The Madison daily leader. [volume] (Madison, S.D.) 1890-current, 1917-01-26
TO BUILD SHIPS
At COST PRICE
Bethlehem Steel viii Make o.
for 10 Uncle Sam.
Bios ON 10 INCH NAVY SHELLS

No Chance For Profit In Them Under
Present Tests, Grace Says-Possibie
Explanation OF the Prices Made by an
English Firm Which Bids Under All
American Manufacturer.
Speaking recently before the Terra.
pin Club OF Philadelphia. Eugene G..
Grace. President OF the Bethlehem
Steel Company, said In part
In a peculiar sense Bethlehem Steel
serves the American people.
For e~ample. though We have been
able to obtain in Europe almost any
price. we have adhered. In our charges
TO the United States Government. q
the basis OF prices established before
the war began.
We agreed-if the Government would
abandon its plans for a Federal plant
TO make armor for our Navy at any
price the Government itself might con-
slider fair.
Our ordnance plants are at the dis
posal OF fhe nation at a fair operating
cost. plus q small margin. thus saving
the Government Investment and de-
probation.
one OF the special needs OF the new
navy Is s~ixteen-inch ~guns-guns sixty
feet long and capable OF hurtling a
900 pound shell with such power and
accuracy as to hit a so foot square tar.
get fifteen miles away.
We have undertaken voluntarily to
construct. at a cost OF S4.5OO.OO0, a
plant fitted TO build sixteen inch guns
Under no conceivable circumstances
can orders which we may receive for
this plant pay even a fair return on
the Investment
Considerable comment has been made
upon the fact that a British manufac
turer recently bid less than American
manufacturers for sixteen and four
teen-ineh shells for the navy.
| am unable TO state the basis upon
which the English bid was made. II
should be remembered. however. that
this bid was for a specific shell. sam
plies Of which are being sent over for
tesla test not yet made.
Two years ago we tool an order for
24O0 fourteen inch armor-piercing shells
at a contract price of S7Gs.0o0. to be
delivered within a certain time or We
had to pay a large penalty.
The only specifications for making
these shells are that they shall be
OF a certain size and must pierce
armor-plate at a certain velocity on I'm
pact. IL Is impossible to ~foretell the
exact conditions OF the tests
We had made large quantities OF shells
in the past which had been accepted
But I'm placing this particular order the
Department altered the angle at which
the tested shells must pierce armor
plate. The result, however. has been
absolute inability ON our part TO pro
duce in any quantity. shells which will
meet these novel tests. In fact, We
know OF no process OF projectile-mak
ing through which 1t Is possible TO pro
duce In quantities shells which will
conform to the requirements.
The result Is that up to now on that
contract OF S76s,0oo. we have put into
actual operating expense SAT- ISL, and
have been penalized for non-deliyery
s495. IA. a total OF S9i3 .625. with no
receipts whatever.
Such was the experience in the light
or Which we were called upon recent
ly TO bid for sixteen-inch shells.
We bid on these shells at approx
mately the same rate per pound as
that OF a fourteen inch shell contract
OF one year ago upon which the Gov
eminent awarded contracts.
We have not the slightest idea what
these shells. We do not know that
there will be any. There Is 10 certain
" that 1t would be possible for us TO
deliver a shell TO meet the test.
For officers In the Navy to assume
that any bid made under such condi
lions is "exorbitant'' is utterly unfair
we Dlu OH tue ucW UdltiSSIulscIS
sums which Navy department experts.
after examination OF our books. found
would yield a profit OF less than ten
per cent. We agreed to assume risks
for increased costs OF materials and la
bor, that made 1t possible that these
contracts might yield no profit what
ever.
-... .,o-l 49, N1. -
propriated by Congress on the basis or
the cost estimates made a year &
And because shipbuilders could not
alter the memorable cost facts and re
duce bids to early estimates Of the
Navy Department. the prices are called
axnrhiianfn