By Alex Abella

If you think the Internet came out of Silicon Valley, that NASA planned the first satellite to orbit Earth, or that IBM created the modern computer—think again. Each one of these breakthroughs was conceived at RAND, a shadowy think tank in Santa Monica, California.

The Intimidation Factor

Rand rose out of the ashes of World War II. After witnessing the success of the Manhattan Project—the $2 billion initiative that created the first atomic bomb—a five-star Air Force general named Henry "Hap" Arnold (pictured) concluded that America needed a team of great minds to keep the country's technology ahead of the rest of the world. In 1946, he gathered together a small group of scientists and $10 million in funding and started RAND (which stands for Research and Development). He even convinced a family friend, aircraft magnate Donald Douglas, to house the project at his factory in Santa Monica.

After a few short months, RAND got the attention of academics, politicians, and military strategists alike by issuing a prophetic study called "Preliminary Design of an Experimental World-Circling Spaceship." At the time, rocket science was still in its infancy, so RAND's call for an orbiting space station was revolutionary. Not only did the think tank specify the kind of fuel the spaceship would need and how quickly it could be built, but it also outlined how the station could predict the weather, transform long-distance communication, and, most importantly, intimidate our rivals abroad. If America could put a satellite into space, what else was she capable of?

Although President Truman passed on the space station, the military fell in love with RAND. Through Hap's connections, the Air Force quickly became the think tank's main contractor, and RAND began consulting on everything from propeller turbines to missile defense. Before long, the organization was so flush with contracts that it had to hire hundreds of additional researchers to keep up. In recruitment ads, RAND bragged about its intellectual genealogy, tracing a direct line from its president, Frank Collbohm, to Isaac Newton. Whether or not that claim was true, the institute secured a reputation as the place to dream up new ways to wage wars and keep enemies at bay.

By the 1960s, America's rivals were paying attention. The Soviet newspaper Pravda nicknamed RAND "the academy of science and death and destruction." American outfits preferred to call them the "wizards of Armageddon."

War Games

The Soviets had good reason to worry about RAND. In 1957, the Air Force hired the think tank to create spy satellites. Within two years, it developed CORONA—a covert system that aimed to send camera-carrying satellites into orbit on the backs of missiles. While the idea was genius, the design was flawed. It took 13 failed attempts before the system finally got off the ground in 1959. Once it did, however, the results were spectacular. The CORONA satellite returned with 161 lbs. of film about the Soviet Union, more footage than spy planes had recovered in the previous four years combined. For the following decade, CORONA became the backbone of American intelligence on the Soviet Union. Researchers watched troops march along the Russian border with China and spied on cities they'd never seen before. They could even count the fruit in Soviet orchards and analyze their crops.

By the early 1960s, RAND had established itself as a fixture of U.S. policy. Branching out from straight rocket science, the think tank had become the center of the nation's nuclear strategy.

One high-profile RAND genius, John Williams, developed game theory to predict how the cagey Soviet Union might act during conflict.

The theory was a perfect fit for RAND, an organization that continually sought to impose objective reality on an irrational world.

Another genius, mathematician Albert Wohlstetter, came up with the fail-safe concept, which saved the world from nuclear conflagration several times. The idea called for a series of checkpoints for bombers armed with nuclear weapons. If a bomber pilot failed to receive confirmation at any checkpoint, he would abandon the mission and turn the plane around. Once, in 1979, a mistake by a telephone operator led to a transmission that the United States was under nuclear attack from Moscow. Ten fighters from three separate bases took to the air armed with nuclear missiles. But in the end, because of Wohlstetter's fail-safe system, none of them deployed their weapons.

Through the years, RAND's sphere of influence became more visible. In the 1960s, Secretary of Defense Robert McNamara hired scores of its young researchers—dubbed the "Whiz Kids"—to reorganize the Pentagon. But perhaps the thing that most solidified RAND's reputation in the public's imagination was the release of the Stanley Kubrick film Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb in 1964. The movie's title character, a deranged Nazi scientist, was modeled after RAND's eccentric Herman Kahn. A military strategist, Kahn famously argued that America could easily survive an all-out conflict with the Soviet Union if people took refuge in shelters and rationed food. Although the radiation would cause hundreds of thousands of genetic defects, Kahn insisted the American people would endure. Kahn's apocalyptic scenarios didn't end there. He also dreamed up the Doomsday Machine, a device that could destroy all life on Earth, which Kubrick used in Dr. Strangelove. In fact, Kubrick borrowed so many of Kahn's sayings and ideas that the scientist began demanding royalties. Kahn was so persistent that Kubrick finally had to tell him, "That's not how things are done, Herman."

Spinning a World Wide Web

While RAND has played a major role in keeping America safe from military attacks and nuclear catastrophes, the think tank has also left its mark on the communications industry. RAND is directly responsible for packet switching, the technology that made the Internet possible. It all started in the 1960s, when the military asked RAND researchers to solve a hypothetical question: If the Soviet Union destroyed all of our communication systems with a nuclear bomb, how could we fight back?

A young engineer named Paul Baran provided an elegant solution by likening the nation's telephone wires to the brain's central nervous system. Baran proposed sending messages via phone lines and changing words into numbers to avoid noise and distortion. Baran also decided that any content relayed should be divided into "packets," or discrete bundles of data. As a result, messages were separated during transmission, and would then automatically reconfigure themselves once they reached their destination. More importantly, if direct communications were destroyed, the packets could reroute themselves through phone lines anywhere in the world.

Baran tried to convince AT&T to install the system, but the phone giant refused to create something that could become its worst competitor.

Instead, the creation of a worldwide packet-switching system was left to the Pentagon, which devised ARPANET, the predecessor to the Internet.

Healthy Choices

During the 1960s, RAND also expanded its lines of investigation into education, welfare reform, and criminal justice. By the time Richard Nixon took office in 1969, the think tank was an established, independent source for social policy research. So, when the issue of medical insurance sparked a great national debate, Nixon tapped RAND for ideas. At the time, there was little data on the effectiveness of free health care versus coverage plans with co-pays and deductibles. In particular, Nixon wanted to know if free health care made people healthier. To find the answer, RAND's Health Division spent 10 years acting as the insurance company for more than 5,000 people around the country.

In the end, RAND's research found that people who paid for health care were just as healthy as people who got it for free. With free health care, people went in for more regular medical screenings, but their other habits—exercise, diet, smoking—were worse. The message was not lost on the insurance industry, nor on the federal government. In 1982, when the study was released, only 30 percent of medical plans had deductibles. Five years later, more than 90 percent did.

Thinking Ahead

Health care was just the beginning of RAND's expansion into the social sciences. Although 50 percent of RAND's current $223 million budget still comes from federal funding, much of that goes toward non-defense work. The think tank currently employs close to 1,000 researchers, who spend their time analyzing everything from renewable energy and obesity to hurricanes and the Israeli-Palestinian conflict. Globalization has also opened up the organization's opportunities. In addition to its five centers that handle social and economic policy issues, as well as the five centers that focus on international affairs, RAND has an affiliate organization in Europe, and a prominent voice in Middle Eastern policy. Most notably, the RAND Qatar Policy Institute is working on reconfiguring the emirate's entire educational system.

Of course, RAND hasn't exactly abandoned its bread-and-butter services. The organization touts three federally funded research and development centers that concentrate on national security. After all, RAND did establish the discipline of studying terrorism in the 1970s, long before the United Nations even had a working definition for the word. Today, the RAND Terrorism Chronology Database, which has catalogued all acts of terrorism from 1968 to the present, has become an invaluable tool for the military and the government. It makes sense that in these times, our new president will pay attention to the think tank, too. Barack Obama has taken a keen interest in its study on post-traumatic stress disorder in soldiers returning from Iraq. In other words, RAND already has his ear.

The Who's Who of Rand John Nash "“ RAND was the motherland of game theory during the 1950s and 1960s, and among its most prominent players was John Nash—the soulful subject of the book and movie A Beautiful Mind. Nash came up with what is now called the Nash equilibrium, which is used to determine the stability of competition. Thomas Schelling "“ Schelling was an economist who came to RAND shortly after Nash's frenzied departure. His game theory concocted a worldview of aggression and counter-aggression that was heavily influential during the Vietnam War. Kenneth Arrow "“ One of the most influential RAND employees, Arrow posited that greed is good, and that what he termed "consumer sovereignty" should rule society. Some critics have blamed Arrow's Theorem for providing the theoretical foundation for the free market frenzy of the past 30 years, including the current housing market meltdown. Albert Wohlstetter "“ The most prominent member of RAND's so-called Nuclear Boys Club. A brilliant theoretical mathematician and an unparalleled nuclear strategist, he worked at RAND on and off from 1951 to his death 46 years later. He originated the Second Strike nuclear doctrine (make sure you have enough backup nukes to wipe out any attackers) and the Fail Safe principle (drop the big one on your target only after confirmation in flight from headquarters). Daniel Ellsberg "“ An endlessly loquacious mathematical genius, strategic thinker, and unlikely peacenik. Disgusted with official lies about America's involvement in Southeast Asia, he leaked the Pentagon Papers, which set in motion the end of the Vietnam War.

This article originally appeared in mental_floss magazine. Alex Abella is the author of Soldiers of Reason: The RAND Corporation and the Rise of the American Empire (Harcourt, 2008).