File No. 694.119/59a

The Secretary of State to the Ambassador in Japan ( Morris )

[Telegram]

For your information. When our embargo commenced to operate it stopped export of over 300,000 tons ship plates and shapes purchased by Japanese at average price above 8 cents per pound. Sato on behalf his Government conducted negotiations with us until December for licensing this steel, when he officially requested us to transfer negotiations to Japanese shipbuilding concerns. Since then we have been negotiating with Suzuki, Asano, Mitsui and Kuhara, purchasers respectively of 180,000, 50,000, 40,000 and 28,000 tons said steel.

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January 26 Suzuki representatives agreed to cable their firm in Japan for authority to sell Shipping Board 250,000 deadweight tons of ships deliverable United States port at rate per month in excess of 30,000 tons from April to November inclusive, at price of $225 per ton, if we would license export 125,000 tons their steel. Asano sailed 24th on Korea agreeing to recommend his firm give us 100,000 deadweight tons ships between now and June 30 deliverable United States at $225 per ton in consideration our release their 50,000 tons of steel. Asano also intended recommending that his firm give additional ships at price of about $175 per ton deadweight if we would license new steel at current price about 3¼ cents per pound. Kuhara representative after attempting unsuccessfully to get basis of exchange modified to one ton of steel for one ton ships stated last night he would take up with his principals matter of making us a proposition based upon one ton steel for two tons ships but involving our releasing new steel at current prices to supplement their purchased steel at the higher prices.

Our proposals to date based upon steel already purchased because we are not yet certain we can spare any additional steel from our shipbuilding program; but for immediate deliveries of substantial tonnage at price in neighborhood of $175 per ton deadweight we would urge delivery of limited amount new steel at current prices on same basis of one steel to two ships conditioned on old steel being taken in full. All large shipbuilding firms should be notified our basis and desire to trade. If by any means you can ascertain likelihood of our being able to trade with Japanese firms on this basis we would appreciate information, also your advice in the matter.

Lansing