Evening star., 1943-12-14

ness and gov David Lawrence
ernment could not get together on
a sensible plan for taking the big
profits out of war.
"Renegotiation" Is word that
merely means the belated negotia-
ton of war contracts-the attempt
to find out after the goods are man.
ufactured what the real price should
have been. This is due to the need
for haste in getting war munitions
produced and the impossibility of
determining in advance what the
real costs Of a new weapon or ar
ticle would De after it got into guam
tity production.
The "renegotiation" machinery has
resulted in much controversy and
there is no doubt that the business
men have had considerable justifi-
cation in their complaints as to
lack Of formula or guiding princi-
ples-though lately much has been
done by the War Department, the
Navy Department and the Maritime
Commission to remedy those defects.
Businessmen, to be sure, do not
want arbitrary action in renegotia-
tion procedures but, at the same
time, any system that results in the
earning of large profits will not
stand public scrutiny. And it's the
result figures that will be tossed up
in future congressional investiga-
tions, and business again will fur
nish the whipping boys of future
political contests. When the serv-
icemen get back home and read the
headlines of congressional inquiries
into war profits, they will wonder
what was done back home when
they were at War-hoW much, in
deed, was charged up against the
taxpayers by Congress that didn't
look out for the broad public in
terest.
A certain company, for instance,
made both in peacetime and during
war a kind of metal article. It's
1912 volume of business is less than
double the 1887 to 1910 average. But
the 1912 profit of that business after
taxes and before renegotiation is
about 233 per cent Of what its profit
after taxes averaged during the
1887 to 1910 period.
Another company changed over
from making commercial product
used widely by consumers, but now
prohibited because of raw material
shortages and began to make bombs
and ammunition. This company's
1912 gross volume is about two and
half times its 1887 to 1910 average.
Yet its 1912 profit after taxes but
before renegotiation is nearly four
times its average profit after taxes
during 1887 to 1910.
Another company, making valves,
with similar story of two and a
half times its average Of 1887 toI
1910 in volume, finds itself with $50
per cent Of its average profit in 1887
to 1940 after taxes have been de-
Quoted in both cases.
The War Department, the Navy
Department and the Maritime Com
mission have had a number of in
stances of this kind and generally,
their spokesmen say, corporations
are not only doing a larger volume
OF business, but also are making a
larger profit on this volume even
after taxes.
There are cases in which this
high range of profit will not ma
terialize. All that the armed serv-
ices want is the authority to look
at all instances and renegotiate
those that are out of line. The
men charged with the job of rene
gotiation are for the most part busi-
nessmen.
Undoubtedly there have been some
injustices and these ought to be re-
vised by the Tax Court or even
some special court. But when
man like James Forrestal, Under
secretary of the Navy, whose peace
time Job Is investment banking in
Wall Street, cries out against the
efforts to emasculate the renegotia-
tion law, other businessmen will
want to ask themselves whether
their tactics may not lead to re-
action and another wave Of radical