File No. 894.85/8
The Ambassador in Japan ( Morris) to the Secretary of State
[Received March 16, 3.55 a.m.]
Your telegram March 13.1 On March 1, I made a proposal to Japanese shipbuilders as follows: For not less than 200,000 deadweight tons of ships, with conditions specified in your telegram of February 21, 8 p.m., as to size, age, speed, etc., to be delivered at Pacific coast of the United States not later than April 30, we would pay $250 per ton and would deliver one ton steel under old contracts for each one and one-half tons deadweight ships received.
On March 14, Japanese shipbuilders stated that after continued efforts they were unable to secure control of over 100,000 deadweight tons ships which they could deliver within next five months as follows: May, one ship 6,850 tons; June, two ships 14,000 tons; July, three ships 24,800 tons; August, three ships 27,350 tons; and September, three ships 26,150 tons.
They offered these twelve ships on following terms which I have refused:
- Three tons deadweight ships for each 2¼ tons steel now under contract including plates, shapes, and bars;
- Aside from the above, other materials necessary for construction of ships, such as pig iron, furnaces, tubes, etc., to be furnished irrespective of the above-mentioned ratio of exchange;
- Price $270 per ton deadweight for delivery at Pacific port of United States including Vancouver on September 30, 1918 (October 30, 1918, in the case of deliveries at an Atlantic port), for those ships delivered prior to September 30 premium of 50 cents gold per deadweight ton per diem to be paid;
- Place of delivery as above at shipbuilders’ option;
- Place of inspection in Japan or at United States port at shipbuilders’ option;
- Export licenses to be issued immediately on conclusion contract;
- All priority certificates to be issued for steel materials designated by shipbuilders.
I would recommend purchase of these twelve ships on following terms and authority is requested to make firm offer to this effect:
- Ships and their delivery dates as specified by restrictions above;
- One and one-half tons deadweight ships for one ton of steel plus any steel which is required for completion of certain designated ships now under contract with British and French Governments for construction, certificate of identity to be required from official representatives of these two Governments proving specific amounts of steel materials required for this purpose;
- Prices for May delivery $300 per ton deadweight, June delivery $285, July delivery $270, August delivery $255, and September delivery $240;
- Delivery and inspection to be at Japanese port—this is because delivery at United States port will mean a voyage under incompetent Japanese crews with very probable result that ships will not be accepted upon arrival;
- Freight to be carried under contracts made by shipbuilders and to their profit;
- All priority certificates to be issued first for delivery and shipment of such steel materials as may be required for completion of ships under construction for Governments of Great Britain and then [France?] as designated by shipbuilders.
These recommendations are made because investigation has convinced me that available tonnage which shipbuilders can obtain has been exaggerated and it is believed this offer contains the very largest amount of tonnage which they can secure considering restrictions imposed by us and the ships we are receiving by charter, and without including regular subsidized liners, which are under Government control. I have had assistance of representatives of French and British Governments who have been engaged in purchase of ships in Japan for past three years, and who know definitely what ships there are and by whom they are owned.
The actual situation is that shipbuilders have not ships to trade with and are compelled to bargain in the open market with owners. I am now informed [it is] doubtful whether shipbuilders can induce owners to accept offer materially different from the one already made by them. Would you consider acceptance of that offer under any circumstances? Better terms can be made for new construction.
- Not printed.↩