There were a number of factors that got us started on the road to heavy regulation. Back in the day (1956) there was a collision over the Grand Canyon that caused 128 deaths. The air traffic control system was not continuous as it is today. There were large parts of the country that had no radar coverage. Both aircraft were "off airways" and were IFR, but operating on "see and avoid" with no assistance from ATC. Both aircraft captains were talking only to their respective company headquarters when they collided, and had taken off from LAX only three minutes apart. More at: http://en.wikipedia.org/wiki/1956_Grand_Canyon_mid-air_collision. That collision was the first civilian collision that caused more than one hundred deaths.
Second was the fact that the FAA was created as a result of this collision. The first head of the FAA was a retired Army Air Force general appointed as the Administrator. He was Elwood R. Quesada, a three star general. Given his background you can imag