The Waterbury Democrat., 1944-02-07


ness Of recapturing excessive war
profits seems to have kicked UP a
good bit Of popular attention, and
has caused no end Of wrangling in
Congress.
The Lincoln Electric Co., to begin
with, is a Cleveland, Ohio, firm
manufacturing electric welders and
electrodes. Head of the firm Is big,
white matched James r. Lincoln, q
colorful, hard fighting industrialist,
with ideas Of his own about every
thing-open shop, employee rela-
tons, profits, incentive pay and re-
negotiation.
PROFIT FIGURES
His company has always done a
good business. From 1896 to 1910, 1t
averaged annual gross sales Of about
10000, 900, on which it had profits
] before taxes Of about $500 600, or
"a per cent year. In 1912, its sales
were $33, 500, 900, with profits before
taxes of $9,500,000, or about q per
cent.
Six per cent of this 1912 business
was direct with the government, So
per cent with government prime and
fsub-contractors. The Navy Price Ad-
juStment Board has suggested that
on all war business, Lincoln Electric
refund to the government some
$3,250,000 Of its 1912 profits before
taxes, equal to between $500, 900 and
$500, 900 after taxes. Even so, accord
| iY1eP RI &hn NoNyNp t1NSe 1vyAlSlS
the company with a net profit Of
over $2,000,000 on its 1912 business,
or about per cent on sales of $33,
100000 in that year.
But with j. F. Lincoln, it's the
! principle Of this system that bothers
him, and hence his lawsuit. In 1t, he
makes three principal claims:
1. That the Renegotiation Act is
unconstitutional and therefore the
government should be enjoined from
enforcing it.
2. That even though the act were
constitutional, it is now arbitrarily
administered by Secretary Of the
Navy Frank Knox and Undersecre-
tary James Forrestal, and that the
statute, properly construed, doesn't
apply to all the Lincoln Electric
Company business included in the
renegotiation.
3. That Lincoln Electric hasn't
made excessive profits.
In contesting this suit, the gov
eminent, through the Department of
Justice, may raise several defenseS.
Some Of them are questions Of juris-
diction which, If decided in favor of
the government, viii end the suit
before the court reaches the ques-
ton of the Renegotiation Acts con-
stitutionality.
GOVERNMENT DEFENSES
First, the government may con-
tend that there is an existing ade-
quate remedy at law, in the courts,
for Lincoln Electric's grievances. In
other words, ]. F. Lincoln could go
into the Federal Court Of Claims
and bring suit on the basis Of his
contracts. though the government
would have to defend such action.
! Second, although government Of
ficers-Secretaries Knox and Forest
al-are named as defendants in this
suit, rather than the United States
government. the government may
contend that in substance this is a
suit against the United States. But
since the United States can be sued
only if it gives its consent to be sued,
and since it has not giver its con-
sent In this case, 1t may be contend
ed by the government attorneys that
the court has no jurisdiction in this
action.
Now these are not mere legal
maneuvers, but preliminary ques-
tions which must be decided before
getting to the matter of the con-
Stitutionality Of the Renegotiation
Act itself.
Lincoln Electrics charge that the
act is unconstitutional is based on
the assertion that 1t takes away a
mans property without due process
Of law.
The governments reply to this is.
in effect, that there is no taking Of
property involved.
The United States government, 1t
may be said, can do business with
any one it wants to and on any
terms 1t wants to, as prescribed by
the acts of Congress. In this case.
the government has said that 1t
won't do business with anyone un-
less that anyone agrees to return ex-
cess profits, Congress having con-
sidered this q necessary safeguard
for the protection Of the taxpayers.
Every contract made with or for
the government after passage Of the
Renegotiation Act is deemed to con-
tain this safeguard. and therefore
1t applies to Lincoln Electric Com
pany and every other war contrac-