6- If this gives you no immediate concern in the light of over 2, 000 years of failure by mankind to settle differences peacefully, I suggest to you there is some immediate and practical peril on the political front. The Federal Government is already under pressure to give greater recognition to other states in awarding defense contracts and to stop giving California such favored consideration. At the same time we have a Secretary of Defense who is dedicated to increasing the efficiency of our defense spending and to reduce it to the lowest amount consistent with our needs for national security. California is relatively a high cost area and even those defense firms long headquartered here are being urged to locate plants elsewhere, and whether the stated reason given is dispersal or lower costs is immaterial. A mere change in the rate of our defense spending will affect California's rate of growth. As I said earlier, the rate of expansion of the defense sector of California's economy is already slowing down despite the fantastic growth in electronics. We are losing our head of steam, and this threatens the continuation of the rate of growth that we have enjoyed in the past. If we are to sustain our rate of growth, we must find some other form of revenue as a substitute for any loss of defense spending that we may suffer The alternative form of increased spending can be either for services or goods. If it is to be for goods, California must find a way either to produce goods in this state that we now import or we must expand our exports of goods already produced in California plants. Under present conditions