Evening star., 1943-06-10
War Profits Act Aids
Private Enterprise,
Forresta| Declares
Tells House Committee
Navy Renegotiotions
Saved 81 900, 600, 900
BY the Associated Press.

Undersecretary of the Navy James
v. Forrestal declared today that
without renegotiation of war con-
tracts some companies would reap
enormous profits" which might prove
harmful to the whole system of pri-
vate enterprise.
His statement came as the House
Naval Affairs Committee opened a
two-weeks' study of the Govern
ment's system Of recouping war
profits deemed excessive. The in
uuiry began with this definition of
the renegotiation statute by Robert
E. Kline, committee general coun-
sell:
This measure was designed to
prevent the advent of a new class
of war millionaires and to prevent
the home front from becoming
happy hunting ground for war
prof1teers"
Mas Seeks Refining"
Meanwhile, Representative Mas.
Republican. Of Minnesota, asserted
that there ought to be some drastic
refining of the renegotiating statute"
and suggested an award above nor
NAL profits for manufacturers who
make sharp reductions in the cost of
war materials.
Mr.. Mas termed the renegotia-
ton law "one Of the most dangerous
ever written by Congress" arguing
the hands of "socializers' it could be
used to destroy private enterprise by
eliminating profits altogether.
But Mr.. Forrestal, emphasizing
his advocacy of the profit motive to
obtain production, told the commit
tee that he wanted to see the law
administered so that industry would
receive a fair profit and come out
of the war lean and hard, not fat
and puffy
Calls Principle TRADITIONAL"
He testified that 'renegotiatlon Is
the present embodiment of tradl-
tional American determination to
prevent inordinate profits from war,
adding:
Balancing this determination
and properly so-is the equally
American reliance upon the profit
motive as an important inducement
in war production. AS long as the
profit motive is thus relied upon,
industries engaged in war work will
and should make reasonable profits.
Therefore war profits must be suf-
ficient to make the profit motive
work, but war profits must not be-
come excessive
Mr.. Forrestal reported that s35,-
0OO,OOO0 900 in war contracts have
been assigned thus far to the Navy
Department for renegotiation, chat
it had handled approximately sl3.-
900 100000 to date. and that 1t had
resulted in a savings of more than
$1,000, 100000.
Mr.. Kline said the committee has
"a completely open mind on the
question of revising the renegotiation
statute. He said representatives of
both big and small manufacturers
would have chance to testify.
Many to Appear.
He reported that he had lined up
spokesmen for the aircraft, textile,
Shipbuilding, machine tool and mu-
nitions industries, as we'll as officials
of the War, Navy and Treasury De-
partments and the War Shipping
Administration.
Two measures dealing with the
law are now awaiting attention by
the Ways and Means Committee,
one to repeal it altogether and the
other to limit its use to contracts
over $50O,0O0. instead Of the present
100000 minimum.
Mr.. Kline, while saying that most
If not all-of the protests against
the statute could be answered, listed
these as some Of them:
l. That the bookkeeping and other
factors involved cost more than they
save.
2. Unwarranted profits are now
recovered through the higher excess
profits tax.
3. 1t discourages manufacturers
from seeking Government contracts
because Of the uncertainty of their
return.
4. 1t is discretionary" in that it
covers the contracts awarded by
only four Government agencies, War,
Navy. Treasury and War Shipping
Administration.