The Waterbury Democrat., 1943-07-14

| war. And, as War Department eX- perience has shown, at least 37 per
 cent of the contracts investigated
 thus far have shown that there were
 not excessive profits.
 Opposition to the renegotiation
 act of April 28,( 1942, in the cam
 paigns of publicity that have been
 conducted in an effort to have the
 law modified or repealed have
 shown a wide variety of arguments,
 some of which border on the naive. At the outset, in considering rene gotiation and contract price adjust ments, officers of the government procurement agencies have adopted ! the attitude that it is the right and | the duty of every corporation eXecu- tive to get as good a deal for his | stockholders as he can. Still, there's | a war on and the taxpayers have some rights in this business too.
 CONTRACTORS GET
 EVEN BREAK
 If anything, the government re- negotiators have probably leaned a good bit toward the side of the con- tractors who are told to put in every cost that seems reasonable, even though it may not be allowed. Pri- vately, the government renegotia- tors, who were mostly business men themselves in private life, joke to each other about when they go to Atlanta, after the war They don't know what they're going for, spe- officially, but they feel they're on their way.
 Still--some of the war contrac- tors leading the parade against re- negotiation try to make cases for themselves which Army and Navy men, recognizing the sacrifice which the soldier or sailor makes with his life, find hard to accept as sacri- flee or risk.
 Building contractors have come up with argument running some thing like this: Yes, they admit, some profits on some building con- tracts have been high. But dLsre- gard those. Average out all the profits of all the contractors and you will see that there has been no eX- cessive profiteering.
 The argument of textile mill executives ran about as follows: Cotton mills should be exempt from renegotiation of contracts be- cause they are an old-time industry, using old-time machines. Their costs were known. If the men who r,,oIa tho oovor,,poe ont contracts had been any good, it would have been impossible for the industry to get contract that would allow excess profits.
 WHERE EXCESS PROFITS LIE
 What they would have the gov ernment overlook in this case is the fact that when volume of pro- duction is increased from two to five times or more, the costs of operation come down amazingly, and there is where the excess profits lie.
 The manufacturer of device used in training aircraft personnel came up with the argument that since the war demands had resulted in the production of all these devices that would be needed for the next 20 years, the government should allow profits that would guarantee the company's dividend rate for the next 20 years.
 Some machine toolmakers have similar argument, which runs that since the war demands have caused the manufacture of machine tools up to the saturation point, there will be little postwar demand and, as a matter of fact, production for next year will be cut back, begin- ming in October. Therefore, it is reasoned that machine toolmakers should have profits assuring main tenance of dividend rate till there is new demand
 There is on record, however, one machine toolmaker which had net worth of $5 million in 1888 and which, in the four years since then, has not only paid out $5 million in dividends-100 per cent dividends, or 25 per cent per year-but has in- creased it's net worth three times to boot.
 That's why there is this thing called renegotiation.