OFFICIAL EYE ON ARMAMENT FIRMS

Pahiatua Herald, Volume XLXII, Issue 15239, 4 January 1943, Page 4

OFFICIAL EYE ON ARMAMENT FIRMS

HOUSE OF COMMONS DEBATE LONDON Oct. 10. The most encouraging aspect of Great Britain’s most extensive arms profits probe of the war, which was debated in the Hous© of Commons during the week is that it throws fresh light on numerous ways in which a vigilant eye is being kept on the finances of armament firms, says the Christian Science Monitor. Two chief conclusions can be reached from the Commons inquiry into the affairs of the British Manufacturing and Research Company, whose most important job has been th© production of airplane cannon. The first is that adequate machinery and powers do exist for virtually eliminating war profiteering in armaments.

The second is that the main troubles with this machinery are its ■ complexity, shortage t>f skilled auditors and the fact that the whole cost system in Government contracts is a constant source of diffb culty. On this point Chancellor of the Exchequer Sir Kingsley Wood gave a hint of coming Government action to revise the system. The British have three methods for taking both profit and waste out of war contracts. One is by the excess profits tax whereby the Exchequer takes as much as 100 per cent qbove a certain profit level. Another is by the Select Committee on National Expenditure, which probes wasteful contracting and extravagance with national funds. The third is the Public Accounts Committee. which has wide powers t-o investigate books and finances of arms firms.

It was on the first report of the Public Accounts Committee that the arms debate arose. This Committee has only found it necessary to investigate the affairs of about half a dozen firms and the test case they chose turned out to be a difficult one to substantiate. In fact, the general trend of the Commons debate on the business record of the British Manufacturing and Research Company showed Commons to be more in sympathy with Managing Director W. D. Kendall of the firm in question than with Col. Walter Elliot, Chairman of the Accounts Committee.

Mr Kendall certainly had the advantage of being a Member of Parliament and thus was able to conduct his own defence in Commons. Charges were that his firm had been paid excessive prices, had refused to give full access to accounts and had even threatened to hold back gun production pending settlement of price negotiations. But on the whole Commons speakers seemed agreed fhe company was vindicated from charges. Some thought a better test case could have been brought. The Members of Parliament were not all impressed by Mr Kendall’s assessment of liis firm s three-year iprofiits at £'3o9. Nor were they satisfied that th© Committee’s estimate of £1,700.000 was the correct figure. To the man in the street here today the report of the Commons session illustrates just how complex an affair, especially in wartime, is company finance, cost determination, and priorities. But the public is reassured somewhat by the vindication of Mr Kendall and even more so by evidence of a check being kept on profiteering and waste in munitions making which, it is recognised, is a. vital factor in the maintenance of national morale as well as in maintaining production efficiency.