Senator ALLOTT. I have your background in the record here. Not all of it, I am sure.

Dr. RATHJENS. No. May I comment very briefly on that?

During many of those years I have been engaged in neither chemistry nor in political science, but in directing large groups of people who conducted analyses of large-scale systems, military and civilian, mostly for the Government of the United States.

For example, in the Institute for Defense Analyses, I had under my direction approximately 100 people, perhaps a third of them with Ph.D.s. These included economists, they included engineers, they included scientists, they included historians, political scientists, the whole range, and by capitalizing on their diverse talents I think we were able to bring to bear on the problems which we undertook for the Defense Department more effective analytical tools than one could have done with either of the talents of a single political scientist or a single chemist or a single economist.

So while my training was originally in chemistry, I have spent most of my professional life doing analytical work for the Government on problems that are roughly of the scale of the SST decision, and in directing the work of others who were engaged in such works.

So I don't think that my background is entirely irrelevant and while I am testifying here as a concerned citizen, and partly on the basis of my gut feelings, it also is based on some background.

Senator ALLOTT. Well, I am happy to have that analysis. I think you have expressed it very well.

FAMILIARITY WITH PROJECT

What professional research have you done on the SST?

Dr. RATHJENS. As I tried to respond to Senator Ellender, I believe, my only exposure, my first exposure, was when I was with the Institute for Defense Analyses, and they did some studies for the FAA on the problem at that time. I was not directly involved, but I reviewed that work.

Now, subsequently, my only connection has been in teaching at MIT, where we have in 2 successive years treated the SST problem as an interesting case study in public policy decisionmaking, and in connection with that I of course looked into it and consulted with other people and brought in other experts.

1959-1960 GOVERNMENT POSITION

Senator ALLOTT. Now, in 1959 and 1960 you were a Special Assistant for Science and Technology to President Eisenhower, according to your résumé I have in these hearings. Is that correct?

Dr. RATHJENS. No. If it says that, it is incorrect. I was on the staff of the President's Science Advisers.

Senator ALLOTT. Just so there will be no mistake about what I am talking about, I am talking about the hearings on strategic and foreign policy implications of ABM systems, before the U.S. Senate in the 91st session, and I am referring specifically to the biographical sketch that was placed in the record at that time, on page 355 of those hearings. I read from that.

And so this is not correct, the statement I read?

Dr. RATHJENS. No, I was on the staff of the President's Science Adviser.

Senator ALLOTT. All right. At that time did you have occasion to consider an SST problem, the construction of an SST?

Dr. RATHJENS. I do not recollect that I was involved at all in that. I was, incidentally, though, concerned at that time with an analysis of whether or not the B-70 program was a sensible one.

Senator ALLOTT. Have you done any research, yourself, on upper atmosphere chemistry?

Dr. RATHJENS. No, I have not.

PISTON-SUBSONIC AND SST AIRCRAFT EXHAUST CONSTITUENTS

Senator ALLOTT. Do you feel qualified to discuss for us at this time. in your chemical experience, the exhaust constituents of the SST compared with piston and subsonic aircraft?

Dr. RATHJENS. No, I don't feel qualified to do that. I have not looked into that.

AIRCRAFT HIGH DEVELOPMENT COST AND NET WORTH OF

MANUFACTURERS

Senator ALLOTT. I would like to ask you one question.

You criticized very severely the participation of the Government in this project. You have stated that you are a very strong supporter of the private enterprise system, which I consider myself to be, also. Do you know, in 1965, what the net worth of Lockheed was? Dr. RATHJENS. No, I do not.

Senator ALLOTT. Do you know what the net worth of Boeing was at that time?

Dr. RATHJENS. No I do not.

Senator ALLOTT. The total Government contribution of this has been placed at $1.342 billion. Don't you think that at the time the decisions were made as to whether Lockheed or Boeing would construct this aircraft, and whether it was possible to get private financing, these decisions would be reflected upon and related very closely to the net worth of either of these companies?

Dr. RATHJENS. It certainly would be, and I do understand that, if one looked at their net worth, it was not as large as one would like to have had, to obtain that kind of money without a good deal of effort to bring in other parts of the financial community.

Insurance companies and other organizations could have gotten in, if they had thought it was a good venture, as they have in financing the actual procurement of many of the aircraft that are flying now. But I am quite sure that if one looked at just Boeing, or to Lockheed, that without some kind of arrangement with other private capital sources, they could not have done it.

Senator ALLOTT. Well, if you had been a stockholder of Boeing, for example, at that time, and you had been asked to acquiesce in the commitment of scientific research or development of a supersonic bomber, which would have cost at least three times the net worth to the company, would you have acquiesced in it, as an individual?

Dr. RATHJENS. That would be very dependent upon the terms of the contract, and what I judged to be the risk to the company as compared with the possible returns.

Senator ALLOTT. Well, as you have testified here, could you answer my question yes or no?

Dr. RATHJENS. No; I cannot, because if I understood your question-perhaps I did not understand your question correctly.

You asked me whether, if I were a Boeing stockholder, I would have favored their doing R. & D. on a supersonic bomber.

all.

Senator ALLOTT. No; nothing to do with a supersonic bomber at

Dr. RATHJENS. Well, I misunderstood you, then.

Senator ALLOTT. I meant a supersonic transport.

Dr. RATHJENS. Well, all right, on the supersonic transport, too. Senator ALLOTT. In 1965.

Dr. RATHJENS. I am sorry. I misunderstood you. I thought you said "supersonic bomber.”

On the supersonic transport, I would certainly have advocated doing some research and development, even without any Government financing.

Now, I certainly would not have advocated going as far as we have gone, but certainly some research would be indicated for a company like that in this area.

Now, when one talks about development, and particularly advanced development, then I think I probably would have been quite negative, if the venture had had to be carried by Boeing itself without a lot of help from the Government.

In the circumstances that actually obtained, where there was this possibility of a partnership, I think the judgment that I would have made as a Boeing stockholder or executive would have depended very much on the very detailed nature of the contract that could be written with the Government.

Senator ALLOTT. Well, we were talking not about a contract with the Government. We were talking about a private development. What I asked you was: If you had been a stockholder of Boeing at that time, would you have voted?

Dr. RATHJENS. No; I would not.

Senator ALLOTT. Well, that is exactly the answer, and that is the thing that people who believe like you have scrupulously avoided during the economic discussion of this whole thing, and that is the extremely high cost of the development of a supersonic transport in relation to the net worth of the three largest companies, airframe construction companies, in the United States at that time.

And that is a vital factor; as to what the stockholders themselves would permit, and what the bankers would have done at that time. Dr. RATHJENS. Senator, in the

PROSPECTIVE GAINS-TECHNOLOGICAL RISKS CONSIDERATIONS

Senator ALLOTT. You know that there were studies done by the FAA, repeatedly, not only including the possibility of private financing, even the possibility of setting up a Comsat type of operation to finance this. You know that, don't you?

Dr. RATHJENS. I was not familiar with the Comsat kind of proposal. I was not.

But let me just point out that aside from the question of the net worth of the Boeing Co., had I been in a position of responsibility I

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would not have recommended going ahead with the program as now constituted, considering the financial risks involved.

It is not just a question of the net worth of the company in question. but it is also a question of the prospective gains as against the technological risks and the economic projections, and it seemed to me then, and it seems to me now, that it was not a very attractive venture.

WITNESS' RECOMMENDATIONS ON B-70 AIRCRAFT

Senator ALLOTT. You were opposed to the original construction of the B-70, were you not?

Dr. RATHJENS. I was opposed to going ahead with

Senator ALLOTT. You were on the White House staff.

Dr. RATHJENS. I was on the White House staff, and I was opposed to going ahead with procurement of the B-70 fleet.

In terms of doing some of the R. & D. that was required for the B-70, I favored that.

To tell you the truth, it has been so long since I was involved in that controversy that I am not exactly sure what position I took on whether there should be one, two, three, or four prototype aircraft. Senator ALLOTT. That is all I have.

Chairman ELLENDER. Senator Proxmire.

WITNESS' BACKGROUND

Senator PROXMIRE. Mr. Chairman.

Mr. Rathjens, I think your whole background should be read for the benefit of the members and the press. I think it is impressive and appropriate.

You were a member of the Weapons System Evaluation Group. Department of Defense, 1953 to 1958. You were on the staff of the President's Science Adviser, 1959 to 1960. You were a chief scientist and then Deputy Director for Advanced Research Projects Agency, Department of Defense, 1960 and 1962. You were Deputy Assistant Director and then Special Assistant to Director, U.S. Arms Control and Disarmament Agency, 1962 to 1965. And you were Director, Systems Evaluation Division, Institute for Defense Analyses, 1965 to 1968.

And you did have a direct responsibility for considering the supersonic bomber, the B-70, did you not? You just testified to that. Dr. RATHJENS. I have been involved in that.

AIRCRAFT MARKETABILITY: RESERVATIONS OF POSITIONS

Senator PROXMIRE. Now let me ask this. Senator Magnuson said that there were 120 orders, I understand. The fact is-and perhaps Senator Magnuson can contradict me if I am wrong-there have been no orders for the SST, none, zero, zip.

The reason I say that is because there have been 120 reservations of positions.

Now, that is entirely different. An order is a 5-percent or $9 million downpayment, by and large, with a commitment to make further payments as the plane is produced. But a reservation of a position is a $220,000 or $250,000, it is a very, very modest payment. It does not require any kind of commitment. It is the kind of thing that they can

walk away from a $50 million investment very easily. Is there not quite a difference?

Dr. RATHJENS. I think there is; yes.

Senator PROXMIRE. And it is for that reason that I think that your statement, that you doubt very much that there will be a hundred of these sold, may well be correct, and the fact that there have been a hundred or 120 reservations does not necessarily contradict that. Now, let me ask you

Senator MAGNUSON. And $59 million deposited in the Treasury by the airlines.

Senator PROXMIRE. Well, $59 million, and the cost

Senator MAGNUSON. Deposited in the Treasury.

Chairman ELLENDER. Just a minute. Let's not argue, please.

AIRCRAFT PRODUCTION COST: SUGGESTED LEGISLATION PROHIBITING GOVERNMENT PARTICIPATION

Senator PROXMIRE. And as I understand it, the cost of producing this plane is going to be $20 to $25 billion, depending on how many are bought. If you sell 500 at a cost of $50 million a plane, that is $25

billion.

Now, is it not true that if it is very hard for these companies to come up with the funds to provide research and development, which would be $1.7 billion altogether, it would be mighty hard for them to come up with $25 billion, which is a sum 15 times as great, for production, even recognizing that the airlines will come in for a substantial part of that?

Dr. RATHJENS. Well, that is one of my major concerns. I am concerned that even when we have spent the $1.3 billion, if we build the two prototypes, or whatever it costs, and it may cost more than that, I suppose, but whatever we spend, I am concerned that that may not be the end of the Government's commitment, despite the intent, the stated intent, to finance the endeavor from their own through private

sources.

I personally would like to see, if the people who feel so strongly that this is such an attractive venture could bring themselves to it, I would like to see legislation introduced to prohibit the Government from spending any money past Phase 3, and prohibit the Government from guaranteeing loans, and that sort of thing.

Failing that, I fear that when we get down to the wire, and the question comes up of actual production, there will be more pressure to continue to have the Government involved, and I think that would be very unfortunate.

AIRCRAFT NOISE SUPPRESSION

Senator PROXMIRE. Now, you brought out in your testimony the fact that the manufacturer, Boeing, has indicated that they feel they can reduce the perceived noise decibels down from 124 to 108, and I questioned Mr. Magruder yesterday, trying to find out the trade-offs.

He indicated that of course there are trade-offs, but he indicated that in the next 6 years, before they go into production, they will be able to solve these problems, and he said he is confident that they will have a plane with the same range, the same payload, the same economic