TRANSPORTATION AND AIRCRAFT INDUSTRY: CONTRIBUTION OF PRIVATE INDUSTRY

For what it is worth to the committee, I will give you my reactions to that. I must predicate them by saying that in my opinion the transportation and aircraft industry of this country, which exceeds all others there is really no second-is one of the prime examples and good examples of the competitive free enterprise system. We hold our dominant position, and it is a dominant position, due primarily to the dynamic forces of our private industry. No better example of this could be cited than the Boeing Company. The Boeing Company has generated two of the finest products for the air transportation industry that anyone could ever conceive of.

Specifically, the 707 generation of aircraft and equally specifically the 747. The 707 was a real revolution in air transportation, and the Boeing Company, with great credit to itself, has given to this Nation one of the finest airplanes that has ever been built any place in the world-until the 747 came along.

The 747 is, in my opinion, the most ingenious, the most efficient. extraordinarily fine piece of transportation equipment. It was developed, to a large extent, under the competitive free enterprise system, admittedly gaining great benefits from military programs.

ENGINE DEVELOPMENT

Contrary to the opinion of most, the development of an engine is just as complicated and just as costly as the development of the air frame. Very few people realize that.

I seem to emphasize that point at this time, and if I do I want to make it clear that the military establishment in respect to the 707 made a great contribution to that airplane by the development of the engine, and also by the development of the air frame. After all, the KC-135, to an unusual extent, is almost identical to the 707.

PROGRAM DEVELOPMENT AND RISK

But that doesn't suggest, nor do I wish it to suggest, that the 707 isn't a product of the ability of the Boeing Company to assume great risk. When it went into the air transportation field by offering to the airlines a 707, it then and there assumed a great deal of risk for which it deserves a great deal of credit.

It went further. It then developed the 747, and it got from the 747 a great deal less benefit from the military establishment programs, or for military programs, I suppose I should say, than it did the 707. It is, Mr. Chairman, an incredible product of American ingenuity and American free enterprise. In due course, it will give to Boeing and to the country, and to the airlines, all the benefits to which they are entitled, economic benefits.

SUPERSONIC TRANSPORT PROGRAM

Moving to the supersonic transport, I feel, and this is my own conviction-it is perhaps derived from my training as a kid, derived from

my own father, who was an immigrant to this country, who believed in our free enterprise system right to the hilt, and I suppose I have inherited some of that. Nevertheless, I would hope that the SST program could progress in an atmosphere with less Government aid and, in fact, I worry about the success of the program because of the Government aid.

I have personally little or no confidence in our bureaucracy, the bureaucracy of Government, to compete in the free enterprise system. The bureaucracy has an amazing ability to avoid responsibility. It doesn't assume the necessity of meeting a payroll. It is stifling, it is a heavy hand, and I shudder when I think of the Government assuming the responsibilities in this program that it seems to be assuming.

I wish some way could be found for the program to progress under conditions that give the major initiative to the aircraft industry and to the air transportation industry, and give to those two industries the major risk and give to those two industries the major rewards of

success.

I don't know exactly how it can be done, but there seem to be ways that are possible-guaranteed loans among them; tax benefits or tax considerations among the possible.

I wish that they could be explored.

COMMERCIAL AVIATION INDUSTRIES

Let me comment for a moment, if I may, on the things that prompt my briefing. When I was a young kid, if I wanted to read about commercial aviation I had to read it either in French, from French magazines, or read English magazines. I couldn't read German magazines, but I could at least look at the pictures. But the major industries were in those countries.

Today we have the major share of the industry and those countries collectively are a poor second to us. It is those countries where, if you wish to describe it as such, socialism has been the stifling influence. The heavy hands of Government there has given to those nations a secondary role in this tremendous industry.

All of us are witnessing what is taking place in England today, witnessing it sadly, of course, but I shudder to think that that could take place in this country. I wonder if it would have taken place in England if the industry had not enjoyed the help of government.

I would hope that we wouldn't try to copy the countries that have failed. We have succeeded over the last three or four decades. The progress in this country has been incredible. I find it difficult to justify copying England, France, Italy, Germany, or Russia.

PRESTIGE

I am not personally influenced at all by the suggestion that we have to do it either because the Russians are or because the Russians will have a prestige or gain a prestige that we, in turn, would lose.

I am not at all worried about our prestige in our supersonic transport program. Naturally, I would like to be first, but our prestige is derived throughout the world by our energy to succeed in the world markets. I don't know of a single occasion where a Russian airplane has ever been sold in the free market.

U.S. COMPETENCE AND ABILITY

I am not worried about the Concorde being sold in this country. We can compete favorably with them. I can find no reason why we should be terribly upset because they are selling a Concorde to us. We have been selling 707's, DC-8's, DC-6's, DC-7's, Constellations, every type of engine and aircraft for decades to them.

If they can produce a better mousetrap, I can think of no reason why we shouldn't buy it. If we can produce a better mousetrap, it has been proven that they do buy it.

So I am not worried about the British and the French getting a market that was ours. We have dominated the market, admittedly, and I think with a certain degree of pride, and I have no qualms about our ability to maintain a dominating position in that market.

I hope that we will not let ourselves copy those countries because they haven't done too well and we have done extraordinarily well. I will admit, and I am the first to say, that a supersonic transport would be a very fine product for us to produce. We can produce it. It is definitely within the state of the art. We are the ony nation that can produce it at above mach 2. I don't think for one minute the British or the French could produce a mach 2.5 supersonic transport.

When I was the Administrator of the Federal Aviation, I made a trip to France and England and made a very strong effort, admittedly one in which I failed, to get the British and the French to join us in a supersonic transport that would be made of the heavy alloys. For whatever reason they saw fit to adopt, they elected to go their own way, and I don't see anything wrong with that. They elected to go to the slower transport and we elected to go to the higher transport; but, nevertheless, Mr. Chairman, I have no fears about our ability to produce a supersonic transport, but I certainly wish it could be produced under a system more compatible to that area where it has caused us to succeed.

ECOLOGY

May I switch, just for a moment, to the ecology? I am afraid that the supersonic transport at this moment is in dire jeopardy and it might not be approved by our Congress.

I have suggested here, for reasons of my own, that the Congress should question very seriously what is taking place today.

I have the feeling, perhaps intuitive, that the Congress is more influenced by another factor than the economic factors to which I have referred.

I don't expect the Congress to listen to me and nobody else. I have dealt with Congress. I have been before more committees than this one, and I know that my words are only considered. I could ask for nothing more.

OPPONENTS TO SUPERSONIC TRANSPORT DEVELOPMENT

But when you are considering the impact on this program that has come from the ecologists, I am afraid that the committee and Congress has responded in a large sense to emotions. I just do not believe what many of the ecologists are saying.

I think they are commenting without technical background, technical proof. The coalition against the SST is seeking reasons why this airplane should not be built, and they often reach very, very far. Friends of the Earth-I am just reading a list here that I have. The Sierra Club, the Committee on Green Foothills.

It disturbs me, and I think the Congress is being influenced, that the Congress is influenced by fears. I would like to think that this country in the future will be dynamic and not phlegmatic, not influenced by what could conceivably happen.

RECOGNITION AND OVERCOMING PROBLEMS

I am the first to admit that there are certain ecological problems that the SST brings to the surface, but I am also the first to want to say that the aviation industry is one that is influenced in large part and remembered in large part by its ability to overcome the problems.

The building of an airplane is not an easy task. The industry has been successful in overcoming the problems. That is why it is an industry.

ALLEGATIONS OF EFFECTS OF SST

I will just recite a few of the slogans that seem to be going around that I personally think are unfortunate, and I hope that this committee and the public and the Congress will view them with the skepticism, at least in part, which I do.

A 50-mile wide swath of destruction that followed the supersonic boom; a change in the earth's atmosphere.

I don't believe these things. I think they have been more generated by emotion than logic.

The Greenland Icecap might in some way be affected.

The change in the ozone balance.

An increase in the level of ultraviolet ray radiation will reach the surface of the earth causing skin cancer.

I am not trying to suggest that these aren't problems, but I do urge upon the Congress to get more proof of what is being said than the fact that they are just being said.

I have little else to say on my own, sir. If you want me to respond in any other way, I will be glad to do it. I will repeat that I am commenting only in behalf of my own convictions, having spent a lifetime in this field of endeavor.

That is about all I have to say.

Senator PROXMIRE. Mr. Chairman?

707 AND 747 DEVELOPMENT: CONTRIBUTION BY PRIVATE INDUSTRY

Chairman ELLENDER. General, you stated that Boeing made a big success of two or three of the transport planes it constructed.

To what extent did Boeing benefit from having done work for the Government at quite an expense, developing similar planes of this character?

Mr. QUESADA. I am sure Boeing and the public got many benefits from military programs that were Boeing programs. There is one thing I would like to bring to your attention, sir: that is that Boeing

on its own initiative designed and in fact fabricated a 707 airplane, and the benefit flowed the other way because the Air Force bought that airplane and named it a KC-135.

Many people think it was the reverse. Boeing was first and the Air Force exploited Boeing's courage.

But in response to your question, sir, Boeing, in the case of the 707, got many throwoff benefits from military programs, but not necessarily at an expense to the military. Technology flowed to the company as a result of military programs.

In the case of the 747, that is true to a much lesser degree. The 747 is almost totally a product of Boeing's industrial and economic courage.

I know of very few benefits-there are some that really came from the military establishment.

SST DEVELOPMENT: CONTRIBUTION BY PRIVATE INDUSTRY

Chairman ELLENDER. As you know, Boeing and quite a few other airplane companies did contribute, and are contributing, to the construction of this SST to the extent of about 24 percent of costs.

We were told today that the contract between the Government and the airplane people that the manufacturing of these planes, the SST, if they are successful, will be done entirely by private enterprise. Does that in any manner temper your views?

Mr. QUESADA. I wish that the ratio was the other way, that the Government was 27 percent and 73 percent would be private.

Senator MAGNUSON. If the Senator would yield, no one would wish more that it was the other way than the Senator from Washington. It would save me a lot of difficulty.

Mr. QUESADA. I am sure of that.

Nobody has been more behind the supersonic transport than Senator Magnuson and no one wishes it could be done more without the heavy hand of Government than Senator Magnuson. I assure you that.

I wish there was a way to develop this airplane without the Government having such a heavy hand. If the Government has 75 percent of the money, it will at least have 55 percent of the say. That is what I don't like.

GOVERNMENT INVESTMENT: REPAYMENT

Chairman ELLENDER. The contract further provides that the Government will be repaid all of its investment and will stand a chance of making as much as $1 billion.

Would that temper your views any, if it would happen?

Mr. QUESADA. I would like to think it would transpire that way. but I don't.

Chairman ELLENDER. Senator Young.

DULLES AIRPORT, VA.

Senator YOUNG. General Quesada, I note your opposition to the use of Federal funds for developing this aircraft. Dulles Airport was built entirely with Federal funds. I think you were the chief adviser