An Act to amend the Merchant Marine Act 1936, as amended, to further promote the development and maintenance of the American merchant marine, and for other purposes
PL 82-586 (S.241), enacted 07/17/1952

760 
PUBLIC LAW 586-JULY 17, 1952 
[66 
S T A T . 
63 Stat. 670. 
7 u s e 
1 3 4 2 , 
1344. 
7 u s e 1346. 
marketing quota in terms of the quantity of cotton described in subsec-
tion (a) adequate to make available a normal supply of such cotton, 
taking into account (1) the estimated carry-over at the beginning of 
the marketing year which begins in the next calendar year, and (2) 
the estimated imports during such marketing year. 
The national 
marketing quota for cotton described in subsection (a) for any year 
shall not be less than the larger of thirty thousand bales or a number 
of bales equal to 30 per centum of the estimated domestic consumption 
plus exports of such cotton for the marketing year beginning in the 
calendar year in which such quota is proclaimed. 
"(c) All provisions of this Act, except section 342, subsections (h), 
(k), and (1) of section 344, the parenthetical provisions relating to 
acreages regarded as having been planted to cotton, and the provisions 
relating to minimum small farm allotments, shall, insofar as appli-
cable, apply to marketing quotas and acreage allotments authorized 
by this section: Provided^ That the applicable penalty rate for such 
cotton under section 346 shall be the higher of 50 per centum of the 
parity price or 50 per centum of the support price for extra long staple 
cotton as of the date specified therein. 
"(d) Unless marketing quotas are in effect under subsection (b) 
of this section, the penalty provisions of section 346 shall not apply 
to any cotton the staple of which is one and one-half inches or more 
in length. 
"(e) The exemptions authorized by subsections (a) and (d) of this 
section shall not apply unless (1) the cotton is ginned on a roller-type 
gin or (2) the Secretary authorizes the cotton to be ginned on another 
type gin for experimental purposes or to prevent loss of the cotton 
due to frost or other adverse condition." 
Approved July 17, 1952. 
July 17,1952 
[S. 241] 
Public Law 586 
CHAPTER 939 
AN ACT 
To amend the Merchant Marine Act, 1936, as amended, to further promote the 
development and maintenance of the American merchant marine, and for 
other purposes. 
M e r c h a n t Ma-
r i n e Ac t, 19 3 6, 
amendments. 
49 Stat. 1995. 
46 u s e 1151. 
C o n s t r u e tion-
differential 
sub-
sidy. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress asse^nbled, That section 501 (a) 
of the Merchant Marine Act, 1936, as amended, is amended to read as 
follows: 
"(a) Any citizen of the United States may make application to the 
Commission for a construction-differential subsidy to aid in the con-
struction of a new vessel to be used in the foreign commerce of the 
United States. 
No such application shall be approved by the Com-
mission unless it determines that (1) the plans and specifications call 
for a new vessel which will meet the requirements of the foreign 
commerce of the United States, will aid in the promotion and develop-
ment of such commerce, and be suitable for use by the United States 
for national defense or military purposes in time of war or national 
emergency; (2) the applicant possesses the ability, experience, finan-
cial resources, and other qualifications necessary to enable it to operate 
and maintain the proposed new vessel, and (3) the granting of the 
aid applied for is reasonably calculated to replace worn-out or obso-
lete tonnage with new and modern ships, or otherwise to carry out 
effectively the purposes and policy of this Act. 
The contract of sale, 
and the mortgage given to secure the payment of the unpaid balance 
66 
S T A T . ] 
PUBLIC LAW 586-JULY 17, 1952 
im 
of the purchase price shall not restrict the lawful or proper use or 
operation of the vessel except to the extent expressly required by law." 
SEC. 2. The first sentence of section 501 (c) of such Act is amended 
to read as follows: "Any citizen of the United States may make appli-
cation to the Commission for a construction-differential subsidy to 
aid in reconstructing or reconditioning any vessel that is to be used 
in the foreign commerce of the United States." 
SEC. 3. Section 503 of such Act is amended by (1) amending the 
third sentence to read as follows: "At the time of delivery of the vessel 
the applicant shall execute and deliver a first-preferred mortgage to 
the United States to secure payment of any sums due from the appli-
cant in respect to said vessel: Provided, That, notwithstanding any 
other provisions of law, the payment of any sums due in respect to a 
passenger vessel purchased under section 4 (b) of the Merchant Ship 
Sales Act of 1946, reconverted or restored for normal operation in 
commercial services, or in respect to a passenger vessel purchased under 
title V of this Act, which is delivered subsequent to March 8, 1946, 
and which (i) is of not less than ten thousand gross tons, (ii) has a 
designed speed approved by the Commission but not less than eighteen 
knots, (iii) has accommodations for not less than two hundred pas-
sengers, and, (iv) is approved by the Secretary of Defense as being 
desirable for national defense purposes, may, with the approval of 
the Commission, be secured only by a first-preferred mortgage on 
said vessel.", and (2) by inserting the following sentences immedi-
ately after the third sentence: "With the approval of the Commission 
such preferred mortgage may provide that the sole recourse against 
the purchaser of such a passenger vessel under such mortgage, and 
any of the notes secured thereby, shall be limited to repossession of 
the vessel by the United States and the assignment of insurance claims, 
if the purchaser shall have complied with all provisions of the mort-
gage other than those relating to the payment of principal and interest 
when due, and the obligation of the purchaser shall be satisfied and 
discharged by the surrender of the vessel, and all right, title, and in-
terest therein to the United States. Such vessel upon surrender shall 
be (i) free and clear of all liens and encumbrances whatsoever, except 
the lien of the preferred mortgage, (ii) in class, and (iii) in as good 
order and condition, ordinary wear and tear excepted, as when ac-
quired by the purchaser, except that any deficiencies with respect to 
freedom from encumbrances, condition, and class, may, to the extent 
covered by valid policies of insurance, be satisfied by the assignment 
to the United States of claims of the purchaser under such policies of 
insurance." 
SEC. 4. The last sentence of section 504 of such Act is amended to 
read as follows: "Such vessel shall be documented under the laws of 
the United States as provided in section 503 of this title. The con-
tract of sale, and the mortgage given to secure the payment of the 
unpaid balance of the purchase price, shall not restrict the lawful or 
proper use or operation of the vessel, except to the extent expressly 
required by law," 
SEC. 5. Section 507 of such Act is amended by inserting therein after 
the words "foreign trade" the words "or domestic trade". 
SEC. 6. Section 509 of such Act is amended by amending that part 
of the fourth sentence preceding the proviso to read as follows: "In 
case the vessel is designed to be of not less than three thousand five 
hundred gross tons and to be capable of sustained speed of not less 
than fourteen knots, the applicant shall be required to pay the Com-
mission not less than 12^/^ per centum of the cost of such vessel, and in 
the case of any other vessel the applicant shall be required to pay 
Application. 
46 use 1153. 
F i r s t - preferred 
mortgage. 
60 Stat. 43. 
5 0 u s e 
app. 
1737. 
Do cument ation. 
46 use 1154. 
46 use 1157. 
V e ssels in do-
mestic trade. 
46 use 1159. 
rm 
PUBLIC LAW 586-JULY 17, 1952 
[66 S T A T , 
46 use 1153. 
"Obsolete v e s-
46 use 1160. 
Rate. 
Construction re-
serve fund. 
54 Stat. 1106. 
46 use 1161. 
Taxes. 
46 u s e 1161. 
R e c o g nition of 
gain, etc. 
the Commission not less than 25 per centum of the cost of such vessel 
(excluding from such cost, in either case, the cost of national defense 
features); and the balance of such purchase price shall be paid by 
the applicant within twenty years in not to exceed twenty equal annual 
installments, with interest at 3i/^ per centum per annum, secured by 
a preferred mortgage on the vessel sold and otherwise secured as the 
Commission may determine: Provided, 
That, notwithstanding any 
other provisions of law, the balance of the purchase price of a pas-
senger vessel constructed under this section which is delivered subse-
quent to March 8, 1946, and which has the tonnage, speed, passenger 
accommodations, and other characteristics set forth in section 503 of 
this Act, may, with the approval of the Commission, be secured as 
provided in such section, and the obligation of the purchaser of such 
a vessel shall be satisfied and discharged as provided in such section: 
And 
provided,''\ 
SEO. 7. Paragraph (1) of section 510 (a) of such Act is amended 
by inserting before the period at the end thereof a colon and the 
following: ''^Provided, That until June 30, 1958, the term "obsolete 
vessel" shall mean a vessel or vessels, each of which (A) is of not 
less than one thousand three hundred and fifty gross tons, (B) is not 
less than twelve years old, and (C) is owned by a citizen or citizens 
of the United States and has been owned by such citizen or citizens 
for at least three years immediately prior to the date of acquisition 
hereunder." 
SEC. 8. Section 510 (d) of such Act is amended by adding the fol-
lowing sentence at the end thereof: "The rate for the use of the 
obsolete vessel shall be fixed by the Commission for the entire period 
of such use at the time of execution of the contract for the construction 
of the new vessel." 
SEC. 9. Section 511 (b) of such Act is amended to read as follows: 
"(b) For the purposes of promoting the construction, reconstruc-
tion, reconditioning, or acquisition of vessels, or for other purposes 
authorized in this section, necessary to carrying out the policy set forth 
in title I of this Act, any citizen of the United States who is operating 
a vessel or vessels in the foreign or domestic commerce of the United 
States or in the fisheries or owns in whole or in part a vessel or vessels 
being so operated, or who, at the time of purchase or requisition of the 
vessel by the Government, was operating a vessel or vessels so engaged 
or owned in whole or in part a vessel or vessels being so operated or 
had acquired or was having constructed a vessel or vessels for the 
purpose of operation in such commerce or in the fisheries, may estab-
lish a construction reserve fund, for the construction, reconstruction, 
reconditioning, or acquisition of new vessels, or for other purposes 
authorized in this section, to be composed of deposits of proceeds from 
sales of vessels, indemnities on account of losses of vessels, earnings 
from the operation of vessels documented under the laws of the United 
States and from services incident thereto, and receipts, in the form of 
interest or otherwise, with respect to amounts previously deposited. 
Such construction reserve fund shall be established, maintained, ex-
pended, and used in accordance with the provisions of this section 
and rules or regulations to be prescribed jointly by the Commission 
and the Secretary of the Treasury." 
SEC. 10. Section 511 (c) of such Act is amended to read as follows: 
"(c) In the case of the sale or actual or constructive total loss of a 
vessel, if the taxpayer deposits an amount equal to the net proceeds 
of the sale or to the net indemnity with respect to the loss in a construc-
tion reserve fund established under subsection (b), then— 
" (1) if the taxpayer so elects in his income-tax return for the 
taxable year in which the gain was realized, or 
66 S T A T . ] 
PUBLIC LAW 586-JULY 17, 1952 
763 
" (2) in case a vessel is purchased or requisitioned by the United 
States, or is lost, in any taxable year beginning after December 
81, 1939, and the taxpayer receives payment for the vessel so 
purchased or requisitioned, or receives from the United States 
indemnity on account of such loss, subsequent to the end of such 
taxable year, if the taxpayer so elects prior to the expiration of 
sixty days after the receipt of the payment or indemnity, and 
in accordance with a form of election to be prescribed by the 
Commissioner of Internal Revenue with the approval of the 
Secretary of the Treasury, 
no gain shall be recognized to the taxpayer in respect of such sale or 
indemnification in the computation of net income for the purposes 
of Federal income or excess-profits taxes. If an election is made under 
subdivision (2) and if computation or recomputation in accordance 
with this subsection is otherwise allowable but is prevented, on the 
date of making such election or within six months thereafter, by any 
statute of limitation, such computation or recomputation nevertheless 
shall be made notwithstanding such statute if a claim therefor is 
filed within six months after the date of making such election. 
"For the purposes of this subsection no amount shall be considered as 
deposited in a construction reserve fund unless it is deposited within 
sixty days after it is received by the taxpayer, 
"As used in this subsection the term 'net proceeds' and the term 
'net indemnity' mean the sum of (1) the adjusted basis of the vessel 
and (2) the amount of gain which would be recognized to the taxpayer 
without regard to this subsection." 
SEC. 11. Section 511 (d) of such Act is amended to read as follows: 
"(d) The basis for determining gain or loss and for depreciation, 
for the purposes of Federal income or excess profits taxes, of any new 
vessel constructed, reconstructed, reconditioned, or acquired by the 
taxpayer, or with respect to which purchase-money indebtedness is 
liquidated as provided in subsection (g), in whole or in part out of 
the construction reserve fund shall be reduced by that portion of the 
deposits in the fund expended in the construction, reconstruction, 
reconditioning, acquisition, or liquidation of purchase-money indebt-
edness of the new vessel which represents gain not recognized for tax 
purposes under subsection (c). 
SEC. 12. Section 511 (g) of such Act is amended to read as follows: 
"(g) The provisions of subsections ';} 
id (f) shall apply to any 
deposit in the construction reserve fund culy to the extent that such 
deposit is expended or obligated for expenditure, in accordance with 
rules and regulations to be prescribed jointly by the Commission and 
the Secretary of the Treasury— 
"(1) under a contract for the construction or acquisition of a 
new vessel or vessels (or in the discretion of the Commission, for 
a part interest therein), or, with the approval of the Commission, 
for the reconstruction or reconditioning of a new vessel or vessels, 
entered into within (i) two years from the date of deposit or the 
date of any extension thereof which may be granted by the Com-
mission pursuant to the provisions of section 511 (h), in the case of 
deposits made prior to the date on which these amendatory pro-
visions become effective, or (ii) three years from the date of such 
deposit in the case of a deposit made after such effective date, 
only if under such rules and regulations— 
"(A) within such period not less than 121/2 P^r centum of 
the construction or contract price of the vessel or vessels is 
paid or irrevocably committed on account thereof and the 
plans and specifications therefor are approved by the Com-
mission to the extent by it deemed necessary; and 
Determination of 
gain, etc. 
Tax benefits. 
Conditions. 
46 use H61. 
7H 
PUBLIC LAW 586-JULY 
17, 1952 
[66 S T A T . 
Extensions. 
46 use 1161. 
Great Lakes, 
etc. 
Vessels over 20 
years. 
46 use 1175. 
Infra. 
Report. 
46 use 1176. 
e apital reserve 
fund. 
46 use 1177. 
"(B) in case of a vessel or vessels not constructed under 
the provisions of this title or not purchased from the Com-
mission, (i) said construction is completed, within six months 
from the date of the construction contract, to the extent of not 
less than 5 per centum thereof (or in case the contract covers 
more than one vessel, the construction of the first vessel so 
contracted for is so completed to the extent of not less than 
' 
5 per centum) as estimated by the Commission and certified 
by it to the Secretary of the Treasury, and (ii) all construc-
tion under such contract is completed with reasonable dispatch 
thereafter ; 
"(2) for the liquidation of existing or subsequently incurred 
purchase-money indebtedness to persons other than a parent com-
pany of, or a company affiliated or associated with, the mortgagor 
on a new vessel or vessels within (i) two years from the date of 
deposit or the date of any extension thereof which may be granted 
by the Commission pursuant to the provisions of section 511 (h), 
in the case of deposits made prior to the date on which these 
amendatory provisions become effective, or (ii) three years from 
the date of such deposit in the case of a deposit made after such 
effective date." 
SEO. 13. (a) Section 511 (h) of such Act is amended by striking out 
the proviso thereto and substituting the following: ''''Provided^ That 
until March 31, 1953, in addition to the extensions hereinbefore per-
mitted, further extensions may be granted ending not later than Sep-
tember 30,1953". 
(b) Section 511 (i) of such Act is amended by inserting after the 
words "portion thereof" in the second sentence the following: "with 
respect to a deposit made in any taxable year ending on or before 
June 30,1945". 
SEC. 14. Section 511 of such Act is amended by adding at the end 
thereof a new subsection to read as follows: 
"(o) The terms 'reconstruction and reconditioning', as used in this 
section, shall include the reconstruction, reconditioning, or moderni-
zation of a vessel for exclusive use on the Great Lakes, including the 
Saint Lawrence Kiver and Gulf, if the Commission determines that 
the objectives of this Act will be promoted by such reconstruction, 
reconditioning, or modernization, and, notwithstanding any other 
provisions of law, such vessel shall be deemed to be a 'new vessel' 
within the meaning of this section for such reconstruction, recondi-
tioning, or modernization." 
SEC. 15, Section 605 (b) of such Act is amended to read as follows: 
"(b) No operating-differential subsidy shall be paid for the opera-
tion of a vessel that is more than twenty years of age except one whose 
life expectancy has been determined as provided in section 607 (b) 
for a period in no case to exceed the life expectancy determined there-
under, unless the Commission finds that it is to the public interest to 
grant such financial aid for the operation of such vessel and enters a 
formal order thereon, and the Commission shall include in each 
annual report a full report covering each case in which such excep-
tion is made, with the reasons therefor." 
SEC. 16. Clause (5) of section 606 of such Act is amended by strik-
ing out the phrase "twenty-year life expectancy of the subsidized 
vessels" and inserting in lieu thereof the following: "life expectancy 
of the subsidized vessels determined as provided in section 607 (b)." 
SEO. 17. Section 607 ^b) of such Act is amended by amending that 
part of the second sentance preceding the proviso to read as foflows: 
"In this fund the contractor shall deposit annually or oftener, as the 
S T A T . ] 
PUBLIC LAW 587-JULY 17, 1952 
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 depreciation charges to be computed on a twenty-
year life expectancy of the subsidized vessels, except that the life 
expectancy of a vessel which shall have been or is to be wholly or 
partially reconstructed or reconditioned shall upon request be deter-
mined jointly by the Secretary of the Treasury and the Commission, 
and the depreciation charges on such vessel shall be computed on the 
life expectancy so determined." 
SEC. 18. Section 607 (d) of such Act is amended by striking out the 
phrase "being twenty years" and inserting in lieu thereof the follow-
ing : "as provided in section 607 (b)". 
SEC. 19. Section 607 (g) of such Act is amended by adding at the 
end thereof the following new sentence: "If a voluntary deposit of 
earnings approved by the Commission under this subsection after 
December 31,1950, results in an overpayment of Federal taxes for any 
year, interest shall not be allowed on such overpayment for any period 
prior to the date of approval of the deposit by the Commission." 
SEC. 20. Section 805 (c) of such Act is amended to read as follows: 
"(c) In determining the rights and obligations of any contractor 
under a contract authorized by title VI or title VII of this Act, no 
salary for personal services in excess of $25,000 per annum paid to a 
director, officer, or employee by said contractor, its affiliates, subsidiary, 
or associates, shall be taken into account. The terms 'director', 'officer', 
or 'employee' shall be construed in the broadest sense. 
The term 
'salary' shall include wages and allowances of compensation in any 
form for personal services which will result in a director, officer, or 
employee receiving total compensation for his personal services from 
such sources exceeding in amount or value $25,000 per annum. 
SEC. 21. Section 905 of such Act is amended by adding at the end 
thereof a new subsection to read as follows: 
"(e) The terms 'United States Maritime Commission' and 'Com-
mission' shall mean the Secretary of Commerce, the Maritime Admin-
istrator, or the Federal Maritime Board as the context may require to 
conform to Reorganization Plan Numbered 21 of 1950, effective May 
24,1950." 
Approved July 17, 1952. 
Overpayment 
of 
taxes. 
L 1 m i t a t ion on 
wages. 
46 u s e 1223. 
4 9 S t a t . 
2001, 
2008. 
4 6 u s e 117 1-
1204. 
46 u s e 1244. 
Definitions. 
64 Stat. 1273. 
5 u s e 
133«-15 
note. 
Public Law 587 
CHAPTER 940 
AN ACT 
Jul 17, 1952 
Relating to withholding, for State income tax purposes, on the compensation of 
[S. 1999] 
Federal employees. 
Be it enacted by the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That where— 
(1) the law of any State or Territory provides for the collec-
tion of a tax by imposing upon employers generally the duty of 
withholding sums from the compensation of employees and mak-
ing returns of such sums to the authorities of such State or 
Territory, and 
(2) such duty to withhold is imposed generally with respect to 
the compensation of employees who are residents of such State 
or Territory, 
then the Secretary of the Treasury, pursuant to regulations promul-
gated by the President, is authorized and directed to enter into an 
agreement with such State or Territory within one hundred and 
twenty days of the request for agreement from the proper official of 
Withholding of 
S t a t e 
i n c o m e 
t a x e s by Federal 
agencies. 
Agreement.