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

Dr. RATHJENS. No, I have not.




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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.

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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 nom.

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 compared with the possible returns.

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

Dr. RATHJEXS. 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 we have favored their doing R. & D. on a supersonic bomber.

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

Dr. RATHJENS. Well, I misunderstood you, then.
Senator Allotr. 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 fest "supersonic bomber."

On the supersonic transport, I would certainly have advocated

doing some research and development, even without any Government 1.1 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 developinent, 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. ŘATHJENS. Senator, in the


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.

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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. RATIJENS. 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.

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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.

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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

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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.

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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

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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.


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

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feasibility, even though they have to add 50,000 pounds to the plane, which is equivalent to their entire payload, in order to solve the noise suppression problem.

How does this strike you? What is your reaction to that position of Mr. Magruder?

Dr. RATHJENS. Well, I find it surprising, and at least in some respects inconsistent with what I understand the vice president of the Boeing Co. to have said. He, I understand, acknowledged when he was up in my State that there would be severe penalties, that you don't get something for nothing, I believe those were essentially his words, and the kind of penalty that he is reported to have indicated was something like a 50-mile reduction in range per DB. As I stated in my testimony, this amounts to something like 800 miles, if you are going to cut from 124 to 108 PNDB noise.

Now, one can trade off, of course, range against payload. You can take the penalty either way, but I think one way or other you are going to have to take a penalty.

You can do something about it, of course, if you scale the size of the airplane up. But as I suggested earlier, that could be a very major scaling job, and it could be a complete redesign of the aircraft.

We have been through one of those already, and if there were to be another one to meet that problem, it would mean a lengthy delay and very much greater expenditures.

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Senator PROXMIRE. What puzzles me is that we have been talking about an improvement in the plane that would permit us to have this 50,000 pounds additional, and no reduction to payload, no reduction in range, but presumably the prototype that we are developing now is the prototype which will serve as the model for the production planes that will be built.

Now, would there not have to be a subsequent prototype in order to prove out the feasibility of being able to operate with a plane which suppressed the noise and had this additional weight and yet would have the kind of payload that would be necessary to make it economically feasible?

Dr. RATHJENS. Well, I am not an aeronautical engineer, but it is my understanding that the prototype aircraft—that the noise reductions will not be achieved with the prototype aircraft, that it will be a substantially lighter aircraft than will be the final aircraft. The wing structure will be different, and that all things considered, I would think, as I indicated earlier, that one would in fact learn very

little about this, and the delicate trade-off problem, from construction of the prototype.

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Senator PROXMIRE. Now the FAA has suggested that the SST would greatly increase traffic to places more distant than Europe. Would you comment on that?

Dr. RATHJENS. Well, I think that that is an exaggeration, perhaps in several respects.

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