711.00111 Armament Control/Military Secrets/1259

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

Mr. E. R. Leonard, Washington representative of the Bethlehem Shipbuilding Corporation, Ltd., and of the Bethlehem Steel Company, called at my office this morning. He said that Mr. Eugene G. Grace, President of both corporations, had asked him to call to inform me of recent developments in connection with the proposal of the U. S. S. R. to have one or more battleships constructed in this country.

Mr. Leonard said that Mr. Grace had recently had some conversations and correspondence with Mr. Edison, Assistant Secretary of the Navy, in regard to the matter; that Mr. Edison seemed to be hopeful that the Bethlehem Shipbuilding Corporation would enter into a contract to construct a battleship, and that he had suggested to Mr. Grace that he write to the Secretary of State in order to obtain a statement of the attitude of the Government toward the proposed transaction. Mr. Leonard said that he did not believe that Mr. Grace would be willing to enter into a contract unless he were definitely requested to do so by the Secretary of State as he felt that the company must be protected against the Congressional and press criticism to which he felt the company would subject itself if it were to construct a battleship for the U. S. S. R. Mr. Leonard asked what reply the Secretary would be likely to make to a letter requesting a statement of the position of the Government.

I read to Mr. Leonard excerpts from the letter addressed to Mr. Gibbs, the naval architect, on June 17, pointing out that that letter contained the statement—

“I am prepared to explain the position of this Government in respect to the proposed transaction, as outlined above, to any American shipbuilders or manufacturers of armament and matériel who may be considering the possibility of participating in the construction of the battleship in question.”

I said that I thought it probable that the Secretary would be willing to write to the Bethlehem Shipbuilding Corporation in terms similar to those used in the letter to Mr. Gibbs but that I thought it highly improbable that he would be willing to ask any American company to enter into any commercial transaction.

Mr. Leonard said that a letter similar to that addressed to Mr. Gibbs might satisfy Mr. Grace. He felt certain, however, that Mr. Grace would not consider entering into a contract to construct a battleship [Page 704] for the U. S. S. R. until he had been assured by the Navy Department that Navy plans and specifications for guns and turrets would be placed at the disposition of the company. He said that no such assurance had as yet been received but that Mr. Edison had suggested that the company follow the established procedure relating to the release of military secrets and write to the Secretary of State asking that it be informed whether the plans and specifications for the necessary armament of a battleship would be released. He said that Mr. Grace was unwilling to follow this suggestion until the whole matter had been thoroughly threshed out with Mr. Edison and until he had received some informal assurance that the necessary releases would be forthcoming. He explained in considerable detail why the company would be unable to provide its own plans and specifications for the guns. In brief, his explanation was that the corps of ordnance engineers which had been built up by the company during the years when it was engaged in the manufacture of guns had been dispersed when the company ceased to manufacture guns and that it could not possibly be reconstituted.

Mr. Leonard said that he would report our conversation to Mr. Grace and that he believed that representatives of the company would confer with Mr. Edison with a view to coming to some definite if informal understanding as to just how far the Navy Department would be prepared to go in releasing the plans and specifications in question.

Joseph C. Green