new mortgage conforms to the eligibility requirements of all the other paragraphs of said subsection (a) of section 1274 of this title;

(3) where the Secretary of Commerce has insured a mortgage under the provisions of this subchapter, the Secretary of Commerce may insure a new mortgage for the purpose of refunding such mortgage: Provided, That the principal amount of the new mortgage shall not exceed the then unpaid principal amount of the original mortgage; that the interest rate on the new mortgage shall not be higher than the interest rate on the original mortgage; that the maturity date of the new mortgage shall not be later than twenty-five years from the date of the original mortgage; and that the new mortgage shall otherwise conform to the eligibility requirements of subsection (a) of section 1274 of this title; or

(4) the Secretary of Commerce may insure mortgages given to finance the purchase of vessels thertofore acquired by the fund under the provisions of section 1275 of this title and to secure loans or advances made for reconditioning and reconstruction of such vessels.

(June 29, 1936, ch. 858, §§ 905 (e), 1106, as added June 23, 1938, ch. 600, § 46, 52 Stat. 972, and amended 1950 Reorg. Plan No. 21, §§ 204, 306, eff. May 24, 1950, 15 F.R. 3178, 64 Stat. 1276, 1277; July 17, 1952, ch. 939, § 21, 66 Stat. 765; Sept. 3, 1954, ch. 1265, § 6, 68 Stat. 1275; July 31, 1959, Pub. L. 86-123, §1(4), 73 Stat. 269; June 12, 1960, Pub. L. 86-518, § 6, 74 Stat. 216.)

AMENDMENTS

1960-Pub. L. 86-518 substituted "twenty-five years from the date of the original mortgage" for "the maturity date of the original mortgage" in clauses (1), (2), and (3).

1959-Pub. L. 86-123 inserted "as provided in section 1276a of this title or" following "except" in opening provisions.

1954 Act Sept. 3, 1954, limited a new mortgage for refinancing to the same maturity date as the old mortgage, and added par. (4).

EFFECTIVE DATE OF 1960 AMENDMENT Amendment of this section by Pub. L. 86-518 applicable only to vessels delivered by the shipbuilder on or after Jan. 1, 1946, and with respect to such vessels shall become effective on Jan. 1, 1960, and with respect to vessels delivered by the shipbuilder before Jan. 1, 1946, the provisions of this chapter existing immediately before June 12, 1960, shall continue in effect, see section 8(a) of Pub. 86-518, set out as a note under section 1125 of this title.

TRANSFER OF FUNCTIONS

"Secretary of Commerce" and "Secretary" were subst1tuted for "Commission" (which had reference to the United States Maritime Commission) on authority of 1950 Reorg. Plan No. 21, set out as a note under section 1111 of this title, and act July 17, 1952, set out as section 1244(e) of this title.

REVISION OF CONTRACTS, COMMITMENTS TO INSURE MORTGAGES, MORTGAGES, AND MORTGAGE INSURANCE CONTRACTS ENTERED INTO PRIOR TO JUNE 12, 1960

For provisions authorizing revision, see section 8(c) of Pub. L. 86-518, set out as a note under section 1125 of this title.

COMMERCIAL EXPECTANCY OR PERIOD OF DEPRECIATION OF TANKERS AND OTHER LIQUID BULK CARRIERS Nothing in any amendment made by Pub. L. 86-518 to operate or be interpreted to change from 20 to 25 years the provisions of this chapter relating to the com

mercial expectancy or period of depreciation of any tanker or other liquid bulk carrier, see section 9 of Pub. L. 86-518, set out as a note under section 1125 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1279b of this title. § 1276a. Commitment to insure mortgage; conditions. The Secretary of Commerce is authorized, upon such terms as he may prescribe, to make a commitment to the prospective owner of a vessel who is a citizen of the United States, prior to the time when such prospective owner has made with the shipbuilder for the construction of the vessel (or if the keel of the vessel was laid under such contract prior to the enactment of this Act, and the vessel owner or prospective owner has an unexpired commitment from the Secretary of Commerce to insure a mortgage on the vessel, issued prior to enactment of this Act under the law then existing, then prior to the expiration of such commitment), to insure the interest on and the unpaid balance of the principal of a mortgage or mortgages which such prospective owner, as mortgagor, may at any time place on the vessel in order to finance the construction, reconstruction, or reconditioning of other vessels or both to refinance a mortgage insured by the Secretary of Commerce on the vessel and to finance the construction, reconstruction, or reconditioning of other vessels, subject to the following conditions

(1) the commitment shall not be assignable without the prior written approval of the Secretary of Commerce;

(2) the vessel is not, at the time of insuring the mortgage pursuant to the commitment, subject to a mortgage which has not been insured by the Secretary of Commerce;

(3) within a reasonable period prior to, or at the time of, insuring the mortgage pursuant to the commitment, the Secretary of Commerce makes the finding required by section 1274 (c) of this title (which requires a finding that the mortgaged vessel or the project with respect to which the mortgaged vessel is to be operated will be, in the opinion of the Secretary of Commerce, economically sound);

(4) the mortgage involves a principal obligation which when added to the unpaid balance of the principal obligations of prior mortgages on the vessel (other than mortgages that are being refinanced by this mortgage) will result in a sum which will not, (a) if the vessel was not built with the aid of construction-differential subsidy and complies with the requirements of section 1159 of this title exceed (A) if the vessel has not been reconstructed or reconditioned before such mortgage is executed, 872 per centum of all amounts the mortgagor has paid or is obligated to pay for the construction (including designing, inspecting, outfitting, or equipping) of the vessel, depreciated at the rate of 4 per centum per annum from the date the vessel was delivered by the shipbuilder to the date such mortgage is executed, or (B) if the vessel has been reconstructed or reconditioned before such mortgage is executed, 872 per centum of all amount the mortgagor has paid or is obligated to pay for the construction (including designing,

inspecting, outfitting, and equipping) of the vessel, depreciated at the rate of 4 per centum per annum from the date the vessel was delivered by the shipbuilder to the date of such reconstruction or reconditioning, and depreciated, from the date of such reconstruction or reconditioning to the date such mortgage is executed, on a straight-line basis and on the basis of a useful life of the vessel determined jointly by the Secretary of Commerce and the Secretary of the Treasury, plus 872 per centum of all amounts the mortgagor has paid or is obligated to pay for the reconstruction or reconditioning of the vessel (if such reconstruction or reconditioning was done without aid of construction subsidy and the vessel complies with the requirements of section 1159 of this title; otherwise, 75 per centum of such amount), depreciated, from the date of such reconstruction or reconditioning to the date such mortgage is executed, on a straight-line basis and on the basis of a useful life of the vessel determined jointly by the Secretary of Commerce and the Secretary of the Treasury, and (b) if the vessel was built with the aid of construction-differential subsidy, or does not comply with the requirements of section 1159 of this title, exceed the amount computed under (a) above except that, where (a) above provides for 872 per centum of the construction cost of the vessel, the percentage shall be 75 per centum;

(5) the mortgage has maturity dates which, if the vessel has not been reconstructed or reconditioned, do not exceed the remaining years of a useful life of the mortgaged vessel of twenty-five years computed from the date the vessel was delivered by the shipbuilder or, if the vessel has been reconstructed or reconditioned, do not exceed the remaining years of a useful life of the vessel determined jointly by the Secretary of the Treasury and the Secretary of Commerce;

(6) the loan agreement for the making of the loan secured by the mortgage, or the mortgage, provides that the underwriter or mortgagee will disburse the loan for one or more of the following purposes: (a) to pay one of the components of actual cost of the vessels to be constructed, reconstructed, or reconditioned and, if any such payment is to reimburse the operator for payments made from his capital reserve fund, to deposit such payment in his capital reserve fund, or (b) to pay part of the loan to discharge an existing mortgage which is insured by the Secretary of Commerce on the vessel that is subject to the mortgage which is to be insured, or (c) to deposit part or all of the loan in the operator's capital reserve fund, if he is a subsidized operator, and in a construction reserve fund, if he is an unsubsidized operator; if any deposit is made in a capital reserve fund, or construction reserve fund under (c) hereof, such deposit may be withdrawn only to pay one of the components of actual cost of the vessels that are to be constructed, reconstructed, or reconditioned, or if for any reason such payments do not exhaust the deposit, then to pay off the loan secured by the mortgage that is to be insured;

(7) the mortgage complies with all of the requirements of section 1274(a) of this title (which defines an eligible mortgage) except subdivision 2 thereof (which specifies the maximum principal amount of the mortgage), subdivision 3 thereof (which specifies the maximum duration of the mortgage), and subdivision 8 thereof (which specifies the purpose of the loan secured by the mortgage);

(8) the mortgaged vessel shall be in class A-1, American Bureau of Shipping, with all required certificates, including but not limited to marine inspection certificates of the United States Coast Guard, with all outstanding requirements and recommendations necessary for retention of class accomplished, unless the Secretary of Commerce permits a deferment of such repairs, and shall be tight, stanch, strong and well and sufficiently tackled, appareled, furnished and equipped, and in every respect seaworthy and in good running condition and repair and in all respects fit for service.

(June 29, 1936, ch. 858, § 1107, as added July 31, 1959, Pub. L. 86-123, § 1(5), 73 Stat. 269, and amended June 12, 1960, Pub. L. 86–518, §§ 1, 7, 74 Stat. 216.)

REFERENCES IN TEXT

Prior to the enactment of this Act, referred to in the text, probably means prior to the enactment of Pub. L. 86-123 on July 31, 1959, which added this section.

AMENDMENTS

1960-Pub. L. 86-518 substituted "4 per centum" for "5 per centum" in two instances in cl. (4), and "twentyfive years" for "twenty years" in cl. (5).

EFFECTIVE DATE OF 1960 AMENDMENT Amendment of this section by Pub. L. 86-518 applicable only to vessels delivered by the shipbuilder on or after Jan. 1, 1946, and with respect too such vessels shall become effective on Jan. 1, 1960, and with respect to vessels delivered by the shipbuilder before Jan. 1, 1946. the provisions of this chapter existing immediately before June 12, 1960, shall continue in effect, see section 8(a) of Pub. L. 86-518, set out as a note under section 1125 of this title.

RATE OF DEPRECIATION FOR VESSELS DELIVERED BY SHIPBUILDER ON OR AFTER JAN. 1, 1946, AND BEFORE JAN. 1. 1960

For provisions relating to computation of depreciation with respect to vessels delivered by the shipbuilder on or after Jan. 1, 1946, and before Jan. 1, 1960, see section 8(b) of Pub. L. 86-518, set out as a note under section 1125 of this title.

REVISION OF CONTRACTS, COMMITMENTS TO INSURE MORTGAGES, MORTGAGES, AND MORTGAGE INSURANCE CONTRACTS ENTERED INTO PRIOR TO JUNE 12, 1960

For provisions authorizing revision, see section 8(c) of Pub. L. 86-518, set out as a note under section 1125 of this title.

COMMERCIAL EXPECTANCY OR PERIOD OF DEPRECIATION OF TANKERS AND OTHER LIQUID BULK CARRIERS Nothing in any amendment made by Pub. L. 86-518 to operate or be interpreted to change from 20 to 25 years the provisions of this chapter relating to the commercia expectancy or period of depreciation of any tanker or other liquid bulk carrier, see section 9 of Pub. L. 86-518 set out as a note under section 1125 of this title.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 1276 of this title § 1277. Offenses and penalties.

Whoever, for the purpose of obtaining any loss

or advance of credit from any person, partnership, association, or corporation with the intent that such loan or advance of credit shall be offered to or accepted by the Secretary of Commerce for insurance, or for the purpose of obtaining any extension or renewal of any loan, advance of credit, or mortgage insured by the said Secretary, or the acceptance, release, or substitution of any security on such a loan, advance of credit, or for the purpose of influencing in any way the action of the said Secretary of Commerce under this subchapter, makes, passes, utters, or publishes, or causes to be made, passed, uttered, or published any statement, knowing the same to be false, or alters, forges, or counterfeits, or causes or procures to be altered, forged, or counterfeited, any instrument, paper, or document, or utters, publishes, or passes as true, or causes to be uttered, published, or passed as true, any instrument, paper, or document, knowing it to have been altered, forged, or counterfeited, or willfully overvalues any security, asset, or income, shall be guilty of a misdemeanor and punished as provided under the first paragraph of section 1228 of this title. (June 29, 1936, ch. 858, § 1108, formerly § 1107, as added June 23, 1938, ch. 600, 46, 52 Stat. 973, amended Sept. 3, 1954, ch. 1265, 7, 68 Stat. 1275, and renumbered July 31, 1959, Pub. L. 86–123, § 1(1), 73 Stat. 269.)

AMENDMENTS

1954-Act Sept. 3, 1954, substituted Secretary of Commerce for Commission.

TRANSFER OF FUNCTIONS

Functions of the United States Maritime Commission were transferred to the Secretary of Commerce by 1950 Reorg. Plan No. 21, §§ 204, 306, eff. May 24, 1950, 15 F.R. 3178, 64 Stat. 1276, 1277, set out as a note under section 1111 of this title, and act July 17, 1952, ch. 939, § 21, 66 Stat. 765, set out as section 1244(e) of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1274 of this title.

§ 1278. Rules and regulations.

The Secretary of Commerce is authorized and directed to make such rules and regulations as may be deemed necessary or appropriate to carry out the purposes and provisions of this subchapter. (June 29, 1936, ch. 858, § 1109, formerly § 1108, as added June 23, 1938, ch. 600, § 46, 52 Stat. 973, amended Sept. 3, 1954, ch. 1265, § 8, 68 Stat. 1276, and renumbered July 31, 1959, Pub. L. 86–123, § 1(1), 73 Stat. 269.)

AMENDMENTS

1954 -Act Sept. 3, 1954, substituted Secretary of Commerce for Commission.

TRANSFER OF FUNCTIONS

Functions of the United States Maritime Commission were transferred to the Secretary of Commerce by 1950 Reorg. Plan No. 21, §§ 204, 306, eff. May 24, 1950, 15 F.R. 3178, 64 Stat. 1276, 1277, set out as a note under section 1111 of this title, and act July 17, 1952, ch. 939, § 21, 66 Stat. 765, set out as section 1244 (e) of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1274 of this title.

§1279. Appropriations.

There is authorized to be appropriated the sum of $1,000,000 and such further sums as may be

necessary to carry out the provisions of this subchapter. (June 29, 1936, ch. 858, § 1110, formerly § 1109, as added June 23, 1938, ch. 600, § 46, 52 Stat. 973, amended Sept. 3, 1954, ch. 1265, § 9, 68 Stat. 1276, and renumbered July 31, 1959, Pub. L. 86-123, § 1(1), 73 Stat. 269.)

AMENDMENTS

1954-Act Sept. 3, 1954, reenacted section without change.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 1272, 1274 of this title.

§ 1279a. Escrow fund. (a) Creation.

In connection with the insurance of loans and mortgages, which are financed by sale of bonds to the general public, the Secretary of Commerce is authorized to accept a deposit in escrow in an amount which at the time of such deposit is equal to (i) the excess of the principal of such loan or mortgage over 75 per centum, or 872 per centum, as the case may be, of the amount paid by or for the account of the mortgagor or borrower for the construction, reconstruction, or reconditioning (including designing, inspection, outfitting, and equipping) of the vessel, (ii) with interest thereon for the period of the escrow agreement.

(b) Disbursement prior to termination of escrow agreement.

The Secretary of Commerce shall, as specified in the escrow agreement, disburse the escrow fund to pay amounts the mortgagor or borrower is obligated to pay as interest on such loan or mortgage or for the construction, reconstruction, or reconditioning (including designing, inspecting, outfitting, and equipping) of the vessel, except that if insurance becomes payable under the insurance contract prior to the termination of the escrow agreement, all amounts in the escrow fund at the time such insurance becomes payable (including realized income which has not yet been paid to the borrower or mortgagor) shall, subject in the case of insurance on a mortgage to the application of mortgage provisions contemplated by section 1274(a) (10) of this title, be paid into the Federal Ship Mortgage Insurance Fund and (i) be credited against any amounts due or to become due to the Secretary of Commerce from the borrower or mortgagor with respect to the insured loan or mortgage and (ii) to the extent not so required, be paid to the borrower or mortgagor.

(c) Disbursement upon termination of escrow agreement.

If insurance has not become payable under the insurance contract prior to the termination of the escrow agreement, any balance of the escrow fund at the time of such termination shall be disbursed by the Secretary of Commerce to prepay the excess of the principal of the loan or mortgage over 75 per centum, or 872 per centum, as the case may be, of the actual cost of the vessel to the extent paid, and to pay interest on such prepaid amount of principal, and the remainder of such balance of the escrow fund shall be paid to the borrower or mortgagor.

(d) Investment of fund.

The Secretary of Commerce may invest and reinvest all or any part of the escrow fund in obligations of the United States with such maturities that such fund will be available as required for purposes of the escrow agreement.

(e) Payment of income.

Any income realized on the escrow fund shall, upon receipt by the Secretary of Commerce, be paid to the borrower or mortgagor.

(f) Terms of escrow agreement.

The escrow agreement shall contain such other terms as the Secretary of Commerce may consider necessary to fully protect the interests of the United States. (June 29, 1936, ch. 858, § 1111, as added July 31, 1959, Pub. L. 86-127, § 1(2), 73 Stat. 272.) SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1271, 1274 of this title.

§ 1279b. Insurance of mortgage securing loan for restoration and return of American-built squarerigged merchant vessel, Kaiulani.

(a) Notwithstanding any other provision of law including sections 1271(f), 1274(a) (2), and 1274(a) (8) of this title, the Secretary of Commerce is hereby authorized to insure all or any part of the principal of and interest on any mortgage made, within the three-year period beginning on December 14, 1967, by the National Maritime Historical Society of the District of Columbia for the purpose of restoring and returning to the United States the vessel, Kaiulani, the last surviving American-built, squarrigged merchant ship presented as a gift to the people of the United States from the people of the Philippines.

(b) An insurance contract issued under this section shall be made only with respect to a mortgage which, in the opinion of the Secretary of Commerce, is economically sound and such contract and the related mortgage shall be subject to such reasonable terms and conditions as he may deem necessary

to protect the interest of the United States.

(c) The Secretary of Commerce is authorized to make commitments to insure a mortgage under this section.

(d) The aggregate unpaid principal amount of any mortgage insured under this section shall not exceed $500,000.

(e) The faith of the United States is solemnly pledged to the payment of interest on and the unpaid balance of the principal amount of each mortgage insured under this section.

(f) Notwithstanding any other provision of law. the vessel Kaiulani shall be entitled to be registered or enrolled under the laws of the United States at any time, and shall be exempt from all United States customs duties and tonnage taxes, if any, upon her return to the United States.

(g) Such of the provisions of this subchapter as the Secretary of Commerce determines, shall apply to the insurance granted under this section. (June 29, 1936, ch. 858, § 1112, as added Dec. 14, 1967, Pub. L. 90-194, 81 Stat. 580.)

§ 1280. Advances to fund.

The Secretary of Commerce is authorized to advance to the Federal Ship Mortgage Insurance Fund from the "Vessel operations revolving fund", such amounts as may be required for the payment, pursuant to section 1275 of this title, of unpaid principal amounts of defaulted mortgages and loans and of unpaid interest thereon: Provided, That such advances shall be repaid to the "Vessel operations revolving fund" as soon as practicable consistent with the status of the Federal Ship Mortgage Insurance Fund: Provided further, That the total advances outstanding at any one time shall not exceed $10,000,000. (Pub. L. 85-469, title I, § 101, June 25. 1958, 72 Stat. 231.)

CODIFICATION

Section was not enacted as part of the Merchant Marine Act, 1936, which comprises this chapter.

§ 1691. Declaration of policy.

The Congress hereby declares it to be the policy of the United States to expand international trade; to develop and expand export markets for United States agricultural commodities; to use the abundant agricultural productivity of the United States to combat hunger and malnutrition and to encourage economic development in the developing countries, with particular emphasis on assistance to those countries that are determined to improve their own agricultural production; and to promote in other ways the foreign policy of the United States. (July 10, 1954, ch. 469, § 2, 68 Stat. 454; Nov. 11, 1966, Pub. L. 89-808, § 2(A), 80 Stat. 1526.)

AMENDMENTS

1966-Pub. L. 89-808 restated the Congressional decla

ration of policy to include the use of the abundant agricultural productivity of the United States to combat hunger and malnutrition and the emphasis on assistance to those developing countries that are determined to improve their own agricultural production and to exclude statement of a policy to facilitate the convertibility of currency, to make maximum efficient use of surplus agr cultural commodities in furtherance of the foreign policy of the United States, to purchase strategic materials, to pay United States obligations abroad, and to promote collective strength.

EFFECTIVE DATE OF 1966 AMENDMENT

Section 5 of Pub. L. 89-808 provided that: "This Art [which enacted sections 1710, 1725, and 17363-36 amended sections 1691, 1701-1704, 1705-1709, 17211724, and 1731-1736, and repealed sections 1693-19 of this title and amended provisions set out as a 4 under section 1701 of this title] shall take effect as January 1, 1967, except that section 4 [which enacte section 1707a of this title] shall take effect upon ens ment Nov. 11, 1966]."