Renegotiation Plan Lauded By Business School Expert

Instrumental in lopping over a billion dollars in excess profits from government war contracts, Business School Professor Thomas H. Saunders last night defended the federal policy of re-negotiation of agreements with industry.

Until recently chief of the cost analysis section of WPB, Saunders exploded the current rumors that the government has "released cost accountants like a swarm of locusts" to prey on business, occupying their time and decreasing their production.

War Checks Inflation

"There are only 400 such accountants to handle all the contracts of the Army and Navy Departments and the Maritime Commission," he insisted, emphasizing that the work they were doing was vital in the battle against inflation.

"This is the simplest way," he said. "Industry must accept the principle that it cannot earn excess profits during war-time. The only alternative is for the government to let it take all the profits it can and this Congress and popular pressure will not allow."

"Concerned only with millions," the re-negotiation policy attempts to recover excess profits for the government by a reconsideration of all the contracts of a company. According to Saunders, this scheme avoids the pitfalls both of requiring individual consideration of each contract and enforcing conformation to a general rule.

"There is no standardized rate of profit allowed," he said, noting that the decision in each case depends on such factors as the risks assumed by the concern. "It obviously is not fair to award the same profits to a company that is largely financed by the government as are given to one that has put up all the money itself," he said.

On the whole, he remarked, the big companies are the easiest to deal with. "They need the public's good will and realize that if prices are allowed to sky-rocket now they will be hard to get back to normal after the war."

There are, however, apparent exceptions to this rule, he added, citing the case of the Jack and Heintz Company, which was making enormous war profits, paying a secretary a $39,000 bonus and giving wrist watches to its employees.