contracts went to three large firms. The rationale for the support of oligopoly was that these three had the possibility of using the Federal subsidy to develop a viable air passenger industry while dispersion of the contracts among a multitude of smaller firms would not. That rationale was not necessarily valid as subsequent events revealed.

The air mail subsidy was subject to abuse. The airlines made a substantial profit on the air cargo they carried so some decided to generate their own cargo. If an airline shipped a desk across country it made a profit on the operation. If it shipped bricks it also made a profit. As usual government subsidies ended up subsidizing activities that they were not intended for.

In 1929 Boeing Aircraft began designing a new model aircraft intended to serve the military market as a bomber and the civilian market as a passenger plane. Up to this time aircraft design was dominated by the single-engined biplanes of World War I. These were originally made of spruce and canvas. Boeing decided to build a twin-engined aircraft made of aluminum. The prototype was completed in 1933 and became known as the Boeing 247. It used Pratt and Whitney engines, of course, and United Aircraft and Transport, of course, ordered 60 of them. Although superior to anything available the Boeing 247 had a capacity of only ten passengers.

Having the Boeing 247 would be a major advantage for United so Transcontinental & Western Air (TWA) sought to acquire some for itself. Boeing Aircraft refused to help an airline in competition with its affiliate United so TWA in 1932 went to Donald Douglas in Los Angeles with its business. Donald Douglas along with Jack Northop immediately went to work designing a plane for TWA. Less than a year later Douglas and Northop had a airliner for TWA designed and built. This airliner which subsequently became the DC-2 was superior to the Boeing 247 in size. TWA ordered 20 DC-2's. American Airlines then persuaded Douglas to enlarge the model to 21 passenger capacity which was then called the DC-3. Soon the DC-3 was the dominant airliner in the United States and the World. Even United was forced to acquire DC-3's. Upwards of 90 percent of the air passengers of the world were flying in DC-3's. Thus the Post Service's policy of subsidizing the three leaders in aviation in the 1920's to the exclusion of the smaller firms proved to be decidedly wrong-headed.

The Air Mail Act of 1934 brought back competitive bidding for air mail contracts. William Boeing was the subject of public criticism for his role in the air mail subsidy. In 1934 the conglomerate that William Boeing put together in the late 1920's was broken up. It separated into Boeing Aircraft, Pratt and Whitney and United Airlines. In that year William Boeing decided to sell off his stock ownership and retire. Thus ended the connection of the founder with Boeing Aircraft.

Clair Egtvedt took over the management of the company, which at that point was not an impressive array of plant and workers. There were only 600 employees at its Seattle and Wichita facilities and the company had scarcely enough orders to keep them busy. The U.S. military came to the rescue.

The Army Air Corp gave Boeing a contract to design and build a large aircraft that could be used as a bomber. The prototype model was completed in 1937. However before that project was complete Claire Egtvedt decided design and build a bomber (the B-17) and enter it in a competition for military purchases of bombers. The major competitors in the competition were Douglas and Martin. In the competition Army Air Corp pilots had to fly the entries and they crashed the Boeing entry. The major share of the government purchases went to Douglas (350 planes) but the military kept Boeing alive with an order for 14 B-17's.

Juan Trippe's Pan American Airlines, which flew to destinations where airfields were not yet available commissioned Boeing to design and build flying boats. These became known as Pan American Clippers.

Boeing went on to design an airliner with a pressurized cabin which allowed it to fly above bad weather. It was called the Stratoliner. There was a crash during a demonstration flight that cast doubt on the safety of the Stratoliner.

The B-17
Flying Fortress

Concern at Boeing about the sales of its products ended when World War II began. Even before the U.S. entered the war there was great demand for Boeing aircraft by the military. Boeing began producing the B-17 bomber in massive quantities in 1938.

During the war President Franklin Roosevelt called the production of 50,000 planes per year. The actual production exceeded even that enormous figure. It was 300,000 planes. Boeing was he major producer as a result of the expertise it developed in bomber design and production during the late 1930's.

The B-29
Super Fortress

Despite its wartime dominance of aircraft production Boeing was not assured of the same dominance of the civilian aircraft market; it was not even assured of survival in that market. Douglas still had the DC-3 which was the dominant civilian aircraft model of the 1930's. Lockheed was also a strong competitor. Both of these aircraft manufacturers had distinct production advantage over Boeing concerning climate. Douglas and Lockheed operating in Southern California could assemble aircraft out-of-doors whereas Boeing in Seattle needed heated hangars for its operation.

The technology of power for aircraft was changing rapidly. Up to the late 1940's planes were powered by internal combustion engines driving propellers. The turbine driven propeller (turbo-prop) seemed the wave of the future.

Britain had a viable aircraft industry after WWII. Vickers and de Havilland had been producing aircraft for decades. By 1948 Vickers had designed and built the turbo-prop Viscount. But the turbo-prop engine was soon made obsolete by the development of the jet engine. De Havilland created a jet-liner called the Comet. It was a superior design but inadequate materials resulted in metal failures. De Havilland went on to produce the Comet-1 in 1952. The Comet-1 could fly higher and faster than most jet fighter planes of the times.

Douglas did not initially adapt to the changing technology and seemed wedded to the notion of propeller propulsion. Lockheed also produced a turbo-prop plane, the L-188 Electra, but ten years after the Vickers Viscount. The net result was that Boeing's competition was not adopting the leading edge technology of jet propulsion and Boeing surged ahead to eventual dominance of jet-liner production.

The Size of the Seattle Economy

The Bureau of Economic Analysis of the U.S. Department of Commerce tabulates income for major metropolitan statistical areas. The city of Seattle is included in the Seattle-Tacoma-Bremerton Consolidated Metropolitan Statistical Area, which is composed of King, Pierce and Kitsap Counties. In the year 2000 the residents of these county had a total person income of $128 billion. This was $35,877 per capita; a figure which was 22 percent higher than the national average.

Here is the level of production in the Seattle-Tacoma region in the 21st century.

The Gross Domestic Product
of the Seattle-Tacoma Metropolitan Area
in Millions of Current Value Dollars
2001 to 2006
155,695 158,031 163,224 171,025 184,419 197,686

With a GDP of about $200 billion per year the production of the Seattle-Tacoma region is comparable to that of a major country such as Colombia or the city-state of Hong Kong.

(To be continued.)

Scenes from downtown Seattle.

Four Views of Mount Rainier

From the northwest

From the west southwest

From the south

From the southeast

From the east southeast


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