Evening star., 1923-05-23
SHIP BOARD RULING
PAVES WAY FOR US.
TO REGAIN MILLIONS
Denial of Bethlehem Steel
Claim of SO, 500, 900, Re-
iects Savings Clause"
CAN RECOVER BONUSES
IF DECISION is UPHELD
Opinion Declares Contractors in
Honor Bound to Effect Economies
Without Extra Payments.

The claim of the Bethlehem Steel
Corporation for sS.5o0.000 alleged to
be due under war time contracts has
been tentatielvy disapproved by the
Shipping Boards claim committee in
decision which was said to have
the approval of a majority of the
board.
The decision was based on a formal
legal opinion setting forth a new
and sweeping Interpretation of gov
ernment contracts which, if sustained
by the courts. will result in the re-
covery by the government of hun
dreds of millions Of dollars paid out
in settlement of emergency construc-
tion.
~Savfngs Clause" Involved
In brief, the opinion held that, a
contract to the contrary nothwith-
standing, a contractor cannot collect
from the government under the So
called savings clause" The Bethle-
hem contract, like scores of other i'm
portant wartime industrial agree
ments. provided that the company
stipulated percentage of any econo-
mics 1t might effect which would
bring the cost of the work below a
set figure. In the opinion Of counsel
consulted by the committee and af-
frmed by the Department of Justice.
a contractor Is bound in honor and
at law to give the best possible re-
suits IN performing the work he un-
dertakes and to effect without extra
compensation all possible economies
fC int
100000 already paid the Bethlehem
corporation as fees under it's con-
tract would be regarded as closing
that contract and the large sums
claimed as savings" would have no
standing.
Might Give "Quit CIaim.n
Outside of any consideration of the
validity OF the company's claim, how
ever, 1t was suggested today the
board might offer to the Bethlehem
company In lieu of any sums con-
aasfsa ns.s SSs fas sIs sa the h
stalled at three of the eompany's
plants at government expense. The
boards accountants have estimated
that BY the
Point, Nd; ss,500,o00 at the Bethle-
hem's Alameda plant, and $1,500,000
at Chester. Pa.
quote schwab Opinion.
1t developed today that in the ex-
ecutive hearings conducted by the
committee upon the case, one of the
precedents cited was established by
Charles Schwab, head of the Bethle-
hem corporation, and also a former
director general of the Emergency Fleet
Corporation.
A letter sent by the fleet corpora
tion during Mr.. Schwab's tenure Of
Office to the American Shipbuilding
Company was read into the record.
1t called attention to a financial state
ment issued by the company, in which
profits of so per cent on government
contracts were. forecast, and declared
that President Wilson had informed
officials of the board during the past
administration that 10 per cent must
be considered adequate lawful COM
pensation. The American Shipbuilding
Company maintained several plants
on the great lakes, at which were con-
structed 156 ships.
Will influence Thousands Of Cases.
Since the fees already paid Bethle-
hem represent more than Is per cent
on it's contract. the boards commit
tee held that Mr. schwab could not
himself gracefully sponsor a demand
for additional payment.
lit was predicted in official circles
that continued consideration of the
Bethlehem contract would disclose
other elements which would have i'm
portant bearing upon the pending
contracts now being closed up by
the various government bureaus. An
indication of Its Importance was
given when Chairman Lasker re-
quested the entire board to be pres
ent. whereas routine cases had been
considered by the claims committee
alone. F.