Veto of Bill To Amend the War Contractors Relief Act.

To the Senate of the United States:

I return herewith, without my approval, S. 3906, "To amend the War Contractors Relief Act with respect to the definition of a request for relief, to authorize consideration and settlement of certain claims of subcontractors, to provide reasonable compensation for the services of partners and proprietors, and for other purposes."

S. 3906 was passed as a substitute for H.R. 3436, 81st Congress, which I was compelled to disapprove on June 30, 1950. It is said that the bill meets the objections I interposed to H.R. 3436. I regret to inform the Congress that it does not.

When the provisions of this bill are read in the light of the statements respecting their purpose which appear in the committee reports (S. Rept. No. 2052, H. Rept. No. 2782) and also in the Record (96 Cong. Rec. 10124, 11224), I think it clear that they serve to transform the War Contractors Relief Act into a general statute of indemnification against loss on Government contracts held during the war years, and do not merely obviate what the Congress regards as "technicalities" that have arisen in the course of administering the Act. It was this same undesirable purpose that mainly prompted my disapproval of H.R. 3436.

While it is evident that an attempt has been made to adopt certain of the clarifying amendments to the War Contractors Relief Act which I suggested, it is likewise evident that no attempt has been made to limit their scope to claims or requests for relief that would have been granted under the First War Powers Act of 1941 but for the termination of hostilities with Japan on August 14, 1945. Indeed, the committee reports negative the possibility of any such restricted interpretation of the amendments. The bill, moreover, would not preclude the reopening of an indeterminate number of cases that have been settled under the First War Powers Act or the Contract Settlement Act of 1944.

In the absence of these limitations, the provisions of the present measure and their legislative background are quite sufficient to accomplish what I consider to be a total departure from the intent and scope of the War Contractors Relief Act. I refer particularly to the proposed "definition of a request for relief" in paragraph (2), which greatly relaxes the existing requirement that claims be founded upon a specific application for the extraordinary relief which was allowable under the First War Powers Act, and to the similar language in paragraph (3) relating to the claims of subcontractors.

It was not the purpose of the First War Powers Act to relieve contractors because of loss, or to indemnify them against loss. On the contrary, that Act authorized the granting of relief because it would assist in obtaining needed war production and thereby "would facilitate the prosecution of the war." In my opinion, the sole objective of the War Contractors Relief Act was to afford a basis for the continued processing of those relatively few requests for First War Powers Act relief which were still pending on August 14, 1945, and could not be handled by the war agencies after that date without additional statutory authority. I am plainly supported in this opinion by the legislative history of the War Contractors Relief Act, to which I expressly invite the attention of the Congress (S. Rept. No. 1669, H. Rept. No. 2576, 79th Congress; 92 Cong. Rec. 9092).

In the veto message on H.R. 3436 (H. Doc. No. 629, 81st Congress) my position in this matter was clearly stated, as follows:

I cannot accept the contention that the purpose of the War Contractors Relief Act . . . was other than to provide a basis for relief to those contractors whose cases would have been handled under the First War Powers Act if war had not ended. Had I believed there was a broader purpose, I would not have issued the kind of regulations which were promulgated in Executive Order 9786. These regulations were a faithful attempt to interpret the language of the act as affording nothing more than a statutory basis for the continued processing of written applications for relief under the First War Powers Act which were pending and undisposed of on August 14, 1945--

H.R. 3436, and the reports recommending its enactment, would radically change the basic purpose of the original War Contractors Relief Act. I believe that in spite of any administrative interpretation which might be made to limit the effects of the bill, its provisions not only require reconsideration of all claims originally filed, but might also be construed to permit reopening of an unknown number of cases settled under the First War Powers Act and the Contract Settlement Act--

I further stated that the net effect of a bill which would relax the requirements for filing notice contained in the War Contractors Relief Act and the regulations thereunder, permit the granting of relief beyond that afforded by the First War Powers Act, and exclude the finality of settlements made under the First War Powers Act and the Contract Settlement Act of 1944--would be to write into law the principle of Government insurance against all wartime net losses incurred by contractors providing goods and services to the Government.

Endowed as it is with a legislative history that makes the fact obvious, it is beyond question that these comments are equally pertinent to S. 3906.

Some time ago I informed the Congress of my belief that it would be a grave error to introduce this principle of insurance against loss on Government contracts; its implications "are profound, both with respect to our finances and with respect to our free enterprise system;" and it would involve "reopening the entire program of financing the war, with incalculable effects upon our finances." I reiterated these views in the veto message on H.R. 3436. Considering the even greater demands upon our finances necessitated by the international developments that have occurred since then, it seems to me that their rightness is not even debatable at present. I therefore adhere to them.

Aside from the matter of finances I should like to add, also, that I cannot subscribe to the notion apparently held in some quarters that legislation of this kind is required to assure contractors of Stair and equitable treatment at the hands of their Government. The well-known record of Government contracting during World War II is, in my opinion, monumental evidence that contractors were accorded eminently fair treatment, by all known standards of law and equity. I am confident they do not expect, or want, the Government to now embark upon a program of underwriting the element of risk that is a normal incident of any contractual undertaking for profit. Such a program, among other things, would destroy the existing system of competitive bidding which is an integral part of our free enterprise economy, and it would virtually annihilate any incentive to perform efficiently.

For the foregoing reasons, I am constrained to withhold my approval from S. 3906.

HARRU S. TRUMAN