New-York tribune., 1918-11-30
Controller Refuses to Agree
to Bakers Blanket Con-
tract Cancellation
Specific Ruling Will
Be Asked of Gregory
Agreements Signed Only by
Government Subordinates
Declared Void

ernment's maturing programme for
cancelling big war orders with the
minimum Of disturbance to business
conditions was thrown into confusion
to-day by a decision of Controller
Warwick Of the Treasury that thou-
sands of orders placed by telegram
telephone or mail are not legally bind
ing, and consequently they may not be
recognized through the negotiation Of
terminating contracts without special
legislation by Congress-.
Officials estimated that hundreds Of
millions of dollars in contracts are in
volved
At the same time, Secretary Baker
announced that the lWar Departments
will direct it's own cancelling of con-
tracts "in spirit OF fairness and help
fulness to all concerned"
Gregory's Opinion Sought
Attorney General Gregory will be
asked to pass on this apparent conflict
between the law, as strictly interpreted
by Controller Warwick, whose au-
thority grows out of his supervision of
payments from the Treasury, and the
desire Of the War Department to ter
inmate ontracts-both those backed up
by formally signed documents and
those undertaken or informal agree
ments--by making some sort of lump
sum payment to the contractors.
If legislation is. found to be neces-
sary, it is said, an attempt will be made
to rush it through Congress immedi-
ately to avoid holding up the govern
ment's great industrial rehabilitation
and readjustment plans.
Planned to Keep Plants Going
Secretary Baker had proposed form
of terminating contracts--a supple
mental agreement-by which the gov
ernment would be released by the con-
tractor from the original contract and
in return would pay the contractor for
Expenses incurred" in carrying out the
agreement, and an additional allowance
for profit limited to 10 per cent of the
cost Of the unfinished articles on hand.
The War Department had further
proposed to pay the manufacturer i'm
mediately rs per cent of the minimum
due on this basis, as determined by a
contracting officer of the government
and the balance after time had been
allowed for careful determination of
the final amount due
This method, Secretary Baker said
would give plants which had devoted
themselves heartily to government
work some capital to finance their re-
conversion to peacetime production
and prevent "a break in their contjnu-
Gus operation and employment Of
labor"
No Profits Are Assumed
Controller Warwick's decision de-
clared "it cannot be assumed. as the
proposed contract form does, that tho
contractor anticipates profits from
completing his Contracts"
The controller also said that "the
making of the supplement, agreement
and the simple certifying to minimum
amount by the contracting officer upon
the statement and estimate of the con-
tractor will not be sufficient nor con-
elusive upon the accounting officers"
This referred to the checking of nav
ments made by accountants working un-
der the direction of the controller of
the Treasury. He adued: "The supple-
mental agreement cannot be permitted
to impose liability upon the govern
mcnt where none heretofore existed 4"
The controller then explained that
contract, to be legal, must 'be reduced
to writing, with the names OF the
parties signed at the end" and that "a
signing by proxy is considered by this
office as not permissible"
Thousands of contracts have been
signed in this manner by proxies Of
the army officers duly authorized by tho
Secretary Of War.