The Wisconsin tobacco reporter. (Edgerton, Wis.) 1877-1950, 1917-01-26
! TO BUILD SHIPS
At COST PRICE
Bethlehem Steel viii Make Of
fer to Uncle Sam.
BIDS ON is INCH NAVY SHELLS

OtOV Wv ~ sNOlb tuuu Viii - ~
No Chance For Profit In Them Under
Present Tests, Grace Says-Possible
Explanation of the Prices Made by an
English Firm Which Bids Under All
American Manufacturers.
Speaking recently before the Terra
pin Club Of Philadelphia, Eugene G..
Grace, President Of the Bethlehem
Steel Company, said in part:
In peculiar sense Bethlehem Steel
serves the American people.
For example, though we have been
able to obtain in Europe almost any
price, we have adhered, in our charges
to the United States Government, to
the basis of prices established before
the war began.
We agreed--if the Government would
abandon it's plans for Federal plant
to make armor for our Navy at 0ng
price the Government itself might con-
slider fair.
Our ordnance plants are at the dis
posal of the nation at fair operating
cost, plus a small margin, thus saving
the Government investment and de-
probation.
One Of the special needs of the new
navy is sixteen-inch guns-guns sixty
feet long and capable of hurting q
1000 pound shell with such power ana
accuracy as to hit so foot square tar
get fifteen miles away.
We have undertaken voluntarily to
construct, at a cost Of $4,500,OO0,
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-inch shells for the navy.
| am unable to state the basis upon
which the English bid was made. 1t
should be remembered, however, that
this bid was for specific shell, SAM
Piles of which are being sent over for
tesla test not yet made.
Two years ago we took an order for
24OO fourteen-inch armOr-piercing shells
at contract price Of $76S,OOO, to be
delivered within a certain time or we
had to pay large penalty.
The only specifications for making
| these shells are that they shall be
| of certain size and must pierce
armor-plate at certain velocity ON i'm
pact. 1t is impossible to foretell the
I exact conditions Of the tests.
We had made large quantities of shells
| in the past which had been accepted.
But in 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 it 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 $768,OOO, we have put into
actual operating expense SAT-, $751;, and
have been penaliZed for non-deliyery
/! 1896, IA, a total of $943,625.. with no
| receipts whatever.
Such was the experience in the light
of which we were called upon recent
| Nv 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
ernment awarded contracts.
We have not the slightest idea what
profit there will be in the making of
| these shells. We do not know that
there will be any. There is no certain
| ty that it would be possible for US &c
deliver a shell to meet the test
For officers in the Navy to assume
| that any bid made under such condi-
tions is ''exorbitant" is utterly unfair.
| We bid on the new battle-cruisers
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 Ia
Dor, that made it possible that these
contracts might yield no profit what
ever.
The costs run beyond the amount ap-
| propriated by Congress on the basis of
| the cost estimates made year ago.
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
tseyOrbitant'