In 1930, a new Airmail Act was passed by Congress, often known as the McNary-Watres Act. This act gave the Postmaster, Walter Fogel Brown, great latitude in assigning airmail contracts. Brown would eventually decide that contracts to haul the majority of the nation's airmail (at a meeting often called the Spoils Conference) would be awarded to three companies, eventually known as United Airlines, Trans World Airlines and American Airlines. All of these companies had recently been created by the merger of smaller airlines and had started to fly larger aircraft.

United Airlines flew the Boeing 247, which was not coincidental...Boeing owned UAL

A Douglas DC-1, built for TWA

A Ford Trimotor, a stable of the American Airlines fleet

After a newspaper started investigating how the airmail contracts were handed out at the Spoils Conference, Senator Hugo Black initiated a special committee to investigate airmail contracting. During these hearings (which some would say were politically motivated), Black argued that the contracts were awarded to companies that were friendly to the Hoover administration. President Roosevelt agreed, and on February 19th, 1934, he cancelled existing airmail contacts by Executive Order. Roosevelt also ordered the Army Air Corps to fly to mail.  

The Army Air Corps had little time to prepare, and used its existing aircraft to carry the mail, such as the Martin YB-10 (top) and the Curtiss A-12 (bottom)

The Army Air Corps Airmail Operation had very little time to prepare for such a large undertaking as transporting a nation's mail, in all types of weather, day or night, and as a result the undertaking was a failure. Twelve pilots were killed and much less mail was being delivered. After a couple of months, the airlines began carrying the mail again.  Although a new Airmail Act was passed in 1934 that put stricter regulations on awarding contracts, all of the airlines that received contracts at the Spoils Conference would get new routes, except United. Additionally, the reputation of the Army Air Corps took a hit from which it would take several years to recover.