File No. 694.119/51
I was informed by those familiar with Japanese conditions that the
Government had been vigorously suppressing any public comment
[Page 714]
on the steel situation, in
the hope that some adjustment could be reached that would allay the
growing feeling of irritation. I was assured, however, by the same
persons, that the feeling among Japanese business men, and even
among Government officials, was very intense.
Then unexpectedly on November 18 the Department of Communications
issued to the press an extended statement on the steel situation. I
am attaching a careful translation of this statement made by Mr.
Ballantine, Japanese Secretary of this
Embassy. It reviews the progress of the negotiations, giving the
three successive proposals made by Japan and the counter-proposals
made to each by the United States. It explains that the acceptance
of any of these proposals, notwithstanding the fact that Japan was
prepared to make great sacrifices for the common cause of the
Allies, would have jeopardized the standard that was necessary to
safeguard Japan’s existence as a nation, and therefore it regretted
that in view of these circumstances there was nothing else to do but
break off negotiations. The result of official investigation as to
how far Japan could supply its own shipbuilding material was also
included in this report, which showed that it would require an
additional 18,000 tons to construct 149 vessels, with an aggregate
displacement of 590,000 tons.
Newspaper comment followed and translations of characteristic
editorials are also attached.1 The Osaka Mainichi
considers it very fortunate that America did not accept Japan’s
offer, which was altogether too liberal, and calls attention to the
imperative duty of reforming Japan’s industrial system. The Tokyo
Mainichi is convinced that America never
intended to lift the embargo on steel, inasmuch as the strides Japan
is making in its merchant marine on the Pacific are viewed with
alarm and jealousy. It thinks that the embargo will give an impetus
to domestic manufacture. The Sekai, however,
hopes that the negotiations will be revived, for it would not hurt
the United States, rich in shipbuilding material, to permit the
unconditional export of 175,000 tons of material.
Very few of those who have called upon me to discuss this question,
have offered any constructive suggestions. I understand, however,
that recently a number of American and Japanese business men have
been endeavoring to organize a movement entirely apart from any
diplomatic negotiations, and which they hope may result in the
tender by private firms and individuals, of a large amount of
immediately available tonnage to the Shipping Board, at reasonable
prices, in consideration of the issuance of a license by our
Government to export a certain amount of steel plates at present
American prices,
[Page 715]
which
will be used only for the construction of ships in the interest of
the Allies. The thought of these men is that they shall persuade the
Japanese Government to discontinue the diplomatic negotiations,
which they are confident can reach no satisfactory conclusion, and
then open negotiations with American firms, tendering ships at
prices to be agreed upon, and obtaining steel by Government
license.
I merely report these facts to the Department for its information,
but am not sufficiently familiar with the negotiations to express
any opinion as to whether such a plan would be practical.
[Enclosure—Translation]
Statement to the Press by the Japanese
Department of Communications, Issued November 18, 1917,
regarding Details of the Negotiations with America in
Connection with Prohibition of Steel
Although the Imperial Government is deeply concerned at the
scarcity of vessels in this country, it has transferred vessels
to meet the demands of the Allied powers and has permitted the
chartering of a reasonable proportion of vessels. Last June our
ally, Great Britain, expressed the desire to be supplied with a
still greater number of ships. Our Government took up
negotiations with the principal idea in view that we could
assist the Allies in the most advantageous and effective manner
if we obtained raw material from Great Britain, utilized our own
shipyards and hastened the construction of vessels, but it
happened that in August, on account of the pressing demands of
its own shipyards, England was unable to supply raw materials.
While these negotiations were going on with Great Britain, in
America the export of iron materials, especially shipbuilding
material came to be prohibited. As it was impossible for the
shipyards or the importers of this country to obtain the
material which they had ordered or contracted for, a memorial
was presented urging negotiations for the release from the
embargo of over 400,000 tons already contracted for.
Negotiations were immediately commenced with a view to their
relief, but the United States declared that its own requirements
in shipbuilding material for aiding the European allies was very
pressing and that it was utterly impossible to supply anything
except what was to be used for the war, so that we negotiated
for the release from the embargo of approximately 60,000 tons,
which was the amount necessary to complete the construction of
those that were most urgently in demand by private individuals.
With the exception of some 10,000 tons for which licenses had
been issued up to August 15, we have been unable to reach a
settlement.
[Page 716]
During these negotiations, as the negotiations for ships with
England came to be interrupted, the Japanese Government
considering as an entirely different question the negotiations
for the release from the embargo of the materials that were
ordered by private individuals already mentioned, took steps to
suggest to the American Government that if we received about
600,000 tons of material we could within two years construct
vessels approximating 1,200,000 tons in gross tonnage, or
1,800,000 tons in displacement.1 A part of them would be
retained by us for cooperating in the war as a member of the
Allied powers, but the greater part would be turned over to the
Allies. The American Government explained that it was very eager
to obtain a supply of existing vessels in view of the fact that
as it required ships in a great hurry for joint cooperation in
the war it was impossible to follow a shipbuilding program for a
long period. Accordingly it was proposed that we should supply
150,000 gross tons of our existing shipping in return for which
America should supply us with 150,000 tons of material during
this year and 300,000 tons during next year, a total of 450,000
tons. From this it was planned that vessels aggregating
1,350,000 tons gross could be constructed, of which 750,000 tons
would be supplied to America between January, 1918, and
September, 1919, and that of the remaining 600,000 tons, 150,000
tons would be used to make up the amount supplied from our
existing tonnage, as already set forth, and the remainder to be
applied to our part in the conduct of the war. Inasmuch,
however, as the negotiations with respect to the material which
had already been contracted for by private individuals are, as
has already been stated, a separate question, the said
shipbuilding materials being materials for the construction of
ships of an exact standard, it goes without saying that they are
entirely different articles from those ordered by private
individuals.
In reply to the above proposal of our Government, the American
Government as a counter-proposal, suggested that in return for a
supply of ships by this Government amounting to a total of
1,000,000 tons, 100,000 tons each month for ten months beginning
with November, 1917, it would issue licenses for the export of
450,000 tons of materials already contracted for by private
individuals up to August of this year, and stated that they
would not require to be supplied with any ships after August of
next year.2
As this was the American proposal, in view of the rate of ship
construction, no matter how much we exerted ourselves, from the
materials supplied by America the vessels we could construct and
[Page 717]
supply would not
exceed three or four hundred thousand tons displacement, the
greater part of the existing tonnage of Japan would have to be
supplied to make up the remaining six or seven hundred thousands
tons, which we were utterly unable to stand. The supply of
150,000 tons displacement of existing tonnage originally made by
our Government, as has already been stated, was for assisting
the Allies, and, after a thorough investigation had been made in
regard to adjusting our marine transportation, (we concluded
that) this offer was the greatest sacrifice that we could make,
and that it was impossible for us to turn over more, in
consideration of the present circumstances, of our marine
transportation. Since the United States states that it will not
require any ships after August next, the portion of our proposal
which was concerned with projects subsequent to September of
next year was abandoned. We proposed finally to supply 150,000
tons displacement of existing vessels and 200,000 tons
displacement from January to August next, a total of 350,000
tons, which should be constructed from materials supplied by
America. The United States was to supply us with approximately
150,000 tons of material within this year and 25,000 tons during
January and February next, a total of 175,000 tons. From this
approximately 525,000 tons displacement of shipping could be
built, of which, as had already been set forth, 200,000 tons
which would be supplied to America, would be subtracted, and
from the remaining 225,000 [325,000?]
tons, 150,000 tons would be used to make up the deficit caused
by the supply of 150,000 tons of existing vessels supplied to
America, and 175,000 tons would be reserved to be freely
disposed of by Japan as a member of the Allies. The American
Government agreed to the proposal of our Government in respect
to the quantity of vessels to be supplied by us and the amount
of the material to be supplied by it, but as supplementary
conditions it proposed that the ships should be less than 7
years old (10 years in the case only of those in best
condition), and that the price of existing vessels should be
$170.00 per ton and of new vessels $200.00 per ton. With regard
to the supply of materials which were for private orders and
contracts, it proposed that the amount should be limited to
those which had already been manufactured and kept in the port
of export or which had already been shipped, provided that this
amount did not exceed 25,000 tons in November, 50,000 tons in
December and 100,000 tons during the period ending August
next.
From the first our country has not begrudged its utmost efforts
to afford facilities as far as it was able, to the cooperation
with the Allies in the prosecution of the war, but it is
imperative that we do not neglect to maintain the standard which
shall not impair the disposition which is necessary to safeguard
the existence of our
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nation and people, and the number of ships as well as the
assistance in maintaining communications in behalf of the other
Allied powers. If, however, we considered the American proposal,
by limiting the ships to be supplied to those under 7 years of
age or even 10 years, we should be giving up the majority of our
best ships which are used on the regular routes of trade of this
Empire. We shall run the risk of creating confusion in our
marine transportation system. Even if a part of the materials
already contracted for by individuals were to be applied to this
project, inasmuch as these materials already contracted for were
purchased by the various shipbuilding yards at current prices,
and since employed in the construction of vessels of various
kinds in compliance with the orders of others, it would be
impossible to hasten the construction of vessels with these
materials within a definite period under a uniform plan.
Furthermore, in regard to the price of vessels, also, there is a
great difference in comparison with our current prices, and the
new vessels under construction by private individuals in our
country have been contracted for at a very high price, so that
it would be utterly impossible to supply them at such a low
price.
To sum up, our Government was extremely desirous of completing
negotiations in a friendly manner with the American Government,
which had been so cordial, but we failed. As there was
considerable difference in the wishes of each of the two
countries, with respect to this question, on account of the
difference in the circumstances of the two countries, we were at
last unable to reach any unanimity, to our great regret.
Nevertheless, in consideration of the conditions of our marine
transportation and shipbuilding industry, we deemed that it
would not be a good policy to continue the negotiations any
further and place our marine transportation and shipbuilding
industry in a very uneasy situation for a long time to come, we
decided to abandon our negotiations in regard to shipbuilding
materials and shipbuilding which we proposed, with the
exception, however, of the negotiations respecting the
materials, which have already been ordered—this being a separate
question.
Investigation as to Whether We Can Supply
Our Own Shipbuilding Material
Previous to this in May or June, our shipbuilders had complained
of a lack of shipbuilding material. As soon as the American
steel embargo was put into effect, the work on vessels which
were under construction at that time had to be suspended, and
the resulting embarrassment was very regrettable. On the one
hand negotiations were taken up, as has been outlined, and on
the other a thorough investigation was started with regard to
shipbuilding materials available in our own country.
[Page 719]
Even at the time when our shipbuilders used to import their
shipbuilding material from the United States, there was great
trouble about the importation of steel plate, and it became
imperative to relieve the distress of the people engaged in that
industry. Therefore, a general development of the shipbuilding
industry was planned, and at the same time it was recognized
that it would be necessary to facilitate the supply of steel
plates. In the latter part of June as a result of a conference
of the various ministers of state of the departments concerned,
a conference of the heads of the bureaus having jurisdiction,
was summoned. At the end of several discussions it was planned
to have it manufactured and distributed as far as possible by
the Naval Arsenal, and that the Edamitsu Iron Works should be
depended upon for a supply of material. Thorough preparations
were made and now we are on the eve of putting the project into
operation. In the first season, beginning with December, about
800 tons will be manufactured. The Department of Communications
will distribute it among the various shipbuilding yards, twelve
places in all, to make up the amount of deficiency of material
which will be required to furnish 21 vessels of approximately
15,000 tons displacement. A few days ago the Department
explained to the persons engaged in the industry the method of
distribution, so that the persons who were unable to complete
the construction of vessels on account of the lack of material
will be able to proceed with their work forthwith. Moreover the
Navy Department in order to meet the necessary requirements of
shipbuilders which will continue, is planning to provide them
with adequate facilities which will enable them to proceed.
In connection with the insufficiency of materials, which has
arisen on account of the American steel embargo, for building
the hulls of vessels which are at present in course of
construction and whose construction is about to be commenced, it
has been computed by the persons engaged in the industry that
about 60,000 tons would be required. There will also be an
importation of materials for which licenses will be obtained
from America. According to the latest investigation at building
yards, vessels of over 1,000 gross tons of class 1, that is to
say vessels which are in the course of construction and whose
keels have already been laid down, to the number of 91, of a
total displacement of 369,000 tons, can be completed if 7,500
tons of material which is lacking, can be supplied. For vessels
of the second class, that is to say, whose keels are shortly to
be laid, if over 11,000 tons of material are supplied, 58
vessels aggregating 220,000 tons can be completed. That is to
say vessels of the first and second class, under construction in
47 yards, a total of 149 with an aggregate displacement of
590,000 tons can be completed if a little
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more than 18,000 tons of material
can be supplied. Our Department of Agriculture and Commerce is
now making an earnest investigation as to how this can be
supplied to our shipbuilding yards.
