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Subsidies are paid by twelfths, upon vouchers prepared by the Government commissioner certifying the completion of the service. At the time of payment of the subsidy, the State pays only the net difference between the subsidy and any amount retained due the State. Subsequently, the amount retained may be charged to the amount of the performance bond and interest due, or to become due, without prejudice to recourse of law.

In order to permit payment of the subsidy within the conditions described above, the subsidy shall be fixed provisionally for each year at a figure determined by the last ministerial decree issued.

Repayment to the State of sums paid in excess shall be effected through deduction from the first twelfth to be paid for the year following.

Penalties Except in case of force majeure, regarding which protest must be entered by the master of the vessel, or by extract from the ship's log, the following penalties apply in connection with performance failure under the contracts :

Total or partial nonperformance of a voyage, a fine of 50,000 francs ($1,950). For using passenger vessels not qualified for the postal service, a fine of 50.000 francs ($1,950).

Reduction of fines, authorization of special vessels for special voyages, and remittance of fines is vested in the Minister of Merchant Marine.

Failure to make required speed New York-Havre Line: 20,000 francs ($780) per knot below average andual speed for each voyage that a vessel shows insufficient average.

The Antilles-Central America Line: 50,000 francs ($1,950) per knot below average annual speed calculated on the average speed of the line.

Delay in departure from terminals, a fine of 100 francs ($3.90) per hour or fractional hour; for 12 consecutive hours delay, a fine of 250 francs ($9.75) per hour. The same penalties apply in case of delay in arrival at terminals.

Irrespective of penalties, whenever the delay exceeds 24 hours, the Minister of Merchant Marine may, with the knowledge of the contractor, take joint action with local authorities for assuring the shipment of mails, and be may charter or requisition vessels for account of the contractor.

Failure to make port of call, a fine of 2,500 francs ($97.50); for a second failure during the same year, 5,000 francs ($195); and for a third or subsequent failure during the year, a fine of 10,000 francs ($390) each.

Failure to replace a vessel, within the period provided in the foregoing regulations, except in uncontrollable circumstances, of which the Minister of Merchant Marine shall be the sole judge, a fine of 1,000 francs ($39) per day shall be imposed for each day of delay.

For refusal to arbitrate, as provided in regulations, a fine of 20,000 francs ($780) to 50,000 francs ($1,950).

Delay or negligence in the postal or parcel-post service, a fine of 1,000 francs (839) to 5,000 francs ($195).

Unfulfillment of obligations to passengers or shippers, as provided in the regulations, including negligence in service for transportation of the State and for every infraction of the clauses in the list of duties, a fine of 1,000 francs ($39) to 5,000 francs ($195). Strikes shall not be considered in themselves as a case of force majeure.

International agreements The list of duties shall be modified, if necessary, in order to bring it into conformity with any international agreements which may be made by the Government, or with agreements which the company may conclude with foreign companies, with the approval of the Minister of Merchant Marine.

Cancelation Cancelation of the contract may be made for nonperformance for more than 2 months; for interruption or abandonment of the service in case of war, except as provided in the contract for such contingencies; for bankruptcy or judiciary legislation ; for frequent irregularities, persistent negligence, or bad faith; for insufficient or poor condition of vessel equipment; for agreements concluded with a foreign government or postal administration without authorization of the Government of France; or for inclusion in the service, without authorization of the Government, of vessels which are not the property of the contractor.

In lieu of placing the service under Government control or canceling the agreement for cause, the Minister of Merchant Marine may apply a penalty in the shape of a fine, the amount of which he shall determine.

MARITIME CREDIT LAW OF FRANCE

FINANCIAL RESULTS OF FIRST PERIOD

The financial results of the first period of operation of the maritime credit law were stated by the Minister of Merchant Marine in January 1934.1 The figures presented are subject to change due to possible reduction, but they show relatively, the credits extended by the Credit Foncier, those advanced through private channels, and the State interest contribution to both, for each year of the 5-year period. These figures show that 45.7 percent of the total authorization of the Credit Foncier was loaned during the 5-year period, that private loans amounted to 18.5 percent of the Credit Foncier loans, and that the State contribution of interest was 54.5 percent of the total authorization of 30,000,000 francs ($1,176,000) for the 5-year period, despite the various liberalizing acts stated. They show also that 87 percent of the Credit Foncier loans were for vessel construction in France.

Financial results of maritime credit laro

Category

Loans by

Crédit
Foncier

Direct private loans

Interest allowance

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First year, Aug. 1, 1928, to Aug. 1, 1929:

Construction in France.
Construction abroad.
Purchased abroad..

Total........
Second year, Aug. 1, 1929, to Aug. 1, 1930:

Construction in France.
Construction abroad.
Purchased abroad..

Total........
Third year, Aug. 1, 1930, to Aug. 1, 1931:

Construction in France..
Construction abroad.
Purchased abroad..

Total........
Fourth year, Aug. 1, 1931, to Aug. 1, 1932:

Construction in France.
Construction abroad..
Purchased abroad..

Total.........
Fifth year, Aug. 1, 1932, to Aug. 1, 1933:

Construction in France.
Construction abroad.
Purchased abroad..

Total........
Total, Aug. 1, 1928, to Aug. 1, 1933:

Construction in France..
Construction abroad.
Purchased abroad..

Total.......
Equivalent in dollars..

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" Chambre Syndicale des Constructeurs de Navires et de Machines Marines No. 31 B. ' In 1934: 3,383,691 francs (franc at $0.0392).

1 Chambre Syndicale des Constructeurs de Navires et de Machines Marines. No. 31B. (Franc at $0.0392.)

TONNAGE RESULTS OF MARITIME CREDIT LAW

The January 1934 report of the Ministry of Merchant Marine states the fol. lowing analysis of tonnage acquired with the aid of the maritime credit law. These figures show that of the total tonnage aided by provision of the law, 61 percent was tonnage acquired in France:

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Mr. Saugstad. There is in France a protective margin in favor of French shipbuilders and this was illustrated in connection with this law. In the law, there is a provision that if an owner calls for bids in a French shipyard and if the French shipyard charges or proposes to charge more than 15 percent more for the vessel than it can be purchased for in a competitive market, the French Government may advance and underwrite his mortgage on the vessel built or purchased in the foreign country.

There was one point I forgot in discussing interest rates. The interest rates are established either by the sales price of the bonds that are issued by the bank for the purpose of raising funds which are to be advanced under this policy, or they may be fixed by the current prices of real estate mortgage loans, plus 1 percent. I think the lowest quotation I had on those loans was 7.4 percent.

Mr. CULKIN. Have the French financed the construction and purchase of any ships abroad, to your knowledge ? Mr. SAUGSTAD. Yes, sir . Mr. CULKIN. In what countries? Mr. SAUGSTAD. Mostly in Germany. Mr. CULKIN. New construction? Mr. SAUGSTAD. Yes, sir. Chambre Syndicale des Constructeurs de Navires et de Machines Marines, no. 31 B.

Mr. Culkin. That is where this provision you referred to a moment ago is effective?

Mr. Saugstap. Yes, sir.

Mr. CULKIN. Where the cost is 15 percent over the foreign market, then the Government itself will finance the purchase!

Mr. SAUGSTAD. Will underwrite the paper.

Mr. CULKIN. Will underwrite the paper for the purchase and construction of a ship abroad-outside of France ?

Mr. SAUGSTAD. Yes, sir.

Mr. CULKIN. And to what extent, just generally, has that been done?

Mr. SAUGSTAD. In January 1934 the ministry of merchant marine reported that under the act 61 percent of the tonnage acquired under these loans was acquired in France; that purchases abroad were 64,631 gross tons; that construction abroad was 29,856 gross tons, and that construction in France was 149,167 gross tons.

Mr. CULKIN. The French were wise in that.
Mr. SAUGSTAD. They have long experience with this policy.

Mr. WALLGREN. Did I understand you aright to say that the interest rate was 7.4 percent?

Mr. Saugstad. The last quotation I had was about 7.4 percent.

Mr. WALLGREN. I would like to have you repeat that statement again. I asked if I was right in understanding you to say that the interest rate was 7.4 percent?

Mr. SAUGSTAD. That is the last notice I have seen.

Mr. SIROVICH. You stated, on the item of reconstruction, that the French House of Deputies had voted for 5 years a sum amounting to 200,000,000 francs?

Mr. SAUGSTAD. Authorized the Credit Foncier to advance that amount.

Mr. SIROVICH. And then after these 5 years they voted an additional 125,000,000 for 4 years?

Mr. SAUGSTAD. Yes, sir.

Mr. SIROVICH. That means that the French House of Deputies voted for construction purposes the sum of 1,500,000,000 francs.

Mr. SAUGSTAD. It means the chamber voted to extend credit to that amount.

Mr. SIROVICH. Which in conformity with the international exchange amounts to about $100,000,000.

Mr. SAUGSTAD. Yes, sir.

Mr. SIROVICH. Which they have put away for the construction of new ships, or the reconditioning of ships, or anything that appertains to construction?

Mr. SAUGSTAD. Yes, sir.

Mr. SIROVICH. Now of this $100,000,000, you stated, further, that the Government, through the House of Deputies, had arranged on the interest basis up to a certain tonnage for cargo and for passenger ships, that the individual, or the corporation, or company that borrowed or had the ship built would have to stand a limit of 2 percent and a maximum of 3-percent interest; is that right?

Mr. SAUGSTAD. Yes, sir; a minimum limit.

Mr. SIROVICH. Now, it struck me, while these figures seem so very large-and I want the chairman to correct me if I am wrong--that we have put away for construction purposes the sum of about $246,000,000. Is that right, Mr. Chairman.

The CHAIRMAN. I do not think that is correct. There was originally $125,000,000 authorized for the loan fund and then subsequently the authorization was increased to $250,000,000, but I cannot tell how much has since been actually appropriated. There was $125,000,000 and then they increased the authorization, but it never reached $250,000,000.

Mr. SIROVICH. So, according to my theory, we have today about $246,000,000 against which we have begun to build and reconstruct new ships.

The CHAIRMAN. I do not think we have that much in our construction loan fund now.

Mr. SIROVICH. We have not that much now, but we had that amount.

The CHAIRMAN. I do not think so; we never had that amount. Mr. SIROVICH. We had 146 and 90, I think-something like that, that was brought out in the testimony a few years ago.

The CHAIRMAN. We will get that from the Shipping Board.

Mr. SIROVICH. On that basis, I want to come to my point, that We show our munificence for the construction of ships by advancing as high as 75 percent of the first mortgage against those ships, so that companies can build new ships, and rebuild and get rid of the obsolete ships that are derelicts upon the ocean of commerce. Now do you not think upon the basis that we charge, as the hearings have brought out, anywhere from an eighth to a quarter of 1 percent, up to 342 percentThe CHAIRMAN. It is 31/2 percent now.

Mr. SIROVICH. It is 312 percent now, but we have as low interest as an eighth and a quarter, up to 342 percent maximum, in which shipbuilders can build new ships,

The CHAIRMAN. Now, wait a minute. They have not that oneeighth of 1 percent now at all. That was a misinterpretation that never ought to have been put into effect by the Shipping Boardthat one-eighth of 1 percent. And that was changed so that the charge was 342 percent for foreign shipping.

Mr. SIROVICH. But they have charged less than 31/2 percent.
The CHAIRMAN. Yes; before the act of 1928.
Mr. SIROVICH. That is what I am trying to bring out.
The CHAIRMAN. You said they had that available now.

Mr. SIROVICH. I said we had available now for the construction of new ships perhaps anywhere from seventy-five to one hundred million dollars, I think.

The CHAIRMAN. I am not prepared to answer that.

Mr. SIROVICH. Now, on that basis, I think our Government has been very liberal, very gracious, more so even than the French Governient with all of its munificence, if the merchant marine operators would only avail themselves of the opportunities we give; because that bank you spoke of, the Credit Foncier, only gives up to 50 percent, and under certain conditions up to 70 percent; and, if they give collateral up to 85 percent, and they can take that collateral and go to any bank and get a loan against it. So that there is nothing to that. So that when you compare the Government of

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