Financial History 25th Anniversary Special Edition (104, Fall 2012) | Page 25

Apollo 13 was a near disaster but was
touted as a huge success because the astronauts returned home alive. Apollo 13 was,
if nothing else, an excellent demonstration
of how human ingenuity and determination can overcome even Murphy’s Law.
For the private companies who were
not caught up in the spotlight of the
Apollo 13 rescue, however, the mission
brought relatively minor trouble. During
the week of the disaster (April 14–18, 1970)
each of the three big companies posted
losses, with Boeing losing 5.5% of its value,
TRW’s value dropping by about 2% and
Grumman’s value sinking 1.3%. The companies which designed some of the equipment associated with the failed mission
took hits too, though not catastrophic
ones. North American Aviation, which
built the Command Module that suffered
the malfunction, lost only 3.5%.
In September 1970, the final three
Apollo missions were cancelled, leaving
only two more scheduled. The cancellation indicated that the mission objectives
of Apollo (to put humans on the moon
and to discover more about our celestial
neighbor) had been accomplished, and
also that the space program was preparing
to move on to different projects, including
Skylab and the Space Shuttle.
Skylab was already in the works and
helped to carry the space program from
the close of the Apollo missions in 1972
to the 1981 launch of the Space Shuttle,
the re-usable orbiter that remained the
defining feature of the American space
program for the next 30 years.
During the week of the Apollo cancellation, Boeing’s stock jumped 10%,
and TRW’s and Grumman’s stocks rose
7.3% and 8%, respectively. The companies
apparently benefitted from the revelation
that NASA and the government would be
turning their sights (and dollars) on other
programs in which the companies would
vie to play large roles.
Investors were not disappointed. Since
the days of the Space Race, the big aerospace companies have continued to thrive
on government contracts. Boeing is still
a major player in the aeronautics field
and acquired North American Aviation.
Grumman Corporation was acquired by
Northrop to form Northrop Grumman
Corp., one of the largest defense contractors in the world today. TRW Inc. was
acquired in part by Northrop Grumman,
which wanted its defense industries. The

non-defense side of the business was spun
off into TRW Automotive, which primarily works to make cars safer through the
development of new technologies.
The major events of the Space Race and
the stock value of the companies involved
in the aerospace industry were deeply
intertwined. While unanticipated events
such as Sputnik or the announcement of
the cancellation of the remainder of the
Apollo program had the anticipated positive and negative effects on the markets
and on the aerospace firms, events such
as the Apollo missions that had been
scheduled and anticipated by investors
had already been taken into account in the
valuation of Boeing, Grumman and TRW
and, therefore, did not affect the companies’ stock prices with nearly the same
punch that geopolitical surprises packed.
The Space Race and the Apollo program
had a major effect on the American economy by harnessing the talents of hundreds
of thousands of Americans, thousands
of companies and hundreds of universities. Although some of the Space Race’s
most gripping moments were surprises,
a majority of the Race was a planned,
dedicated effort of which the public and
investors were kept well aware. Markets
fluctuated as new information became
available, but they were rarely shaken to
the core. As a result, investors continued
to pour their savings into the market and,
thereby, finance the big companies whose
engineers won the Space Race.
America’s foe, despite its early lead in
the race, lived under a very different set of
rules that in the end could not command
the resources necessary to win the Space
Race or the Cold War of which it was a
part. Although it achieved a few successes,
including Sputnik and Gagarin’s flight,
the Soviet government wasted precious
resources, manpower and ingenuity on
projects with more political appeal than
practical military or economic sense.
In the 1930s, for example, it expended
a substantial part of its R&D budget
in a failed attempt to develop aircraft
powered by steam turbines. During the
Space Race, America quickly drew even
with the Soviets scientifically and militarily, while the Soviets were content to
trounce the US only in the propaganda
department. By January 1960, seven of 15
satellites launched by America were still
orbiting Earth, while only one of three
Soviet devices still roamed the skies, a fact

that should have dispelled some of the
abundant American discomfort about the
Soviet “lead” in the Space Race.
The American focus on scientific and
technological value, even if that meant
smaller satellites and lower lift capacity
rockets, clearly turned out in the long
run to be a much better tactic than the
Soviet’s emphasis on larger but less useful
technologies.
The financial crisis of 2007–9 — and subsequent recession and attendant human
suffering — revealed that capitalism, that
complex and ever-evolving mix of free
markets, democracy and big government, is far from perfect. The Space Race
reminds us, however, that it was superior
to communism, its main 20th century
rival. Despite its warts, perhaps capitalism
is still the best system available. 
Peter “Sander” Kline is an undergraduate
student at Augustana College in Sioux
Falls, SD. The Thomas Willing In