Evening star., 1942-04-06

.Forgo Profits,
Nelson Says
Tells Senate Group
He Opposes Bill to
Limit Earnings
By the Associated Press.

INDUSTRY would De Wiling 10
forgo wartime profits from the
Government IN the great ma
jority of cases, provided it was
assured protection against capi-
tai impairment, Chairman Don
aid M. Nelson of the War Pro-
duction Board believes.
Il think the majority of industry,
If l interpret it rightfully, would
be, If all things were equal, willing
to work for nothing for the Gov
eminent in this war period. pro-
vided there was no capital impair
ment during this time" Mr.. Nelson
told the cenate Appropriations Com
mlttee In testimony made public
today.
Questioned in connection with
proposed profit legislation submit
ted 10 the Senate. Mr.. Nelson urged
that the Army, Navy and Maritime
Commission be given flexible au-
thority to renegotiate production
contracts on which they suspected
excessive profits had been made.
Instead, the committee approved
submission of an amendment to q
pending s19212 ,O00.0 900 military sup
ply bill which would apply sliding
scale of limitations.
Fear Capital Losses.
Mr.. Nelson said he thought that
most contractors desired to make
only reasonable profit, but wanted
to be protected against capital losses
when they entered a relatively new
field of manufacturing munitions
and other war supplies.
Now the thing that is in the
mind of most manufacturers, both
the large and the small alike. I think
in this war effort from what I have
seen, is that they are not so much
concerned with profits" he said. 7
am talking about the great ma sjority.
I would say 80 per cent of the
volume.
But they do not want to take
capital losses and there may be
capital losses entailed where a man
takes a contract at a fixed price
and his costs do not turn out as
he expected. His labor costs him
more, his material costs him more;
he is not able TO do it in the time
expected: it took him longer to do
it. or the reflections were greater;
the repairs he had to make on the
item were greater.
"All of those things might bring
about capital impairment and. Of
course, no one wants to see that
capital dissipated."
McNary Backs Limitation.
Earlier Minority Leader McNary
had swung powerful Republican
support behind the effort to write
drastic war profits limitations into
the huge military supply bill.
Declaring he would support any
workable scheme to cut of excessive
war contract profits, Senator Nc
Nary said he was confident other
Senate Republicans felt the same
way and would give wholehearted
backing to pending proposals.
we don't run wars to make mil
lionaires," he told reporters
Special significance was attached
to Senator McNary's statement Of
the minority viewpoint since the
profit limitation proposal was due to
be presented today in such a way
that two-thirds vote might be nee
essary to attach 1t to the military
bill.
Sliding Scale Approved.
Striking down a fiat 6 per cent
limitation previously approved by
the House, the Senate committee
voted to authorize the presentation
of a comprehensive amendment
under which industry would be al
lowed profits ranging from 10 per
cent on the first 100000 of war con-
tracts down to 2 per cent on all
above s50000,000
While the House provision was
limited solely to future contracts to
be made on funds provided within
the bill, the Senate committee de-
cided to broaden the proposal to in
clude all war orders, past present
and future, except those on which
the Governpent already had made
final payments.
While Senator McNary said he
had not yet familiarized himself
with all the details of the commit
tee-approved amendment, he felt
the principle was workable.
Likewise. Democratic Leader Bark
ley said he thought the amendment
was satisfactory, although Senators
OMahoney, Democrat, of Wyoming
and Overton, Democrat, of Louisiana
made known their intention of Of
fering substitute, which the COM
mittee rejected Saturday by an 8-to-
8 tie vote.
The substitute proposal would leave
the responsibility of fixing final
profits with the War and Navy De-
partments and the Maritime Com
mission, which would be authorized
to renegotiate contracts on which
they found excessive profits we're
being made or excessive costs
charged.
Once the profit limitation feature
is settled. the Senate is expected 70
give speedy approval to the huge ap-
preparations bill, carrying ST,
OO0, 900 for the Army and $1,634 .000,-
O0O for the Navy in addition to minor
appropriations for other depart
ments.
Of the Army's share, $6 6,990, 900 900
would go to the purchase and out
fitting of 81 ,o7O additional airplanes,
with $3.50, 1000 900 allocated to ex-
pansion of ground facilities and to
stepping up the pilot training pro-
gram.
Slightly more than s2,O00,0 100000
would be provided for the training,
subsistence, pay and housing of the
Army, expected to reach a strength
of 100000 men before the end Of
the year. A total of $4,000, 900, 900
would be made available for aid to
Americas allies in the form of air.
craft equipment and parts, trans
portation service, depots and other
services overseas.
The Navy's share would be divided
between s809 900 900 for new shore
facilities and maintenance, and
1925 ,000, 900 for miscellaneous items,