The United States Post Office had been running the air mail service since 1918 mainly using variants of the de Havilland DH.4 biplane. In 1925, it decided to modernize and placed an order with Douglas for a replacement aircraft based on the Douglas O-2 observation biplane. The company modified an O-2 by covering over the forward ****pit to make a mail compartment and moving the pilot into what had been the observer's ****pit. The aircraft was designated the DAM-1 (Douglas Air-Mail-One) but this was soon shortened to M-1. The M-1 used the same Liberty engine as the DH.4, which was available in large numbers. Small modifications were made to the exhaust system to keep fumes away from the pilot and the design was considered a success, but was not ordered into production.

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