711.00111 Armament Control/Military Secrets/1018

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

Mr. Scott Ferris, representing the Carp Export and Import Corporation, called on the Secretary last evening to recount to him once more the difficulties which his clients have encountered in connection [Page 676] with their efforts to purchase a battleship for the U. S. S. R. He repeated much of what he had told me a few hours before, but emphasized particularly the alleged opposition to the proposed transaction on the part of subordinate officers in the Navy Department which, in his opinion, is the fundamental cause of the reluctance of Mr. Gibbs, the Bethlehem Shipbuilding Corporation, Limited, and the Sperry Gyroscope Company, Incorporated, to enter into contracts with the Carp Export and Import Corporation. He urged that something be done to put an end to the situation which he described as existing in the Navy Department.

Mr. Ferris called at my office this morning. He told me of his conversation with the Secretary. He said that the more he considered the matter the more he was convinced that the attitude of the subordinate officers in the Navy Department—he mentioned particularly Admirals Holmes and Furlong—was responsible for the refusal of Mr. Gibbs and the two American companies mentioned above to take any further steps in connection with the construction of this battleship. He said that he had been told that Mr. Gibbs had visited the Navy Department half a dozen times recently at intervals of a week or so, hoping each time to receive the authorization of the Navy Department to proceed, but that on his return to New York he had reported again and again to Mr. Wolf that the attitude of subordinate officers in the Navy Department remained unchanged and that, as long as it did remain unchanged, he could not even go so far as to transmit the plans to the Navy Department for inspection. Mr. Ferris said that Mr. Gibbs and representatives of the Bethlehem Shipbuilding Corporation had done all that they felt that they could properly do on their own initiative to overcome the opposition in the Navy Department, and he described their conference with Mr. Edison, the Assistant Secretary of the Navy, and other officers of that Department, in which, as he understood, the plans had been displayed and discussed at great length.

Mr. Ferris quoted alleged statements of naval officers to Mr. Gibbs and representatives of the shipbuilders as follows:

“We shall still be here after Mr. Roosevelt and Mr. Hull and Mr. Swanson and Admiral Leahy have gone. They are temporary and we are permanent. In such matters as this, it is our wishes that are important, not theirs.”

He went on to say that Mr. Gibbs and the officers of the Bethlehem Shipbuilding Corporation and the Sperry Gyroscope Company felt certain that, if they entered into contracts to design or construct or equip a battleship for the U. S. S. R., officers in the Navy Department who were strongly opposed to the sale of arms to a communist government would take vengeance on them, would “crucify them”, and would [Page 677] see to it that they received no Navy contracts for years to come. He said that they had cited examples of companies which had been treated in this manner for similar reasons. He said that they did not even wish to discuss the problems which had arisen in connection with this proposed transaction with the Department of State or with Admiral Leahy lest they should offend subordinate officers in the Navy Department.

Mr. Ferris urged that the President be requested to take steps to put an end to this alleged situation in the Navy Department. He expressed the belief that, if that could be done, all the difficulties would vanish, Mr. Gibbs would submit his plans, and, if the plans were found not to involve any military secrets, the Bethlehem Shipbuilding Corporation, Limited, would enter immediately into a contract and would begin construction of the battleship within two months.

Joseph C. Green