Editing Lockheed Corporation (section)

====Loan guarantee====
Drowning in debt, in 1971 Lockheed (then the largest US defense contractor) asked the US government for a loan guarantee, to avoid insolvency. Lockheed argued that a government bailout was necessary due to the company's value for U.S. national security.<ref name=upshot>{{Cite news|last=Irwin|first=Neil|url=https://www.nytimes.com/2020/03/19/upshot/coronavirus-comparing-bailouts.html|title=A Taxonomy of Bailouts: Comparing the Coronavirus Rescues With Rescues Past|date=March 19, 2020|work=The New York Times|access-date=March 19, 2020|language=en-US|issn=0362-4331}}</ref> On May 13, 1971, the [[Richard Nixon]] administration sent a bill titled "The Emergency Loan Guarantee Act" to Congress requesting a $250 million loan guarantee for Lockheed and its [[Lockheed L-1011 TriStar|L-1011 Tristar airbus]] program.<ref name=NYTLL>{{cite news|title=The Lockheed Loan|work=The New York Times|date=May 14, 1971|url=https://www.nytimes.com/1971/05/14/archives/the-lockheed-loan.html}}</ref> The measure was hotly debated in the US Senate. The chief antagonist was Senator [[William Proxmire]] (D-Wis), the nemesis of Lockheed and its chairman, Daniel J. Haughton.<ref name=upshot/> Some of the debate in Congress developed over what conditions should be attached to the bailout. Senator [[Alan Cranston]] demanded that the management be forced to step down, lest it set a precedent rewarding wasteful spending. Others argued that the company should be allowed to go into bankruptcy citing the recent decision to leave [[Penn Central Transportation Company|Penn Central railroad]] to that fate, and the fact that the airbus program at issue was commercial rather than military.<ref name=NYTLL/>

Naval scholar Thomas Paul Stanton notes that the opposition to the bill held it was "the beginning of the socialization of the American aircraft and aerospace industry."<ref name=Stanton>{{cite journal|title=An Assessment of Lockheed Aircraft Corporation and the Emergency Loan Guarantee Act|author=Thomas Paul Stanton|date=1977|publisher=Calhoun: The NPS Institutional Archive|url=https://core.ac.uk/download/pdf/36711265.pdf}}</ref> Proponents responded by claiming "this socializing process had taken place many years before", and some witnesses before Congress discounted "the very notion of 'free enterprise'."<ref name=Stanton/> [[John_Connally|Treasury Secretary Connally]] pointed to the faltering economy and worries about unemployment while testifying "the time has come within the United States when we have to look at things differently. Free enterprise is just not all that free."<ref name=Stanton/> Questions arose whether letting Lockheed fail would be bad for the market due to decreased competition or good by screening out inefficient competitors and mismanagement.<ref name=Stanton/> Lockheed's competitors, McDonnell Douglas and General Electric (collaborators on the [[McDonnell Douglas DC-10|DC-10]]) strongly opposed the bill and they feared the government would steer contracts to Lockheed to insure loan payments.<ref name=Stanton/> Admiral [[Hyman G. Rickover]] condemned the bill saying it represented "a new philosophy where we privatize profits and socialize losses."<ref name=Stanton/> The New York Times editorial board held that the Nixon administration was violating its own free enterprise principles by advocating for the loan.<ref name="NYTLL"/> (Later, historian [[Stephen J. Whitfield]] viewed the passage of the loan guarantee as a support for the argument that America was shifting away from [[John Locke|Lockean]] liberalism.<ref>{{cite journal|title=Review: The Pertinence of Garry Wills|author=[[Stephen J. Whitfield]]|date=1981|publisher=American Quarterly|jstor=2712317|url=https://www.jstor.org/stable/pdf/2712317.pdf}}</ref>)

Following a fierce debate, Vice President [[Spiro T. Agnew]] cast a tie-breaking vote in favor of the measure on August 2, 1971. President Nixon signed the bill into law on August 9, 1971 - which became colloquially known as the "Lockheed Loan". Even after its adoption, a further controversy developed when the Emergency Loan Guarantee Board set up by the Executive branch to oversee the loan refused to allow Congress' General Accounting Office to examine its records. They argued that the office was attempting "interference in the decision-making process" amounting to an effort to "bully" and "harass" the board. This claim was denied by Comptroller General [[Elmer B. Staats]], and efforts were made by Senator [[William Proxmire]] to get Treasury Secretary [[John Connally]] to testify due to the suspicion that the loan guarantee was in jeopardy. The editorial board of ''The New York Times'' blasted the situation, citing it as another argument against the propriety of the loan guarantee and the precedent it set for other failing companies.<ref>{{cite news|title=Lockheed Loan|date=May 7, 1972|work=[[The New York Times]]|url=https://www.nytimes.com/1972/05/07/archives/lockheed-loan.html}}</ref> The debate around the ramifications of the Lockheed loan guarantee soon resurfaced in late 1975 with discussions on possible aid to [[History of New York City (1946–1977)#Fiscal crisis|New York City during its fiscal crisis]].<ref name=Stanton/>

Lockheed finished paying off the $1.4 billion loan in 1977, along with about $112.22 million in loan guarantee fees.<ref>Stanton, T.P. [http://oai.dtic.mil/oai/oai?verb=getRecord&metadataPrefix=html&identifier=ADA040197 "An Assessment of Lockheed Aircraft Corporation and the Emergency Loan Guarantee Act."] {{Webarchive|url=https://web.archive.org/web/20140101081320/http://oai.dtic.mil/oai/oai?verb=getRecord&metadataPrefix=html&identifier=ADA040197 |date=January 1, 2014 }} U.S. Naval Postgraduate School, 1977.</ref>