The daily monitor leader. [volume] (Mount Clemens, Mich.) 1942-19??, 1944-02-11
. BEHIND THE SCENES
IN WASHINGTON .

Six per cent of this 1912 bust
ness was direct with the govern
ment, So per cent with govern
ment prime and sub-contractors.
The Navy Price Adjustment
Board has suggested that on all
business. Lincoln Electric re-
fund to the government some
$3,250,000 of its 1912 profits be-
fore taxes, equal to between
100000 and 100000 after
taxes. Even so, according to the
Navy, this would leave the COM
pany with a net profit of over
S2,000,000 on its 1912 business,
or about 6 per cent on sales of
S33, 100000 in that year.
But with J. F. Lincoln, it's the
principle of this system that
bothers him, and hence his law
suit. In it, he makes three
principal claims:
/. That the Renegotiation Act
is unconstitutional and there
fore the government should be
enjoined from enforcing it.
2. That even though the act
were constitutional, it is now ar
bitrarily administered by Secre-
tary of the Navy Frank Knox
and Undersecretary James For
restal, and that the statute, pro-
perly construed, doesn't apply
to all the Lincoln Electric Com
pany business included in the
renegotiation.
3. That Lincoln Electric
hasn't made excessive profits.
In contesting this suit, the
government, through the De-
partment of Justice, may raise
several defenses. Some of them
are questions of jurisdiction
which, if decided in favor of the
government, will end the suit
before the court reaches the
question of the Renegotiation
Acts constitutionality.
GOVERNMENT DEFENSES
First, the government may
contend that there is an existing
adequate remedy at law, in the
courts, for Lincoln Electric's
grievances. In other words, j.
F. Lincoln could go into the
Federal Court of Claims and
bring suit on the basis of his
contracts, though the govern
ment would have to defend such
action.
Second, although government
officers-Secretaries Knox and
Forrestal-are named as defend
ants 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 given its
consent in this case, it may be
contended by the government
attorneys that the court has no
Jurisdiction in this action.
Now these are not mere legal
maneuvers, but preliminary
questions which must be decided
before getting to the matter of
the constitutionality of the Re-
negotiation Act itself.
Lincoln Electrics charge that
the act is unconstitutional is
based on the assertion that it
takes away 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 govern
ment, it may be said, can do bus
mess with any one it wants to
and on any terms it wants to, as
prescribed by the acts of Con-
gress. In this case, the govern
ment has said that it won't do
business with anyone unless that
anyone agrees to return excess
profits. Congress having consid-
cred this a necessary safeguard
for the protection of taxpayers.
Every contract made with or for
the government after passage Of
the Renegotiation Act is deemed
TO contain this safeguard, and
therefore 1t applies to Lincoln
Electric Company and every
other war contractor.