811.20 Defense (Requisitions)/1
Memorandum by the Assistant Chief of the Division of Controls (Yost)
Commander Carney of the Office of the Secretary of the Navy called this morning to inform me that at a conference held at the White House the day before yesterday the President had instructed the Secretary of the Navy to requisition large quantities of machine tools now being manufactured by American firms for certain foreign governments and companies. In compliance with these instructions the Secretary of the Navy is sending out today letters to various American manufacturers requisitioning machine tools to a value of about $3,500,000. It is proposed to extend these requisitions in the near future to apply to tools valued at a total of between $21,000,000 and $22,000,000. The tools involved in the initial requisitions are chiefly large lathes for the production of heavy ordnance. Later requisitions may also involve machine tools for the aircraft industry.
The two countries chiefly affected by the initial requisitions are Japan and the Soviet Union. It is proposed in the future to extend these requisitions to orders placed by Norway, Sweden, Holland and Belgium. It is hoped that these latter requisitions may be made with the consent of the governments involved since it is believed that, with the possible exception of Sweden, deliveries could not be effected in any case. It is also believed that future requisitions may affect orders placed by Italy, and there is even some question of requisitioning a large Italian order which is already on the docks in New York ready for shipment. Commander Carney assured me that no steps would be taken in regard to this particular requisition until we had been consulted.
As I understand it these requisitions are not to be made under the authority of any law but simply on the basis of contractual relationships between the Navy Department and the companies concerned and on the basis of the general interests of the national defense. Some of [Page 297] the pertinent contracts between American manufacturers and foreign buyers provide that the goods shall not be delivered if the United States Government should express a desire to procure them. Other contracts, however, do not contain this provision and will have to be broken by the companies concerned. The Navy Department proposes to furnish to these companies not only funds to reimburse the foreign purchasers for partial payments which have already been made but also funds to pay any damages which they may incur for violation of contracts.
Though the War Department is not yet doing so, it is believed that it will in the near future participate in this program.
Commander Carney has promised to supply us with complete data in regard to all orders which will be requisitioned now and in the future.