No. 2 Men

Wisconsin's Melvin Laird, the incoming Secretary of Defense, knows the Pentagon well. For 14 of his 16 years in the House, he served on the appropriations subcommittee handling military spending, and he has shown familiarity with national-security issues as a frequent critic of Democratic defense policies. The chink in Laird's armor is his lack of administrative experience, and last week he moved to close it with an impressive appointment. As his Deputy Secretary of Defense, No. 2 man in the Government's biggest department ($80 billion a year, a military and civilian personnel of 4,500,000), he picked one of the nation's most unusual and successful businessmen: Centimillionaire David Packard, 56, board chairman of California's prosperous Hewlett-Packard Co.

Packard and William Hewlett, a Stanford classmate ('34), started the electronics company in a Palo Alto garage in 1939 with a $600 stake. Their first sale of any consequence was to Walt Disney, who bought nine audio oscillators to help create the sound effect for Fantasia. With Hewlett as the original engineering brains and Packard as a fiercely dynamic manager, the company has become the world's largest maker of electronic measuring devices. In the postwar era of computers, television and solid-state circuitry, its sales have grown to $269 million annually. It is a rare U.S. TV repair shop that does not use Hewlett-Packard equipment to detect picture-tube defects.

Student Target. Three years ago, Packard began a series of company commitments to better the lot of underskilled blacks and Mexican-Americans. He started training programs for the hardcore unemployed and used Hewlett-Packard resources to help set up East Palo Alto Electronics, owned and run by blacks. A Stanford trustee since 1954, he has been a target of student protest because of Hewlett-Packard's defense contracts and his seat on the board of General Dynamics. To many dissidents he seemed the personification of the military-industrial complex. Yet during a campus sit-in last May, he was the only high-level university official who talked to the protesters.

"You have made a great deal of progress in getting power and influencing how the university is run," he told the Stanford students. "But," Packard warned, "if you get in a confrontation, you'll lose all this and the university will lose too." As he left, one sit-in leader observed: "I don't believe it. There's a guy we've been cursing for twelve months, and when he shows up in person everyone sits in stunned silence." Last summer, Packard hired Phil Taubman, a Stanford Daily editor and TIME campus correspondent, as "radical in residence," with free rein to look into any aspects of Hewlett-Packard's operations he chose. "The type of job reflects Packard's style," Taubman reports. "I now have a less stereotyped image of the business world. But I still see business as a barely enlightened force for creative change in American society."

Impossible Problem. The size of Packard's stake in a company that does more than a third of its business ($100 million last year) with the Government and Government contractors will raise questions when he comes before the Senate Armed Services Committee for hearings on confirmation to his $30,000-a-year post. He will be the richest man to join the Government since Nelson Rockefeller served as Under Secretary of Health, Education and Welfare in the Eisenhower Administration. However, Rockefeller's investments were widely diversified. The holdings of Packard and his wife consist almost entirely of 3,610,700 shares of his own company --a 29% interest in Hewlett-Packard that was worth $299,688,100 at last week's stock-market closing.*

"When I considered this matter," said Packard last week, "my first response was that I have an impossible conflict-of-interest problem." He may still be right. Because his holdings in Hewlett-Packard are so large, he cannot unload them without drastically affecting the market price of the stock. He also argues that the voting rights to his large block of stock must remain with Hewlett-Packard management and not go to strangers. For Hewlett-Packard to stop doing business with the Government while Packard is in Washington, he says, would be "unrealistic."

Therefore, he proposes to put his stock into a short-term trust managed by members of the Hewlett-Packard board, with dividends and any capital gains going to charity. Eventually, Packard will get the stock back. Because of that, his proposed arrangement seems to violate the rule-of-thumb laid down for incoming Cabinet officers by John Ehrlichman, who will be a White House counsel in the Nixon Administration. Says Ehrlichman: "We don't want any whiff of a question. They've got to put their assets out of their control and even out of their knowledge."

In Manhattan last weekend, President-elect Nixon named a fresh face and a familiar one to top posts at the State Department under Secretary-designate William Rogers. Massachusetts Attorney General Elliot Richardson, 48, who was briefly Acting Secretary of HEW in the Eisenhower Cabinet when Rogers was Attorney General, will be Under Secretary of State. He comes from an old Boston investment-banking family, and his second cousin, Francis Sargent, will succeed John Volpe as Governor when Volpe resigns to become Nixon's Secretary of Transportation. Richardson has been president of Boston's World Affairs Council but, like Rogers, is without direct experience of foreign policymaking. "What matters," he says, "is that one is equipped by education and experience for making tough decisions."

The professional expertise in State's top echelons will come from Career Ambassador U. Alexis Johnson, 60, who is currently serving in Tokyo. In 33 years as a foreign-service officer, Johnson has also been assigned to Korea, China, Manchuria, Brazil, the Philippines, Czechoslovakia, Thailand and Viet Nam. He will be the No. 3 man, Under Secretary for Political Affairs. Johnson's appointment was particularly popular with career foreign-service officers, whose Foreign Service Association recently recommended that the No. 3 job go to a professional diplomat. Nixon also announced that he would ask Ellsworth Bunker, 74, the U.S. Ambassador in Saigon, to stay on in South Viet Nam for the time being.

*Eisenhower's first Defense Secretary Charles Wilson sold $2.5 million worth of General Motors stock before taking office in 1953. A successor, Robert McNamara, also an automobile company president, was compelled to sell $1.5 million in Ford stock in 1960.

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