The investigation resulted in a citation of contempt of Congress on February 5, 1934, against attorney William P. MacCracken Jr., who helped draft the law while working for the government and brokered the meeting of the airlines.

On June 12, Congress passed the Air Mail Act of 1934 cancelling the provisions of the 1930 law and enacting punitive measures against executives who were a part of the Spoils Conference.

Although a public relations nightmare for the administrations of both presidents, the scandal resulted in the restructuring of the airline industry, leading to technological improvements and a new emphasis on passenger operations, and the modernization of the USAAC.

The operation was put together in ten days by Major Reuben H. Fleet, the executive officer for flying training of the Division of Military Aeronautics, and managed by Captain Benjamin B. Lipsner, a non-flyer.

Lipsner procured Standard JR-1B biplanes specially modified to carry the mail with twice the range of the military mailplanes, the first civil aircraft built to U.S. government specifications.

MacCracken left the Commerce Department in 1929 and returned to his private law practice, where he continued to be involved in the growth of commercial aviation by representing many major airlines.

Requiring an informed intermediary, Brown asked MacCracken to preside over what was later scandalized as the Spoils Conferences, to work out an agreement between the carriers and the Post Office to consolidate air mail routes into transcontinental networks operated by the best-equipped and financially stable companies.

In 1930, with the nation's airlines apparently headed for extinction in the face of a severe economic downturn and citing inefficient, expensive subsidized air mail delivery, Brown requested supplementary legislation to the 1925 act granting him authority to change postal policy.

The merger, begun in February 1930 to plug the only gap in UATC's cross-country network of airlines, had been amicable until three weeks before its finalization, when Keys reversed his initial approval.

[7] On May 19, three weeks after the passage of McNary-Watres, at the first of the "Spoils Conferences", Brown invoked his authority under the third provision to consolidate the air mail routes to only three major companies independently competing with each other, with the goal of forcing the plethora of small, inefficient carriers to merge with the larger.

Further meetings between the larger carriers, presided over by Assistant Secretary of Commerce for Aeronautics William P. MacCracken Jr., continued into June that often developed into harsh wrangling over route distribution proposals and consequent animosity towards Brown.

The Ludington officer mentioned to Lewis that in 1931 the carrier could not get a proposed "express service" air mail contract to extend CAM 25 (Miami to Washington via Atlanta) to Newark, New Jersey, not even by submitting a low bid of 25 cents a mile.

[15][n 6] The special Senate committee investigated alleged improprieties and gaming of the rate structure, such as carriers padlocking individual pieces of mail to increase weight.

However, not stated to the public was that the decision had overridden Farley's recommendation that it be delayed until June 1, by which time new bids could have been received and processed for continued civilian mail transport.

Carrying a partial load of mail and a passenger list of airlines officials and news reporters, they flew from Douglas Aviation's plant at Burbank, California, to Newark, New Jersey.

[26][29][n 13] President Roosevelt, publicly embarrassed, ordered a meeting with Foulois that resulted in a reduction of routes and schedules (which were already only 60% of that flown by the airlines), and strict flight safety rules.

[4][n 15] On March 10, President Roosevelt called Foulois and Army Chief of Staff General Douglas MacArthur to the White House, asking them to fly only in completely safe conditions.

Norman E. Borden, in Air Mail Emergency of 1934, wrote: "To lessen the attacks on Roosevelt and Farley, Democratic leaders in both houses of Congress and Post Office officials placed the blame for all that had gone wrong on the shoulders of Foulois.

"[4] Other supporters of the president outside of the government muted criticism of the administration by focusing on and excoriating Lindbergh, who had also made headlines by publicly protesting the cancellation of the contracts two days after they were announced, "as if his telegram had caused the deaths.

[n 20] On AACMO's last night of coast-to-coast service on May 7–8, YB-10s were used on four of the six legs from Oakland, California, to Newark to match Rickenbacker and Frye's DC-1 stunt, flying a greater number of miles and making three extra stops in just an hour's more time.

[16] Ironically, of the major carriers present at the "Spoils Conference", all received new contracts for their old routes with the exception of United, "the one airline completely innocent of any possible charge of collusion.

[16] Colonel Paul Henderson was compelled to leave his position as National Air Transport's general manager because he had attended the "spoils conferences," this despite offering damaging testimony against Brown to the Black Committee.

On July 14, 1941, Commissioner Richard H. Akers of the United States Court of Claims found that there had not been any fraud or collusion in the awarding of contracts pursuant to the Air Mail Act of 1930.

Drum, had proposed a compromise in 1933, recommending activation of the General Headquarters (GHQ) Air Force, a centralized organization that had been part of Army mobilization planning since 1924.

Subsequently, a pair of bills were proposed in Congress to increase Air Corps autonomy by expanding its size and authorizing it several administrative functions separate from the rest of the Army, both of which the General Staff adamantly opposed.

Speaker of the House Henry T. Rainey, echoing comments made by Gen. Billy Mitchell,[4] criticized: "If we are unfortunate enough to be drawn into another war, the Air Corps wouldn't amount to much.

[49] Within the Air Corps, instrument training was upgraded, radio communications were greatly improved into a nationwide system that included navigation aids, and budget appropriations were increased.

Chairman William N. Rogers of New Hampshire was suspicious of Foulois for negotiating aircraft contracts instead of assigning them to the lowest bidder, and during his testimony the Chief of Air Corps had been flamboyant and careless with hyperbole.

Foulois demanded that Rogers release the evidence against him (largely damning testimony from senior Army staff officers given during secret hearings) and garnered the full support of the normally hostile Secretary of War, George Dern.

The matter finally went before the Army's inspector general, whose findings in June 1935 exonerated Foulois of any criminal wrongdoing, but did cite him for making misleading statements regarding the mail operation.