The modern contract is the foundation stone of industry and commerce. If the integrity of that foundation be impaired, we come into a condition of anarchy of which Anglo-Saxon civilization knows nothing. The man who breaches a contract can be held in court to indemnify the other party to it, and the Government itself cannot escape such liability. On the first day of the armistice there were 30,000 outstanding war department contracts. Three thousand of these, involving a government expenditure of over $1,500,000,000, either were so near completion or called for the production of materials so necessary to the maintenance of the demobilizing Army or for the future preparedness of the United States that they were allowed to go through undisturbed. The other 27,000 contracts bore a face value of $6,000,000,000. Under many of them there had been extensive deliveries of finished supplies to the Government, these deliveries (including the deliveries made while the industries were tapering off their production and adjusting themselves to peace conditions) amounting to approximately $2,000,000,000 in value. Thus there was left to the War Department a contractual obligation amounting to $4,000,000,000, which huge sum would go to pay for a great mass of materials for which the Government could have no possible use. It was highly desirable to terminate the unfulfilled portions of these contracts; yet few of the contracts contained termination clauses. It will be remembered that the standard termination clause did not appear as a common feature of the war contracts until the final six weeks of hostilities. Thus the majority of the 27,000 contractors possessed the plain legal right to go through with the performance of their contracts, even though the war had ended, and thereafter to hold the Government to the full payment of the face value of the contracts. The sum of such determination, had it been unanimous, would have cost the United States $4,000,000,000 with nothing to show for it except a great collection of useless munitions which could be sold to the junk dealers. Upon the administration of the War Department rested the responsibility to save for the people as much of this sum as could be saved. Not all of it could be saved. Millions had been spent by the contractors for machinery and other equipment, for materials, and to pay manufacturing costs during the early stages of production. These millions the Government was bound to reimburse in any event, together with a reasonable profit upon work already done. The closer the administration could come to paying these legitimate costs and nothing else, the more successful would be its conduct of the industrial demobilization. The question was, what procedure to adopt.