David Williams - The William E. Boeing Story: A Gift of Flight

30:48Well, you mentioned he's got some really nice, super old Veuve Clicquot that is like, you know it in the book, so in your mind, that's important. I was like, wow, that must be really nice stuff. It must be, you know? And he had a whole case. Well, he had the best of everything. Yeah, yeah. When he did a boat, he did the best boat. When he did a plane, he did the best. He did the best. He did the best of everything. Yeah. But then there was a second run-in that he had later on, which was actually more damning than the first one, where he actually was recorded on a tapped telephone ordering scotch for a Fourth of July party.

31:32And that case actually became a precedent-setting case that is still – the federal government had not gotten a warrant to issue the wiretaps. And it was some pretty groundbreaking legal work. Privacy protection. And actually, Bill did not get the privacy protection. Yeah. The privacy protection was written about in a dissenting opinion and then later on that dissenting opinion actually – not to get too far afield, but the dissenting opinion on the case over the wiretapping is – sort of created the notion of the right to privacy and that ended up going forward in Roe v. Wade. and was a very complex legal question with the Supreme Court.

32:31But Bill found himself in a difficult situation where they had him dead to rights. I mean, and he was recorded on the phone ordering alcohol from a known bootlegger, and the feds had it. So he ended up turning state's witness. And that was a very difficult time for him because he was essentially breaking trust with his friend who he had bought the liquor from. But he ended up not serving any time in jail. Charges against him were dropped. But it was a difficult time. That scene in the book is a great scene. Like you can just imagine what's going on. The defendant's lawyer is asking him point blank, have you received immunity?

33:22You know, if he has, you know, he's not a good witness because then he's not a good character. And again, that whole scene was just like, and to your point, you tell the Royalmstead side. And, you know, again, I just think that's a great part of the book for people to go in and want to go down the rabbit hole of that. It's got legal. It's got everything. This book has everything. So by 1919, war contracts dry up. Boeing goes from 400 employees to 80. The company bids on making display fixtures for a department store and loses. They try selling bedroom furniture. How close did the company come to just not making it?

34:00It came very, very close. And in fact, there is a story that's detailed in the book where Bill took home a bunch of ledgers, sat with them late at night, you know, drinking his brandy and reading the ledgers and decided, and he says this in a speech, I decided to close up. We were done. But then as he slept on it overnight, his conscience got the better of him. And the next morning, he said, I couldn't do that. I couldn't do that to all those wonderful people who had dedicated their lives to me and to aviation. So let's give it a couple more months. And those couple of months were all they needed to get a government contract to refurbish some.

34:41So as you said earlier, the mail business was kind of the original driver of the airplanes. As we learn through this book, as we discuss with FDR and all this stuff, the government isn't very good at doing in business what a business can do well, and Bill Boeing's life teaches that pretty well. So they bid – they win the Chicago-San Francisco airmail contract in 27 at$1.50 a pound. The way this reads, it was blind bidding. So you put out your bids and whoever the lowest cost bidder. And it's like – and they're kind of guessing, right? They're kind of saying, well, here's what you think the mail poundage is and things like that.

35:18I think the other two bids were$224 and$264. So someone's sending a letter. I mean, this is way below what the other bids are. So they're coming in very cost competitive.

35:30Competitors screamed he was out to wreck the whole air system. Like, cut to kill. He's ruining us. The post office made a post the bond, right? Because this is so low. We don't trust you, right? Exactly. In the end, was this just – he wanted to get the contract to prove the concept? Was that the idea? Well, yes, but also he was a competitive guy and he wanted to show that his airplanes and his company were the best. And a couple of things that I find quite ironic. The reason he was able to bid so low – this is a little bit of a long story. Bear with me. But during World War I, the U.S. military needed engines for the thousands of airplanes they thought they were going to build.

36:18So they contracted with Packard to build this engine called Liberty. And thousands of Liberty engines were built. They were a water-cooled engine. And then the war ended before any of these engines ever made it to combat. So the U.S. government had thousands of engines that they had bought and nothing to put them in. So going forward on all the airmail contracts and all the future military contracts for quite a while, the bid specifications said you must use a Liberty engine. Well, Bill had developed a relationship with Frederick Rentschler at the engine company building air-cooled engines, the Pratt-Whitney air-cooled engines, which were much lighter.

37:10They didn't have to have a radiator. They didn't have to have a reservoir for fluid. So he built all of his planes using Frederick Rentschler's WASP air-cooled engine. When people asked him, how could you bid so low? He said, because I'm only paying to take mail across the mountains. I'm not paying to carry water, which was his reference to the radiators. So when he was able to outbid everybody, the other competitors said, well, you're trying to ruin the business. It's ironic that then a few years later, Roosevelt comes on board and says, well, these bids were rigged. If it had been an open bid, we could have got it a lot cheaper.

37:56Well, they weren't rigged and you couldn't have got it cheaper because Bill was already underbidding everybody else by a phenomenal amount. When you also, as they're bidding, I thought, you know, you're learning to learn like when you're Bill Boeing. So they're bidding and they're like, yeah, here's what they think the tonnage is going to be right now. But when they were running other routes, they saw that as they came in and the price was attractive, what happened? Mail volumes doubled pretty quickly. So they could kind of, they had a better model for pricing this and understanding where the business was going than others did at times as they did more and more mail.

38:30Exactly. And then the thing that was really interesting is that when the airmail routes were put together, airplanes would only fly 300 or 400 miles at a time. As Boeing got deeper into this, he built planes that could fly thousands of miles at a time, which meant that those little routes, you know, there was never – at first, there was never a route from New York to Los Angeles. There was a route from New York City to Buffalo, from Buffalo to Detroit, from Detroit to Chicago, from Chicago to Wichita. And as Bill built planes that had longer distance capability, he was able to say, we'll put these all together.

39:15And as long as we're going from New York to Chicago or New York all the way to Los Angeles, let's put people on. If we don't have enough mail cargo to maximize the plane's capability, we'll sell seats. And that's when they began selling seats, was once they were able to stitch these little routes together into longer cross-country routes. Just as a temporary digression, Cole's brother, Bryce, works for the French company that puts the seats in the 777s and 787s. So a shout out to Bryce. Yeah, I was going to say my father-in-law worked in tooling at Everett plant of Boeing for 37 years. At the Boeing plant in Everett and lives up north there.

40:03So you walk through how Bill Boeing bought stocks on margin. and how that worked. And it was 10 % down in those days, broker loans, the rest. Great as long as the prices go up. Bill's people were doing this. Then October 20 of 1929 happens. How exposed was Bill and what did his response say about him?

40:29I don't think he was terribly exposed because even though he bought on margin, he had, I don't think he bought as much on margin as some of the little people that couldn't afford it. Bill had the money to back up. If there was a margin call, he could make the call. A lot of people couldn't. We hope you're enjoying the podcast. You know, we work hard putting together this show, but we work even harder for our investors at Smead Capital Management. At Smead, we believe in disciplined investing, which is why the Smead funds have a proven track record of long-term outperformance. If you're an investor who plays the long game and want to invest in wonderful companies to build wealth, we invite you to visit SmeadCap.com.

41:11Past performance is not indicative of future results. Investing involves risks, including loss of principle. Please refer to the prospectus for important information about the investment company, including objectives, risks, charges, and expenses. Read and consider it carefully before investing. Smead Funds distributed by Smead Funds Distributors, LLC, not affiliated. So let's go to the airmail contract because you talk about Roosevelt. Yes. And we've done Amity Schley's book, The Forgotten Man, which is a great story of not only the Great Depression, but also the government meddling. And this part of your book was just meddling.

41:50Oh, that never happens, Cole. It was just meddling. The government never meddles. So let me get to the question. So Roosevelt cancels the airmail contract, hands the routes to the Army Air Corps, okay? In just three weeks. Let me say that again. in just three weeks, how bad did it get for the lives of people doing that in the Army and the mail service itself? Oh, it got horrendous because the Army was never built to deliver mail. And initially, way back when the airmail started, yeah, the Army carried mail. They carried it in open cockpit biplane fighters, little pursuit planes that could carry a couple Saxa mail, and they would make these three or 400-mile hops.

42:34When Boeing took it over, by the end, he was using pressurized aluminum planes with multi-engines with radio communications and heated cockpits. So if they were flying through a snowstorm or a windstorm, the pilot It wasn't being pelted with rain. The planes could fly hundreds of miles. Well, all of a sudden overnight, Roosevelt canceled all these contracts and handed it back to the military. And the military was expected with very little preparation to fly night flights in small, fragile planes over the mountains. and the airmail system had put in beacons and literally arrows on the ground that were lighted arrows that pointed you towards the next airport.

43:33And the military didn't have any of that at their disposal. And it was a disaster. They crashed a number of planes and killed a number of pilots in just three weeks. Yeah, I remember in your book you said that Eddie Rickenbacker, who flew for the military. No. He called it legalized murder is what they referred to it in the end. Let's see. So the Air Mail Act of 34 forces the United Aerospace, what is it? I'm trying to think of the T. United Technology Corporation. UTC. Yeah, Technology Corporation breakup. And then they play this idea up that at the Spoils Conference, as you talk about, when they got together, like everyone got fat and rich.

44:12So anyone at the Spoils Conference from government contracts for five years. This becomes a massive problem, obviously, for Bill Boeing and his entities. And they really go after Phil Johnson, okay? That's who's kind of targeted in all this. It's kind of dismantling everyone. Just so everybody knows, like, your story here is why there's United Air and Boeing. And they're separate businesses to this day because of this kind of framework. Well, and there's still, UTC, United Technologies Corporation, still exists. Yeah, there's still a business in the plane business. So, you know, do you look at that?

44:47I mean, it's all all this all this Boeing story. It's really just the bedrock of American aviation, isn't it? It just got splintered at that moment. It absolutely is. And I'm not sure how much time we have left in this, but I do want to point out that the irony is within a couple of years, the U.S. military and Roosevelt specifically needs 11 ,000 B-17s built. and he has to come back to Boeing and say, all right, well, sorry that we blackballed Phil Johnson. We'll let Phil Johnson come back and run the company because he needs to build us a bunch of bombers. And we're sorry we broke up the company.

45:29You're too small to build the number of bombers we need. So we're going to take the order for your plane and divide it between you and Lockheed and a couple other airplane manufacturers. So the irony of the government forcing Boeing to break up. At that point, what they were breaking up was United Technologies, but then had to come back to them in just a few years, I mean, less than 10 years. Yeah. And they came up with the war because the government was in a position of, uh-oh, we've been way behind the eight ball. America played isolationist. They tried to help Britain. We eventually get drawn into the war ourselves.

46:05And suddenly it's like these people that they had bad mouth and meddled in their lives and business, they were the most important people for government contracts tied to the war. So you do a great job of talking about the B-17. You do a great job of talking about the B-29. Not only does it come full circle with the government, but then it comes full circle for like Wilhelm Boeing. For Bill, yeah. Okay. And that is something where the Boeing Corporation historian and I still disagree a little bit. Okay. Because if you look at the Boeing corporate record, well, Bill was out from 34 on. If you look at the Boeing family archives, there are thousands of documents.

46:46I'll say this. From 1934 to 1942, Bill had nothing to do with the company except that he had founded the bank that financed all of Boeing's stock releases. And he was the CEO of the bank and approved all the stock releases and that he wouldn't approve a stock release on a project he didn't think was appropriate. So he was still – he was the puppeteer a layer up, if you will. But then the war happened. The Japanese attacked Pearl Harbor, which was very personal to Bill because Bill Jr., there had been a couple of kidnap attempts against Bill Jr. when he was a teenager. So to protect Bill Jr., Bill Sr.

47:27sent him to live in Hawaii. So Bill spent a lot of time in Hawaii, and when the Japanese attacked Pearl Harbor, he took that very, very personally. So he came back to the company, and from 1942 to 1946, there are over 2 ,000 letters, documents, minutes of meetings of Bill Boeing attending meetings at the Boeing company. If you look at all of the engineering meetings during World War II, Bill's name is top on the distribution list. I have Bill's wife. That's because everybody's trying to win the war. I mean that's – and he was a patriot. He was and he didn't – he did not buy a share of stock back.

48:15He did not get paid a penny. He did not draw a salary, but he went into work at least two days a week during the entire war. And he did it all free because, as he said, because my name's on those planes. Yeah, yeah. Yeah. So, like, but he ends up, I mean, those B-29s end up bombing where Wilhelm Boeing's from. Well, the B-17s did. The B-29s bombed Japan, but the B-17s. Oh, you're right, B-17s. But, like, for Bill, I mean, he's coming completely full circle. the place that his father immigrates from, he's coming back to fight a war. And given he's got these German roots and obviously World War I happens, and this is very common for some Americans, like World War I, World War II, you're kind of fighting against your family legacy.

48:58Your family, yeah. Correct. And he was passionately on the American side. It wasn't like a debate for him, to your point. Well, what happens is your name goes from Schmeed to Smeed after World War I. They anglicized the German names. In their case, they added an E. Do you know an example of that? Can you think of anyone named Smead who – Yeah. Yeah. Exactly. Yeah. So that was very common. Yeah. Bill's family heritage is in the Ruhr Valley. And if you're a World War II historian, you know how important the industrial Ruhr was and how vicious the battles over the Ruhr were. Let's see. Real narrow piece.

49:41Ellen Church. Sure. Like Ellen Church is like an unsung hero in the history of aviation, I think. This is a little like story you tucked in. And I was like, this is so awesome. It all makes sense now. And there was even a greater calling in that, you know, that she had personally gifted to her. And I often wonder what would have happened if instead of – if they just hired Ellen Church to be a pilot. Yeah. Could you just tell this briefly, like the Ellen Church story? Because it's great. I just love it. Well, she wanted to be a pilot. She wanted to fly. And she presented herself to United Airlines and they said, no, sorry, we don't hire women.

50:25We won't hire a woman to be a pilot. What would our passengers think? At the same time, she went home and she thought about it and she said, well, I'm not just a pilot. I'm a nurse. Wouldn't it be great if United Airlines could say, we have licensed nurses on every flight? So if you have a medical emergency or if you have anxiety, there's a nurse there to help you. So she went back and she offered herself as a nurse.

50:55And I'm trying to think of who she dealt with first. But at any rate, they came back and said, well, we'll take you out as a nurse, But you also need to make the passengers comfortable, hand out lunch, give them drinks, talk to them, help them to their seats. And that, of course, became the first flight attendant. And it was just to be sort of a test program. We'll just try it for a couple of months and see how it works. It was so successful. There isn't a plane today that doesn't have a flight attendant. Yeah, and I wonder on big international flights and so forth, I wonder if one of the attendants is trained as a nurse or if someone – They usually don't.

51:38That's why they ask if there's a doctor on board. Yeah, if there's somebody that's trained. So this is one of my other favorites later in the book that I want Bill to mention. Yeah, so Sunday, August 8, 1955, test pilot Tex Johnson rolls the 1 ,600-pound – The 160 ,000. 160 ,000-pound dash 80 at 490 knots, 1 ,500 feet over Lake Washington in front of hundreds of thousands of spectators. By the way, obviously I lived there – It's like you're thinking of Seafair, you're at the high roads. Seafair, oh, yeah. Exactly kind of the thing. Then he does it again on the return pass. Bill Allen calls him in the next day.

52:14What do you think you were doing yesterday? Johnson says, selling airplanes. Is that moment American commercial aviation was actually born? Because you tell the next day, they have all these buyers there at this conference. There was an IATA meeting, International Association of Air Traffic, of Air Transport. So all of these airlines were visiting Seattle for the Gold Cup hydroplane race. And they were at the Gold Cup race on various yachts along the log boom. and Tex, you know, he knew the plane could take a roll. It was a zero-G roll. And he rolled it both ways and T. Wilson called him in and was ready to fire him and then realized, oh, this is a great sales technique.

53:09Yeah. Yeah. Yeah. So Bill dies on the attack of night off Edmonds on September 28, 1956, four days shy of his 75th birthday. Bertha's handwriting in the log says simply, W.E.B. died at 1.08 p.m. What kind of ending is that for a man who spent his life around water and air? Well, it goes a step further in that his ashes were then taken up to Queen Charlotte Sound and were distributed over the ocean. Before he loved airplanes, he did love boats. He learned to sail when he was in Switzerland. He loved being on the water. Liked to fish. Loved to fish. Loved to fish. and which was a neat thing about his personality.

54:00He liked to take the taconite out. He loved to fish and he loved to feed people food that he had caught with his hands. Same way when he opened the Aldera farm in the foothills of the Cascades. He'd love to bring people to the farm and then feed him. I was going to say, it's so funny. you. Until I read your book, I didn't understand why I went way out east of Seattle to play golf at this beautiful, ultra fancy golf course called Aldera. I wasn't born and raised in Seattle. I didn't know anybody when I came there. I didn't know any of these things. And so I went and played out there. And then I read your book.

54:45Oh, this makes complete sense. They took his property and they put this incredible golf course on this property that he had. And it was such an interesting place that he'd gather friends and relatives and so forth. Very dear to him. And just to settle any confusion, because there are two Aldera's. There was Aldera in the highlands that was his Mediterranean-style mansion. But then during World War II, he felt it was too vulnerable because it was right on the water, right on Puget Sound. And there was concern that a Japanese submarine or Japanese patrol boat could attack the house. That a Japanese submarine, they didn't have as good a sonar as they do now.

55:34Now, the Japanese submarine could have snuck into Puget Sound and they could have attached the house. So he gave the house to Children's Hospital and then bought a huge piece of property in the Cascade Foothills called that Aldera. And so that's the – and that has become a golf course or a good portion of that has become a golf course. The family still owns quite a bit of that. Yeah. Each summer, we go up to go see friends in the Seattle area. And since we're from Woodway where Phil Johnson lived for a period of life, we always stay in Edmonds. And I'm kind of like walking out of your book. I'm like, there's not a single plaque in Edmonds, Washington saying like, you know, here on these shores died Bill Boeing, one of the greatest fathers of our city.

56:18And you didn't mention that Aldera, he had his horses there also, didn't he? We didn't talk about his horses. A whole other thing for the listeners is like his horses and his horse racing. It's like this is like the height of horse racing at places like Santa Anita down in California. Yes, he owned horses. And winning big stakes horse races is just such a whole other world to this book. It would have been fun to be Bill Bowling. Let's just put it. Or be his fraternity brother or something like that. Or be his buddy from Yale. Yeah. That would have been a lot of fun. Let's see. So, David, you mentioned your other book that you just had come out just a second ago, but before we started, what was the title of that book again?

56:59That book is the Chuck Liford story, Every Day Counts. Chuck Liford was a third generation, well, his father was a timber surveyor, a timber cruiser. And Chuck grew up within a stone's throw of Bill Boeing Jr.'s house. He was a friend of Bill Boeing, a friend of Bill Jr. as well. He became a very prominent powerboat racer, an airplane racer. If any one of you has ever watched the Reno air races, Chuck was very, very successful with the racing P-51 Mustang. Then he became a car racer. Then he married fortuitously. His first wife was Mary Simpson, Simpson timber fortune. His second wife was Pamela Clapp, who was heir to the Clapp Warehouse fortune.

57:55But he was a philanthropist, a CIA operative in Central America, a boat racer. But that story is all about Seattle and kind of continues the Seattle legacy that you see in the Boeing book. his life overlapped quite a bit with the Boeings and a lot of that he then Chuck became friends with the McCaw family with Joe Clark, Clay Lacey some big names in aviation so it's a very fun story Clay Lacey Aviation is still there at Boeing Field you go to Clay Lacey and drive right by an I-5 absolutely Let's see. Where else can people follow you going forward, David, outside of your writing? Do you have a website?

58:44Are you active on social media or anything like that? Right now, the only social media – well, there is a social media for the Myra Slovak book, A Race to Freedom. And I've got a pretty active site under David Williams. And now that I've retired, I will be putting up an author's website, but I just haven't finished it yet. No worries. All the books are available on Amazon. Yep. Your book, The William E. Boeing Story, reminds me that great companies are built by people who apply themselves to Bill's credit for a lifetime and that the industries you take for granted were once man's obsession. As you think about timber or aviation, legacy is everything in the building of a long lasting tribe for our families, our communities and our companies.

59:34Our listeners should go out and buy a copy of the William E. Bowling story today. If you enjoyed this podcast, go to Apple, Spotify, YouTube, or wherever you listen to a book with legs. Give us a review. Tell others about the books and great authors like David Williams that we have the opportunity to understand and study the world with and through. For our tribe, if you have a great book that you'd like to recommend, email podcast at smeadcap.com. That's podcast at smeadcap.com. You can also send your suggestions to us on X. Our handle is at SmeadCap. Thank you for joining us for Book With Legs podcast.

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