Page:United States Statutes at Large Volume 49 Part 1.djvu/2050

 74 TH C ONGRESS. SESS. II. CH. 858. J UNE 29, 1936 . prescribed by the Commission as provided in title III w henev er pr actica ble, the o perato r sha ll us e only arti cles, mate rials, and supplies of the growth, production, and manufacture of the United States, as defined in section 505a herein, except when it is necessary to purchase supplies and equipment outside the United States to enable such vessel to continue and complete her voyage, and the operator shall perform repairs to subsidized vessels within the continental limits of the United States, except in an emergency. Sa m. 607 . (a) Every con tract for an oper ating-differentia l sub- sidy made under authority of this title shall provide that the con- tractor shall be entitled to annually withdraw from net earnings of subsi dized vessels and services incident thereto as profit, if the con- tractor is a natural person or a partnership, or may pay to its share- h older s or stockh older s, as divid ends, if t he con tract or is an a ssocia : tion or corporation, a sum not in excess of 10 per centum per annum on the contractor's capital necessarily employed in his b usiness, except s ubjec t to the fu rther prov isions of t his s ection whic h lik ewise shall be incorporated in such contract. (b) To insure the prompt payment of the contractor's obligations to the United States and the replacement of the contractor's subsi- dized vessels as may be required, the contractor shall create and maintain, out of gross earnings, during the life of such contract, a "capital reserve fund", in such depository or depositories as may be approved by the Commission. In this fund the contractor shall deposit, annually or oftener, as the Commission may require, an amount equal to the annual depreciation charges on the contractor's vessels on which the operating differential is being paid, such depre- ciatio n charges to be computed on a twe nty-year life exp ectancy of the subsidized vessels : Provided, however, T hat if, during any accounting year, the annual depreciation charges on the contractor's line of subsidized vessels has not been earned, in whole or in part, over and above the annual expense of operation of such vessels (exclusive of said annual depreciation thereon), the contractor shall not be required to deposit in his capital reserve fund for such accounting year a sum in excess of the amount of annual deprecia- tion actually earned during that year but shall make up any and all deficiencies in his c apital reserve fund as soon as the earnings of his su bsidized vessels in excess of ann ual expenses of o peration shall p erm it. The p roceeds of all in surance indemniti es received by th e contractor on account of the total loss of any subsidized vessel shall also be deposited in the capital reserve fund. The contractor shall also deposit in the capital reserve fund, from time to time, such percentage of the annual net profits of the con- tr actor's business covered by the c ontract as the Co mmission shall determine is necessary to further build up a fund for replacement of the contractor's subsidized ships ; but the Commission shall not require the contractor to make such deposit of the contractor's net profits in the capital reserve fund unless the cumulative net profits of the contractor, at the time such deposit is to be made, shall be in excess of 10 per centum per annum from the date the contract was executed. From the capital reserve fund so created, the con- tractor may pay the principal, when due, on all notes secured by m ortgage on the subs idized ves sels and m ay make d isbursemen ts for the purchase of replacement vessels or reconstruction of vessels or additional vessels to be employed by the contractor on an essential foreign-trade line, route, or service approved by the Commission, but payments from the capital reserve fund shall not be made for any other purpose. Annual withdrawal of profi ts. Maintenance of'cap- ital reserve fund" by c ontra ctor . Deposits. 2005 Ante, p. 1992. Use of articles of American manu fac- ture, etc . Ante, p. 1998. Exce ption . Pro viso . If annual deprecia- tion charges not earned . Insurance indemni- ties ; deposit of proceeds in fund . Percentage of annual net profits to be de- posited . Capital reserve fu nd ; requirement w aived under c ert ain condi- tions . Di sbu rse men ts fr om capital reserve fund.
 * and (7) that