So I'll preface by saying I am not a Historian. I am by trade an Air Traffic Controller who has a minor in and deep interest in history. If the mods remove this due to lack of appropriate sources I'll understand, but this is a nuanced subject that few people in my profession really pay much mind to and as I feel I may be best suited to answer I'll give it a try in my first post here. Bear in mind I'm in the US, so my answer is VERY largely US centric. True scholarly work on this subject is scant at best.

ATC was in fact introduced in 1929. Archie League was a pilot hired by the city of St. Louis, Missouri to wave various colored flags to indicate cleared to land, cleared to take off, hold position, go around etc. https://www.faa.gov/news/communications/controller_remembered/ Cleveland, Ohio built the first of what we now know as control towers in 1930 https://www.natca.org/images/NATCA_PDFs/Publications/ATCHistory.pdf . They were radio equipped.

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Air traffic up until then was pretty light. Concurrent with this was a dispatch system started by the USPS that notated which flights were where via radio. https://www.dispatcher.org/dispatcher/early-dispatch-history These people also gave weather updates to pilots among other vital information. This translated into the airlines which had massive headquarter's buildings with dispatchers moving airplanes across maps as they made reports. The system worked, but as with any system there was a failure.

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As the system worked at the time airliners in cruise flight were not under federal ATC control. Rather they reported to their own dispatchers. In 1956 the following happened https://en.wikipedia.org/wiki/1956_Grand_Canyon_mid-air_collision . The gist is a pilot wanted to climb, the analog of a controller said no, the pilot renounced his protection under what we call IFR and a mid air collision happened.

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Leading to this the airlines were wanting to cede control to the government, albeit slowly, and this accelerated the regulatory portion as well as airspace rules.