There have been many stories told about the practice of cutting the
shirt of the freshly soloed pilot. None of them made any sense to me,
so, after once again reading of the 'tradition' on another list, I
asked the one person that I knew who had made a long career of flying
and flight instructing, the chief instructor at my college aero program
(the late and lamented Bates Aeronautical Foundation at Harvey Mudd
College), Iris Critchell. Iris' first lessons were in a Cub circa 1939,
was the first woman to complete the civil pilot training program at
USC, has some great first-person stories about piloting P-51 Mustangs
during WWII and was inducted into the flight instructor hall of fame in
2000. She also still flies and instructs.

http://csmonitor.com/cgi-bin/durable...6/20/p17s1.htm

I quote Mrs. C's answer, with permission:

"This shirt tail cut off business.
Someone in the late 70's peak of flight school business (or early 80's)
thought that up and it caught on across the country simply as something
to do to amuse the customer. Pin the shirt tail up in the flight
school office and every one signed it!

It had no place in the flight training of earlier years. It was not
started "back when". When I was in my first CPTP course, when the USC
group who flew with the instructor had got their licenses, they knew he
liked Johnny Walker Black label and got him a bottle! I never came
across that idea again. At most your instructor wrote something in the
remarks section of your log book when you soloed. No, it was not a
regular custom in earlier years! ...

None of my contemporaries nor I had any shirt tails cut off when we
soloed or got licenses. That was before and during the Civil Pilot
Training Program 1938-39 and on. When I taught on the CPTP program
in 41-42 no shirt tails were cut off around us.

It was too close to the years of the depression and people could not
afford to go around destroying people's perfectly good shirts! "

....and that is definitive as far as I am concerned! Evidence to the
contrary should be more than hearsay.
cheers,
-Greg
solo in '74, shirt remains intact