cases where vessel loans are given, not for certain time periods, but on 

 a demand "basis with an arrangement that repayments are to he made in 

 accordance with the owner's income from the vessel, hut not later than 

 36 months. 



Most vessel loans in the Gulf States are secured hy a pre- 

 ferred mortgage which is registered at the Custom House where the "boat 

 is registered. Vessels on which loans are given must he covered hy ftill 

 marine insurance. They must also he covered hy protection and indemnity 

 policies. These insurance expenditures are very high. Part of the loan 

 must often he used not only for acquisition of the vessel hut also for the 

 first year's insurance payments. 



The reasons why the hanks do not extend longer credits are 

 manifold. Among these reasons the following should he mentioned: 



(1) Commercial hanks can only allow part of their deposits 

 to he used for long term loans because they have received most of the • 

 deposits under the condition that they can be withdrawn by the depositor 

 without notice, 



(2) Very few banks have enough experience in the fishing 

 business to make the type of loans which are requested for fishing 

 vessels. Reference is made to the woi'ds of W. P. Aberly, vice-presi- 

 dent, Gibbs Corporation, expressed in the November 1953 meeting of the 

 Gulf and Caribbean Fisheries Institute "... this stringent requirement 

 hy the bankers is the resiilt, not of a lack of confidence in the shrimp 

 industry, but of a lack of knowledge of the industry, its operations, 

 marketing techniques, etc., due in great measiire to the reluctance of 

 the industry to bring the bankers into its confidence." 



(3) Commercial banks regularly ask for additional security 

 since the boat owner is often iinable to obtain adequate insurance cover- 

 age against loss. In many cases the additional security consists of an 

 endorsement of the note by the construction company which has built the 

 vessel. This company often guarantees the obligation of the fishermen, 

 who bought the vessel and mortgaged it. 



To date the Maritime Administration (formerly Maritime Com- 

 mission) alone among government agencies has had the power to guarantee 

 payment to commercial banks or other financial institutions which lent 

 money to the fishing industry for the construction of vessels. A statute 

 of June 29, 1936 established the Federal Ship Mortgage Insurance System 

 under which the Maritime Administration was enabled to insure mortgages 

 for construction or reconditioning of fishing vessels. In spite of this 

 opportunity to obtain insurance on loans only a few tuna vessels have 

 qiialified in the past to obtain this protection iinder the Federal Ship 

 Mortgage Insurance Act of 1936. 



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