LITTON INDUSTRIES; PROVING

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88-01315R000300440001-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 8
• Document Creation Date: December 16, 2016
• Document Release Date: October 15, 2004
• Sequence Number: 1
• Publication Date: December 1, 1968
• Content Type: MAGAZINE

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"Business and industry are our last hope. They are the most realistic
elements of our society.,'-KENNETH B. CLARK, PSYCHOLOGIST, TESTIMONY BEFORE THE KERNER COMMISSION
[TITANS AND OLYMPIANS] [THE TECHNOLOGY OF PROFIT]
[TILE MOST EYES WERE FOCUSED on the presiden- r -l,: HE VAST ACCRETION or PowiiR in the last decade
tial elections, an unprecedented humiliation was to military-based conglomerates like Litton and
being visited upon one of the dinosaurs of the L-T-V has caused remarkably little public concern,
moat( The United considering the implications for an ostensibly free
V V American corporate com y?
Fruit Company-whose hoard directors and presidents were society. There are many factors behind this default, but prob-
accustomed to serving the nation as secretaries of State and ably the most important one is the least conspicuous. It is the
directors of the CIA, and whose divisional branches exercised universal conviction that bigness and even monopolistic con-
unchallenged supremacy over sovereign republics in the banana centration are inevitable, being the natural and necessary con-
belt of Central America-found that it was the target of a sequences of technological modernity. To protest therefore
series of takeover bids. Who would have the nerve? seems merely to stand in the way of progress, mindlessly
Twenty-five years ago Textron, Incorporated, was only a repudiating the bounty of the age in favor of nostalgic illusions.
diminutive manufacturer of textiles. Since then, however, the John Kenneth Galbraith, the New Monopolistic State's
firm has acquired a new name and scores of companies span- most urbane, unabashed and best-selling apologist, has ex-
ning 27 industrial categories, and has taken a prominent place pressed the wisdom of the times most eloquently: "By all but
in the military-industrial complex. On election eve Textron the pathologically romantic, it is now recognized that this is
announced that it was adding United Fruit to its family. not the age of the small man." Is it the quest for monopoly
This was not the biggest merger of the year, but it dramatical- profits that has resulted in the gargantuan enterprises which
ly symbolized the tremendous upheaval that is shifting the now dominate the American economy? Certainly not, says Gal-
corporate foundations of American society. The U.S. is cur-braith: "Size is the general servant of technology, not the
rently in the midst of the largest merger wave in its history, special servant of profits. The small firm cannot be restored by
already twice the magnitude of any previous wave and still breaking the power of the larger ones. It would require, rather,
on the upswing, with no sign of peaking. The main action in the rejection of the technology which since earliest conscious-
this incredible concentration of economic power, accounting ness we are taught to applaud." Modern technology, says
for about 90 per cent of all acquisitions in 1968, is going to a Galbraith, requires "planning, specialization and organiza-
new species of corporate organization: the conglomerate. Led tion," and these require that the market be "superseded,"
by such aerospace giants as Litton Industries, Ling-Temco "controlled" or "suspended," which is accomplished primarily
Vought (L-T-V) and Textron, the conglomerates are already by monopolistic concentration.
regarded by many as the heirs apparent to American corporate These statements, exuding all the natural plausibility of
power. With their feet solidly planted in the military-industrial conventional wisdom, are wholly seductive. To offer empirical
complex, each has managed to absorb close to a hundred support for the generalizations seems almost superfluous. Yet
other corporations and to create a composite giant whose the actual empirical studies that have been made provide no
scope of industrial enterprise is truly awesome. substantive basis for the thesis that technology requires
This explosive velocity of conglomerate expansion makes monopoly-indeed they point strongly in the opposite direction.
the most fantastic projections seem plausible. Litton Indus- Thus, the authoritative study in the field (Joe S. Bain's
tries provides a typical case in point. Fifteen years ago Litton Industrial Organization) concludes that for 80 to 90 per cent
was a 51.5 million electronics firm. Today, employing about of the industries investigated, there is no need for high con-
100,000 people in 28 countries, it is worth more than a thou- centration to make production and distribution efficient. On
sand times as much. The record of L-T-V is equally spectacular. the other hand, many of the new technologies have a decidedly
Twenty-two years ago, James J. Ling invested $3000 in an decentralizing thrust, and as Dr. John M. Blair, chief econ-
electronics shop in Dallas. Today the successor of that firm, omist for the Senate antitrust subcommittee, has pointed out,
L-T-V, is even bigger than Litton, with $1 billion in assets and highly monopolistic industries like steel have been decen-
S2 billion in sales. Moreover, the expansion of these conglom- tralizing their assembly plants at the same time that another
crates over whole empires seems to have no natural limit, unless model of monopolistic concentration, General Electric, has
it is the economic system itself. Indeed, one enthusiastic "shut down its huge Schenectady factory while making a
reporter of the L-T-V octopus has already run his story under veritable religion of decentralization."
the headline: "It is Theoretically Possible for the Entire United If relatively high concentration is not technologically justi-
States to Become ONE VAST CONGLOMERATE Presided fied for single industry firms, it is hardly justified for the
Over by Mr. James J. Ling." Nor is the prospect one from conglomerates, which are made up of randomly acquired
which Mr. Ling would shrink. companies encompassing diverse product lines and categories.
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For that reason among others, the heads of Litton, like all
conglomerate managements, don't like to admit that they are
such an enterprise (although their more than 80 companies
operate in I8 distinct industrial categories). According to
number two man, RoyAsh, Litton's acquisitions have been in
fields where its technological capabilities give it a competitive
edge. "In truth," comments Fortune, "considerable mental
agility is required to perceive an impending technological
revolution in some of the businesses Litton has bought-
e.g., office furniture."
Litton Industries cannot in fact seriously claim to provide
any benefits of integrated production to its jumble of sub-
units. And if they are sometimes inclined to invoke the salutary
but mysterious influence of their mode of central management,
when they get down to it the feature of their organization
about which they are proudest is just how decentralized it is-
with each division manager given his head and acquired coin-
panics remaining autonomous and even rivals of their sibling
subunits. So the occult potency of Litton's management is like
that of the magician who claims to be twice as good as any
other because he can conjure a rabbit in a hat and make it
disappear, all faster than the eye can see. The idea of some
arcane technology of management-a notion drawn from
military and space prink contracting activities-is Litton's
stock in trade. The alternative, that central ownership is just
that, (hat its prink function is to own-i.e., to concentrate linan-'
cial, industrial and political power-is of course unthinkable.
But the Wall Street Journal did manage to think of it when
they interviewed officials of Textron, and they got a rather,
candid response. Asked the Journal "How can any group of
executives maintain control over such dizzyingly varied busi-
nesses in most of which they can have had no ez'rerience? The
answer to the question, say Textron men, is simple. The com-
pany has acquired unrelated businesses to make money."
Office furniture aside, Ash's claim that Litton's size facili-
tates technological innovation reflects another major tech-
nological myth of our age: that the giant corporation is a neces-
sary agent for creasing new technologies. As Galbraith puts it:
"A benign providence who, so far, has loved us for our worries,
has made the modern industry of a few large firms an almost
perfect instrument for inducing technical change. It is ad-
mirably equipped for financing technical development. Its
organization provides strong incentives for undertaking de-
velopment and for putting it into use. . . . There is no more
pleasant fiction than that technical change is the product of
the matchless ingenuity of the small man forced by competition
to employ his wits to better his neighbor. Unhappily, it is a
fiction. Technical development has long since become the
preserve of the scientist and the engineer. Most of the cheap
and simple inventions have, to put it bluntly, been made." Once
again the record indicates that the "perfect instrument" must
somehow be too sublime to do the job.
In an authoritative study of 61 "major contemporary
inventions," it was found that only 12 of these could be
attributed to the laboratories of large corporations. The jet
engine was originated independently in Fngland a nd Germ,-:,:y
by individuals who were unable to interest the aircraft pro-
ducers in it (the Englishman even allowed his patent to lapse).
Kodachrome arose from the experiments of two musicians,
"sometimes working in their kitchen sinks hetwcen concerts."
Other examples of products of individual inventors-often
working with primitive equipment-were the first computer
(ENIAC), air conditioning, the modern self-winding watch
(which was rejected by the Swiss watch companies when it was
first offered to them), stereophonic sound reproduction, the
syncromesh transmission, neomycin, frequency modulation
(FM; it was opposed by RCA) and xerography. In military
technology, individuals without organizational support were
either responsible for, or played a crucial role in the develop-
ment of, the gyrocompass, the helicopter, the atomic sub-
marine and the sidewinder missile.
A closer look at the inventions that do come out of the
laboratories of the industrial giants should quickly dispel
Galbraith's "perfect instrument" idea. Arthur K. Watson, the
head of IBM, the very symbol of modern technology in busi-
ness, pointed out to an International Congress of Accountants
in 1962, "The disk memory unit, the heart of today's random
access computer, is not the logical outcome of a decision made
by IBM management. It was developed in one of our labora-
tories as a bootleg project-over the stern warning from
management that the project had to be dropped because of
budget difficulties. A handful of men ignored the warning.
They broke the rules. They risked their jobs to work on a
project they believed in."
Can it be that the supercorporation of the space age is really
all that shortsighted and tightfisted about seeking new tech-
nologies? Private industry does after all spend S9 billion it
year on research and development (four per cent on basic re-
search, the rest largely on altering, refining, packaging and
marketing existing technologies). And of that, the larger firms,
those with more than 5000 employees, certainly carry their share.
Though they make up only three per cent of the companies
doing research, they spend 85 per cent of the total. That looks
like pretty extravagant entrepreneurial daring. Of course this
investment in the future is made considerably easier for them
by the fact that the government puts up 60 cents of every
'R&D dollar that private industry spends. Moreover, two-
thirds of the rest is ultimately charged off as overhead on
government contracts.
So it seems that the real entrepreneur is the government,
who is not only extraordinarily openhanded about putting
'up the investment, but agreeably lighthearted about not reaping
the profits on it. So agreeable, in fact, that it goes on to buy
the product that it financed, at a healthy profit to the surrogate
developer. Like buying the Brooklyn Bridge, this must be
looked on as an act of peculiar generosity. It is a game where the
roles of politician, general, corporate manager and government
official are shifted around so rapidly that an embarrassed
player can even forget if he is to be the donor or the recipient.
But then again it's not their money. If the corporation is
spending the government's money, the government is spending
the taxpayer's. If he had a very clear idea of it, the taxpayer
might frown on this happy arrangement and spoil all the
fun, but his attention is turned toward the welfare pennies
allegedly squandered on people who don't work. Whereas the
men on the board at Litton have very good jobs indeed.
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Litton Industries is a holding company for its decentrally
managed subsidiaries. But Litton is not merely a Beverly I tills
address where worldwide profits are mailed to be figured by
accountants into grand totals. It is a focal point for an empire's
growing economic power which it applies with consummate
skill to the great financial and political levers on Wall Street
and Washington.
1TrON IS A NEW LORD OP THE CORPORATE REALM; it has
ascended to an order of nobility that had seemed at
the time of World War 11 to be virtually closed by a
?.-~stuble system of fiefdoms which each of the major
corporations had carved out of the Industrial Revolution,
leaving no unclaimed ground on which a new economic power
could be built. And in fact, although Litton has achieved
sufficient financial strength-by playing an inflated stock
market for all it is worth-to acquire properties in the eco-
nomic heartland inhabited by the older corporations, the
original and indispensable basis of Litton's strength was not
successful competition in already allocated markets. Litton
is first of all lord of a newly opened virgin territory. That is
to say, Litton is not an industrial pioneer in traditional markets
in the sense that one might characterize Polaroid or Xerox,
whose spectacular growths have been based on new products
which people have found highly useful. Litton is more the
master of a "land grant dominion," dispensed and continu-
ously subsidized by the federal government as part of the
unbelievable largesse of the postwar contract state.
The form which these grants take is the military prime
"systems" contract, and the region is electronics. A good ex-
ample is Litton's contract to design, plan, produce and main-
tain, in accordance with broad requirements, a worldwide fleet
of floating military bases. Since the price of a system not yet
designed cannot be fixed in advance, in systems contracting the
government in effect agrees to pay the corporation back
whatever it spends, plus profits. The prime contractor is ex-
pected to turn around and subcontract whatever it can't do
itself and the government advances funds'to cover outlays by
the contractor. So you don't really need investment capital
or competence to get the job-or the profits.
Obviously it's nice work if you can get it. But who gets it
and how? Since the criteria of cash and competence are
consigned by government contracting policies to roles of
distinctly secondary importance, the importance of a cor-
poration's influence in the federal bureaucracies naturally
looms inordinately Iarge. For a long time, corporate political
strategy had its focus on military decision makers, whether
generals or civilians. However, as the military budget has
become a permanent factor of major proportions in the
economy as a whole, the ramifications of its spending policies
have'grown more and more extensive. From its contract to
build the floating base system, for example, Litton gained
`facilities and expertise-at taxpayers' expense-which have
given it the inside track on the civilian shipbuilding industry
as well. More importantly, neither military policy nor the
Defense bureaucracy is divorced from the rest of the national
political structure, and the political power gained by the suc-
cessful prime contractors in the military field has become an
important basis for extending their field of operation to other
areas where the federal government exercises responsibility
and allocates its huge budget.
With an eye to the immense dominions of largesse still to
be granted by the sovereign power, Litton has been careful to
keep its representatives at court and to keep a foot in every
available political door. Among its executives and directors
are Defense Department secretaries and military 1;cn..crals,
highly influential Democrats and equally important Repul;li-
cans, liberal Humphrey supporters and the chief financial
backer of Ronald Reagan-in short, the whole spectrum of
legitimized political power(and potential contract dispensation).
With its expansive political network as it foundation, Litton
has been in the forefront of the move to extend systems
contracting to nonmilitary fields. Litton was the first private
contractor to take over responsibility for a War on Poverty
Job Corps project and the first corporation to apply the sys-
tems approach to the economic development program of an
entire geographical region (in Greece), and its distinctive mode
of operation in these instances provides an ominous portent of
things to come. Litton's career follows what may turn out to
be the most natural line of development for the huge and
continuously growing conglomerate corporations as they
overflow the traditional limits which have contained them.
[CONTRACTING DEVELOPMENT
"Litton is a world-wide organization dedicated to utilizing the
discoveries of modern science by converting them into useful
goods and services-products that bolster the Free World's
vital economic base and defend the inflexible ideal of human
freedom."
-LITTON INDUSTRIES' ANNUAL REPORT TO STOCKHOLDERS, 1963
0 N APRIL 21, 1967, A SUDDEN COUp d'etat in Greece sent
a shudder through Europe. The coup, carried out by
junior officers to forestall an impending liberal
electoral victory, represented a shift so far to the
right that the conservative monarchy was eventually thrown
into opposition and the king virtually deposed. The epithet
"fascist" was thrown in the face of the regime as it quickly
filled the jails with thousands of political prisoners. And for
the first time in non-Iberian Europe since World War II, the
term rang true. The governments of Norway and Denmark
immediately tried to have the Greek junta kicked out of NATO,
and later out of the Council of Europe. Other West European
governments signified their disapproval but reserved action.
Even Washington, whose military and intelligence agencies
were implicated in the coup, held back any immediate support.
Then, three weeks after the overthrow, when the new regime
was still unstable and the adverse worldwide reaction held
out the possibility that the junta might disintegrate and fail, a
gesture of support was made by one of the largest U.S. cor-
porations, one with a reputation for having powerful connec-
tions in the White House and the Pentagon.
That corporation was Litton Industries. The gesture was the
agreement by Litton to be prime contractor on a "develop-
ment" program for Greece.
In keeping with Litton's usual strategy, the agreement was
on a cost-plus basis, with Litton agreeing to procure SS4O
million in capital for Greece over a 12-year period. In return,
the military junta agreed to repay Litton its costs plus 11 per
cent, plus a commission of about two per cent on all capital
that Litton succeeded in steering to Greece. For readers whose
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minds are fixated on the concept of private enterprise as member, but also to pull some of Litton's golden political
in some sense free or competitive, the significance of this strings. Within days, the doors of the four, politicians were
kind of contract might be spelled out once again. Litton itself opened to the representatives of the Greek colonels, while
risks nothing. Every month Litton files invoices for its costs, the State Department fumed,
and in 15 days it gets back everything it has paid out plus a
profit of 11 per cent. As explained by Robert M. Allan Jr., IItLETIIORNTON'SIIEIIiND-TIiE-SCENiSmaneuvering
president of Litton International Development Corporation was building up pressure for an eventual resurr,p-
and head of Litton's program in Greece, "The return on Lion of military aid to the Greek regime, the
investment here, of course, is very large because we don't have V1J first real break came with the announce-
any basic investment. Our real investment is our good name ment of a $12.5 million loan from the World Bank. This was
which of course is the most valuable thing we own." Litton's the first solid evidence of external financial support for the
good name (and contacts) were indeed attractive assets for the regime. (After the coup, the European Economic Community
military regime. -more popularly known as the Common Market-which had in
Another was Litton's promotional expertise, which was 1962 made available $125 million in loans to Greece, refused
promptly directed to the vital task of convincing Americans the ordinarily automatic extension of time allowed for drawing
-particularly very important Americans-of the virtues of the funds. Having used less than half of the total, Greece lost
iron rule in Athens. The key figure in Litton's PR work for the a$70 million credit.) It happens that the World Bank loan was
junta is Barney Oldfield, Litton International's chief public one of the first issued under its new president, Tex "ihornton's
information officer, who, according to spokesmen for the Greek old breakfast chum Robert McNamara. So this might look
resistance, runs the pro-junta propaganda campaign both in like a classic case of friendly persuasion. In fact, however, most
Athens and in the United States. Oldfield, who was an Air observers discount Litton's role.
Force colonel before going to Litton, got his PR training as Ironically it is Litton itself which, rather than issuing demure
chief public information officer for NATO in Europe and has protestations of innocence, has sought to create the impression
excellent Pentagon and Republican connections. -among those who don't already know better-that it was
To the uninitiated, it might seem strange that the former not only responsible for the loan, but that if the Greek junta
chief PR man for NATO-a military alliance allegedly formed wants any more loans from the World Bank it will have to go
to defend freedom-should suddenly become a salesman for a through the Beverly Hills conglomerate. When you are market-
totalitarian dictatorship in Greece, but Oidfeld's behavior is ing a reputation for prowess and success, Don Juanism can be
certainly within the norms laid clown by Washington. Thus on a valued accusation.
May 17, 1968, a year after the coup (and a good deal of Litton Foreign capital, representing foreign confidence, was ob-
politicking), Washington softened its attitude towards the viously a high priority for the Greek junta. One full page ad
junta. Secretary of Defense Clark Clifford went before the which the junta ran in the New York Times was headed:
Senate Foreign Relations Committee to ask support for an "Greece: Ideal Country For Investors." The ad underscored
administration proposal for $661 million in military aid to the the stability of the internal political situation as a major en-
dictatorships of Korea, Turkey, Iran, Taiwan and Greece. Of couragement to investment, in contrast to the turbulent days of
the latter, Clillord said: "The obligations imposed on us by Greek democracy. This was echoed in a speech two months
the NATO alliance are far more important than the kind of later by Litton's Robert Allan. According to Allan, there were
government they have in Greece or what we,ihink of it." four basic ingredients of national growth in Litton's view:
One of Litton's most important services to'the junta prior capital, know-how, incentive and "stability of environment."
to its reception into the Free World fold was performed by As Allan explained, "If a government will restrain itself from
Litton's president, Tex Thornton, six months earlier in Septem- outbursts which create long pauses among investors, and
ber 1967. Following a meeting of the governors of the World potential investors ... then we have a working partnership."
Bank in Rio de Janeiro, Costas Thanos, a high Greek of iiciai Allan's speech went on to attack such opponents of the
whom Columbia University has accused of plagiarizing his Greek junta as actress Melina Mercouri and former Cabinet
PhD thesis, and Demetrius Galanis, governor of the Bank of Minister Andreas Papandreou, who were described as "an
Greece, traveled to New York for a planned banquet with aging actress without a play" and "an agitating professor out
American bankers. At the urging of the U.S. State Department, of work." "Their country," Allan declaimed, "which owes its
however, the American bankers decided not to attend. Thanos very existence to soldiers who fought for its survival, they say is
then flew to Washington and requested meetings with Vice ' now in poor hands because the same men rule it." (Actually it
President Humphrey; Secretary of the Treasury Fowler; was the Communist-led guerrillas who liberated Greece in
Congressman Mendel Rivers, chairman of the House Armed World War II.)
Services Committee; and Speaker of the House John McCor- Readers may be wondering if this kind of double-think is
mack. The Grecks wanted to talk to these powerful American reserved by Litton executives for public occasions and formal
politicians about increased foreign aid and a resumption of addresses. Partly to find out, RAMPARTS went down to Beverly
full military assistance. However, all four men declined to meet Hills to interview Robert Allan, who describes himself as
Thanos and Galanis, again because of a negative sign from the working "for the Greek people." By the time RAMPARTS spoke
State Department. Faced with this crisis, the Greeks naturally with Allan, several authenticated descriptions of the terror
turned to their powerful ally, Litton. in Greece and the torture of political prisoners had already
Tex Thornton immediately flew to Washington in his private been smuggled out of that country and circulated in the
plane, ostensibly to attend a meeting of the President's international press. Writing of one of the island prisons five
Advisory Commission on Civil Disorders, of which he was a months after the coup, Newsweek observed: "Tradition has it
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that the Emperor Tiberius, one of the cruelest Roman rulers,
refused out of simple humanity to imprison any of his subjects
on the treeless, waterless Aegean island of Yioura. No such
scruples, however, inhibit the present military rulers of Greece
who, soon after their coup last April, filled Yioura's cellblocks
and tent camps with 6500 of their fellow citizens."
Alluding to similar reports documenting the torture of Greek
prisoners, Allan went into a monologue right out of 1984: "I
satisfied myself that most of these prisoners in Greece are living
on an island, the way you and I'd live on Catalina. They're free
to come and go as they wish. A lot of fresh air and a lot of
sunshine, but no communication. It isn't the way that you and
I would like to see something done, but they couldn't stand
any more riots. The whole nation was just going into chaos,
and this was their way of answering it. I've also tried to my
best ability to determine what went on, and as far as I could
determine, there was no more torture or beatings than they
would have in a normal police station anywhere in the world
. which, God knows, none of us like, but do go on."
The reason that Litton likes the military junta, as Allan
freely admits, is because the junta "provided the atmosphere
in which things can get done," and in particular an atmosphere
in which Litton could do them: prior to the coup, the Litton
contract had been turned down by several Greek parliaments.
The very structure and strategy of Litton as a business enter-
prise gravitates toward the military and the state, and toward
authoritarian regimes. The Litton-Greece contract has been
followed up by parallel schemes for Portugal and Turkey. In
conversation, Allan's thoughts drift toward the dictatorships
of Nicaragua, Indonesia and Taiwan, as examples of countries
where he'd like to try the "Greek approach."
HIS GRAVITATION TOWARD TIIE STATE is a function of
the systems approach, as is the particular preference
for the state's authoritarian forms. The primary
features of the systems approach arc its dependence
on state financing and its need to override the sovereignty of
the people. So while one might think that the oyerali economic
development of Crete and the Western Peloponnesus was the
proper concern of the people who live in the area and of a
representative government of the people, under the Greek-
Litton arrangement it is Litton who draws up the overall
development plan. "In Greece," explains Tex Thornton, "our
objective is not to single out one economic activity, but to
apply the ? systems approach to building a future for that
historic nation."
What specifically did Litton's space-age systems-oriented
management propose for launching Greece out of its morass
of poverty and underdevelopment and into the modern era?
"Our primary thrust," Allan explained, "is to develop tourism."
If tourism were indeed a lever of development, rather than one
of the chief syndromes of economic dependence and under-
development, then the West Indies, Spain and Greece itself
would long ago have, become industrial nations. Old-fashioned
imperialism begins to look economically progressive compared
to what Litton is proposing! The old imperialists at least dug a
mine, built a port (financed by the colony's taxes) and ran a
road or a railway from the mine to the port. What Litton has
in mind according to one business magazine, are"hotels, roads
trading posts, no doubt], recreation facilities," etc. In other
words, a Disneyland economy with an ample supply of color-
ful locals to service the pavilions and their visitors. Naturally,
Litton's Stouffer Division will supply the hotels.
Perhaps the worst aspect of this is that Allan knows Litton's
plan is a bitter prescription for the Greeks. in person he will
admit that it won't really meet the long-term needs of the
Greek economy. But if there is something offensive about the
transformation of the crucible of Western civilization into
another Honolulu, then again, worse things could happen. "I
don't approve of it, and I hope Greece won't have it happen,"
Allan told RAMPARTS, "but gee, Honolulu in ten years has gone
from here to here [raising his hand over his head) as far as
volume of input is concerned."
In addition to the Ionolulu complex, Litton has plans for
"agricultural development." These feature it system of artesian
wells which Allan says would save about $72 million over inc
cost of a planned system of irrigation darns. Litton also has
assigned its computers to wrestle with the problem of the price
of brussels sprouts in the West German market, and it is talking
of making Crete a major producer of this basic foodstul;.
'Finally, an international developer from Wichita, Kansas, has
submitted a plan to Litton proposing the construction of 300
townhouses, at a cost of $7000 each, in the Western Pelopon-
nesus. The average Greek-for whom the houses, needless to
say, are not planned-would have to spend his entire annual
income for more than 15 years to buy such an item.
If Litton succeeds in its "development" plans, it is evident
that the result wall be merely to extend the economic and social
blight which has characterized Greece's postwar dependence
on the United States and on U.S. investment in tourism, oil
refining (Esso-Pappas) and Coca-Cola. However, there are
signs that Litton may not be succeeding even in this modest
endeavor. Under the terms of the original contract of May 1967,
. Litton had committed itself, as a starter, to attracting S60
million in foreign capital to Greece by May 1969. With two-
thirds of the period gone, Litton has attracted only $3.5 million,
or about six per cent of its projected goal. Most of this
investment represents Litton's own capital; none of it is in
industrial or agricultural projects. Not only has Litton failed
to attract any substantial capital (or to invest much of its own),
even the research and feasibility studies were not prepared
by its own high-powered managerial talent. According to
highly placed sources, Litton has been digging up old economic
feasibility studies prepared by academics (including the arch
opponent of the military regime, Andreas Papandreou), Greek
government economists and economic consuIIants.
All this led to rumors that the junta would not renew the
contract with Litton in May. To scotch these rumors, Litton
announced plans for a $3 million German brewery, a $350,000
electronics assembly plarit (a Litton subsidiary), a $3.8 million
Stouffer hotel in Crete and a multimillion dollar tourist
complex in the Western Peloponnesus. But while speculation
developed as to whether these plans would materialize, Litton
was dramatically upstaged by another entrant onto the scene,
the newly-wed Aristotle Onassis.
Ten days after Washington had resumed delivery of major
military equipment to Greece, thus offering its imprimatur
for the regime and a new guarantee of its stability, Onassis
announced his own systems approach: a $400 million invest-
ment package (the largest ever made in Greece) in tourist
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leading, to hotels, the airport where hotel guests can land, sup-
plies of food and water, handicraft manufacture [for tourist
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facilities, an airport in Athens, an aluminum processing plant
(in conjunction with Reynolds) with a companion thermo-
electric power plant, it shipyard, and an oil refinery which, ac-
cording to initial reports, would be "bound to make more
money than all the action in Las Vegas." So it seems that for
all his private plane trips and brussels sprouts, Tex Thornton
may have been out-hustled by a local boy.
If Onassis has upstaged Litton it is not simply on the basis
of national solidarity. The Greek government finds Onassis
important because he deals in the kind of old-line imperial
enterprises that are part of the basic economy-he owns one of
the world's great tanker fleets and will soon be producing his
own oil. In contrast, Litton's major thrust is in advanced
technologies and knowledge industries geared to markets in
highly developed environments. So all it could really attempt
in Greece was to exploit the government without exploiting
the economy, and there is just not enough loose money around
in the country to sustain such an arrangement. The oppor-
tunities of underdevelopment were enticing, but Litton was
ill-equipped to profit from them.
The perfect situation for Litton would be an underdeveloped
area with an overdeveloped government which would be less
discerning about results than the colonels. An impossible dream?
Not at all. Litton had already found it-at home.
[CONTRACTING POVERTY]
HL INPUT-THE RAW MATERIAL-that is fed into this
machine is people. The output is people. It is the
fl function of this machine to transform these people."
.--. That is the philosophy of "education" held by John
1-1. Rubel, vice president of Litton's Economic Development
Division, as expressed in a letter to Sargent Shriver. Rubel,
formerly assistant secretary of Defense under Robert Mc-
Namara, is credited with having convinced Shriver to award
Job Corps contracts to private enterprise rather than strictly
to educational institutions. Of course, it was, only fair that
Litton should get one of the first contracts the Parks Job
Corps Center in Pleasanton, California.
Litton's predictably titled Educational Systems Division
includes many valuable properties, such as the American Book,
D. Van Nostrand and Chapman-Reinhold publishing com-
panies. They also serve as program administrators for
Oakland Community College in Bloomfield Hills, Michigan.
Its most important enterprise, however, is the Parks Center, be-
cause the Job Corps is the opening wedge for Litton's entrance
into the potential treasure houses of social welfare and
education.
Litton's public relations department celebrates the Parks
Job Corps camp as a free enterprise success story. Recently,
Parks placed, its 5000th "graduate" in a job; the center has
thus placed more of its graduates than any other Job Corps
camp in the country. Of course, the PR men neglect to mention
that the number one "employer," accounting for roughly 40
per cent of Parks' graduates, is the U. S. military.
Litton administrators consider Viet-Nam a highly desirable
placement for their predominantly black corpsmen. The wait-
ing room of the placement office, where each graduate of the
nine-month course goes to inquire about future employment, is
plastered with posters urging, nondenominationally, enlistment
in the Army, Navy, Air Force or Marines. A life-size cardboard
cutout of a sharp looking black soldier salutes the graduate as
he steps in the door. Piles of brochures invite him to learn
"The Secret of Getting Ahead in Today's Action Army." And
lest the message he forgotten, on the way out a flashing sign
reminds him: DESIRABLE LOCATION-YOUR U. S. ARMY-TRAiN-
iNG GUARANTEED WITH BIG BUSINESS-YOUR CHOICE OF SCHOOLS
-STEADY ADVANCEMENT.
Of course where enticement fails, there is always induction.
Every week an IBM print-out announces the names of those
at the Parks Center who have turned eighteen. Each one must
then register for the draft with a Litton employee, conveniently
certified by the local Hayward board. Upon graduation, Litton
notifies the corpsman's draft board of his new educational
achievements. (Litton arranges for the majority of its enrollees
at Parks to receive a high school equivalency diploma, which
makes those who had been deferred due to low scores on the
Army mental aptitude exam eligible for retesting.) Al Cassell,
the head of placement at the Parks Center, explained: "We
get draft notices by the hundreds every day. We furnish the
draft board with information relative to the training level
achieved by the young man.... We take him to Hayward and
have him retested.... If he passes . . . the Hayward testing
center notifies his local board, and they in turn will usually
draft him."
Even if the corpsman does not improve his score on the
test, his new high school diploma might well make him eligible
for induction. At one time, in a kind of reciprocal trade ar-
rangement, Litton kept a Job Corps recruiter at the frequently
embattled Oakland Induction Center in California. Many
ineligible draftees, led to believe that they would become
qualified for a high paying job in industry, enrolled in the
program only to find themselves returned full circle at the end
of the course. Two sergeants from Hayward go out to the
Parks Job Corps Center every day. No other prospective em-
ployers have permanent recruiters there.
ERNON ALDEN, PRESIDENT OF OiUO UNIVERSITY, envi-
sioned the Job Corps as a place that would "offer a
new environment where hopes can be lifted and
skills developed free from the shackles of oppressive
and antagonistic surroundings." So much for visions.
Litton's Job Corps center, located on an unused Navy
base, is surrounded by a barbed wire fence with checkpoints
manned by Litton-employed guards. The 2000 corpsmen
sleep in open bay Army barracks, wear green uniforms, march
to their meals at the mess hall, and are hauled off to the brig
when they misbehave. The young men arriving at Parks arc
not exactly prepared for such an environment. Most of them
have been signed up by the Litton recruiters who are stationed
throughout the poverty areas of the nation advertising the
wealth of opportunity in California. Since Litton's contract
with the Office of Economic Opportunity (OEO) depends on a
sufficient number of enrollees, the recruiters use every possible
means to lure them. Of course, they give the standard come-on:
training for a good-paying job, the equivalent of a high school
diploma, 530-a-month spending money, a S50-a-month bonus
upon graduation for time completed, and a chance to get
away from home. There is also exotic talk of pools and
girls, private rooms with TV's-even draft deferments!
If getting them there is half the battle for Litton, keeping
them there is the other half. When a new enrollee decides that
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life was better back home, even though home may have been it
decaying urban slum, his request to leave is met with hostility
by Litton officials. I is is told that he cannot leave for at least
90 days for any reason other than a death in the immediate
family. Moreover, if he wants to quit at any time prior to the
end of his nine-month course, he must pay his own way home,
often halfway across the country.
Those who protest this policy too loudly are "quieted" by
muscular counselors or hauled off to the brig. Some become
desperate. A psychiatric social worker at Parks reported that
he had been assigned to work with a young boy from Dallas,
Texas, who had sliced his arm open in an attempt to get out.
But even with all of Litton's tenacity, 55 per cent drop out
before the end of the course.
Justice at Camp Parks is supposed to be administered by a
Center Review Board (CRB) comprised of corpsmen and
Litton people. But by disciplinary counselor Lindsay Johnson's
own admission, the board is his rubber stamp: "I have a good
working relationship with the CRB," he notes. "They do
whatever I tell them to."
While Job Corps discipline is harsh, it is not really like the
Army's. As one Parks teacher told RAMPARTS, "It isn't feasible
to take these kids off the streets ... and put them in the equiva-
lent of boot camp, especially since the counselors aren't
armed." Rather, Litton does try, in its own words, to "reha-
bilitate the entire social perspective" of the corpsmen, includ-
ing particularly their work ethics and attitude toward
authority. As Pat Coughlin, Parks' program coordinator for
occupational training told us, "If the boss tells [the corpsman]
to pick up a broom and sweep the floor, he's got to learn not
to tell the boss what to do with the broom."
If the physical surroundings at the Parks Center are grim
and the general atmosphere intimidating, the educational
operation is laughable. The Basic Education program is in-
tended to bring the corpsman's reading and arithmetic skills
up to a level appropriate to the specific job skills in which he
is to be trained. The curriculum materials for the reading
course, developed by Litton, are somewhat unusual. The pre-
test, which determines the student's reading, level before he
takes the course, and the post-test, which determines his level
upon completion of the course, are identical. In addition, the
actual teaching materials used during the course and those
used to measure any improvement contain the same text and
exercises as do the pre-test and post-test. Of course, this setup
merely passes off the repeatedly coached memorization of a
particular passage as the ability to read. But schemes like this
enable Litton to present impressive statistical evidence "docu-
menting" their expertise in educating underprivileged youth-
a cruel but profitable joke. When a Parks teacher complained
that all the enrollees were only learning how to improve
their scores. on one particular test, the head of Litton's cur-
riculum development at Parks replied, "We're not doing any-
thing here that college fraternities don't do for their members."
True'enough. Still, no college fraternity has yet been awarded
a $25 million government contract to educate ghetto youth.
Aside from such relatively subtle deceptions, there is doubt
about the simple veracity of the figures used in the statistics
Litton has put out about Parks. According to Professor
William Austin, former president of the, Parks Federation of
Teachers and Counselors, "Public relation's officers kept putting
out fake figures.... One would hear about this number of
corpsmen being placed in job positions and this number of
corpsmen demonstrating academic success by various grade
levels.... All of it was nonsense.... There was so roach pres-
sure on supervisors to produce figures that in general people
just faked them.... Fifty per cent or more of the corpsmen
didn't make it to class . . . if a corpsman quit after having
completed just one module out of 15 in the total training, he
would be considered a'graduate.' "
Austin feels that educating the corpsmen is riot Litton's
primary concern. "The corpsmen didn't mean a damn thing,"
Austin reported. "There was a lot of very expensive equipment
around which nobody had any idea how to use...."
the management of the Job Corps Center, Litton
has exhibited those lucrative skills which have made it
a leader among defense contractors. It subcontracts
to its own divisions as a means of maximizing profits while
minimizing service. Litton originally received from OEO a
$12.8 million cost-plus contract with a fixed but redetcrmin-
able fee for running the Job Corps Center. It then decided to
buy unnecessary textbooks from the American Book Pub-
lishing Company, a member of Litton Educational Systems. A
General Accounting Office (GAO) investigation later showed
that $337,000 worth of American Book Publishing Company
textbooks lined closet shelves at Parks. According to a copy-
righted story in the Denver Post, "Among the books it bought
for Job Corpsmen, many of whom could barely read, were
textbooks on the theory of relativity, the stock market and the
slide rule."
This same GAO report noted that there was, in the words
of the San Francisco Chronicle, "a devastating picture of high
costs, waste and disciplinary problems at a Job Corps Center
[Parks] in California. After two years of operation the esti-
mated cost of the Center had jumped from $12.8 million to
$25.5 million, the dropout rate was 55 per cent and only eight
per cent of the enrollees were placed in jobs related to their
training."
Given what is known about Parks, it is not surprising that
a great deal of racism is exhibited there. One new employee,
upon arriving at the gate, was met by a guard who hailed him
with, "So you're another one coming out here to help these
dumb niggers." But far more unnerving was the surrealistic
scene-straight out of Invisible Man-when a Litton executive
flew over Parks in his private plane dropping dollar bills to
the corpsmen assembled below. Litton officials amused them-
selves by watching the young men trample each other in a
frantic effort to grab the money. A former Litton employee
remarked that the object of the "airlift" was to "see how fast
the niggers could run."
Litton, in keeping with a gentleman's agreement with
officials of the semi-suburban towns near Camp Parks, has
forbidden corpsmen to enter them. Young men from the Parks
Center have reported that whenever they ventured into one
of the neighboring communities, they were returned to Parks
by local police, although they had created no disturbances.
Litton's idea of community relations is to keep the cages
locked during the week and to bus the corpsmen on weekends
to "hospitality houses" in the nearby cities of San Francisco
and Oakland.
According to Professor: Austin, living conditions and
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sanitary facilities at Parks were at times worse than those in
the big city ghettos the corpsmen came from. At one point,
hygiene conditions in the dormitories were so bad that Austin
approached public health people at the University of Cali-
fornia to ask what could be done. The answer seemed to be
"nothing," because the center was located on a military base
leased to a private company, and no one knew if county health
officials had any right to enter the base.
_- r- F LCi roN WAS RUNNING PARKS SO POORLY, why didn't the
government step in and enforce its contract? The answer
is that in the spring of 1967, the OEO did try to en-
force part of its contract with Litton. The teachers union
at Parks had been refused a room to meet in at the center after
working hours, a denial which violated both the National
Labor Relations Act and Job Corps bulletin 67-12. Despite
the intervention of W. P. Kelly, a director of the Job Corps;
Richard Groulx, an executive of the Alameda County Central
Labor Council; and several arbitrators from the OEO office in
Washington, Litton was able not only to refuse to meet with
anyone, but also to fire the president, two vice presidents and
the secretary-treasurer of the teachers union for "disloyalty to
the company." The last OEO arbitrator, Hyman Bookbinder,
commented to Groulx and union officials that the OEO was
unable to enforce the terms of its contract with Litton.
During the teachers' strike at Parks that resulted from
Litton's action, Senators Robert Kennedy, Joseph Clark and
George Murphy of the Senate Subcommittee on Employment,
Manpower and Poverty, were in San Francisco on a nation-
wide tour of the Poverty Program. The senators curiously
reversed their original plan to visit Parks, and showed no
interest in discussing the situation there with Parks teachers
and corpsmen. Cynics said it was possibly because Litton was
one of the largest contributors to the Democratic Party, of
which Kennedy and Clark were members.
In it recent paper, Professor Austin observed, "Job Corps
facilities have been a popular form of educatignal experimen-
tation for these companies, allowing them to train their staffs
and develop materials on taxpayers' dollars."'The real profits
will conic, it is hoped, from supplying the physical plant,
audio-visual equipment, curriculum materials and "experts"
to educational programs in large cities.
Companies like Litton are planning to subcontract a city's
complete school system, claiming to be able to meet whatever
contractual standards are set more "efficiently" than local
school boards could. This will be a tempting offer to the often
hard-pressed, bewildered city officials whose school systems
have been bogged down by almost total impotence. And for the
community, dumping the whole complex educational crisis
into the lap of Litton's "experts" would seem a blessed relief.
in the '50s, when prime contracting started with the Air Force
and spread to the Army, and later to the Navy. The Air Force
was contracting out whole weapons systerns, and the con-
tractors, naturally, became a powerful lobby for that service.
Thus the Army found itself losing valuable missiles appropria-
tions in Congress to its rival. The Air Force had upped till;
ante, and the Army was forced to meet the price. Like a protec-
tion syndicate, business gives security to those who cooperate
with it.
Now, as government social agencies struggle for funds, the
Wall Street Journal reports that, "Business is turning into an
important force for pushing embattled domestic proposals
through Congress." And an executive of the Department of
Housing and Urban Development-whose special advisor,
General Bernard Adolph Schriever, is called the "space
general" for his role in NASA-is quoted as saying: "Each
agency has gradually developed a list of firms interested in its
field . . . we don't keep them turned on all the time, but we
know how to turn them on...."
Among the businessmen who are throwing their support
behind constructive social welfare programs is James J. Lin;,
mastermind of Ling-Temco-Vought, which ranks 38th in For-
tune magazine's' 1968 listings, six notches ahead of Litton. A
recent interview with Ling in the Chicago Tribune indicates the
perspective of one of the most important new men of con-
glomerate power. If and when L-T-V reaches a point where
it absorbs the competition or where it is number one on
Fortune's list, reports the Tribune, Ling would be willing to
consider a political role for himself.
Ling usually votes Republican, though he contributed to the
Kennedy, Johnson and Humphrey campaigns and was a
delegate to this year's Democratic convention. He doubts that
he has the temperament to obtain elective office, but he might
accept a cabinet post, preferably as secretary of Defcnse or
secretary of Health, Education and Welfare. Ling's ideas on
the latter position are described by the Tribune as "inter-
esting." And so they are. Says Ling: "Once you make a
taxpayer of these hard-core unemployables, you're moving
towards a solution. It's the old Hitler solution. You teach them
by force. You make it mandatory and send them to a govern-
ment compound. Males at twenty-one, females at eighteen.
You teach them personal hygiene, the rudiments of life. It's
nothing new. The New Deal, with its NRA, CCC, etc., made
tremendous social reforms."
One doesn't know what transpired between the interviewer
and the wizard of Dallas at this point; the report continues:
"Then again, Ling admits: 'I can't buy it, it opposes free will.
But if you could only computerize it,' he sighs. 'Figure the
requirements of industry, how many of this skill and that skill
are required, take all the people who want to learn and
can't, seek them out....
Corporations like L-T-V and Litton Industries are feeding
the whole range of social problems into their computers. Will
they be the ones called upon to solve them? It may be that
there are just enough people who will take comfort in the idea
that however bad things look, Big Brother is already there
extending a helping hand.
UT COMMUNITY EXIIAUSTION WITH social problems is by
no means the only thing that the process of business
supplanting government has going for it. Govern-
ment agencies depend on the political influence of
which engage in lucrative contracting methods naturally receive Researchers on this story: Jan Austin, William Goodman, Jack
the most enthusiastic support, while recalcitrant agencies and
programs suffer. This was the pattern in military contracting
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