, 1917-02-01
To BUILD SHIPS
At COST PRICE
Bethlehem Steel viii Make o.
fer to Uncle Sam.
BIDS ON 16 INCH NAVY SHELLS

No Chance For Profit In Thorn Under
Present Tests, Grace Says-Possible
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:
II a 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, t o
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 al any
price the Government Itself might On
slider fair.
Our ordnance plants are at the dis
posal OF the nation at a fair operating
cost, plus a small margin, thus saving
the Government investment and de-
probation.
One Of the special needs of h new
navy is ~sixteen-inch guns-guns sixty
feet long and capable of hurtling a
1000 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 $4,5o0,oOO, a
plant fitted to build s~ixteen-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 a specific shell, sam
Piles of which are being sent over for
tesla test not yet made.
Two years ago we took an order for
240O fourteen-inch armor-piercing shells
at a contract price Of $76S,000, 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
-- IL L. -----tIlN 81 for1t1ll cha
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, a been
absolute inability on our part to pro-
duce in any quantity, shells which will
meet these move 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 $76S, O00. we have put into
actual operating expense SAT .SS1., and
have been penallZed for non-delivery
e495, 744., a total of $943 ,625., with no
receipts whatever.
Such was the experience in the light
of which we were called upon recent
ly to bid for s~iNteen-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
profit there will be In the making Of
these shells. We do not know hat
there will be any. There is no certain.
ty that it would be possible for us to
deliver a shell to meet the test.
For officers in the Navy to
that any bid made under such condi
lions is ''exorbitant" Ii utterly unfair.
We bid on the new battle-cruisers
sums which Navy department experts.
after examination OF our books, found
would yield n profit of less than ten
per cent. We agreed to assume risks
for increased costs of materials and la.
Dor, that made it possible that these
contracts might yield no profit what.
ever.
The costs run beyond the amount ap-
proprlated by Congress OIL the basis OF
the cost estimates made Il year ago.
And because shipbuilders could not
aItar rho iupNnroIAa cost facts md p