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"SEC. 215. The provisions of this Act, insofar as they are practically or appropriately applicable, are extended to the construction and operation of aircraft used in transportation for hire of passengers and property in overseas trade between the United States, its Territories, possessions, or the Canal Zone and foreign countries; and between the United States and its Territories, possessions, or the Canal Zone; and between such Territories or possessions and between the ('anal Zone and such Territories or possessions."

SEC. 4. Section 301 (a) of the Merchant Marine Act, 1936, is hereby amended to read as follows:

"SEC. 301. (a) The Commission is authorized and directed to investigate the employment and wage conditions and ocean-going shipping and, after making such investigation and after appropriate hearings, to incorporate in the contracts authorized under titles VI and VII of the Act minimum-manning scales and minimum-wage scales, and reasonable working conditions for all officers and crew's employed on all types of vessels receiving an operatingdifferential subsidy. After such minimum manning and wage scales and working conditions shall have been adopted by the Commission, no change shall be made therein by the Commission except upon public notice of the hearing to be had, and a bearing by the Commission of all interested parties, under such rules as the Commission shall prescribe. Every contractor receiving an operating-differential subsidy shall post and keep posted in a conspicuous place on each such vessel operated by such contractor a printed copy of the minimum manning and wage scales and working conditions prescribed by his contract and applicable to such vessel: Provided, houever, That any increase in the operating expenses of the subsidized vessel occasioned by any change in the wage, manning scales, and working conditions as provided in this section shall be added to the operating-differential subsidy previously authorized for the vessel."

Sec. 5. Section 301 (b) of the Merchant Marine Act, 1936, is hereby amended to read as follows:

“(b) Every contract executed under authority of titles VI and VII of this Act shall require

“(1) Insofar as is practicable, officers' living quarters shall be kept separate and apart from those furnished for members of the crew ;

“(2) Licensed officers and unlicensed members of the crew shall be entitled to make complaints or recommendations to the Commission, provided they file such complaint or recommendation with their immediate superior, who shall be required to forward such complaint or recommendation with his remarks to the Commission ;

"(3) Licensed officers who are members of the United States Naval Reserve shall wear on their uniforms such special distinguishing insignia as may be approved by the Secretary of the Navy; officers being those men serving under licenses issued by the Bureau of Marine Inspection and Navigation ;

“(4) The uniform stripes, decoration, or other insignia shall be of gold braid or woven gold or silver material, to be worn by officers, and no member of the ship's crew other than licensed officers shall be allowed to wear any uniform with such officer's identifying insignia ;

“(5) No discrimination shall be practiced against licensed officers, who are otherwise qualified, because of their failure to qualify as members of the United States Naval Reserve."

SEC. 6. Section 402 (b) and (c) of the Merchant Marine Act, 1936, is hereby amended by striking out the quotation marks.

Sec. 7. Section 501 (c) of the Merchant Marine Act, 1936, is hereby amended by striking out the words "section 201 (c)” where they appear in such subsection and inserting in lieu thereof the words "section 204 (b)."

SEC. 8. Section 502 (a) of the Merchant Marine Act, 1936, is hereby amended to read as follows:

“(a) If the Secretary of the Navy certifies his approval under section 501 (b) of this Act, and the Commisison approves the application, it may secure, on behalf of the applicant, bids from foreign and domestic shipbuilders for the construction of the proposed vessel according to the approved pians and specifications. If the bid of the domestic shipbuilder who is the lowest responsible domestic bidder is determined by the Commission to be fair and reasonable, the ('ommission may approve such bid, and, if such approved bid is accepted by the applicant, the Commission is authorized to enter into a contract with the successful domestic bidder for the construction, outfitting, and equipment of the proposed vessel, and for the payment by the Commission to the shipbuilder, on terms to be agreed upon in the contract, of the contract price of the vessel, out of the construction fund hereinbefore referred to or out of other available funds. Concurrently with entering into such contract with the domestic shipbuilder, the Commission is authorized to enter into a contract with the applicant for the purchase by him of such vessel upon its completion, at a price corresponding to the estimated cost, as determined by the Commission pursuant to the provisions of this Act, of building such vessel in a foreign shipyard."

SEC. 9. Section 502 (b) of the Merchant Marine Act, 1936, is hereby amended to read as follows:

**(b) The amount of the reduction in selling price which is herein termed the construction-differential subsidy' may equal, but not exceed, the excess of the bid of the domestic shipbuilder constructing the proposed vessel (excluding the cost of any features incorporated in the vessel for national-defense uses, which shall be paid by the Commission in addition to the subsidy), over the fair and reasonable estimate of cost, as determined by the Commission, of the construction of the proposed vessel if it were constructed under similar plans and specifications (excluding national-defense features as above provided) in a principal foreign ship-building center which is available to the principal foreign competitors in the service in which the vessel is to be operated and which is deemed by the Commission to furnish a fair and representative example for the determination of the estimated cost of construction in foreign countries of vessels of the type proposed to be constructed. The construction differential approved by the Commission shall not exceed 3342 per centum of the construction cost of the vessel paid by the Commission (excluding the cost of nationaldefense features as above provided), except that in cases where the Commission possesses convincing evidence that the actual differential is greater than that percentage, the Commission may approve an allowance not to exceed 50 per centum of such cost, upon the affirmative vote of four members, except as otherwise provided in subsection 201 (a). In any case where the Commission finds that the construction differential exceeds 3313 per centum but does not exceed 50 per centum of such cost, and that the lowest bid of a responsible domestic shipbuilder is unreasonable, excessive, or collusive, the Commission may anthorize the applicant to have the vessel built in a foreign shipyard, without financial aid from the United States, if the applicant agrees to document such ressel under the laws of the United States as soon as practicable after its completion. Where the ('ommission finds that the construction differential exceeds 50 per centum of such cost, the applicant may have such vessel built in a foreign shipyard without the consent of the Commission. The Commission shall reimburse the applicant for the cost of the national-defense features incorporated in such vessels constructed in foreign shipyards under this section. Notwithstanding any other provision of law, such vessels shall be eligible for an operating-differential subsidy upon being documented under the laws of the United States, under the same terms and conditions as if such Tessels had been constructed in a domestic shipyard under the provisions of this Act."

SEC. 10. Section 502 (c) of the Merchant Marine Act, 1936, is hereby amended to read as follows:

"(c) In such contract between the applicant and the Commission, the applicant shall be required to make cash payments to the Commission of not less than 25 per centum of the price at which the vessel is sold to the applicant. The cash payments shall be made at the time and in the same proportion as provided for the payments on account of the construction cost in the contract between the shipbuilder and the Commission. The applicant shall pay, not less frequently than annually, interest at the rate of 34 per centum per annum on those portions of the Commission's payments as made to the shipbuilder which are chargeable to the applicant's purchase price of the vessel (after deduction of the applicant's cash payments). The balance of such purchase price shall be paid by the applicant, within twenty years after delivery of the vessel and in not to exceed twenty equal annual installments, the first of which shall be payable one year after the delivery of the vessel by the Commission to the applicant. Interest at the rate of 342 per centum per annum shall be paid on all such installments of the purchase price remaining unpaid."

Sec. 11. Section 502 (d) of the Merchant Marine Act, 1936, is hereby amended by adding at the end thereof a new sentence to read as follows: "Nothing in this section shall be construed as authorizing the Commission to approve a construction-differential in excess of 50 per centum of the construction cost of the vessel paid by the Commission.

SEC. 12. Section 503 of the Merchant Marine Act, 1936, is hereby amended to read as follows:

"SEC. 503. Upon completion of the construction of any vessel in respect 10 which a construction-differential subsidy is to be allowed under this title and its delivery by the shipbuilder to the Commission, the vessel shall be documented under the laws of the United States, and concurrently therewith, or as soon thereafter as practicable, the vessel shall be delivered with a bill of sale to the applicant with warranty against liens, pursuant to the contract of purchase between the applicant and the ('ommission. The vessel shall remain documented under the laws of the Uuited States for not less than twenty years, or so long as there remains due the United States any principal or interest on account of the purchase price, whichever is the longer period. At the time of delivery of the vessel the applicant shall execute and deliver a first preferred mortgage to the United States to secure payment of any sums due from the applicant in respect to said vessel. The purchaser shall also comply with all the provisions of section 9 of the Merchant Marine Act, 1920.”

SEC. 13. Section 504 of the Merchant Marine Act, 1936, is hereby amended to read as follows:

“Sec. 504. Where an eligible applicant under the terms of this title desires to finance the construction of a proposed vessel according to approved plans and specifications rather than purchase the same vessel from the Commission as hereinabove authorized, the Commission may permit the applicant to obtain and submit to it competitive bids from domestic shipyards for such work. If the Commission considers the bid of the shipyard in which the applicant desires to have the vessel built fair and reasonable, it may approve such bid and become a party to the contract or contracts or other arrangements for the construction of such proposed vessel and inay agree to pay a constructiondifferential subsidy in an amount determined by the ('ommission in accordance with section 502 of this title and for the cost of national-defense features. The construction-differential subsidy and payments for national-defense features shall be based on the lowest responsible domestic bid. No constructiondifferential subsidy, as provided in this section, shall be paid unless the said contract or contracts or other arrangements contain such provisions as are provided in this title to protect the interests of the United States as the Commission deems necessary. Such vessel shall be documened under the laws of the United States as provided in section 503 of this title and operated as approved by the Commission under the requirements applicable to vessels constructed under this Act."

SEC. 14. The last proviso in section 505 (b) of the Merchant Marine Act, 1936, is hereby amended to read as follows: Prorided, That this section shall not apply to contracts or subcontracts for scientific eqnipment lised for communication and navigation as may be so designated by the Commission, nor 10 contracts or other arrangements entered into under this title by the terms of which the United States undertakes to pay only for national-defense features, and the Commission shall report annually to ('ongress the names of such contractors and subcontractors affected by this provision, together with the applicable contracts and the amounts thereof."

SEC. 15. The Merchant Marine Act, 1936, is hereby amended by striking out section 506 and inserting in lieu thereof the following:

“Sec. 506. Every owner of a vessel for which a construction-differential subsidy has been paid shall agree that the vessel shall be operated exclusively in foreign trade, or on a round-the-world voyage, or on a round voyage from the west coast of the United States to a European port or ports which includes intercoastal ports of the United States, or a round voyage from the Atlantic coast of the United States to the Orient which includes intercoastal ports of the United States, or on a voyage in foreign trade on which the vessel may stop at an island possession or island Territory of the United States, and that, if the vessel is operated in the domestic trade on any of the above-enumerated services, he will pay annually to the Commission that proportion of onetwentieth of the construction-differential subsidy paid for such vessel as the gross revenue derived from the domestic trade bears to the gross revenue derived from the entire voyages completed during the preceding year. The Commission may consent in writing to the temporary transfer of such vessel to service other than the service covered by such agreement, for periods not exceeding six months in any year, whenever the Commission may determine that such transfer is necessary or appropriate to carry out the purposes of this Act. Such consent shall be conditioned upon the agreement by the owner to pay to the Commission, upon such terms and conditions as it may prescribe,

an amount which bears the same proportion to the construction-differential subsidy paid by the ('ommission as such temporary period bears to the entire economic life of the vessel. No operating-differential subsidy shall be paid for the operation of such vessel for such temporary period."

SEC. 16. Section 507 of the Merchant Marine Act, 1936, is hereby amended to read as follows:

"SEC. 507. If a contract is made by the Commission uuder authority of this title for the construction and sale of a new vessel to replace a vessel then operated in foreign trade, which in the judgment of the ('ommission should be replaced because it is obsolete or inadequate for successful operation in such trade, the Commission is authorized, in its discretion, to buy such replaced vessel froin the owner at a fair and reasonable valuation, which valuation shall pot exceed the cost to the owner or any fornier owner plus the actual cost previously expended thereon for reconditioning, and less a reasonable and proper depreciation, based upon not more than a twenty-year life of the vessel, and apply the purchase price agreed upon to that portion of the construction cost of such new vessel which is to be borne by the purchaser thereof : Prorided. That the owner of such replaced vessel shall execute a bond, with one or more approved sureties, conditioned upon indemnifying the United States from all loss resulting from any existing lien against such vessel : And provided further, That sich vessel has been documented under the laws of the United States for a period of at least ten years prior to the date of its purchase by the United States,"

SEC. 17. The first sentence and the second sentence down to the first semicolon of section 509 of the Merchant Marine Act, 1936, is hereby amended to read as follows:

"Sec. 509. Any citizen of the l'nited States may make application to the ('ommission for aid in the construction of a new vessel to be operated in the foreign or domestic trade (excepting vessels engaged solely in the transportation of property on inland rivers and canals exclusively). If such application is approved by the Commission, the ressel may be constructed under the terms and conditions of this title, but no construction-differential subsidy shall be allowed. The ('ommission shall pay for the cost of national-defense features incorporated in such vessel. The applicant shall be required to pay the Commission not less than 25 per centum of the cost of such vessel (excluding cost of national-defense features) :".

SEC. 18. Section 604 of the Merchant Marine Act, 1936, is hereby amended to read as follows:

"SEC. 604. If in the case of any particular foreign-trade route the Commission finds, after consultation with the Secretary of State, that the subsidy provided for in this title is in any respect inadequate to offset the effect of governinental aid paid to foreign competitors, it may grant such additional subsidy as it determines to be necessary for that purpose: Provided, That no such additional subsidy shall be granted except upon an affirmative vote of four of the members of the Commission."

SEC, 19. Section 606 (5) of the Merchant Marine Act, 1936, is hereby amended to read as follows:

"(5) that when at the end of any ten-year period during which an operatingdifferential subsidy has been paid, or when prior to the end of any such tenyear period the contract shall be terminated, if the net profit of the contractor on his subsidized vessels and services incident thereto during such period or time (without regard to capital gains and capital losses), after deduction of depreciation charges based upon a twenty-year life expectancy of the subsidized vessels has averaged more than 10 per centum per annum upon the contractor's capital investment necessarily employed in the operation of the subsidized vessels, services, routes, and lines, the contractor shall pay to the United States an amount equal to one-half of such profits in excess of 10 per centum per annum as partial or complete reimbursement for operating-differentialsubsidy payments received by the contractor for such ten-year period, but the amount of excessive profit so recaptured shall not in any case exceed the amount of the operating-differential-subsidy payments theretofore made to the contractor for such period under such contract and the repayment of such reimbursement to the Commission shall be subject to the provisions of section 607;".

SEC, 20. The last sentence of the first paragraph of section 607 (b) of the Merchant Marine Act, 1936, is hereby amended to read as follows: "The proceeds of all insurance and indemnities received by the contractor on account

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of total loss of any subsidized vessel and the proceeds of any sale or other disposition of such vessel shall also be deposited in the capital reserve fund."

Sec. 21. Section 607 (b) of the Merchant Marine Act, 1936, is hereby amended by adding at the end thereof a new sentence to read as follows: "The contractor may, with the consent of the Commission, pay from said fund any sums owing but not yet due on notes secured by mortgages on subsidized vessels.”

SEC. 22. The second paragraph of section 607 (c) of the Merchant Marine Act, 1936, is amended to read as follows:

"If the profits, without regard to capital gains and capital losses, earned by the business of the subsidized vessels and services incident thereto exceed 10 per centum per annum and exceed the percentage of profits deposited in the capital reserve fund, as provided in subsection (b) of this section, the contractor shall deposit annually such excess profits in this reserve fund. From the special reserve fund the contractor may make the following disbursements and no others :".

SEC. 23. Section 607 (c) (2) of the Merchant Marine Act, 1936, is hereby amended to read as follows:

“(2) Reimbursement to the contractor's general funds for current operating losses on completed voyages of subsidized vessels whenever the Commission shall determine it is improbable that such current losses will be made up by profits on other voyages during the current year;".

SEC. 24. The Merchant Marine Act, 1936, is hereby amended by inserting two new subsections after subsection (e) of section 607 to read as follows:

"(f) Unless otherwise provided in the operating-differential-subsidy contract, upon the termination of any such contract, the reserve funds required under this Act shall be the property of the contractor, except for such amounts as may be due the United States.

"(g) With the approval of the Commission, the contractor may voluntarily increase the amount of either or both reserve funds by depositing in such fund or funds any or all of the earnings otherwise available for distribution to stockholders, or may transfer funds from the special reserve funds to the capital reserve fund."

SEC. 25. Subsection (f) of section 607 of the Merchant Marine Act, 1936, is amended to read as follows:

“(h) The earnings of any contractor receiving an operating-differential subsidy under authority of this Act, which are deposited in the contractor's reserve funds as provided in this section, except earnings withdrawn from the special reserve funds and paid into the contractor's general funds or distributed as dividends or bonuses as provided in paragraph 4 of subsection (c) of this section, shall be exempt from all Federal taxes. Earnings withdrawn from such special reserve fund shall be taxable as if earned during the year of withdrawal from such fund."

SEC. 26. Section 609 of the Merchant Marine Act, 1936, is hereby amended by striking out the letter “(a)" and by repealing subsection (b) thereof.

SEC. 27. Section 610 of the Merchant Marine Act, 1936, is hereby amended to read as follows:

"SEC. 610. An operating-differential subsidy shall not be paid under authority of this title on account of the operation of any vessel which does not meet the following requirements: (1) The vessel shall be of steel or other acceptable metal, shall be propelled by steam or motor, shall be as nearly fireproof as practicable, shall be built in a domestic yard (except as provided in section 502 (b)) or shall have been documented under the laws of the United States not later than February 1, 1928, or actually ordered and under construction for the account of citizens of the United States prior to such date, and shall be documented under the laws of the United States during the entire life of the subsidy contract; and (2) if the vessel shall be constructed after the passage of this Act it shall be either a vessel constructed according to plans and specifications approved by the Commission and the Secretary of the Navy, with particular reference to economical conversion into an auxiliary naval vessel, or a vessel approved by the Commission and the Navy Department as otherwise useful to the United States in time of national emergency."

SEC. 28. The Merchant Marine Act, 1936, is hereby amended by adding a new section at the end of title VI thereof to read as follows:

"SEC. 611. (a) The contractor, upon compliance with the provisions of this section, may transfer to foreign registry the vessels covered by an operatingdifferential-subsidy contract held by him in the event that the United States defaults upon such contract or cancels it without just cause. Any contractor

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