Defense: The Solicitous Giant

During his stay in Lilliput, Lemuel Gulliver had to be on his guard all the time to avoid harming the inhabitants. He was so enormous that a careless step could demolish a building.

The men who run the U.S. Defense Department, said Deputy Defense Secretary Roswell L. Gilpatric in a recent speech, "sometimes feel like a Gulliver among the Lilliputians." Spending upward of $50 billion a year, nearly 10% of the entire gross national product, the Defense Department is an economic giant that dwarfs the biggest of corporations. Its decisions on where and how to spend its money can mean prosperity or pinch for business firms, cities and entire regions.

The Piano Impact. The explosive postwar prosperity of California has largely resulted from a widening share of the Pentagon's contract awards. California currently accounts for 24% of the dollar value of all prime defense contracts, as against 14% a decade ago and less than 10% during World War II. The defense business concentrated along Route 128 in the Boston area has enabled Massachusetts to recover from the textile industry's migration to the South. But Midwest defense business has dwindled drastically, leaving pockets of economic slack and high unemployment. Five Great Lakes states, Ohio, Indiana, Illinois, Michigan and Wisconsin, produced 32% of the nation's defense output during World War II; today the figure is a meager 12%. During that span, Michigan's share of total defense production has plummeted from 10.5% to 2.7%, and the state for several years has been in financial distress.

For a city heavily involved in defense business, winning or losing a big Pentagon contract is a momentous event, good or bad news not only for defense workers, but for numerous breadwinners, from bankers to beauticians, whose livelihood is affected by the city's prosperity. During the $7 billion TFX fighter-plane competition between Boeing Co. and General Dynamics Corp., the outcome was awaited with mingled fear and trepidation by thousands of people in the two cities that stood to gain or lose the most: Wichita, Kans., where Boeing's principal plane-making facilities are located, and Fort Worth, Texas, site of main General Dynamics airplane plants. The economies of both cities had been crimped by the phasing-out of bombers last fall, the 6-52 in Wichita and the 6-58 in Fort Worth.

When the Pentagon announced that General Dynamics had won the TFX award, a fog of disappointment settled upon Wichita. In Fort Worth, which expects that half of the $7 billion total will be spent there, a department store blared the news to customers over loudspeakers. Piano dealers report that several customers who had been postponing purchases came in and bought pianos the day after the contract was announced. During the following four months, 2½ times as many houses were sold in Fort Worth as in any similar period in the city's history.