File No. 694.119/60

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


Replying to your telegram January 30, 2 p.m., Captain Home1 and Mr. Frazer2 have kept in close relations with Japanese shipbuilders since negotiations commenced. They have advised me of all developments and since receipt of telegram have guided me in careful investigation of the shipping conditions here. British and [Page 630] French Embassies have submitted all their confidential data and their experts have generously cooperated. Captain Home and Mr. Frazer associate themselves with me in following conclusions.

It would not be possible for Japanese shipbuilders to supply more than 400,000 to 500,000 deadweight tons ships within one year and possibly less on account of increasing labor troubles. Shipbuilders badly in need of steel plates. Every reason to believe that a trade can be made. Would suggest Shipping Board authorize Embassy to convey to shipbuilders, treating with group or with individuals, firm offer for purchase of 500,000 deadweight tons ships at per ton $225, with the release of 250,000 tons of steel, yards taking old steel first at contract prices and balance of steel at [omission] per ton. Such an offer is more than fair to shipbuilders. Our calculations show profit to them of at least 18 per cent net.

Advise us promptly [to] complete transaction what [whether?] arrangements include value of licensed steel available for use other than selling single [building ships for?] United States.

  1. Frederick J. Home, naval attaché of the Embassy.
  2. Robert Frazer, jr., Consul at Kobe.