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August, 1922 ceeds of sale, it is the entire amount of the proceeds which must be _ in- vested in new construction, and not merely the amount of the tax which would otherwise be assessed on it. In the case of the application of proceeds of sale, the owner is required only to invest the ‘total amount of the pro- ceeds of sale; he is not required to contribute anything to the cost from other sources. Must Fly American Flag It is required not only that such ves- sels shall be built in shipyards of the United States, but also that they shall be documented under American laws and retained as a part of the mer- chant fleet. Subsequent transfer of such vessel to a foreign flag requires the owner return to the government an equitable part of the amount which had been waived and the rules and regulations provides that in such a case, though ‘the circumstances are such as to justify the board other- wise approving such transfer, it re- serves the right to require the owner to pay an amount equivalent to an equitable part of the tax originally waived, which the board may desig- nate. This amount may vary, accord- ing to the years of service the vessel has rendered the American merchant marine, before its transfer is asked. The provision that the net earnings in relation to which the tax is waived must be net. earnings from a_ vessel “operated in foreign trade’ does not mean the vessel must have been ex- clusively operated in that trade, the board holds. The construction ap- plied by the board and the treasury in these rules is that the vessel may have engaged during the year both in coastwise and in foreign trade, but that the provisions of the act apply only to that part of its earnings which accrue from the transportation of goods in foreign commerce, which is an encouragement for owners to use their vessels in foreign trade. The provisions of the section are to lbe applied under the terms of the act for 10 taxable years from the date of its enactment, June 5, 1920. Earn- ings which accrued during the 12 months previous to June 30, 1920, if otherwise meeting the requirements, are entitled to its benefits. This brings within the operation of the act the period between June, 1919, and June, 1920, which was a very lucrative period for shipping, with the result that some owners have funds with reference to which they are claiming exemptions aggregating as much as $3,000,000. The board has thad inquiries from 25 to 30 owners indicating that they MARINE REVIEW will claim these benefits. Others are expected as the treasury and the ship- ping board have agreed that any owner who may yet make application for exemption, although the applications may relate to taxes which accrued against them in previous taxable years, may be entitled to have their appli- cations considered. The board points out that although congress intended the policy to con- tinue for 10 taxable years “beginning with the first taxable year ending after the enactment of this act,” the policy cannot be applied continuously through the period mentioned unless new leg- islation makes it applicable to taxes imposed by the revenue acts subse- nuent ‘to that of 1918, for the terms of the section expressly limit it to taxes imposed (by the revenue act of 1918. Although these taxes in sub- stance are re-enacted and re-imposed by the revenue act of 1920, the treas- ury applies the technical construction that the ‘fact of 1920,” is not the “act of 1918”, and does not come within the terms of the section, and therefore the taxes imposed by the act are not waived. The shipping board has se- cured the introduction of a bill in congress which, if it becomes law, will correct this defect, and all income and profit taxes on such net earn- ings or proceeds of sale will be sub- ject to ‘the provisions of the act. The public policy on which Section 23 of the merchant marine act, 1920, is based, has become more important since the adoption of a “naval holi- day” by tthe United States, as a result of the limitation of armaments con- ference the board says. The new in- ternational policy which thas’ been adopted means the loss of American shipyards of many government con- tracts through the next 10 years, for the construction of naval vessels which would otherwise have been built. It is imperative that everything possible be done to maintain American shipyards through that period, and to encourage and develop workmen skilled in the construction of vessels, the statement concludes. Launch Be loinc Fuct Supply Ship The Kamot, launched June 8 at the yards of the New York Shipbuilding Corp., Camden, N. J., is a twin-screw fuel supply ship ordered by the imperial Japanese navy. On a length of about 500 feet and a designed draft of 28 feet, the vessel has a displacement of 20,000 tons and a deadweight carry- ing capacity of about 13,000 tons. She is designed to carry 10,000 tons of cargo oil, provision also being made for 331 alternately carrying about 2000 tons of cargo coal. The vessel is electrically propelled and is expected to achieve a speed of 15 knots with 8000 shaft horsepower. The boilers are of special design and are coal firing, provision being made, how- ever, for auxiliary oil firing. The Kamor will be the first electri- cally propelled ship of the Japanese navy. At the launching, Capt. K. Goto, chief Japanese naval inspector in this country said: “About 25 years ago, the Japanese cruisers Kasacr and Cuitose were built in ‘this country, and today we are pleased to celebrate the launching of © the Japanese naval ship Kamor. Dur- ing this quarter of a decade, we have sometimes had a few warships con- structed in England but it seems that the opportunity did not occur to have them built here. However, in recent years, the progress of shipbuilding and engineering in this country has made such great strides, and electric propul- sion has had such a successful outcome we have turned our eyes from England to America.” Must Wait Subsidy Action Plans for the organization of a $30,- 000,000 corporation to operate shipping board vessels between Pacific coast ports and all the countries of the world, must await enactment of legislation looking to the granting of a subsidy to the American merchant marine, ac- cording to Herbert Fleishhacker, president of the American and London Paris National Bank, San Francisco, and prime mover in the original plan for the formation of the big corporation. The Noank, ‘Conn., plant of the Groton Iron Works was sold recently at auction to Miss Jennie R. Morse, a sister of Charles W. Morse. Her bid was $2500 for the equity and she as- sumes obligations which make the total price $43,841.20. The property was appraised at $61,000. The pur- chaser held a mortgage which with interest amounted to about $108,000. A contract has been closed by the Hooven, Owens, Rentschler Co., Hamil- ton, O., for furnishing two 4-cylinder triple expansion 2700-horsepower en- gines for the new combination passenger and freight steamers being built by. the Federal Shipbuilding Co. Kearny, N. J., for the Merchant & Miners Trans- portation Co. Richard Wetherell has. been appoint- ed temporary receiver for the Baldt Anchor & Chain Co.,, Chester, Pa., on an equity bill filed by stockholders and creditors.