711.00111 Armament Control/Military Secrets/871

Memorandum by the Chief of the Office of Arms and Munitions Control (Green)

Mr. Scott Ferris representing the Carp Export and Import Corporation called at my office this afternoon to discuss recent developments in connection with the attempts of his clients to enter into contracts for the purchase of a battleship for the U. S. S. R.

Mr. Ferris said that Mr. Beal of the New York Shipbuilding Corporation after his recent conversation with Admiral Leahy had informed Mr. Carp that his company would not enter into the proposed contract. He gave as his reason that the company could not manufacture 16-inch guns and furthermore could not undertake to design or install fire control apparatus without the cooperation of the Sperry Gyroscope Company, Inc., which was not willing to take any part in the proposed transaction. Mr. Ferris said that Mr. Morgan of the Sperry Gyroscope Company, Inc., had explained to him that its refusal to consider supplying fire control apparatus for a battleship to be exported to the U. S. S. R. was due to the expressed opposition of several important officers in the Navy Department. Mr. Ferris said that Mr. Morgan had said that he understood thoroughly the official position of the Navy Department but that he was obliged to take into account in such matters the strong opposition of subordinate officers in that Department who might make it extremely unpleasant for his company if it were to take any action contrary to their wishes.

Mr. Ferris said further that the Bethlehem Shipbuilding Corporation, Limited, although it had apparently reached a decision some weeks ago not to enter into the proposed contracts with his clients under any circumstances, had recently informed them that it would do so if Admiral Leahy could overcome the opposition to the proposed transaction on the part of his own subordinates, and that they would enter into the contracts if the Admiral were willing to inform his subordinates in writing of the policy of his Department in regard to the proposals and to direct their adherence thereto.

Mr. Ferris asked me whether the Department of State could not do something further to induce Admiral Leahy to put an end to the expression of opposition by his subordinates to any transactions by American companies which would increase the armament of the U. S. S. R.

I told Mr. Ferris that I did not believe that the Department could properly do anything further in that matter than it had already done in bringing the statements of his clients to the attention of Admiral [Page 488] Leahy and in arranging an appointment for him to discuss the matter with the Admiral in person.

Joseph C. Green