Before the Cold War, and particularly before World War Two, the main industries in Texas were oil extraction, refining and transport. Yet even before World War Two, Texas had a relatively large number of airplane repair businesses, and during World War Two, the armed forces built a large number of Texas army bases to station and manufacture aircraft. After the war, once it was clear that future conflicts would be won or lost in the air, Texas benefitted from a surge in growth in defense spending, and because the state had many air bases already, and had already won contracts during the war to build bombers and other military aircraft, a large number of contracts for building next generation military bombers and fighter jets went to companies located in Texas.
By the 1960s, the volume of aircraft manufacturing in North Texas (Arlington, Forth Worth, et cetera) was second in the nation only to aircraft manufacturing in California. This diversification in industrial priorities in Texas from oil production and support services, to defense contracting, helped turn Texas into a technology and innovation hub. Both the oil and technology sectors benefitted greatly, as did Texas' economy. The large number of army bases in Texas, the amount of cheap land, and the increasingly large number of college graduates from Texas schools who had studied engineering, culminated in a perfect synergy between Texas's burgeoning computing and aerospace engineering companies, and the rapacious appetite of the Defense Department to produce more sophisticated weapons systems to counter the Soviet threat.
Companies such as General Dynamics, Boeing and Texas Instruments won hundreds of millions of dollars in defense contracts to build rockets, research ballistic missile technology, and test new explosive devices. The high paying jobs that these companies created transformed many sleepy towns into affluent cities or suburbs. To ensure that the state could continue to attract these new businesses, Texas put more money into engineering programs at its state schools, and kept its tax rates very low, to encourage more businesses to come to the state. The electronics and computing companies that sprang up in Texas (like Texas Instruments and Dell) needed energy, and Texas oil drillers and refineries (Exxon, ConocoPhillips, Valero et cetera) benefitted greatly from this growing appetite for energy, from both private industry and government defense programs. Chemical companies in Houston also began to find ways of turning oil into plastic, which became a key component of most consumer goods and of many defense and aerospace parts.
Finally, Lyndon B. Johnson's decision to locate NASA in Houston in the 1960s brought even more jobs, revenue, military and congressional support, as well as prestige to Texas' aerospace and aeronautics industry. It also helped make Texas a hub for major airline carriers, helping to launch American Airlines and Southwest. Yet more than anything else, it was the mission to put a man on the moon that captured the nation's imagination, and the world's attention. The successful 1969 moon landing, broadcast around the world, solidified the state's reputation as a center for innovation, engineering, can do attitude and military prowess. NASA's control center in Houston made the city a household word around the world, one that signified American ingenuity and American might. Many top scientists and engineers from around the country and the world flocked to Texas to be part of the space exploration and aeronautics industries, which remain a major driver of the Texas economy today.
All of this brainpower in one place led to a perfect creative storm, which led to the formation of such Texas based companies as Dell, AT&T, Southwest Airlines, American Airlines, KBR, Kinder Morgan, Halliburton, Baker Hughes, and many other consumer oriented companies (Sysco, Whole Foods, Dr. Pepper-Snapple, et cetera) which catered to the growing middle class with plenty of disposable income.
To give some context of way that economic growth affected Texas, the population of Houston in 1950 was just under 600,000. By 1970, it had more than doubled to over 1.2 million, and by 1990, the population in Houston was over 1.6 million. Even more dramatic was the growth in Arlington, which became a defense industry and military hub. The population there went from just 7,692 in 1950, to about 90,000 in 1970, and over 261,000 in 1990. This kind of explosive population growth would not have happened without the pull of the aerospace and aeronautics industry, massive defense spending, the decision to base NASA in Houston, and the innovation that resulted from all of the entrepreneurial talent that these companies attracted to the state. In turn, none of this would have happened without the motivation of the Cold War.
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