One—
The Failure of Industrial Reform

Aircraft manufacturers in interwar France were quick to invent new airplanes but slow to convert to mass production. This combination of technical prowess and business conservatism had deep roots in a country where industrialization had done little to diminish the prominence of specialty trades, artisanal production, and the family firm. In the early days of aviation this penchant for small-scale, high-quality production was a blessing. Between 1906, when the Voisin brothers established the first factory for making airplanes for sale, and 1914, when more than twenty small firms had entered the business, France quickly emerged as the world leader in aviation.^[1] Much the same story could be told of French automaking. But by the early 1930s French aircraft builders were losing ground to American and German firms better equipped for aggressive marketing, corporate mergers, and mass production. As early as 1928 nearly everyone connected with French aviation recognized that French manufacturers were slipping behind. But if the malaise was obvious, its remedies were not. Business and government officials spent nearly a decade battling with one another over how to revitalize a troubled industry.

Despite the predilections in France for entrepreneurial caution, it is puzzling that French aircraft manufacturers had such difficulty in the interwar period modernizing their industry. For one thing, French manufacturers had already made one successful effort to mass-produce aircraft—during the First World War, when French firms employed two hundred thousand workers to build more than fifty-one thousand airplanes and ninety-two thousand motors, an achievement that made France the leading producer of aircraft matériel in the war.^[2] During the 1920s, moreover, several French firms—Potez, Bréguet, Hispano-Suiza, Gnôme-et-Rhône—remained major competitors in the world market. In

the French business community at large there were several entrepreneurial visionaries—men like Ernest Mercier and Auguste Detoeuf, who proselytized in behalf of scientific management, industrial concentration, and a new partnership between business and the state to stimulate growth. These neoliberals dissented openly during the early 1930s from the dominant values of laissez-faire liberalism and called instead for a planned, mixed economy.^[3] Yet despite a strong start in aviation and a business culture at least partially open to new ideas, the French failed to rejuvenate the industry in those years. Government policy, military doctrine, budgetary austerity, and entrepreneurial strategy all conspired to freeze the industry in a structure ill suited for a rearmament effort.

Industrial Drift in the 1920s

The troubles in French aviation began with demobilization after the First World War. Peace cut short the demand for warplanes, and new markets for aircraft only slowly emerged. Throughout the 1920s the industry floundered. In 1919 employment shrank 50 percent to one hundred thousand workers and then plummeted in 1920 to an astonishing fifty-two hundred workers.^[4] Many firms managed to survive by investing war profits shrewdly and making other products until demand for airplanes revived. As a result, by the late 1920s at least twenty-three companies were still in the business of building airframes in France, and about ten companies were making motors—fewer firms than the forty of 1918, but a sizable number nonetheless.^[5] Since nearly all these companies made their profits on military aircraft, builders in this troubled industry appealed to the state to keep them alive.

For the most part, government officials obliged. The army had served as the industry's main customer since before 1914, and despite the emergence of commercial aviation state orders remained the lifeblood of the companies after the war. Eager to preserve the industry as a military resource, the government followed a politique de soutien , or support policy, of dispersing orders widely to keep firms afloat. Such a policy had the virtue of maintaining excess capacity in the event France had to rearm for another war; it was also consistent with the military's desire to avoid becoming too dependent on any one firm for supplies.^[6] A support policy, of course, could easily degenerate into pork barreling, as was the case in the notorious stock-liquidation scandal, when some manufacturers were alleged to have bought back surplus airplanes at a pittance from the government to sell them at premium prices abroad. Questions of collusion between state bureaus and the companies kept the industry in the newspapers throughout the 1920s; it was commonplace to assume

that airplane companies depended as much on government connections as on the talent of entrepreneurs.

Not that the industry lacked for talent: by the late 1920s two generations of remarkable builders had emerged to dominate the aircraft business. Several of the prewar pioneers, men like Louis Bréguet, the Farman brothers, and Fernand Lioré, still ran firms and served as chieftains of the industry. Typically these pioneers had trained in elite engineering schools and worked in machine construction or the new automobile industry before throwing themselves into aviation. Louis Bréguet, for example, after graduating from the Ecole Supérieure d'Électricité, worked for a while in his family's electrical machine firm before turning to airplanes in 1905. Louis Blériot established an automobile headlight factory before taking to the air. When Fernand Lioré, a polytechnicien with several years' experience in the chemical industry, saw Blériot fly in 1907 in the fields of Issy-les-Moulineaux outside Paris, he gradually began to convert his own new automobile accessories firm into an airplane company. Aviation became a passion for men with just the right blend of money and madness to adapt swiftly to a novel technology.

During the First World War a second generation of builders entered the business alongside the early adventurers—young men like Henry Potez and Marcel Bloch, who after graduating from the new Ecole Supérieure de l'Aéronautique in Paris joined the army engineering corps and used their positions to launch a firm of their own. Emile Dewoitine, a brilliant young engineer, had a similar start in Toulouse; during the war he rose to the rank of technical director for Pierre Latécoère's company before breaking away to set up his own Toulousain firm in 1920. But whatever their differences in experience, both generations of builders, the pioneers and the younger newcomers, possessed that special combination of qualities it took to succeed in the business—creativity, ambition, an obsession with flight, a measure of greed, and, not least, a capacity to cultivate contacts in the ministries. If the world war taught these airplane manufacturers anything, it was that military orders made a firm.^[7]

Not surprisingly, then, builders and politicians looked to the state for remedies when the ills of the aircraft industry became apparent in the late 1920s. By 1927 employment had risen to eleven thousand.^[8] Only a few firms really prospered. Bréguet, Potez, Farman, and Lioré et Olivier remained competitive internationally, but many firms just limped along. Blériot's director, for instance, warned parliament in 1926 that despite the firm's recent technical successes it might soon have to close for lack of orders.^[9] The irregularity of demand and a chronic shortage of capital—few bankers could stomach the risks of the aircraft business—

plagued nearly every firm in the airframe sector. The major engine firms, especially Gnôme-et-Rhône and Hispano-Suiza, flourished reasonably well building motors for a host of client firms; but in the end their health, too, depended on the vitality of the airframe business.

Nor did the general condition of French aviation give cause for comfort. Throughout the 1920s the fledgling French air force that had emerged from the war remained little more than a stunted stepchild of the army and navy. Military conservatives and their parliamentary allies stymied every effort to create an autonomous air force.^[10] Commercial aviation languished as well. French fliers may have been winning trophies and grabbing headlines, but the French airlines appeared to be less of a match for their rivals abroad. The German aircraft industry, which had been prohibited from building military aircraft by the Treaty of Versailles, spent the 1920s developing the world's most advanced commercial aircraft to supply an aggressive group of German airlines.^[11] By 1928 Germany boasted a network of domestic air routes covering sixty thousand kilometers, which made the paltry three-thousand-kilometer domestic network of France seem in comparison like a blank wall, as one despairing journalist put it.^[12] More worrisome still, the new British and German semipublic airlines, Imperial Airways and Lufthansa, threatened to squeeze French airlines out of the new international air routes opening up in Asia, the Near East and the Americas. When Charles Lindbergh beat his French competitors in the race to master the Atlantic in 1927, French journalists announced to the public what experts had been fearing for years—that French aviation was fast losing its competitive edge.^[13] By 1928 every airplane accident, business scandal, or setback at the international air races only deepened the awareness of a dreadful crisis in French aviation. Henry Paté, a deputy from Paris, captured the prevailing mood of frightened frustration when he introduced the air budget of 1928 to his colleagues in parliament: "Once again we cry: French aviation is gravely ill. In its general organization, its technology, its industry, in supplying military and naval units, and in developing its commercial airlines, it suffers from profound troubles which have become chronic, will soon kill it, and which in any case have now made it inferior to aviation abroad."^[14]

The New Air Ministry

By the summer of 1928 ideas were circulating in parliament about how the state could rejuvenate aviation without jeopardizing the private status of the industry. The most serious effort to chart a policy came from a commission of the Conseil National Economique (CNE), the quasi-governmental body that a center-left government, the Cartel des

Gauches, had created in 1925 to bring together spokesmen from business, labor, and the state. Raoul Dautry chaired the commission. As a polytechnicien and director of the Compagnie du Chemin de Fer du Nord, Dautry bridged the worlds of engineering, business, and state administration. A Freemason and political centrist who stayed clear of party rivalries, he embodied the Saint-Simonian optimism and political pragmatism that had become common in progressive business circles since the war. Like many technocrats of the late 1920s, he viewed industrial rationalization and a closer partnership between business and the state as the keys to economic rejuvenation.^[15]

In his CNE report Dautry offered a hardheaded diagnosis of commercial pathology. He said the government's support policy, its failure to promote research, and its haphazard subsidies all conspired to weaken French aviation. As a remedy, Dautry's commission called for policies that would enhance state regulatory powers without encroaching on the autonomy of private firms, including state subsidies for research, state-guaranteed loans for private companies, improvements at the Ecole Supérieure de l'Aéronautique, and the creation of a Superior Air Council to coordinate air policy. Dautry drew attention to Germany, where a subtle partnership between the state, the big banks, and the companies had enabled the builders to make strides. "From the example of foreign countries," he argued, "it would seem useful to make a small number of creative firms prosper and to steer industrial manufacturers toward series [mass] production."^[16] But he stopped short of recommending a way to reorganize the industry, calling for industrial concentration but refraining from saying how it was to be done. Dautry's commission, which was itself divided over whether the state should take over the airlines, proved astute in analyzing the illness but equivocal in prescribing a cure.

Meanwhile support grew in parliament for creating an Air Ministry. A parliamentary coalition stretching from the conservative Pierre-Etienne Flandin to the Socialist Pierre Renaudel shared the view that a new ministry might help revive aviation. Since the war, aircraft questions had fallen under—and often between—the purview of four ministries: war, navy, commerce, and the colonies. Air policy had become a hodgepodge of programs; as the army's leading advocate for aviation, General Hirschauer, put it, "There were too many tensions, too many cliques, too much of a desire to be isolated from one another and to have one's own schools . . . , personnel, workshops, [and] experimental commissions."^[17] A single ministry, as many aviators had been arguing since 1920, could coordinate policy, economize funds, and pave the way for a bona fide, autonomous air force. But since an autonomous air force was precisely what military conservatives bitterly opposed, Poincaré's center-right government dragged its feet on the issue.

When on 6 September 1928 Poincaré's cabinet finally yielded to the notion of an Air Ministry, the irony of the circumstances escaped no one. Four days before, Maurice Bokanowski, Poincaré's commerce minister, died in a plane crash en route to Clermont-Ferrand, where he was about to address a gathering called to popularize the idea of air travel. The Socialist press took the opportunity to ridicule the government: "Criminal French aviation," the headlines of Le Populaire read, "has killed even its own leader!"^[18] An embarrassed cabinet approved the new ministry, and within days Poincaré named André Laurent-Eynac to run it. Amid the uproar opponents of an Air Ministry, not the least of whom had been Bokanowski himself, now mounted little resistance.

Poincaré's new air minister, Laurent-Eynac, a lawyer and parliamentarian, seemed ideal for traversing between the government bureaus and company boardrooms of aviation. He had flown in the war, chaired a subcommittee on aviation in the Versailles Treaty deliberations, and promoted air routes to French colonies as under secretary of aviation in 1921. A powerful insider in aviation circles, he had shown his gift for delicate brokering in 1924 when as under secretary once again in Herriot's Cartel des Gauches government he managed to keep the lid on investigations of the stock liquidation scandal. Once a Radical-Socialist, Laurent-Eynac had gradually migrated like so many of his colleagues to the respectable moderation of the center-right. As one prominent general said of him, "he knows the airline executives and the manufacturers in aviation thoroughly; he has confidence, firmness, tenacity, and savoir-faire. And something else valuable: he is viewed well by the press, he has the ear of parliament and is liked there, and he knows how to use his influence in the government."^[19] Poincaré's choice no doubt pleased both the aeronautical professionals looking for competence and the businessmen looking for a friend in high places.^[20]

Although Laurent-Eynac assumed command in temporary headquarters—the Air Ministry would eventually be located near the southwestern edge of town on the boulevard Victor—his first act as minister was a decisive step toward industrial reform: he appointed Albert Caquot as the ministry's technical and industrial director. Though only forty-seven, Caquot was already something of a legend in the world of French aviation, for it was he who had supervised the airplane procurement program in 1917 and 1918. The third son of a farming family in the Aisne, Caquot rose to fame, and eventually fortune, in a manner that seemed to vindicate the meritocratic ideals of both the Napoleonic and republican traditions. As a brilliant student he won entry into the Ecole Polytechnique in 1898, and after securing a post in the prestigious Corps des Ponts et Chaussées, he made a name for himself as a civil engineer before

the war. Then, as technical director for the under secretary of aviation, he coordinated the immensely successful effort to mass-produce airplanes during the final stages of the hostilities.^[21] By the 1920s Caquot—stern, dignified, decisive—enjoyed the enormous respect that only a man of extraordinary accomplishment as both engineer and administrator could have commanded in the select fraternity of the aviation business.

With a political mandate to address the purported crisis in aviation, the team of Laurent-Eynac and Albert Caquot hoped to revitalize the aircraft industry in three ways: by launching a new wave of innovation in airplane design; by decentralizing the industry, moving it to new locations away from Paris; and by streamlining and concentrating the industry's structure. Caquot, who as an engineer approached industrial problems as if they were technical puzzles, believed that the first goal, technological innovation, provided the key to the entire undertaking. French aeronautical design had suffered badly from state neglect; in 1928, for example, the French government spent 40 million francs on aircraft research, in comparison to the 118 million francs spent in Germany.^[22] Overnight Caquot made research the Air Ministry's highest priority; he immediately replaced the discredited support policy with what would prove to be the hallmark of the ministry between 1928 and 1932—a so-called prototype policy to promote research. Accordingly, the ministry set aside a large portion of its budget to pay firms to design airplanes for speed and ease of maneuver. To stimulate this activity, it would reimburse firms for 80 percent of the costs of new prototypes, however viable these new inventions proved to be. In addition, it would give bonuses for prototypes that offered new ways to enhance the speed or diminish the ascent time of an aircraft. In exchange for this support the builders were required to yield all patent and licensing rights to the state.^[23]

Although this last provision infuriated those builders who were accustomed to profiting handsomely by selling licenses to other firms, the prototype policy plowed a great deal of money into the companies. Moreover, Caquot's prototype policy conformed to an established tradition of state-sponsored research. Since the eighteenth century French governments had financed the invention of guns, cannons, and ships, and had even built state-owned arsenals, without undermining the arms business as a private, profit-making venture. During the First World War state sponsorship of research had gone hand in hand with what one historian has called the privatization of arms production: state contracts expanded the private sector in the arms business much more substantially than the state-run sector.^[24] As a veteran of the airplane procurement effort, Caquot symbolized the continuity of a tradition in which state engineers played a strong role in directing research without in-

fringing on the independence of private firms. He saw the new prototype policy in precisely this light—as a way to invigorate the industry within the framework of state-tutored private enterprise.

Caquot's efforts to decentralize the industry conveyed the same respect for the integrity of private firms. The vast majority of airframe and engine plants had been built in Paris and its western suburbs. Since the war, however, military officials had urged airplane manufacturers to set up new plants in southern and western France as a precaution against aerial bombardment in the event of another war. Moreover, advocates of decentralization argued that by building plants in provincial cities, employers would reap the benefits of cheaper wages. Yet by 1928 only a few plants had sprung up in the provinces. True, Pierre Latécoère and Emile Dewoitine had made Toulouse second only to Paris as a center for airplane construction, and the port cities of Nantes, Saint-Nazaire, Bordeaux, and Marseille served several firms profitably as places to make seaplanes. But for most companies the attractions of Paris remained irresistible. Close ties to other metalworking firms, the availability of engineers, draftsmen, and skilled workers, and proximity to the ministries made Paris a superb locale for building planes. Only a determined Air Ministry could reverse a natural inclination to expand the industry as a Parisian enterprise. Accordingly, Albert Caquot established a fund to subsidize the costs of starting or enlarging provincial plants. Again, in decentralization as in prototype building, Caquot's style was to steer, guide, cajole—but not commandeer.

In the same spirit Caquot approached the most vexing problem of all, the need to streamline the aircraft industry by reducing the number of firms. In November 1928 he and Laurent-Eynac sent plans for restructuring the industry to the Chambre Syndicale des Industries Aéronautiques, the employers' association that the pioneers of the industry had founded in 1908. Housed in elegant headquarters on the rue Galilée just south of the Arc de Triomphe, the Chambre Syndicale was the one institution that brought together employers in all three branches of the industry—airframes, engines, and accessories. This organization, Caquot hoped, would assume some of the burden for converting an overgrown gaggle of government-fed firms into a leaner group of major enterprises. With this goal in mind, Caquot and Laurent-Eynac called on the Chambre Syndicale to form groupements, or company groups, that would pull firms together into trusts and lay the foundation for future mergers. According to Caquot's plan, the groupements would bring about "the rationalization of the industry," a process of industrial concentration carried out by the builders themselves.^[25]

Caquot's program, with its focus on prototypes, decentralization, and groupements, produced a flurry of activity between 1929 and 1932, but the

results were disappointing. Prototypes proliferated: the Air Ministry sponsored more than two hundred contracts for innovations in airframes and engines. But as a Finance Ministry audit revealed in 1933, the Air Ministry handed out too many contracts to too many firms to build airplanes of questionable technical value. There seemed to be no grand design to the program. Auditors discovered, moreover, that Caquot's system of paying firms in three installments for their prototypes gave builders an incentive to abandon projects in midstream and husband the funds for other activities.^[26] Some strides were made—in 1931 French firms made the breakthrough to all-metal airframes, and by 1933 some prototypes achieved a speed of 350 kilometers an hour^[27] —but many planes failed; Villacoublay, the major testing field just southwest of Paris, became known as a prototype cemetery.^[28] Similarly, the decentralization policy produced only modest results. Louis Bréguet opened factories in Le Havre and Saint-Nazaire; Lioré et Olivier followed suit in Rochefort, as did Hanriot in Bourges, Amiot in the Norman town of Caudebec-en-Caux, and Loire-Nieuport in Saint-Nazaire.^[29] Overall, however, the industry remained vulnerable to German attack, and the engine sector was still completely ensconced around Paris.

Worse still, little came of the effort to streamline the industry. Two mergers did occur, with the encouragement of the Air Ministry—the creation of Loire-Nieuport and Potez-CAMS. But Caquot's strategy of groupements backfired. As early as the autumn of 1928 builders at the Chambre Syndicale warned Laurent-Eynac that the whole subject of industrial concentration "had to be approached with great prudence." They expressed a willingness to "envision mergers, but they would have to involve [state-financed] indemnities for the losers," something the Air Ministry opposed.^[30] By 1930 the Chambre Syndicale had gone ahead and helped firms construct two large groupements —the Société Générale Aéronautique, which brought together Hanriot, Amiot-SECM, Loire-Nieuport, the Société Aérienne Bordelaise, and the engine-building firm Lorraine; and the Groupement Aéronautique Industriel, which included Bréguet, Lioré et Olivier, Potez, and for engines, both Hispano-Suiza and Renault.^[31] But the companies created these groups for purposes quite different from those Caquot had intended. By design the builders had assembled firms with complementary specialties so that when the Air Ministry granted an order to the group, it was simply passed along to the firm best equipped to handle it. Firms in the company groups pooled some of their financial resources but left intact their own production facilities and administrative services. The Chambre Syndicale, moreover, created a liquidation fund, financed through the groups, to compensate weak firms that might otherwise fall into bankruptcy.^[32] In short, the builders used the company groups not to rational-

ize the industry by closing down plants and negotiating mergers but rather to protect themselves from the very process of concentration that Albert Caquot had proposed.

Thus, between 1928 and 1932 the Air Ministry managed to stimulate research but failed to remedy the structural flaws that lay behind the shortcomings of the industry. This failure to develop a more concentrated, rational manufacturing sector stemmed from three basic sources. The first was the contradictory nature of Caquot's efforts. Despite his desire for industrial concentration his policies actually militated against the emergence of a few robust firms. As auditors pointed out in 1933, his pricing policy, which allowed firms to add a flat 10 percent profit margin to their cost estimates, gave builders little incentive to cut costs or seek economies of scale.^[33] Caquot's stress on prototypes and decentralization, moreover, impeded the progress of industrial concentration. Pierre-Etienne Flandin, leading conservative rival to Laurent-Eynac for the Air Ministry in 1928 and a close associate of Louis Bréguet and the Farman brothers, criticized Caquot's policy on precisely these grounds. Flandin applauded the effort to promote research but opposed a policy that separated prototype building from series production. Caquot's approach, he argued, was simply financing a host of small builders who were eager to invent something but ill equipped to address the challenge of mass production. Better to entrust research to larger firms able to modernize their manufacturing procedures and lower their costs. Flandin identified the same fallacy in decentralization. This policy, he asserted, would only weaken the largest firms by depriving them of skilled Parisian workers, who did not want to be uprooted, and engineers, who thrived on contact with "that creative flame that animates the Paris region."^[34] What the industry needed, in his view, was the same spirit that "propelled General Motors in America"—a commitment to bigness, since aviation seemed to him destined to follow the commercial path of the automobile. Critics like Flandin believed Caquot had unwittingly perpetuated the support policy he had vowed to replace.

It was one thing to argue that Caquot's prototype policy should have linked research to a program promoting mass production; it was quite another to propose feasible ways to increase demand for mass-produced aircraft. Here lay the second impediment to industrial concentration—the failure of the Air Ministry to expand the market for aircraft, either by building a strong air force or by stimulating growth in the airline business.

When the air ministry opened in 1928, no autonomous air force came in on its coattails. Between 1928 and 1932 pacifism in parliament and traditionalism in the military kept air force enthusiasts at bay. Laurent-Eynac made a few modest gains: he created the post of air force chief of

staff and won juridical control over the air force, even though most air personnel technically remained under army and navy command. Laurent-Eynac's successor, Paul Painlevé, continued the effort; he established a Superior Air Council in 1931 and an Air Force Studies Center in 1932.^[35] But on the terrain that really mattered—military doctrine, battle planning, and the budget—army conservatives like generals Philippe Pétain and Maxime Weygand rebuffed the aviators. For them, an air force was simply an auxiliary instrument of a land-based army, valuable for reconnaissance, transport, and tactical bombing but illegitimate as a strategic fighting force. As veterans of a war that had been won on the ground, army traditionalists had little sympathy for the notion of massive, strategic bombardment that the Italian strategist, General Giulio Douhet, had popularized in his writings during the early 1920s. Moreover, Douhet's lurid images of devastated cities made pacifists on both the right and the left all the more hostile to "aero-chemical warfare" and the notion of a large, modern air force.^[36] Through 1932 military traditionalism, pacifism, and the pursuit of disarmament all conspired against any serious new program for building airplanes. Without an ability to distribute large orders, Albert Caquot could not entice builders into restructuring firms.

Nor was the Air Ministry successful in bolstering civil aviation as a market for aircraft. By the late 1920s five major airline companies, each heavily subsidized by the state, faced chronic financial difficulties and stiff foreign competition. In 1928 Raoul Dautry's CNE commission on aviation had been at odds over what to do: some members favored, and some opposed, consolidating the five airlines into a single national firm in which the state would participate as the major minority stockholder—the arrangement behind Lufthansa and Imperial Airways. For conservatives like Pierre-Etienne Flandin, this scheme raised the specter of a state monopoly. Amid the controversy Laurent-Eynac first wavered, then postponed, and finally evaded the issue. Instead of addressing the structural problems, the Air Ministry continued to subsidize the five airlines and pinned its hopes on a drive to negotiate favorable air routes abroad for the leading French firms.^[37] By 1933, however, the depression and Hitler's rise to power had so poisoned the atmosphere for air route diplomacy that even this feeble strategy had to be abandoned. The French airline business suffered accordingly, as did the demand for commercial aircraft.

If Caquot's policy was poorly designed for promoting industrial concentration, and if large orders were unavailable as a tool of industrial policy, might it still have been possible for the builders, as Caquot hoped, to consolidate firms on their own? Perhaps, but a third obstacle stood in the way of structural reform: the hostility of the manufacturers to state

intervention. Of course, every aircraft company was perfectly prepared to depend on the Air Ministry as its chief source of sales. The prototype policy, in fact, made builders as eager as ever to lobby privately in the corridors of the ministry for lucrative contracts. Georges Houard, the editor of the trade journal Les Ailes and a conservative conscience for the industry, was moved in 1930 to write in an open letter to the air minister, "There is an immoral rush toward the Air Ministry going on, not to give support, competition, and cooperation, but to extract from its formidable budget of two billion francs everything that such a sum placed at the disposition of the State would permit in the form of orders, subsidies, broker's commissions, honor, and other smaller advantages. Aviation? That's secondary! Business first!"^[38]

No doubt most of the moguls of aviation believed that there was something noble, and certainly patriotic, about building airplanes. But in the end it was a business; aircraft manufacturers were as loath as anyone else who owned a factory to sacrifice their autonomy at the behest of the Air Ministry. To do business with the state without losing control of the business—this was the delicate balance that every builder wanted. Yet with so many companies bedeviled by the problems of winning regular orders, finding long-term capital, paying a highly skilled work force, and keeping up with technical advances, it was a balance that was becoming more and more difficult to achieve. When Caquot and Laurent-Eynac sent the Chambre Syndicale their plans for stimulating mergers and acquiring the licensing rights of new planes, the builders promptly assumed a defensive posture. At the Chambre meeting of 4 December 1928 some members went so far as to proclaim that "we are headed toward the socialization of the industry" and that the builders ought "to get in touch with other Chambres Syndicales" to coordinate a response.^[39] Ironically, Caquot, who had no intention of undermining the private status of the airplane business, had inspired the builders to turn more resolutely to the Chambre Syndicale as an instrument of collective defense.

This odd blend of "asking for personal favors from people highly placed," as one company spokesman put it, while pursuing a strategy of collective resistance to state-led reform served to perpetuate the fragmented structure of the industry.^[40] Had one or two firms been strong enough to swallow up their competitors, the industrial concentration that Raoul Dautry, Albert Caquot, and many other observers were calling for might have occurred. Several leading builders were certainly aggressive enough to have entertained great ambitions for growth. Fernand Lioré, the Farman brothers, and Louis Bréguet had all invested heavily in the airlines, and Lioré in particular had become a major power in the boardrooms of commercial aviation by the early 1930s. Louis Bréguet

had experimented during the 1920s at his factory in Vélizy outside Paris with ways of adapting the basic principle of the assembly line to airframe production. He eventually abandoned the effort for lack of large-enough orders to make it pay.^[41] Henry Potez and Marcel Bloch were nothing if not ambitious, and they were clearly the ablest aeronautical engineers of the lot. By the early 1930s Potez had built, with hefty government subsidy, a major factory for large series in the small northeastern town of Méaulte. But none of these men could establish enough command over the market to become an oligarch in the industry. The one manufacturer who eventually did build an industrial empire, Marcel Bloch (later Marcel Dassault), was only getting back into the airplane business in 1929 after a decade of making money in real estate. In the early 1930s no one was in a position to become the General Motors of aviation of which Flandin dreamed.

Not only did state policy and the structure of the industry mitigate against change; the business culture of aviation did so as well. The aircraft business was a fraternity, a tightly woven network of men who shared in the great technological adventure of their time. They had all won places for themselves in aviation during the world war, and they continued to serve side by side as the stewards of a host of institutions—the Aéro-Club de France, the Comité pour la Propagande de l'Aéronautique, the Fédération Nationale Aéronautique, the Ligue Aéronautique de France, and the airports and testing fields that by 1930 had sprung up in every important municipality in France. A busy calendar of air races, flying shows, dinner gatherings at Maxim's, meetings at the rue Galilée, and sessions in the bureaus of government, to say nothing of family connections and school ties, made the airplane business a fishbowl where men like Potez, Bréguet, and Bloch were colleagues as well as competitors. The bonds of friendship, the pressures of dependence, and the benefits of collaboration were too strong to ignore. In such a milieu airplane manufacturers had little incentive to break from the fold. Instead they preferred to protect the autonomy of all the firms, pursue the strategy of groupements as a defensive measure, and, in so doing, preserve the status quo. As a result, by 1932 the industry was still as fragmented, as ill equipped for mass production, and as poorly prepared to compete with foreign rivals as it had been in the late 1920s.

The balance sheet of Caquot's reform effort between 1928 and 1932 mixed high promise with mediocre results, and in this respect the Air Ministry bore the stamp of the Tardieu era in national politics. André Tardieu, whose two governments between 1929 and 1932 shaped the national political debate, had been an early advocate of an Air Ministry in the twenties. Though a leading conservative, in 1929 he broke decisively with the right-wing orthodoxy of laissez-faire. He campaigned vig-

orously for a policy of national retooling—a program of state financing for industrial modernization that resembled the kind of state intervention that Caquot and Dautry were promoting.^[42] Between die-hard conservatives like Louis Marin, on the one hand, and the Socialist and Communist left, on the other, these neoliberals searched for new ways to use the financial leverage of the state to rejuvenate a capitalist economy. Air policy offered these reformers a splendid arena for putting these ideas to work since aircraft procurements, commercial subsidies, and air route diplomacy gave state officials considerable power in the industry.

Yet neither Tardieu nor the Air Ministry could overcome the obstacles to industrial reform. By 1931 Tardieu had proved unable to construct a political coalition to push national retooling through parliament. The traditional right refused to betray laissez-faire principles, and the reformist left resented Tardieu for stealing its thunder. Most Radicals, meanwhile, opposed his program for fear it would usher in the corporatist France of big business and bureaucracy they abhorred. In the end the interest groups that stood most to gain from Tardieu's retooling—big employer organizations, medium- and large-scale farming concerns, and, to some extent, the reformist trade unions—remained either too weak, too suspicious of the state, or too removed from parliamentary debate to lobby effectively for the program.

Likewise, Caquot and Laurent-Eynac lacked the political support for pursuing a coherent strategy of state intervention. Schemes for consolidating the airlines, much less the aircraft industry, aroused bitter opposition from the left and the right. During the air budget debate of 1930, for example, Socialists expressed fears that the effort to promote concentration in the industry would only create powerful trusts and enrich the banking cartels without solving the underlying problems in aviation.^[43] The right, meanwhile, shared Flandin's fears that state intervention would prevent a few healthy large firms from really flourishing. In short, the new Air Ministry lacked the broad base of political support needed to change both the level of demand for airplanes and the structure of the industry itself—the two steps required to revitalize French aviation. The malaise of the 1920s had inspired just enough political consensus to get an Air Ministry off the ground but not enough to launch policies that would break the impasse over industrial structure, military doctrine, and airline subsidies that had led to the malaise in the first place.

The lack of political allies, however, does not account fully for the weakness of Air Ministry policy; ideological convictions were important as well. Dautry, Laurent-Eynac, and Caquot proposed solutions to basic problems—an industry with a half-dozen large firms, an autonomous air force, and a national airline equipped to compete with Lufthansa. But they were hamstrung when it came to taking action. In the late 1920s and

early 1930s progressive businessmen and state administrators were still constrained by conventional notions of state intervention. They may have toyed with visions of consolidating the aircraft business "from above"; but when it came time for action, the men at the Air Ministry fell back on traditional methods. The prototype program, international business diplomacy, continued subsidies to the airlines, and tighter control over air policy—these were all half-measures that revealed the ambivalence reformers still felt about enlarging the role of the state in French industry.

Pierre Cot and the Second Round of Reform

Changing international conditions, however, and the return to power of the Cartel des Gauches paved the way for a fresh round of reforms in the aircraft industry in 1933. By then the French economy had finally succumbed to the Great Depression; French aviation had weakened accordingly. Hitler, moreover, had come to power, deepening French fears of a belligerent Germany. Military officials had little doubt that Hitler could, in short order, transform Germany's top-notch aircraft industry into a rearmament machine. It was in this context that Edouard Daladier, the emerging standard-bearer of the Radical Party, formed a center-left cabinet on 31 January 1933, which brought Pierre Cot to the helm of the Air Ministry. However lackluster the Radical governments of 1932 and 1933 proved to be for the country as a whole, Cot's brief stint at the boulevard Victor turned out to be a remarkable moment in the struggle to reinvigorate the industry.

Cot, in contrast to his predecessors at the Air Ministry, was willing to challenge the conventional boundaries of state intervention. His nonconformity in this respect was characteristic of many young politicians coming of age in the early 1930s. Born into a political family from the Savoie in 1895, Cot served in the combat artillery during the war and then trained in international law. After running unsuccessfully for the Chamber of Deputies in 1924 as a Poincaré conservative, he switched to the Radical Party. In 1928 he won a deputy seat from the Savoie. A brilliant orator with a streak of brashness, Cot soon became a rising star in the Radical Party. "Make a friend of him," Aristide Briand advised the British diplomat Philip Noël Baker in the early 1930s. "He will be premier of France not once, but many times."^[44] Cot quickly became a leading spokesman for the so-called Young Turks of the party. As good Radicals, the Young Turks were republican and anticlerical. But the world war had undermined their faith in economic liberalism; by the early 1930s they felt an attraction to antibourgeois, antiliberal and anticapitalist ideas that set them apart from the mainstream of the party. After 1933, when

the cleavage widened again between left and right, the Young Turks too would diverge: some, including Pierre Cot, Pierre Mendès France, and Jean Zay, would move left; others, like Bertrand de Jouvenel and Gaston Bergery, would move right. But between 1930 and 1934 they shared a common quest for a "rejuvenated" politics, a program to escape the "tiresome dichotomies" of collectivism and capitalism, left and right.^[45]

In this atmosphere of ideological inventiveness Cot tried to blend the moderation of party elders with the irreverence of his own generation. He affirmed the traditional aims of the party—as he put it, "to protect the independence of the individual and to permit the full development of the human personality"—and the need of the party to remain committed to its traditional constituency of small producers, peasants, artisans, and liberal professionals. With greater stridency than most Radicals, however, Cot condemned "the moral bankruptcy of the bourgeoisie," which he viewed as a grave threat to the individualism and independence he had vowed to defend. "Our bourgeoisie," he wrote in 1931, "knows not what to do: neither to adapt itself, reform itself, rule events, nor revolt against itself; it neither understands, nor commands. . . . The people of France no longer have the elite they deserve." He admired Socialists for proposing alternative policies, implying that Radicals ought to build bridges to the left: "If it is absolutely necessary to choose between socialism and capitalism in the name of individualism we choose socialism. We are Radical-Socialists and not Radical-Capitalists."^[46] In practical terms, as far as Cot was concerned, this meant nationalizing monopolies (in the Socialist tradition), sponsoring cooperatives (in the Solidarist tradition) and struggling against financial speculators (in the interest of small savers). Without offering a full-blown political program, he nonetheless sought a perspective whereby socialism, Radicalism, and technocratic interventionism might converge. That he could articulate such a position on the left fringe of the party while retaining respect from the party's old guard testified to his political skill.

As air minister, Cot promptly confirmed his reputation for boldness by rushing headlong into the nasty thicket of the airline question. In December 1932, two months before he took over the ministry, parliament passed a statute giving the state greater control over equipment procurement by the airlines. Most officials believed that the statute would affect only one company, Aéropostale, which the state was trying to salvage from bankruptcy. Cot thought otherwise. He viewed the statute as a device to reshape the entire airline industry. In April 1933, he addressed letters to each of the five airline presidents announcing that as a condition for further subsidies their firms must merge into a single company. Naturally, this directive, as one commentator understated, "raised a stir in aeronautical circles."^[47] But by 1933 state subsidies had

come to account for 80 percent of the income of the airlines, and the depression was only crippling the firms further.^[48] Faced with a choice between bankruptcy and the merger, the airlines complied with Cot's demand, and by June his efforts had given birth to Air France. State subsidies could now be distributed on a more rational basis, and routes added or eliminated, without concern for the short-term solvency of several firms. What Raoul Dautry had only imagined in 1928 became a reality through Cot's administrative guile.

Although Cot may have envisioned nationalizing Air France at some future time, he was careful to establish it as a private firm. His merger agreement allowed private stockholders to transfer their holdings in the constituent firms into comparable shares of Air France, whereas the state was to own only 25 percent of the stock. Despite Cot's efforts to reduce the influence of the major airplane manufacturers in the airlines, the builders managed to secure one-fifth of the directorships on the Air France board.^[49] Of course, the Air and Finance ministries had real leverage in the firm, through stock power and subsidies. But the new Air France was still a far cry from the nationalized firm it was eventually to become in 1945. Technically speaking, it differed little in structure from other companies—Crédit National, the Caisse Nationale de Crédit Agricole and the Compagnie Française des Pétroles—in which the French government had become an important minority stockholder.^[50] Still, Cot's success in breaking through the impasse in commercial aviation was no mean achievement considering how hostile some of the airline executives were to the merger.

Cot also made strides in winning more autonomy for the air force. Just as the depression had given him greater leverage with the airlines, so too another external shock, Hitler's rise to power, strengthened his hand in military aviation. Working closely with General Victor Denain, the air force chief of staff, Cot secured approval for a decree giving the air force its own general staff. Issued on 1 April 1933, the decree granted air force generals a command status equal to that of their counterparts in the army and navy; it also established a system of "air regions" supervised solely by air force officials. For the first time an air minister referred to the air force as l'armée de l'air .^[51] The festering argument over air doctrine, however, remained unresolved; Cot's decree simply identified three objectives for the air force—aerial operations, territorial defense, and tactical support for the army and navy—an ambiguous mission that sidestepped debate over strategic bombing.^[52] All the same, the decree gave the air force a measure of independence, and hence the Air Ministry a bit more legitimacy as a claimant for credits in the budget for national defense.

Fear of a rearming Germany also enabled Cot and General Denain to

win approval for the first of what would prove to be several plans for building new aircraft. Plan I, also known as the Plan 1010, called for constructing 1,010 airplanes over a two-year period to replace the outmoded frontline aircraft of the air force.^[53] The Superior Air Council approved Plan I in June 1933; parliament appropriated credits in 1934. According to the production schedule of the plan, France would have a refurbished air force by 1936, just about when General Denain expected Hitler might contemplate war.^[54] Plan I, then, marked the first serious effort at aircraft rearmament. It signaled a shift in the Air Ministry from a preoccupation with prototypes to an effort to balance research and mass production. This shift, in turn, gave the Air Ministry a fresh opportunity to use production contracts to encourage firms to decentralize their plants and rationalize the competitive structure of the industry.

Cot hoped that this change in the industrial priorities of the Air Ministry would open the door to reform, and he proceeded accordingly. In the Matériel Committee, where representatives from the air force and the Finance Ministry met regularly with Air Ministry officials, Cot spelled out his strategy for improving the industry. He insisted that the time had come for scaling down prototype production, for simplifying the most promising new models, and for equipping only the strongest firms for mass production. Henceforth, he argued, contracts should go only to "approved firms well experienced in manufacturing new equipment most efficiently from the point of view of simplicity and low cost."^[55] The production of new planes for training and commerce should be, as he put it, "as simple as possible and subject to free competition and minimal regulation." Cot also called for restoring closer connections between prototype building and series production by giving large firms, in effect, two contracts—one for the prototype, another for raw material and machinery to construct a small series of ten planes.

Through this shift in policy Cot and his colleagues in the Matériel Committee sought both to strengthen the supervisory role of the Air Ministry and to encourage large firms to function more competitively. This strategy required a sharper division of labor: the ministry would set production goals, define standards, and enforce contracts, and firms would meet these objectives as best they could. Under the new policy the military would reimburse firms for prototypes only if they were successful, thus shifting the risks of innovation from the state back to the enterprise—risks that only the largest firms could afford to assume. Feeble firms that had survived on prototype contracts alone would now, presumably, fall by the wayside. This tough stance aroused little debate in the Matériel Committee. Embarrassed by past errors and now pressured to meet the new deadlines of Plan I, government officials agreed in principle to promote series production in the largest firms.

If Cot found it was easy enough to secure official approval for a new industrial policy, achieving concrete results was another matter. To break the old habits of favoritism, to abandon the deeply institutionalized practice of keeping most firms afloat, and to overcome what Cot called "the spirit of routine," the Air Ministry needed money, political leverage, and time.^[56] All three assets were hard to come by in 1933. As long as the Radical Party remained committed to deflation as remedy for depression, and as long as the air force remained the weakest branch of the military, the Air Ministry would continue to operate within severe financial constraints. As a junior cabinet member of a timid government, Cot was in no position to change these conditions.

Nor was Cot in a strong position to prevail over Louis Bréguet, Henry Potez, and the rest of the aircraft fraternity. Although he charged pell-well into the world of aviation when he assumed his post at the boulevard Victor, even to the point of learning to fly, he remained an outsider to the industry. This status was obviously to his advantage if he hoped to shake builders and bureaucrats out of their complacency. But it would take time and support for an outsider to make headway—time to win allies within the industry and the bureaus of the Air Ministry, and support from the highest levels of the government, especially from the premier and the Finance Ministry. In an era of weak government and ministerial instability, time and support were not in the offing. Cot survived two cabinet collapses in the course of a year, but when the Daladier government fell after the bloody night of right-wing rioting on 6 February 1934, Gaston Doumergue put together a more conservative cabinet and made General Denain the new air minister. It thus fell to Cot's military associate, an air force insider with more conservative views, to implement Cot's program of reform.

Failure Exposed

The street fighting of 6 February triggered much more than a cabinet change; it marked the first fusillade in what some historians have called an undeclared civil war in France, a polarization of left and right that threatened the stability of the Republic until 1937.^[57] Right-wing extremists rebelled against the ineffectuality of the republican center. Their rebellion, in turn, prompted Communists, Socialists, and Radicals to forge a popular front against fascism at home and abroad. As the political temperature rose, many people gradually altered their views on foreign policy and national defense. Many leaders on the left drifted away from pacifism and toward an enthusiasm for national preparedness, whereas many of their counterparts on the right swung away from a traditional hostility toward Germany to defend appeasement. This re-

versal only began to evolve in 1934; it would take another three years to complete. But almost immediately after the February demonstrations it was easy to see that France, as the British journalist Alexander Werth wrote, "was in an acute state of 'nerves.'"^[58] Political polarization made the center-right cabinets of 1934 and 1935 all the more stalwart in their conservatism. Such rigidity could not help but affect the way government officials and businessmen addressed the unsolved problems of industrial reform.

This changing political climate made the new air minister, General Denain, all the less likely to adopt Cot's healthy disrespect for the conventional boundaries of state intervention. Denain, unlike Cot, had little interest in pondering the difficult questions of economic reorganization. He was a war hero and an energetic promoter for the air force. He had risen rapidly through the ranks, and by the time he became air minister at the age of fifty-four, he had acquired an easy familiarity with nearly everyone of political consequence in the world of aviation—generals, ministers and industrialists. Ambitious builders like Marcel Bloch and Henry Potez felt comfortable with the man.^[59] Denain no doubt cared deeply about Plan I and the fate of the air force, but his style was to grease the machinery of state-business relations rather than tinker with its structure.

The contrast between Cot's irreverence and Denain's accommodation with the business world became apparent in the way Denain handled the airline question. Just when it seemed that the creation of Air France had brought some order to civil aviation, Denain mired himself in the Air Bleu affair. In July 1935 Louis Renault and two former administrators from Aéropostale, Beppo di Massimi and Didier Daurat, inaugurated Air Bleu, an airline providing postal service between six major cities in France. They designed the scheme shrewdly: Georges Mandel, the postal minister, granted them exclusive rights to domestic postal routes, and Denain gave them subsidies to buy a fleet of Simoun aircraft build by Louis Renault's aircraft division, Renault-Caudron. Thirteen months later, the airline collapsed. Just as Louis Bréguet and other unsympathetic officials at Air France had warned, Air Bleu could not compete with the overnight trains, which could carry the mail more cheaply. It was a fiasco in state-business collaboration worthy of the 1920s: the Air Ministry had once again embarrassed itself by supporting costly, unviable routes, and Denain found himself open to charges by the left that he enriched his friends at public expense.^[60] The Air Bleu affair did little for the effort to establish the ministry as an august authority safely removed from profiteers.

Of greater importance was General Denain's failure to advance the cause of industrial concentration. To be sure, the air minister made ges-

tures in this direction. In July 1934 Paul Dumanois, a distinguished state engineer who as industrial and technical director had assumed Caquot's role in the campaign for industrial reform, presented a new plan to the builders for revitalizing the airframe sector. His plan, addressed to the Chambre Syndicale, called for accelerating the drive to locate factories in the provinces, adopt modern machinery, and consolidate the airframe sector into five or six firms. Dumanois wanted genuine mergers, "a unification of administrations," and not the phony mergers that the earlier groupements strategy had disguised. To press his point, he warned the Chambre Syndicale that Joseph Caillaux, the chairman of the Finance Committee of the Senate, had lost his patience with the industry and had recommended "the purchase of foreign airplanes and the need for tightening credits and reducing orders from French industrialists."^[61]

The leaders of the Chambre Syndicale responded to the Dumanois plan with characteristic finesse. Henry Potez, Chambre president and by now the most accomplished builder in the airframe business, endorsed the call for concentration. He warned his colleagues, prophetically, that "if the Chambre Syndicale does not find a concrete solution, [the air minister] himself will proceed with his own program on account of the pledges made before the Senate."^[62] The Chambre Syndicale saw fit to follow Potez's heed. By the fall of 1934 builders had put together a new configuration of six groupements , which presumably would go further toward merging firms. In practice, however, this scheme fell far short of genuine concentration. Eight firms either dragged their feet or refused outright to enter the new groups. Firms that did cooperate still maintained their autonomy within their groupement , preserving their own fixed capital, production facilities, research laboratories, and administrative services. Each group created a central bureau to parcel out orders to member firms, negotiate contracts, and search for foreign clients.^[63] In effect the groups served more as marketing cartels than as central administrations, and in this respect they differed little from the two large groupements they replaced.

By the end of 1935 the structure of the industry had still scarcely changed: only two of the groups, Potez-Bloch-Cams and Farman-Mureaux-Blériot, even functioned in accord with the new plan of the Chambre Syndicale. By 1936 seventeen firms still preserved full autonomy behind the facade of the company groups.^[64] If a handful of the feeblest firms was beginning to fall by the wayside, the basic problem of fragmentation remained.^[65] The Air Ministry had once again failed, and employers had wasted what would soon prove to be their last chance to reorganize the industry on their own.

If Denain and Dumanois ran up against the same wall of resistance that Albert Caquot had encountered years before, at least they had an

opportunity to use the handsome production orders of Plan I to encourage encourage the strongest firms to enlarge. But here too Denain failed. Like his predecessors, he could not resist the temptations to spread out the largesse. In November 1934, for example, he gave contracts for building Bloch 200s not just to the two firms his staff had recommended for the job but to four, apparently to give more firms the benefits of new orders. In the fall of 1934 Denain and Dumanois clashed openly in the Air Ministry's Matériel Committee over which firms should be granted new orders.^[66] By April 1935 the practice of dissipating orders had become so common that an angry and beleaguered Dumanois told Denain one last time that everything should be done to concentrate orders in a few firms and when possible grant serial production contracts to the mother firm, that is, the company that had invented the original prototype.^[67] Soon thereafter Dumanois resigned. Years later he would accuse Denain of practicing favoritism in awarding contracts and of undermining the effort to decentralize factories.^[68]

Conflicts between Dumanois and Denain crystallized tensions that had been building up in the Air Ministry. As a proud member of the state aeronautical engineering corps, Dumanois epitomized the staff professional of the ministry—technocratic, distrustful of industrialists, eager to enforce standards. When in 1934, for example, he discovered that Renault had failed to build fifty motors according to specifications, he proposed to Denain that the contract be canceled, "having believed frankly that after the sixth of February some things would have changed."^[69] Denain preferred, however, to let the matter slide and continue Renault's contract as usual. Other conflicts of this ilk, pitting technical standards against company interests, led Dumanois to view the ministry as divided into factions—with Denain and his personal staff, on the one hand, willing to yield to business pressure, and professional engineers, on the other, alone committed to protecting the interests of the state. Though Dumanois obviously had his own axe to grind, he no doubt spoke for other engineers whom Denain had dismayed by failing to force industrialists to reform.

As long as the controversy remained within the ministry, little was likely to change. But when the airplane companies fell behind the schedule for Plan I, the bankruptcy of the reform effort became obvious to everyone privy to procurement policy. By January 1936 the industry had produced only 588 of the 725 planes scheduled for completion, and ministry officials predicted the builders would fall even further behind by the summer.^[70] Design changes had created some of the delay, but the main cause was clear: the industry, wrote a liaison officer in the Air Ministry, "was not equipped to respond to massive orders."^[71] A large cluster of undercapitalized firms that still relied on artisanal methods simply

could not build the airplanes of Plan I in the time required. In March 1936 the Air Ministry had to revise its deadlines so that by the end of the year the companies could deliver what had been originally anticipated for 1935.^[72] What made the delays doubly painful, moreover, was the knowledge that Plan I had become pitifully inadequate to the country's needs. As early as 1934 intelligence reports had concluded that French air superiority would disappear by the end of 1936. Worse still, the airplanes of Plan I would be outmoded as soon as they left the factories.^[73] Beyond Plan I lay the larger challenge of producing a new generation of airplanes in numbers several times larger than that plan had entailed. Plan I, which looked like a boon to builders in early 1934, exposed how little they had done to adapt to the needs of national defense.

The builders, of course, bore a hefty share of the blame for the failure to modernize the aircraft industry. Together they had conspired to avert the Darwinian struggle that a serious wave of mergers, acquisitions, and bankruptcies would have involved. They made little effort to lobby the government to invest in reequipping the industry. Since 1928 they had clung stubbornly to a strategy of collective defense—a strategy that, though effective in the short run, left them increasingly vulnerable to government critics. When Marcel Déat, the neo-Socialist and future right-wing extremist, became air minister in Albert Sarraut's government in early 1936, he expressed his exasperation with the builders, and no doubt that of many other people, in no uncertain terms in front of a Senate subcommittee: "I cannot have confidence in my manufacturers. The groupements are purely a facade, and the aircraft industry as such does not exist. You can't build on moving sand. . . . As for the manufacturers, they work when they please, practice blackmail, play with layoff threats and the rising price of raw materials. It really is, excuse the word, a filthy mess [pétaudière ]."^[74]

If in retrospect, however, it is easy to see that employers were short-sighted in resisting Caquot's invitation to restructure the industry on their own, at the time it clearly made sense from the builders' point of view to stick to their defensive strategy. Aircraft manufacturing was still as precarious a business in 1935 as it had been in the late 1920s. Handsome profits could be made, but only sporadically—with a big production order, a coveted export contract, or a successful prototype. Because the irregularity of demand made it hard to amortize the costs of plant and equipment, builders had little incentive to invest in factory expansion or the latest machinery; it seemed wise to minimize capital expenditures, especially in periods when orders were scarce.^[75] Most of the time companies tried to finance yesterday's payroll on tomorrow's delivery. Cash flowed, and builders lined their own pockets, but the companies remained financially insecure.^[76] In another business owner-manufactur-

ers might have sold out for more promising vineyards. But aviation was different: most manufacturers were in it to stay, having long since accepted its uncertainties for the chance to make their own airplanes. Men who derived such prestige from their products, and often enough real personal wealth, placed a high premium on their autonomy.^[77] Under these circumstances Malthusian business practices—dividing up markets rather than trying to expand them and compete for larger shares—made sense to these men in the short run, even though they ran the risk, as Henry Potez warned, of mortgaging their independence down the road.

Yet it would be a mistake to view entrepreneurial conservatism as the chief source of the ills of the aircraft industry. For one thing, the younger generation of builders—Potez, Bloch, and Dewoitine—had great ambitions, as their work in the late 1930s would eventually show. Even some of the older pioneers might have expanded more aggressively in the early 1930s under different market conditions, as Louis Bréguet had tried to do in the previous decade until he was stymied by government obstacles. What made Malthusianism a rational strategy was the willingness of the government to sustain it. Air ministers from Laurent-Eynac to Denain had all called for industrial reorganization; none took effective measures to promote it. From Caquot's prototype program to Denain's favoritism, the Air Ministry had preserved rather than transformed an outmoded industrial structure. Whereas builders followed a logic of short-term survival, government officials were stuck in a shortsighted logic of their own. Laurent-Eynac, Denain and even Cot all assumed that structural reform could be gradual, that it could accompany rather than precede rearmament, and that the builders could be persuaded to take up the cause of reform as their own. Cautiousness at the top, moreover, played into the hands of air force and Air Ministry bureaucrats, who did not wish to see any one firm emerge as too powerful a force in the industry. By the end of 1935 the bankruptcy of government policy had been laid bare—so much so that Denain came under heavy criticism on the floor of the Chamber of Deputies. "There really has been no industrial policy in the Air Ministry," Antoine Brocard, a center-right deputy from the Isère, said to Denain on 17 December. "You have pursued precisely the opposite of an industrial policy. . . . So it is not surprising that our aircraft industry, after having been overwhelmed by orders of considerable quantity, finds itself a prey to the worst difficulties."^[78] Deputies across the political spectrum applauded after Brocard's remarks, a sign of the rising tide of impatience in parliament over the impasse in aeronautical reform.

In criticizing Denain, however, Brocard neglected to say that industrial policy was itself a hostage of the same fiscal conservatism and military antipathy that had plagued every air minister since 1928. Despite

Plan I, budgetary allocations to the air ministry actually declined from 29 billion francs in 1933 to 24 billion in 1936, largely because of the deflationary policy that the conservative governments of Doumergue, Laval, and Flandin upheld.^[79] The high command, moreover, remained just as antogonistic to the air force as before. Under Denain's ministry the air force even lost some of the autonomy it had won under Cot: General Weygand reestablished the right of the army to command more than 86 percent of the aerial forces in the event of a war.^[80] In 1936 the air force still garnered only 18 percent of the defense budget.^[81] In contrast to Britain, where the Royal Air Force was able to win a serious commitment to aerial rearmament in 1935, in France financial and military policy would continue to hamper the Air Ministry until late 1937.^[82]

If conservative economic policy and hostility in the general staff prevented the government from investing in the modernization of the industry, might not the Air Ministry still have been able to force the builders to consolidate firms? In principle nothing was to prevent a crusader at the boulevard Victor from using the leverage of contracts to force firms to merge. But political realities stood in the way. Laurent-Eynac, Caquot, Denain, and the bureaucrats they presided over in the Air Ministry lacked the autonomy to carry out rigorous reforms. These men were too closely tied to the conservative business culture of aviation to overcome the resistance of the manufacturers. As Cot later wrote, "Most of the civil and military officials of the [Air Ministry] were honest people who would have resisted every bribe. But it was impossible to establish watertight bulkheads between administration and purveyors; social or family relations and friendships grew up and destroyed the absolute independence that should have existed." Cot understood how tough it was to break the habits of patronage: "The 'pioneers' of the aeronautical industry . . . thought that they had a lifetime or hereditary right to partake of the manna of state orders. Their bankruptcy would have been considered scandalous."^[83] Despite the importance every Air Ministry clearly attached to decentralizing the factories, consolidating firms, and modernizing production methods, air ministries lacked either the autonomy or, in the case of Pierre Cot, the political support of a strong regime to reorganize the industry.

Thus the failure of industrial reform had its roots in the ability of the builders to exploit an entrenched pattern of state patronage that government officials were either unwilling or unable to change. This pattern had a distinctly French character. In the United States a small number of large firms emerged in a competitive struggle to capture the market for commercial aircraft. In such a huge country there was a sizable demand for commercial aircraft, especially to carry the mail. By 1933, Boeing, Douglas, and Curtiss-Wright had already emerged as the leading firms;

civil aviation, not the military, propelled the industry. British airplane manufacturers, by contrast, were much more like the French: they depended directly on an Air Ministry that as a matter of policy supported an artificially large number of firms. But in contrast to France, in Britain there was a modest movement toward concentration in the aircraft industry, centered around the Hawker Company. More important, British manufacturers and government officials did not engage in a protracted struggle over industrial policy. The British Air Ministry did not try to play midwife to a process of industrial reorganization. Once rearmament had got under way after 1934, the ministry expanded production by subcontracting work to a wide variety of metalworking firms rather than restructuring the industry.^[84]

France in the 1920s and early 1930s was, as Stanley Hoffmann has argued, a stalemate society. Economic interest groups relied on weak regimes and stable bureaucracies to protect their established position. To be sure, France's centralized state bureaucracy had a good deal of potential power to implement change; but as long as the political balance of power vacillated innocuously between weak center-left governments and weak center-right ones, the predictable dependencies that had developed in the aircraft industry survived. For all the rancor between reformers in the Air Ministry and the builders in the Chambre Syndicale, in the end the reformers were stymied by a regime that as Hoffmann has written, "had plenty of brakes and not much of a motor."^[85]

Had airplane manufacturing been merely a commercial affair, politicians and bureaucrats might have tolerated the impasse over industrial reorganization a good while longer. But German rearmament kept everyone's feet to the fire. By the winter of 1935–36 even conservatives in parliament were expressing frustration with the recalcitrance of men like Louis Renault who were successfully rebuffing government promptings to move some of their operations away from Paris.^[86] Paradoxically, after spending years resisting the injunctions of Albert Caquot, Pierre Cot, and Paul Dumanois, manufacturers were beginning to exasperate even the die-hard defenders of laissez-faire. When the left-wing parties of the Popular Front coalition issued a call, as part of their electoral campaign in the spring of 1936, for the nationalization of the arms industry, the spontaneous impulse of most conservatives was to dismiss the notion out of hand. But as events would soon show, much of the confidence in the conventional framework of state-tutored private enterprise had disappeared. By squandering their credibility and resisting reform, the builders unintentionally set the stage for a revolution in state-business relations that would follow the coming to power of the Popular Front.