continuity in funding for research, the absence 

 of a coherent national science policy especially 

 with regard to IRI's, and their current need for 

 more money. 



Respondents from Federal intramural 

 laboratories and the Federally Funded Research 

 and Development Centers (FFRDC's) expressed 

 a need for long-range planning and focussed on 

 the commitments and priorities implied by a 

 workable, coordinated national research policy. 



In the following pages, individual quotations 

 document the respondents' concerns about 

 dependability of funding for research and the 

 possible role of national planning and policy in 

 assuring such dependability. 



INDUSTRY 



Ruben F. Mettler, President, TRW, identified 

 factors which he felt have had and will continue 

 to have a strong adverse impact on fundamental 

 research in industrial laboratories, and which 

 also have negative effects on fundamental 

 research in university and Government 

 laboratories. Some relevant sections of his 

 letter are quoted here: 



To place my views on this subject in context, I 

 should say that I regard fundamental research as 

 a long-term investment for a corporation. Hence, 

 along with other long-term investment, fun- 

 damental research should be relatively well 

 insulated from minororshort-term fluctuations in 

 business results. However, along with other long- 

 term investment, fundamental research is not 

 insulated from more basic trends affecting 

 business results, and it is two of these basic 

 trends which I wish to identify as endangering the 

 effectiveness of fundamental research. 



Dr. Mettler first identified "inflation" and 

 noted: 



The cumulative effect of inflation has, of course, a 

 strong bearing on the amount of capital American 

 companies need to invest in order to maintain 

 investment levels comparable with historical 

 levels. Even if current inflation levels now drop 

 (perhaps only temporarily) it will take years of 



significantly higher corporate investment levels 

 to compensate for the effects of inflation. 



He also mentioned declining capital resources 

 and continued: 



Just when inflationary forces require higher 

 levels of corporate investment, the capital 

 resources of American corporations are declin- 

 ing. The steady decline in corporate profitability, 

 and a continuing long-term bias in national policy 

 over the past several decades resulting in 

 increased personal consumption in preference to 

 capital formation, have squeezed the basic 

 capital resources — as measured by retained 

 earnings — of American corporations to such an 

 extent that we now see a declining trend in long- 

 term investment in real (non-inflated) terms. This 

 decline in long-term investment generally has 

 included declining investment in fundamental 

 research. 



James Hillier, Executive Vice President, 

 Research and Engineering, RCA, presented in a 

 way typical of many industrial responses the 

 capital formation problem as it relates to 

 research and innovation in the current economic 

 climate: 



There is a well-known and well-established 

 relationship stating that one dollar spent on 

 successful basic and exploratory research re- 

 quires ten dollars worth of development to make it 

 ready for introduction and utilization in the 

 economy and, further, that an additional one 

 hundred dollars of investment in plant, training, 

 marketing and promotion is required for its 

 introduction and its support to the point of self- 

 sustained viability. It is also known that for 

 significant innovations the entire process usually 

 takes about ten years to go from the successful 

 basic and exploratory research to self-sustained 

 viability. Cash investment is required throughout 

 this period and even considerably beyond if the 

 rate of growth of the business is high. Finally, 

 recognizing that only a fraction of the basic and 

 exploratory research projects in industry are 

 successful in the sense of being suitable for 

 proceeding into a business venture, it must be 

 appreciated that the total process can be con- 

 tinually supported only by companies that are 

 larger than some minimum threshold in size 



34 



DEPENDABILITY IN FUNDING FOR RESEARCH 



