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The biggest spending—and hence the biggest potential saving—is in the Defense Department. Before they could run this sprawling giant, Defense Secretary Wilson and Under Secretary Roger Kyes, both from General Motors, found that they had a lot to learn about public life. Wilson was doubly damned for refusing to sell his $2,500,000 stock interest in G.M. and for blurting out at a congressional hearing: "What is good for the country is good for General Motors, and what's good for General Motors is good for the country." Kyes was the swaggering newcomer who flicked his fingers at generals' stars. When Wilson and Kyes made an across-the-board slash in Air Force funds, the feeling spread that in an atomic-bomb age, the saving of a dollar was getting a higher priority than defense. But behind the scenes, the new managers of military might were laying the base to get more defense for less money.
The Defense Department was buying 4,000,000 different items; Wilson and Kyes discovered that a mere 300 accounted for more than half its dollar purchases. Said Kyes to the Pentagon generals: "You've been walking all around this elephant. Let's concentrate on saving money on these 300 items first. We'll worry about the nits and lice later." Among the biggest cost items were aircraft engines. The Air Force found that they had been improved so much that their life expectancy was far greater than realized, hence fewer spare engines were needed. Saving: $500 million.
Wilson & Co. weeded out high-cost producers and cut down on support planes. They left research funds largely intact. But by canceling orders for production planes that were not to be delivered for years, they put procurement on an up-to-date, businesslike basis. Total Air Force saving: $5 billion.
The "nits and lice" also came in for attention. By redesigning a foot-powder can, the Army cut unit costs from 16¢ to a nickel for a total saving of $275,000. Wilson and Kyes found that the military carried in inventory no fewer than 5,000 different types of electronic tubes and 800 categories of screw drivers; on their orders, tube types were cut to 192, and screw drivers to 100.
At year's end, most of the critics had quieted down, especially after Wilson threw his weight behind a bigger Air Force. Because of the new economies, the Air Force figured that it can provide 115 wings (ranging from 35 to 75 planes) instead of 110 in 1954 and 120 instead of 115 in 1955, at no extra cost. The new goal for 1957: 137 wings v. the 120 originally advocated by Wilson.
First Things First
Because the businessmen in Washington knew that there can be no such thing as long-range military security without economic stability, they put a high priority on sound money. Treasury Secretary Humphrey, who left the chairmanship of Cleveland's M. A. Hanna Co. to take command in that sector, figured that the best way to protect the dollar was to snuff out the last traces of inflation. His methods: 1) pushing interest rates upward, and 2) spreading the $270 billion national debt, concentrated 75% in securities coming due within five years, into longer-term maturities in order to take money out of circulation.