File No. 894.85/8

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


Yours, March 15, 8 p.m. Mr. Hurley feels [we] cannot pay such high prices to Japanese builders without causing complications with [Page 640] our American building program. We prefer to deliver more steel and secure lower price for ships. You may therefore make final offer for immediate acceptance as follows:

1. We buy twelve ships specified in your telegram of approximately 100,000 tons deadweight now constructed and under construction. We license for each deadweight ton of ships one ton of steel now under contract including plates, shapes and bars. No ship less than 6,000 tons. Age, speed, etc., as specified our telegram February 21, 8 p.m. Inspection and acceptance of workmanship and material at Japanese yards. Shipbuilders assume responsibility for delivery in good order at United States port. Freight to United States to be carried under contracts made by shipbuilders and to their profit. Payments for ships to be made on delivery at United States ports as follows: May $265 and June delivery $260 per deadweight ton, July delivery $250, August $240, September $225.

We will endeavor to arrange about steel required for completion of any British and French Government ships with their representatives here and about priority certificates but this cannot be made condition of present negotiations.

Above prices and exchange of steel are our best terms and if you can do better hope you will do so but do not take too much time over negotiations. Prefer to close at once in order to secure the ships.

2. New construction. In addition to the foregoing we authorize you to arrange with Japanese shipbuilders for 200,000 deadweight tons ships to be built out of new steel for which ships we will pay on the basis of the present cost of building in American yards which is $175 per deadweight ton. We will furnish 100,000 tons of steel at American Government price of 3¼ cents per pound for plates, 3 cents per pound for shapes and 2.9 cents per pound for bars, delivery f.o.b. mills.

Inspection, approval and place of delivery as above. Date of delivery: 50,000 tons October, 50,000 November, 50,000 December and 50,000 January. No ship less than 6,000 tons. Following specifications: speed to be not less than 10½ knots; to class to 100A1, Lloyd’s classification.

Japanese shipbuilders to receive the profit for freight to the United States on these ships built out of new ordered steel as well.

Ordinary Japanese specifications to be used as basis for building subject to such minor modifications as may be desired by us, each shipbuilding company to give suitable American bankers’ guarantee.

Proposition 1 may be accepted without proposition 2 but proposition 2 cannot be accepted unless proposition 1 is accepted.