Evening star., 1943-06-16
House Group Hears
100000 5hipyard
Profited S74,7b
Michigan Firms OfficioI
Opposes Any Reduction
Through Reneeotiotion
BY the Associated Presx

By the Associated Press.
A Michigan shipbuilder told
the House Naval Affairs Commit
tee today that his Arm, building
small vessels for the Navy, had
realized in 1912 a $734,75 profit,
after payment of taxes, on a cap
ital investment of approximately
100000.
Harry Defoe of Bay City, Mich,
operating the Defoe Shipbuilding
Co. as a partnership with his BROTH
er, two sons and a nephew, MAIN
tanned. also, that the profit should
not be reduced through renegotia-
tion with the Navy Price Adjustment
Board.
Preliminary details of the firms
financial structure. its past and DO
tential profits, and it's pending Navy
contracts were disclosed by Mr. De-
foe under questioning as he called
upon the Naval Committee for sharp
modification of the statute author
izing recovery of excessive profits.
He said the firms $734.736 profit
was realized on business of $22,773,-
4O5, and after taxes amounted to
only 3.6 per cent" The question of
readjusting that profit is now pend
ing before the Navy Price Adjust
ment Board.
Cut Would Halve Profits.
Mr.. Defoe said the Navy board
wanted to cut the firm gross profits
Of IS ,087 900 by 81, 500, ,0O0-an action
which would cut its net profits ap-
proximately in half
He said that he owned one-third
Of the partnership. his two sons an
other third, and his brother, a New
York lawyer, and the latter's son,
the balance He testified that his
own salary had been boosted from
$751; 900 in l94l to $4,000 in 1912.
Mr.. Defoe reported that his two
sons were brought into the partner
ship recently las they came of age"
and that they received annual SAL
aries of $4,000 each. Representative
Magnuson, Democrat, of Washing
ton, commenting that one of the
sons could mot be more than % or
"a years DID," drew from Mr.. Defoe
an estimate that the son would be
entitled to more than s1O0 900
from the firms last years profits.
New Jersey Firm Probed.
Testimony was produced before
the committee earlier today that SAL
aries of some executives of the New
York Shipbuilding Co.. Camden,
N. j., had been doubled since the
company began a huge naval ship
construction program.
The salary hikes on Government
business drew criticism from COM
mittee members, but were defended
by K. F, Metten. chairman of the
company's board.
Testimony was presented that Mr.
Metten's salary was $4,000 in 1899
before the war; $4,000 IN 194l and
now is 100000
Mr.. Metten told the committee his
companys salaries. after the in
creases, were not out OF line with
salaries paid by comparable com.
panies, and this was confirmed by
K. H. Rockey. head of the Navy
Price Adjustment Board, which
handles renegotiation of contracts.
The board chairman also stressed
the increase of responsibilities han-
died by the executives.
Mr.. Metten told the committee his
company received $751; .336,396 for
construction of battleship, aircraft
carrier and five cruisers, and after
renegotiation, but before taxes, the
profit amounted to s12,769.9 .97o.
After taxes, he said, the COM
pany's profit on these seven ships
amounted to about IS per cent OF
the sl5l 1886 1896. He compared this
with larger percentage profits on
pre-war business done by his COM