Evening star., 1942-02-19

that it could not David Lawrence.
be widely reproduced in the press.
Yet everybody who does business
with the Government by contract
has an interest in the principles set
forth.
Simply stated, the controversy
arose during the First World War
when the Emergency Fleet Corp,
representing the Government, made
a contract with the Bethlehem Ship
building Co. for the construction OF
ships with which to combat sub
marine warfare. The Bethlehem
Shipbuilding Co. fulfilled the con-
tract and made substantial proft.
Judged by the standards existing
In those days, it was not out of line
with other profits in other Govern
ment contracts. Judged by what
has been subsequently learned about
production costs, 1t was too high a
profit.
The question to be decided in
lawsuit instituted by the Justice
Department was whether the courts
should take cognizance of what
were termed "unconscionable prof
its" and "a years later nullify a
contract made in good faith by both
parties or whether the remedy should
come in the form of subsequent
legislation by Congress. Much of this
sort Of legislation has since been
adopted to control proflteering or
to collect high excess profits taxes.
Between Two Courses.
Stated another way, the specific
question was whether the courts
should undertake to write legisla-
ton that Congress omitted at the
time to write or whether Congress
should take full responsibility for
its mistakes.
Justice Murphy. In concurring
opinion, summed it up thus:
ut is understandable that one
may be indignant at Bethlehem's
claim, but such indignation does not
Justify the distortion Of established
legal principles to relieve the Gov
ernment of its approval of a hard
bargain. The possibility that
the Government may be relieved OF
bargains "a years after agreeing to
them Is not conducive to mutual
trust and confidence between ciu-
Gems and their Government"
It is interesting to note that this
case was decided by six New Deal
appointed judges-Messrs. Black,
Reed, Murphy and Byrnes, who
lined up on one side, and Justices
Frankfurter and Douglas, who dis
sented. The other three Justices
Stone, jackson and Roberts-did
not participate in the case due to
technical reasons.
Possessed Remedy.
Justice Black, in writing the
prevailing opinion of the court,
waved aside the argument that the
Government in 1917 was powerless
and had to sumbit to Bethlehem's
terms or not get ships built. He
said Congress had the power to
commander plants and draft busi-
ness organizations in time of war,
but Just because Congress failed to
avail itself of such policy and
selected commercial negotiation"
instead cannot be now offered as
q reason to invalidate contracts
which admittedly had in them no
taint Of fraud.
Mr.. Black added that he was un-
willing to rely on the vague gen.
erality of what is or is not "un-
conscionability." For, he said, the
evidence showed that the Bethlehem
ships were built for less cost than
those of other shipbuilders at the
time and the contracts were in line
with what was then stanoaro
practice of computation.
"The profits" wrote Justice Black,
smade in these and other contracts
entered into under the same system
may justly arouse indignation. But
Indignation based on the notions OF
morality of this or any other court
cannot be judicially transmitted
into a principle of law or greater
force than the expressed will OF
Congress"
Frankfurter Follows Tendency.
The dissent by Justice Frankfurt
ter follows his tendency to regard
the Supreme Court as a body that
must review the mistakes of Con-
gress and supply verbiage where
the statute happens to omit the
same. His argument in this case
is that the Supreme Court must
not allow an "unconscionable profit"
In contract obtained by private
parties under duress. He said:
THE courts generally refuse to
lend themselves to the enforcement
Of a bargain in which one party
has unjustly taken advantage Of
the economic necessities of the
other"
# the Frankfurter doctrine is
correct, then every organized labor
contract obtained by strike is a
form of duress. In the long run,
though outwardly favorable to
business corporation. the opinion
delivered by Justice Black will be
found more nearly in conformity
with liberal thought than that of
Justice Frankfurter. Mr.. Blacks
views deserve commentator for
their fairness, all the more because
this correspondent and others have
for the last few years attacked him
as being without judicial minded
ness. The latest decision nullihes
That accusation.
0spfodustion Kishts Reservsd.)