Under the budget of 1933 and in the name of the Minister of Merchant Marine, the law opened a credit of 150,000,000 francs ($5,850,000) to be entered under chapter 37b "Subvention to the Compagnie Generale Transatlantique." The Minister of Merchant Marine was authorized to pay to the Compagnie Generale Transatlantique a sum of 12,500,000 francs. ($487,500) per month over a period of 4 months, beginning with the date of the law, by way of installments on the subvention provided for the year 1933.

II. THE CONTRACT AGREEMENT

BASIS OF SUBSIDY

The basis of the annual subsidy to be paid the Compagnie Generale Transatlantique, under the contract, is the excess of expenditures over receipts under the following limitations:

Total allowed receipts include all revenues except (a) the subsidy payment, (b) receipts from sales of vessels, fixed property or securities, (c) amounts received from underwriters for the loss of or damage to vessels.

Expenditures allowed include all expenditures chargeable to operations, including general expenses of administration and actual overhaul and major repair costs, (b) insurance premiums paid to private underwriters, to insurance funds or to the State, and (c) actual amounts paid for financing charges, including amortization and interest on bonds and debts.

The annual subsidy must not exceed 150,000,000 francs ($5,850,000). If necessary, the services must be reduced to a point where this expenditure shall not be exceeded.

When the deficit is less than 150,000,000 francs ($5,850,000), the difference between the deficit and the authorized maximum amount shall be distributed: (1) On increased amortization and (2) in building up a legal reserve. Increased amortization of mortgages is provided in cases where the company is not permitted to carry a normal industrial amortization for additions made to the initial value of vessels since entry into service, in addition to normal amortization on the average of 4 percent for cargo vessels and 5 percent for combination and passenger vessels. Additional amortization established within conditions approved by the Minister of Merchant Marine in this manner shall be utilized for the repayment of debts to the State.

The constituting of a legal reserve is accomplished in the following manner: When the amount of the deficit, plus the added amortization allowances described above, do not equal a sum of 150,000,000 francs, the annual subsidy shall be limited to the amount of the deficit and amortization, increased by a sum equal to 85 percent of the difference between this sum and 150,000,000 francs ($5,850,000).

The 85 percent of the total shall be distributed as follows: 2 percent to an administrative bonus, to be divided between executives and administrative personnel, and personnel retirement funds of the company, under conditions established by the Ministers of Merchant Marine and Budget; 83 percent to be distributed as a dividend to the capital stock, the temporary bonds (actions de jouissance), the beneficiary bonds, and to all types of compensation paid for the purpose of better financing, as well as to a supplementary amortization of the floating equipment.

When the subsidy under these conditions is greater than 50,000,000 francs ($1,950,000), stock dividends shall not exceed 5 percent, and dividends to the temporary and beneficiary bonds shall not exceed 1 percent. Reserves shall be used for the purchase or the construction of ships, and may not exceed 50,000,000 francs ($1,950,000) in 1 year, nor must the total amount of the account, less deduction made for sums thus used, exceed 200,000,000 francs ($7,800,000) without reducing the subsidy.

As security, the State shall hold liens upon the floating equipment, determined by the various amounts paid on such equipment from the subsidy allowances.

The minimum annual subsidy is 50,000,000 francs ($1,950,000). If allowances previously outlined are less than 50,000,000 ($1,950,000), at least twothirds of the difference between their amount and the total minimum amount of the subsidy shall be paid to a special replacement reserve. The same shall apply to two-thirds of the profit from operation, if the account provided for shows profits.

The subsidy is payable by monthly installments, based on the deficit determined for the year by decision of the Minister of Merchant Marine. At the

end of each fiscal year, the subsidy account shall be audited by the Audit Commission for Subsidized Navigation Companies' Accounts.

Into the special reconstruction reserve shall be carried: (a) Receipts from the sale of fixed property, vessels or assets; (b) sums paid by underwriters to the account of insurance funds for loss or damage to vessels; and (c) special sums previously referred to. Any sum carried to the special reserve may not be used except upon authorization of the Minister of Merchant Marine.

Beyond various fixed limitations, certain of these accounts may be utilized subject to the authority of the Minister of Merchant Marine, in order to complete construction and purchases of tonnage. Loans or security issues are limited to a 25-year period. Loans for completion of the passenger steamei Normandie may be contracted under the guarantee of the State, approved by the Minister of Merchant Marine and subsequent authorization by the Minister of Finance.

REIMBURSEMENT OF 1933 ADVANCES

The contract provides that advances made under earlier laws of 1933 shall be repaid to the treasury from the monthly subvention.

CANCELATION

The contract provides for cancelation, and authorizes the State to take over the operations of the company in such event. (See also p. 39.) Further, the contract specifically cancels the agreement of November 20, 1912, relative to services between Havre and New York, as well as the contract of April 21, 1927, relative to the services between France, Mexico, the Antilles and Central America. The charter party of May 1, 1928, relative to services between France, Algeria, and Tunis is maintained.

SALE OF EQUIPMENT

Unless authorized to the contrary by the Minister of Merchant Marine, all sales for over 300,000 francs ($11,700) shall be on a competitive basis, and shall have the approval of the Minister of Merchant Marine.

III. INSURANCE ON THE "NORMANDIE" (SUPPLEMENT No. 1)

Supplement no. 1, attached to the contract provides for the insurance of the passenger vessel Normandie. It specifies that the vessel shall be insured in the market for the maximum amount possible, all or part of which may be reinsured to its equivalent value in foreign exchange at 1 percent. Coverage against all risks carries an exemption of 2 percent, and is of the same type as for other passenger liners of the company, such as the Ile de France, Paris, Lafayette, or Champlain. Insurance contracts are subject to the approval of the Minister of Merchant Marine and the company, and are made with the State as beneficiary.

The company shall cover with its own funds the insurance on a part of the amount, to be determined by agreement between the Minister of Merchant Marine and the company, upon advice of the Minister of Finance. This sum shall be established from year to year.

The remaining amount necessary to cover the vessel shall be covered from the beginning of construction by a special insurance-credit fund set up with the trust and deposit fund (La Caisse des Depots et Consignations.)

This guarantee is arranged by agreement between the company, Minister of Merchant Marine and Minister of Finance, and shall not exceed total loss or abandonment. It includes the negligence clause, including prohibition of recourse against the master and crew, guarantee against latent defects, sistership, clause and, in general, stipulations usually admitted under this type of insurance.

The premiums are payable quarterly, and in case of insufficiency of insurancecredit funds, the State assumes the obligations in the same amount." Whenever the insurance value of the vessel shall be equal to or less than the total of the sum covered jointly by the market and company insurance funds,

In view of the difficulties in connection with the total loss and abandonment case of the L'Atlantique, it is interesting to note that the insurance contract provides that if the State considers that repairs are not practicable, this case shall be considered from the insurance point of view as a total loss.

or whenever a passenger vessel is retired from service other than in case of loss chargeable to the insurance-credit funds of the State, these funds shall become the property of the State in compensation for the engagement assumed by it.

IV. LIST OF DUTIES (CAHIER DES CHARGES)

OBJECT AND TERM OF CONCESSION

The first section provides that the operation of maritime postal and general interest services between France and United States of America, and France, Mexico, the Antilles, and Central America shall be modified in such a manner as to always remain within the limitation of 150,000,000 francs ($5,850,000) annually under the contract provisions.

TERM OF CONTRACT

The term of contract is for 14 years, beginning January 1, 1933, and ending December 31, 1946, unless previously canceled, and the State reserves the right to extend this term until the service is taken over by another contractor, in case the agreement has not been renewed within reasonable time before its lapse. However, the term of extension must not exceed 1 year without the consent of the concessionaire or the contractor.

The State waives its power to subsidize directly or indirectly any service leaving France which touches at any point on the lines covered by the contract, or which leaves a point outside of France and touches any two points provided in the contract. This limitation, however, does not apply to (1) supplementary lines created for local needs of the colonies nor (2) to lines which by virtue of an agreement with the State assure a service to the colonies in the Pacific via the Antilles and the Panama Canal, nor (3) to lines which are to serve certain transportation purposes, which cannot be guaranteed to be taken over fully by the contractor, etc. The contractor, on the other hand, has the right to preference in contracting for services which the Government may decide to create in extension of the services covered by the contract.

PERFORMANCE BOND

As a guarantee of performance, the Compagnie Generale Transatlantique assumes a performance bond in the amount of 3,000,000 francs ($117,000) in cash. treasury bills, State obligations, or floating property. The contractor agrees that all insurance policies covering vessels given as security under the bond cannot be settled excepting under agreement with the Minister of Merchant Marine.

The bond applies to claims against the contractor, as specified in the list of duties, or in all cases of accounting agreements with the State, including those regarding postal shipments, all damage attributable to infractions of the contract generally, and extra expenses arising from measures taken for ensuring the service in case the contractor fails to carry out contract stipulations. CHAPTER II. SPECIAL PROVISIONS COVERING SERVICES BETWEEN FRANCE AND THE UNITED STATES OF AMERICA

The contract provides 52 round-trip voyages annually between Havre and New York, with one sailing per week, except that from November 1 to March 1 only one sailing per fortnight may be made, on the condition that 52 obligatory voyages are completed within the year. Passenger vessels are prohibited from crossing the Newfoundland Bank from April 15 to October 15. The company shall operate a passenger vessel on the Marseille-New York line on type of the De Grasse, which vessel is to be fitted out in Marseille. During the period November 1 to March 1 this steamer may be substituted by a passenger steamer of the Havre-New York line, which may not be in the North Atlantic service at that time. The vessels covered by the contract when concluded were: T-6 (Normandie, under construction), Ile de France, Paris, and France.

The contract provided that until the T-6 goes into service the Champlain and Lafayette may be designated for postal service by special authorization for each voyage by the Minister of Merchant Marine.

Vessels to be constructed for the service must have a minimum displacement, fully loaded, of 22,000 tons. The contractor must possess at least three passenger vessels having a speed of over 20 knots at sea. In case one of these

vessels goes out of service the Minister may require a replacement vessel to be ordered within the ensuing 6-month period.

SPEED

The average minimum speed to be maintained by each vessel during the year shall be fixed as follows: T-6 (Normandie, under construction), 23 knots; Ile de France, 20 knots; Paris, 20 knots; France, 18 knots; and for substitute vessels: Champlain, 18.5 knots; Lafayette, 17 knots.

For vessels to be built, the minimum speed shall be determined by competitive conditions in the trade. The minimum speed may be reduced by onetenth of a knot from January 1, 1933, for vessels in service on that date, and for each new vessel from the January 1 following its entry into service.

CHAPTER III. SPECIAL DISPOSITIONS AS TO SERVICES BETWEEN FRANCE, MEXICO, THE ANTILLES, AND CENTRAL AMERICA

The services to be performed by the contractor are covered by four lines, as follows:

Line no. 1.-Covering fortnightly sailings between Havre, Plymouth, one or two Spanish ports, Barbados, Puerto Colombia, as well as several other ports, terminating at Cristobal, and return.

Line no. 2.-Covers 10 voyages a year between St. Nazaire, Bordeaux, four Spanish ports, and many ports in the West Indies, terminating at Santiago de Cuba, and returning via San Juan, St. Thomas, etc.

Line no. 3.-To supply two voyages not covered by line no. 2, in order to make monthly sailings locally between Fort de France, St. Lucie, Barbados, Pointe-a-Pitre, Basse-Terre, St. Barthelemy, St. Martin, and San Martin (Puerto Rico) and return.

Line no. 4.-One monthly sailing in the interisland services between Fort de France, St. Lucie, Barbados, Trinidad, terminating at Demerara, and return.

The Minister is authorized to require the establishment of the services planned in the contract of April 21, 1927, whenever economic circumstances shall permit it, without, however, exceeding the maximum of the subvention. It is understood that line no. 2 and a line to Mexico, if established, shall terminate in St. Nazaire.

SPEED

The minimum average annual speed on Line No. 1 shall be 14 knots, while Lines Nos. 2, 3, and 4 shall be 11 knots. For vessels in service at the time the contract was concluded, the following variations were permitted:

For the other vessels, such as Colombie, Cuba, and Mexique, no reduction is permitted. A reduction of one-tenth of 1 knot per year from January 1, 1933, shall be granted for passenger vessels in service at the time the contract was concluded and for new passenger vessels from the 1st of January following their entry into service.

CHAPTER IV. SPECIAL DISPOSITIONS CONCERNING THE SERVICES CONNECTING THE MEDITERRANEAN COAST OF FRANCE WITH ALGERIA AND TUNIS

The services defined by the charter party of March 1, 1928, shall be maintained and also all stipulations of that charter party."

Vessels used in these services shall benefit in regard to their replacement through the functioning of special account in the contract. Mediterranean

7 See Shipping and Shipbuilding Subsidies, p. 122.

traffic shall be covered by special book entries, and the commission charged with the administration of the charter party of March 1, 1928, shall extend their activities to all transportation for the account of the Compagnie Generale Transatlantique in the Mediterranean, including the company-owned vessels as well as those which have been chartered from the State, and the commission shall be obliged to include in its membership 1 representative for Algeria and 1 for Tunis.

CHAPTER V. DEFINITION OF SPEED

The average annual speed is the average of the speeds obtained by each passenger steamer during the various passages. The total of the individual results divided by the number of passages shall establish the figure for the average annual speed, and the average speed of each passage shall be computed by dividing the distance between the port of departure and terminal point of the line, by the time used for passage, deduction being made for stops at ports of call, exception also being made for cases of force majeure. Damage to engines, except broken shafts or lost propellers, shall not be considered as force majeure.

The time of passage shall be expressed in hours and tenths of an hour. The speed shall be expressed in knots and hundredths of knots, the final figures being computed to the hundredth of a knot. In the computation of the speeds attained, the periods of slowing-up arising out of the necessity of making the ship arrive in port during working hours shall not be counted. If the annual speed of passenger vessels is equal to, or more than, the speed authorized for that vessel, the required speed for the line shall be taken as speed of the vessel. If the average speed of a passenger vessel is less than the speed authorized for that particular ship, the speed required for the line, minus the deficiency, shall be taken as the speed of the ship. The contractor may be required to replace each passenger vessel of which the average speed for the voyages completed during the year past shall be one knot under the contract speed for the line to which the vessel belongs or for the passenger vessels listed.

Two years shall be allowed for effecting replacements, which period may be extended to 3 years if the replacement necessitates the construction of a new vessel. The rejected passenger vessels may be readmitted into the postal fleet after reconstruction, when they have qualified by official trials.

Transportation for State account (see also p. 30)

Passengers traveling for account of the State, in the public service or under agreement with the central or any colonial government of France, including students with scholarships, are entitled to 30-percent rebate on transportation and subsistence applicable to commercial passengers. Within this category is included also families and parties or persons. The 30-percent reduction applies to excess baggage weights on the New York Line, but not on furniture and equipment which must be carried at commercial rates.

Officials of the Merchant Marine Administration or Inspection-General of Finance, on special tours of inspection relating to contract performance, are transported gratuitously, the subsistence being chargeable to the State.

In case of troops transportation, the contractor must set aside certain spaces for storage of troop equipment.

The contractor undertakes to carry a number of passengers for State account equal to one-fourth of the total number of berths on each of the four classes, first, second, intermediate, and third, which comprise the facilities of the vessel. In cases where the needs of the Government exceed one-fourth, the contractor shall reserve the number of berths necessary, subject to 15 days to 3 weeks previous notice from the Government, prior to the sailing of the vessel. Fifteen days' notice shall be given when the number of the passengers of the State is between one-fourth and one-half of the berths and 3 weeks shall be given if the number is over one-half of the berths.

One-tenth of the carrying capacity of the vessel must be reserved for State and colonial cargo traffic up to the 10th day before sailing, upon the expiration of which the company may use this space for commercial purposes.

The contractor must grant the Government the most advantageous commercial freight rates and is otherwise free to grant the Government special rates.

135956-35-11