"We made the DC-3 without a computer to test it. There was plenty of data from the DC-1 and DC-2 to formulate the design. Often we got down on the floor and worked things out ourselves. There was personal ingenuity, and application, and we made things happen overnight." Ivar Shogran ; Chief Power Plant Engineer "; Douglas Aircraft Company

Cyrus Rowlett Smith, President of American Airlines and William Littlewood, American Airlines. Vice president of engineering, had both flown in the DC-2 and did not like some of its performance characteristics, although it was a marked improvement over the Boeing 247. It had the highest rated engines in use at the time, but they felt it lacked power. It carried 14 passengers, two more than the DC-1. Moreover, it could not make New York to Chicago, non-stop, although it was faster than any other airliner on that route. They also had reports that, at times, it was difficult to land, with heavy aileron and rudder control. Additional reports of directional instability, propeller, and fin icing problems and yawing excessively in turbulence also concerned them...

Soon after C. R. Smith read the report he telephoned Donald Douglas with a proposal. Smith had decided what kind of airplane American needed. He was looking for a larger and more comfortable airplane than his Condors or Fords, and better than the Boeing 247. He also wanted something bigger than the DC-2. Smith wanted to give his customers safe, comfortable, and reliable transportation, and his Curtiss Condor "Sleepers" and Ford Tri-Motors simply did not measure up to these standards. The airplane Smith was looking for had been described in Raymond's report...

At first, Douglas did not react strongly or positively to Smith's proposal. He was reluctant to take on a new design and the associated headaches. The DC-2 was in full production with 102 machines already manufactured, and another 90 orders on the assembly line.2 A new model would mean new tooling and starting over another gamble.


Smith spent over $300 on a two-hour long distance call before he finally convinced Douglas to modify a DC-2 to American's sleeper requirements. Some have said if Smith had not persisted and made an offer, Douglas would never have built the DC-3. Douglas nevertheless was skeptical. Night flying was about as popular as the plague, and he wondered about Smith's business sense. Where would Smith get the millions of dollars needed to finance this venture and who would want to sleep in an airplane? After all, the Fords were noisy and the Condors were cramped...

After there was general agreement among the airlines on the potential, a detailed evaluation process began. The airline's total needs, from the number of aircraft, to passenger accommodations, facility requirements, and total economic impact was part of the evaluation.

The Great Depression had created hard times for many of America's industries and the government had formed the Reconstruction Finance Corporation to loan money to the private sector. Cyrus Smith took advantage of this agency and obtained a loan to fund the development of the new design. On July 8, 1935, Smith sent a telegram to Douglas ordering ten transports costing $795,000. The actual specifications for Smith's proposed airplane arrived at Douglas Aircraft on November 14, 1935 (long after construction had begun). Before the first flight of the DC-3, American doubled their initial order to include eight DSTs and 12 DC-3s. By the time the actual contract was signed on April 8, 1936, American Airlines and Donald Douglas both had a heavy financial commitment.3 In today's business environment the contract always precedes work, but in 1935, American Airlines had such faith in Douglas' dependability and integrity that the order came first and the contract after delivery.