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The second committee amendment amends the title of the Senate bill to read as follows:

An Act to amend the Merchant Marine Act, 1936, to provide for Federal ship mortgage insurance, and for other purposes.


The Senate bill and the committee substitute both provide for the insurance of mortgages to secure loans or advances made for the construction or reconditioning of certain types of vessels engaged principally in the domestic trade but including similar types of vessels engaged in foreign trade in waters adjacent to the United States. This legislation is in harmony with the policy declared in section 101 of the Merchant Marine Act, 1936. Its primary purpose is to extend Federal aid to an important part of our merchant marine not now benefited, except to the limited extent permitted by section 509, without the expenditure of public funds, by inducing private capital to become interested, on a sound business basis, in financing the construction, reconstruction, and reconditioning of our domestic shipping, thereby lessening further demands on the Treasury. Inability to obtain financial assistance is undoubtedly contributing to the obsolescence of our domestic fleet, which is in urgent need of modernization from a standpoint of national defense as well as safety. It is hoped that a shipbuilding program will be initiated that will be stimulating to many industries in all sections of the country which supply materials for ship construction, reduce unemployment in those industries and contribute to the relief of economic conditions generally, train mechanics in trades where a shortage now exists due to the curtailment of production during the years of depression, and build up a new personnel available to man our vessels in foreign trade in time of peace, and that may become eligible for the Naval Reserve.


Both the Senate bill and the committee substitute provide for a shipmortgage-insurance fund of $1,000,000 to be administered by the United States Maritime Commission as a revolving fund.

Under the Senate bill the maximum aggregate obligations of mortgages insured is limited to $100,000,000, while under the committee substitute the maximum aggregate obligations of mortgages insured and outstanding at any time is limited to $200,000,000.

Under the committee substitute, mortgages securing existing loans or advances may be insured to the extent of $20,000,000 if coupled with new loans or advances in a substantial amount of the total indebtedness. Otherwise no authority is given to insure mortgages securing any loan or advance made prior to enactment of this title or any refinancing thereof.

The Senate bill applies to "domestically owned" vessels. Under the committee substitute only preferred mortgages as defined in the Ship Mortgage Act, 1920, as amended, may be insured and the mortgages must be on vessels documented under the laws of the United States. Such vessels must be owned by citizens of the United States within the meaning of section 2 of the Shipping Act, 1916, as amended in section 2 of the committee substitute, and must be designed principally for commercial use. Those types of vessels excluded by definition may be included upon certification of the Secretary of the Navy as capable of serving as a naval or military auxiliary in time of war or national emergency.

The committee substitute in order to protect against undue expansion or replacement of existing tonnage requires that the projects to be financed by the loans offered by the insurance must be economically sound, while the Senate bill has a requirement that in passing on applications for insurance the Commission shall have due regard to the public convenience and necessity of the proposed project to be financed by an insured mortgage.

The Senate bill provides for an insurance premium or charge at the rate of one-half of 1 percent, while the committee substitute provides that the rate shall be not less than one-half of 1 percent and not more than 1 percent. The Senate rate applies to the face value of the mortgage, while the committee substitute rates apply to the amount of the principal obligation of the mortgage outstanding at any time.

In general, the committee substitute is worked out in greater detail than the Senate bill and takes advantage of the experience under the Federal Housing Administration, as reflected in the amendments made to the National Housing Act at the beginning of the current session of Congress. The definitions of mortgagee, mortgagor and maturity date appearing in section 1001 are substantially the same as the definitions of those terms in the National Housing Act. Likewise the provisions of section 1002 with respect to the fund, the handling of moneys, and the purchase of debentures, section 1003 authorizing insurance and commitments to insure, section 1004 prescribing eligibility requirements, premium charges, appraisal, and other fees; section 1005 relating to foreclosure and acquisition of title and possession of the mortgaged property, the conveyance and assignment of said property, and the issuance of debentures; section 1007 prescribing penalties for violations; and section 1008 authorizing rules and regulations to be made and promulgated, are substantially the same as similar provisions of the National Housing Act.

Section 1006 contains the $20,000,000 limitation on existing indebtedness, above referred to, and further provides for insurance of mortgages securing loans in addition to those secured by mortgages theretofore existing and insured, and for the insurance of mortgages given to finance the purchase of vessels acquired by the fund under section 1005. No such "bailing out" limitations are imposed under the National Housing Act. However, the proposed legislation is experimental and for that reason the committee has thought it wise to impose these limitations and other restrictions not found in that act. For example, among the eligibility requirements of section 1004 is a restriction as to amount of 75 percent as against 90 percent in the National Housing Act; there is no authority to insure mortgages to secure advances made as the construction, reconstruction, or reconditioning work progresses; and the mortgagee, under section 1005, to some extent is made a coinsurer by limiting the issuance of debentures in a face amount equal to the unpaid principal obligation secured by the mortgage, accrued and delinquent interest, taxes, foreclosure costs, and other charges being absorbed by the mortgagee.

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APRIL 26, 1938.-Committed to the Committee of the Whole House on the state

of the Union and ordered to be printed

Mr. McREYNOLDS, from the Committee on Foreign Affairs, submitted

the following


[To accompany H. J. Res. 659]

The Committee on Foreign Affairs, to whom was referred the resolution (H. J. Res. 659) to authorize an appropriation for the expenses of participation by the United States in the Third Pan American Highway Conference, having considered the same, submit the following report thereon with the recommendation that it do pass.

The facts in support of this proposed legislation are fully set forth in a message from the President, dated April 19, 1938, and in a report to the President from the Secretary of State, dated April 15, 1938, both of which are made a part of this report, and are as follows: To the Congress of the United States:

I commend to the favorable consideration of the Congress the enclosed report from the Secretary of State to the end that legislation may be enacted authorizing an appropriation of the sum of $15,000, or so much thereof as may be necessary, for the expenses of participation by the United States in the Third Pan American Highway Conference, to be held at Santiago, Chile, in September 1938.



Washington, April 15, 1938. The PRESIDENT:

An invitation was received from the Chilean Embassy under date of September 9, 1937, for the United States to participate in the Third Pan American Highway Conference, to be held at Santiago, Chile, in September 1938. The purpose of this conference is to coordinate the efforts of the Republics of the Pan American Union in advancing the development and improvement of highways.

The Secretary of Commerce and the Secretary of Agriculture, to whom the invitation was submitted, strongly recommend that the United States send delegates to this conference, and that a recommendation be made to the Congress for an appropriation of $15,000 to cover tire expenses of such participation.

The first official recognition of the need for better highway communication in Latin America was expressed at the Fifth International Conference of the American States, held at Santiago, Chile, in 1923, when a resolution was passed calling for an automobile road conference.

In 1925 a program was arrarged by the various industrial groups in the United States, including automotive and road-machinery manufacturers and bankers, to have delegates from the countries in the Pan American Union attend a panAmerican highways conference in the United States. Nineteen countries sent delegates to this conference at the expense of the industrial groups mentioned, and they were conducted on a month's tour through nine States in a close investigation and study of methods of highway construction and motor transportation in every phase.

The invitation to the First Pan American Congress of Highways, held at Buenos Aires in October 1925, was a logical sequence of the broad and constructive effort initiated by the United States. The United States was represented by a delegation of eight members under authorization of Public Resolution No. 72, approved March 4, 1925.

At the Second Pan American Highway Congress, held at Rio de Janeiro, August 16 to 28, 1929, under the authority of Public Resolution No. 24, approved April 3, 1928, and Public Act No. 563, approved May 29, 1928, the United States was represented by a delegation of 13 members.

Considerable progress has been made in recent years toward the early completion of the plan of an inter-American highway extending from the southern border of the United States to Panama. A conference was held in Panama from October 7 to 12, 1929, to consider the means of completing this section.

As you know, the Congress of the United States made available by Public Act No. 78, approved March 26, 1930, the sum of $50,000 to enable this Government to cooperate with the other American governments in making a reconnaissance survey of the proposed inter-American highway. Acting under the above-indicated authority, the engineers of the Bureau of Public Roads of the United States Department of Agriculture, in cooperation with the engineers of the Governments of Panama, Costa Rica, Nicaragua, Honduras, and Guatemala have carried on a reconnaissance survey and a report on this work was made to the Congress on March 5, 1934 (S. Doc. 224, 73d Cong.). By Public Act No. 412, approved June 19, 1934, the Congress appropriated $1,000,000 to cooperate with the several governments in connection with the continuation of this work and the construction of the proposed highway. In addition to the above appropriations, the Secretary of Agriculture was authorized, by Public Act No. 393, approved June 18, 1934, to expend not more than $75,000 for this purpose.

In addition to previous appropriations, Public Act No. 440, approved March 5, 1938, provides as follows:

“Inter-American Highway: For the continuation of cooperation with the several governments, members of the Pan American Union, in connection with the survey and construction of the inter-American highway as provided by the Act approved March 4, 1929 (45 Stat. 1697), and supplemental Acts, the Secretary of Agriculture is hereby authorized to expend not to exceed $34,000 from the administrative funds provided under the Act of July 11, 1916, as amended.”

The foregoing authorization will be sufficient to meet the expenses of the representatives of the Bureau of Public Roads of the Department of Agriculture until about the middle of the present year in connection with work actually begun and now in prosecution.

This cooperation of the United States with the above-mentioned governments has been largely a program of bridge construction, the United States furnishing most of the engineering services and the necessary supplies of steel, concrete, and equipment for the superstructure, while the other governments provide the local materials, rights-of-way, labor, etc. According to the latest information available, approximately one-half of he road from the United States-Mexican border to Panama is now constructed.

The Inter-American Conference for the Maintenance of Peace, which met at Buenos Aires, Argentina, in 1936, adopted a convention on the Pan-American Highway, which provided among other things that

"The High Contracting Parties agree to collaborate, with all diligence and by all adequate means, in the speedy completion of a Pan American Highway, which will permit at all times the transit of motor vehicles.

shall form a Commission of technical experts with the object of coordinating the work of the different governments and also to complete the studies and formulate the necessary projects in those countries which, not having heretofore completed inis work,

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may need the cooperation of the Commission.

shall consult among each other with a view to appointing a financial committee composed of the representatives of three of the ratifying Governments. This Committee shall study the problems concerning the speedy completion of the Pan American Highway,

This convention was ratified by the United States on July 29, 1937, and it has also been ratified by Mexico and Nicaragua. Steps are now being taken with a view to the establishment of these committees. Although the Pan American Highway is not a topic on the agenda of the forthcoming conference, the interest of the United States in the construction of that highway makes it important that this Government cooperate in all conferences relating to road construction.

Today it can be said with all due conservatism that the nations and the people of South, Central, and North America look upon highway development as a fundamental necessity to the continued progress of their social, economic, and political relations. The highway engineers are mastering the physical obstacles encountered in the jungle, desert, and mountain country. New impetus has been given to production in rich but hitherto economically inaccessible areas.

The forthcoming conference at Santiago, Chile, in 1938, will afford an opportunity for the 21 American republics to consider jointly the problems relating to the improvement of highway communication throughout the Western Hemisphere. The agenda for this conference will include discussions on the following topics: Standards for testing and classifying soils; methods of construction of subgrades or foundation courses for surfaces or pavements; systems and suitable types of low-cost roads; uses of concrete; designing of high-speed highways; new developments in equipment for highway construction maintenance; development of laboratory work; improvement in the design and construction of bridges; uniform traffic regulations; regulation of international traffic and simplification of customs procedure.

In view of the foregoing considerations, I, therefore, have the honor to recommend that the Congress be requeste 1 to enact legislation authorizing an appropriation of fifteen thousand dollars ($15,000), or so much thereof as may be necessary, for the expenses of participation by the United States in the Third Pan American Highway Conference, to be held at Santiago, Chile, in September 1938. Respectfully submitted.


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