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File No. 763.72/4685½

Mr. Balfour, for the British Special Mission, to the Secretary of State

Memorandum 1

During the informal discussions between members of the British mission and the Chairman of the Shipping Board, mention was made of the requirements of Great Britain for steel, plates, forgings, etc., from the United States for shipbuilding. The needs of Japan, Canada, Hongkong and Shanghai for United States steel for the same purpose were also alluded to, and the question was raised whether it might be assumed with certainty that this material was in every case required solely for immediate and essential war construction. If this were not the case in regard to Japan, it was suggested that the supply of United States steel to her might be made conditional on the proper employment in the interests of the Allies of Japanese shipping already built or under construction with United States steel.

In order to be able to give a complete answer in the light of fresh developments during the past month, Mr. Balfour referred these questions to his Government and he is now in a position to give to the Government of the United States an official assurance that ships built in the United Kingdom, Canada and Hongkong with steel supplied from the United States will be used for essential purposes connected with the war and that the output of the yards in all three places is being directed solely with this end in view. No such assurance can at present be given as regards Japan and His Majesty’s Government are in full agreement with the suggestion that the supply of United States steel to her should be made [Page 597]conditional on a suitable arrangement as to the employment of Japanese shipping. As regards Shanghai, the amount of steel required is not likely to be large and as exact information is not available at the moment as to the situation at that port, the question of the supply of steel from the United States may be left in abeyance for the present, to be settled on its merits when it eventually comes up for practical consideration.

The requirements of Hongkong cannot be stated exactly but the figure for that colony will probably be about 20,000 tons. The requirements of the United Kingdom and Canada will form part of the general steel requirements of these countries which will, it is understood, be discussed at the pending munitions conferences.

Further, in regard to the question also raised by the chairman of the Shipping Board during the informal discussions as to the contracts placed by His Majesty’s Government with the various yards in the United States, Mr. Balfour is desired by his Government to make the formal official statement that these contracts were placed with sole reference to the exigencies of the war and for no other purpose. His Majesty’s Government at first desired to place orders in the United States for construction of standard ships in conformity with the policy adopted in Great Britain, but in practice it was found necessary, with a view to the earliest possible deliveries, to adopt in each case the type and size of ship best suited to the facilities of each particular yard. As he has no knowledge of the construction or standardization policy of the Shipping Board Mr. Balfour is unable to judge whether that policy will introduce new factors rendering possible the more rapid construction of other types of ships, but he is confident that the United States Government will shortly arrange for close and detailed discussion between the expert advisers of the two Governments on this subject, and that meanwhile they will facilitate in every way possible the rapid execution of the existing contracts in respect of which he has given the above assurances.

  1. Transmitted under covering letter, dated May 15, 1917, which reads in part: “My dear Mr. Secretary: I have the honour to enclose herewith a memorandum covering certain points which have come up during informal discussions between the members of my mission and the chairman of the Shipping Board. As this memorandum touches on important questions of international policy, I think it right to communicate it to Mr. Denman through you.”