The applicants will enter into a construction contract to be satisfactory to, and approved by the committee on construction loans with the New York Shipbuilding Co. for the construction of the proposed vessels in accordance with the plans and specifications which have been submitted and approved by the Secretary of the Navy and the committee on construction loans. The proposed vessels will be first-cabin passenger and cargo vessels of approximately 705 feet length, 86 feet beam, 30 feet load draft, and of 12,000 tons dead weight. The vessels will be propelled by twin screws, driven by geared turbines, or by turbo-electric combination. The amount of the contract will be approximately $10,500,000 for each vessel. Competitive bids have been received by the owners and submitted to the committee and the committee has satisfied itself that the price is fair and reasonable for the construction of the proposed vessels in an American shipyard. The repayment of the loans herewith applied for is guaranteed by the United States Lines (Inc.). The committee has caused the United States Lines (Inc.) to submit for its consideration the same data as required of the applicants. This data has been carefully investigated and considered by the committee and it is of the opinion that the guarantor is of a sound and satisfactory condition and that the financial condition and standing of the guarantor justifies the proposed loan.

In view of the above-stated findings and facts, the committee recommends that the above-mentioned applications of the Transatlantic Steamship Corporation and North Atlantic Steam ship Corporation for loans from the construction loan fund be approved, and that said loans be authorized subject to the following terms and conditions:

1. Amount of loan.-The administration of the loans will be facilitated by granting a separate loan for each vessel to each corporation. Under this arrangement each loan should be of the amount not to exceed three-fourths of the cost of construction of each vessel, and not to exceed $7,875,000, whichever sum may be the lesser.

2. Repayment and interest.-The principal of the loans shall be repaid in 20 annual installments as nearly equal as possible with interest thereon payable semiannually. Interest should be at the minimum rates provided in section 301-a of the merchant marine act of 1928, as amended, or such other rate, as the board may fix pursuant to law, prior to the first advance on the loan and/or on the effective date of the permanent loan on the vessel

3. Investment by owner.-No part of the loans should be advanced unless and until the owners have expended on the construction of the vessel to which the loan relates the amount of the difference between the proposed cost of the vesse! and the amount agreed to be loaned to the end that an equity may thus be created as added security to the Government for advances made by it on construction

accounts.

4. Security for loan.-The committee on construction loans should be authorized and directed to require and secure from the owner such securities for the loans as it may deem necessary, including temporary and permanent notes, deeds of trust, mortgages, etc. and including finally such preferred mortgages as are required by law.

5. Insurance.-Adequate and proper insurance on the vessels should be required both during the period of construction and thereafter so long as any amount remains due on the loans. Such insurance should be in amounts, forms of policies and with companies acceptable to the board.

6. Classification.-The vessels should be required to have the highest classification of the American Bureau of Shipping so long as any amount remains due on the loans.

7. American flag.-The vessels should be required to be documented under laws of the United States immediately on its completion and to remain so documented for a period of 20 years thereafter and so long as there remains due any amount on account of the loans.

8. American citizenship.-If the ownership of the stock of the applicant should at any time be such that the applicant is not a citizen of the United States as defined by existing law, it should be provided that the board, at its option, can declare all outstanding notes due and payable.

9. Counterclaims.-Provision should be made that the borrower must make payments due on the loans promptly as they accrue without deducting anything due the obliger by the Government in connection with other matters.

10. Performance bond.-The contractor agrees to furnish a construction contract performance bond in the amount of $1,575,000 for each vessel, the bond to be indorsed by a surety company satisfactory to the board.

11. Authorization to committee on construction loans.-Appropriate authority should be given the committee on construction loans to modify and extend the provisions above suggested except as to the amount, period of payment, and rates of interest, so that the documents in the case may contain as full and complete provisions as practicable to secure payment of the loans with interest. The committee should be also given appropriate authority to direct and supervise the taking of the necessary steps to carry into effect the purpose and intention of the loans and the executory matters arising from and under the actual making of the loans;

The committee has prepared and submits herewith a proposed resolution designed to make effective the recommendation contained in this report to be used in the event that the Shipping Board approves the said recommendation. H. I. CONE,

E. C. PLUMMER,
ALBERT H. DENTON,
Committee on Construction Loans.

EXHIBIT N

CAMDEN, N. J., February 16, 1931.

UNITED STATES SHIPPING Board:

Plant operations here quietly suspended on conference contracts noon Saturday. We have on order materials and equipment exceeding $3,000,000. Must have quick and definite decision as to program in order to stop work on outstanding orders and avoid embarrassment and useless losses. Copy sent Secretary Lamont.

C. L. BARDO, President New York Shipbuilding Co.

EXHIBITO

FEBRUARY 19, 1931.

Whereas the board now has before it a memorandum dated February 18, 1931, signed by P. W. Chapman, president, P. W. Chapman Co. (Inc.), agreeing to the items enumerated in support of his application to the board of January 26, and subsequent communications.

Resolved, That the board authorize the proper officers to proceed with the advancement on the loan up to three-fourths pro rata, upon the general terms outlined in these papers, such necessary documents and legal instruments to carry this action out to be prepared immediately, in conjunction with the general counsel. Also, that the New York Shipbuilding Co. be notified of this action of the board in order that they may proceed to restore work on the vessels.?

Resolved further, That the passage of this resolution shall not be an acceptance of the aforesaid memorandum or bind the board in any wise as a contract.

1 Feb. 14, 1931.

Feb. 24, 1931.

MERCHANT MARINE INVESTIGATION

Hon. EWIN L. Davis,

UNITED STATES SHIPPING Board,
Washington, January 20, 1932.

Chairman Committee on Merchant Marine, Radio, and Fisheries,
House of Representatives, Washington, D. C.

DEAR CHAIRMAN DAVIS: There is transmitted to you herewith answer to the following question propounded by the committee:

QUESTION 13.-What construction or reconditioning has been done to date or is under way in each case?

The statement of the construction loan fund status, mentioned as copy marked "1" in the answer to Question 12, answers this fully.

Very truly yours,

T. V. O'CONNOR, Chairman.

UNITED STATES SHIPPING BOARD,
Washington, January 21, 1932.

Hon. EwIN L. DAVIS,

Chairman Committee on Merchant Marine, Radio, and Fisheries, House of Representatives, Washington, D. C.DEAR CHAIRMAN DAVIS: There is transmitted to you herewith answer of the board to the following question propounded by the committee: 14. What have been the operating results to date in each case? We assume that this question refers to the operating results from the date of sale of the respective lines or ships to date. The Fleet Corporation is not in possession of the information necessary to answer this question. Our sales contracts do not provide that the Fleet Corporation has the right of investigation and audit of the operation results of ships or lines subsequent to the date of sale. While there may be certain instances where we may be in possession of data covering a limited period of time since the sale, we do not know of any case where information is available which will allow the preparation of a reply to this question.

Very truly yours,

T. V. O'CONNOR, Chairman.

UNITED STATES SHIPPING Board,
Washington, January 20, 1932.

Hon. EWIN L. DAVIS,

Chairman Committee on Merchant Marine, Radio, and Fisheries,

House of Representatives, Washington, D. C.

DEAR CHAIRMAN DAVIS: There is transmitted to you herewith answer of the board to the following question propounded by the committee:

30. Give full and complete history of the operating results of the United States Lines up to the sale of the lines to P. W. Chapman & Co.

Very truly yours,

T. V. O'CONNOR, Chairman.

153

Results of operation of the United States Lines by fiscal years, July 1, 1923, to June 6, 1929

July 1, 1923, to
June 30, 1924

July 1, 1924, to
June 30, 1925

July 1, 1925, to
June 30, 1926

57

80, 669
213, 229

$12, 814, 770. 47
1,054, 747.99
1,880, 385. 14
182, 418. 61