railroads, railways, electric lines, roads of whatever description, railroad or railway fixture, canal, lock, dam, wharf, pier, dock, bridge, building, structure, engine, machine, mechanical contrivance, car, vehicle, boat, or aircraft, or any other means of transportation whatsoever, whereon or whereby such national-defense material, or any troops of the United States, are being or may be transported either within the limits of the United States or upon the high seas; and all dams, reservoirs, aqueducts, water and gas mains and pipes, structures, and buildings, whereby or in connection with which water or gas may be furnished to any national-defense premises or to the military or naval forces of the United States, and all electric light and power, steam or pneumatic power, telephone and telegraph plants, poles, wires, and fixtures and wireless stations and the buildings connected with the maintenance and operation thereof used to supply water, light, heat, power, or facilities of communication to any national-defense premises or to the military or naval forces of the United States. Sec. 4, added to act of Apr. 20, 1918, by act of Nov. 30, 1940 (54 Stat. 1220); act of Aug. 21, 1941 (55 Stat, 655); 50 U. S. C. 104.

The original text of this section has been amended as indicated by first paragraph supra. The second provision, supra, has been added as a new paragraph.

Military areas for the protection of national defense material, premises and utilities, as defined in this section, were established by Executive Order No. 9066, ante 2180a.

2189. Sabotage act; destroying or injuring war or national defense material, premises, or utilities.

That whoever, with intent to injure, interfere with, or obstruct the national defense of the United States, shall willfully injure or destroy, or shall attempt to so injure or destroy, any national-defense material, nationaldefense premises, or national-defense utilities, as herein defined, shall, upon conviction thereof, be fined not more than $10,000 or imprisoned not more than ten years, or both. Sec. 5, added to act of Apr. 20, 1918, by act of Nov. 30, 1940 (54 Stat. 1221); 50 U. S. C. 105.

The above provision is added as a new paragraph of this section.

Under authority of this section, the President by Executive Order No. 8972, December 12, 1941 as modified by Executive Order No. 9074, February, 25, 1942, authorized the Secretary of War and the Secretary of the Navy to establish and maintain military guard and patrols, and to take other appropriate measures, to protect certain national defense material, premises, and utilities from injury or destruction.

2190. Sabotage act; making defective war or national defense material.

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That whoever, with intent to injure, interfere with, or obstruct the national defense of the United States, shall willfully make or cause to be made in a defective manner, or attempt to make or cause to be made in a defective manner, any national-defense material, as herein defined, or any tool, implement, machine, utensil, or receptacle used or employed in making, producing, manufacturing, or repairing any such national-defense material, as herein defined, shall, upon conviction thereof, be fined not more than $10,000 or imprisoned not more than ten years, or both. Sec. 6, added to act of Apr. 20, 1918, by act of Nov. 30, 1940 (54 Stat. 1221); 50 U. S. C. 106. The above provision is added as a new paragraph of this section.

Notes of Decisions

In general.-Appellants were convicted of in violation of 50 U. S. C. 103 (sec. 3, act of making war material in a defective manner 20 April 1918) and of conspiracy to violate

the

part of the statute in question provides a penalty for willfully making war material in a defective manner with reason to believe that the act may injure or interfere with the United States or any associate nation in preparing for or carrying on a war. The making of defective war material which is condemned by the statute must be such a making as to interfere with the normal functional result of the particular product. The record shows conclusively that any and all welding does not in and of itself result in defective war material. Also, while failure to comply with a specification, whether drawn by the Government or a private contractor, might constitute a breach of contract, it does not constitute a violation of the statute unless it creates defective war material. The refusal to stop welding castings and the unethical concealment of the welding may have shown willfulness but did not show willful violation of the statute. Schmeller v. U. S. (C. C. A. 6, 1944), 143 F. (2d) 544.

same statute. Appellants operated a foundry company which agreed with a motor company to produce aluminum castings to be used in motors under contracts theretofore executed between the motor company and the Government of the United States and Great Britain. Upon acceptance of the specifications by the Army Air Corps, the specifications could not be changed without its consent. One of the specifications provided that the castings should not be repaired by welding without written permission from the purchaser. When the motor company detected that some of the castings were welded, the appellants denied this fact and deliberately continued welding, making every effort to conceal that the castings were welded. Numerous expert witnesses testified that welding did not make the castings unsafe and that it was an established practice in the industry to weld such castings. It was also shown that the Air Corps subsequently approved the practice of welding castings. Judgment set aside. Held: The latter 2190a-1. Subversive activities; counselling insubordination, disloyalty, or mutiny.—(a) It shall be unlawful for any person, with intent to interfere with, impair, or influence the loyalty, morale, or discipline of the military or naval forces of the United States—

(1) to advise, counsel, urge, or in any manner cause insubordination, disloyalty, mutiny, or refusal of duty by any member of the military or naval forces of the United States; or

(2) to distribute any written or printed matter which advises, counsels, or urges insubordination, disloyalty, mutiny, or refusal of duty by any member of the military or naval forces of the United States.

(b) For the purposes of this section, the term "military or naval forces of the United States" includes the Army of the United States, as defined in section 1 of the National Defense Act of June 3, 1916, as amended (48 Stat. 153; U. S. C., title 10, sec. 2), the Navy, Marine Corps, Coast Guard, Naval Reserve, and Marine Corps Reserve of the United States; and, when any merchant vessel is commissioned in the Navy or is in the service of the Army or the Navy, includes the master, officers, and crew of such vessel. Sec. 1, act of June 28, 1940 (54 Stat, 670); 18 U. S. C. 9.

For similar statute but applicable only in time of war, see 2184, ante. For section 1, National Defense act, see 2, ante.

2190a-2. Subversive activities; advocating overthrow of the Government.— (a) It shall be unlawful for any person—

(1) to knowingly or willfully advocate, abet, advise, or teach the duty, necessity, desirability, or propriety of overthrowing or destroying any government in the United States by force or violence, or by the assassination of any officer of any such government;

(2) with the intent to cause the overthrow or destruction of any government in the United States, to print, publish, edit, issue, circulate, sell, distribute, or publicly display any written or printed matter advocating, advising, or teaching the duty, necessity, desirability, or propriety of overthrowing or destroying any government in the United States by force or violence;

(3) to organize or help to organize any society, group, or assembly of persons who teach, advocate, or encourage the overthrow or destruction

of any government in the United States by force or violence; or to be or become a member of, or affiliate with, any such society, group, or assembly of persons, knowing the purposes thereof.

(b) For the purposes of this section, the term "government in the United States" means the Government of the United States, the government of any State, Territory, or possession of the United States, the government of the District of Columbia, or the government of any political subdivision of any of them. Sec. 2, act of June 28, 1940 (54 Stat. 671); 18 U. S. C. 10.

2190a-3. Subversive activities; attempting or conspiring to commit.— It shall be unlawful for any person to attempt to commit, or to conspire to commit, any of the acts prohibited by the provisions of this title. Sec. 3, act of June 28, 1940 (54 Stat. 671); 18 U, S. C. 11.

2190a-4. Subversive activities; seizure of written and printed matter.Any written or printed matter of the character described in section 1 or section 2 of this Act, which is intended for use in violation of this Act, may be taken from any house or other place in which it may be found, or from any person in whose possession it may be, under a search warrant issued pursuant to the provisions of Title XI of the Act entitled "An Act to punish acts of interference with the foreign relations, the neutrality and the foreign commerce of the United States, to punish espionage, and better to enforce the criminal laws of the United States, and for other purposes," approved June 15, 1917 (40 Stat. 228; U. S. C., title 18, ch. 18). Sec. 4, act of June 28, 1940 (54 Stat. 671); 18 U. S. C. 12.

2190a-5. Subversive activities; penalty.—(a) Any person who violates any of the provisions of this title shall, upon conviction thereof, be fined not more than $10,000 or imprisoned for not more than ten years, or both.

(b) No person convicted of violating any of the provisions of this title shall, during the five years next following his conviction, be eligible for employment by the United States, or by any department or agency thereof (including any corporation the stock of which is wholly owned by the United States). Sec. 5, act of June 28, 1940 (54 Stat. 671); 18 U. S. C. 13. 2191. Contracts; suspension of the eight-hour law.

See 745, ante.

2191a. Contracts; reports to Congress.-It shall be the duty of the Secretary of War and the Secretary of the Navy, respectively, to file with the Congress, within sixty days after the end of each fiscal year, a complete list of all contracts in excess of $150,000, including contracts for the purchase of land, undertaken during such fiscal year for the expenditure of funds appropriated by this or any other Act, showing (1) a statement of the subject matter of each contract; (2) the names of the contractors; (3) the names of the persons who approved the specifications, consummated the making or concluded the negotiation of any such contract on behalf of the Government, and of all persons who participated in the negotiations on behalf of the contractor; (4) if any such contract was awarded without competitive bidding, a statement of the principal or controlling reason for the selection of the contractor; and (5) as to contracts for the purchase of land, also the location, area, intended use, the purchase price and assessed value thereof. Sec. 2, act of Aug. 25, 1941 (55 Stat, 686); sec. 401, Sixth Supplemental National Defense Appropriation Act of Apr. 28, 1942 (56 Stat. 244); 5 U. S. C. 219a.

646631°-45-38

2191b. Contracts; Renegotiation Act.—

(1) DEFINITIONS

(a) For the purposes of this section

(1) The term "Department" means the War Department, the Navy Department, the Treasury Department, the Maritime Commission, the War Shipping Administration, Defense Plant Corporation, Metals Reserve Company, Defense Supplies Corporation, and Rubber Reserve Company, respectively.

(2) In the case of the Maritime Commission, the term "Secretary" means the Chairman of such Commission, in the case of the War Shipping Administration, the term "Secretary" means the Administrator of such Administration, and in the case of Defense Plant Corporation, Metals Reserve Company, Defense Supplies Corporation, and Rubber Reserve Company, the term "Secretary" means the board of directors of the appropriate corporation.

(3) The terms "renegotiate" and "renegotiation" include a determination by agreement or order under this section of the amount of any excessive profits.

(4) (A) The term "excessive profits" means the portion of the profits derived from contracts with the Departments and subcontracts which is determined in accordance with this section to be excessive. In determining excessive profits there shall be taken into consideration the following factors:

(i) efficiency of contractor, with particular regard to attainment of quantity and quality production, reduction of costs and economy in the use of materials, facilities, and manpower;

(ii) reasonableness of costs and profits, with particular regard to volume of production, normal pre-war earnings, and comparison of war and peacetime products;

(iii) amount and source of public and private capital employed and net worth;

(iv) extent of risk assumed, including the risk incident to reasonable pricing policies;

(v) nature and extent of contribution to the war effort, including inventive and developmental contribution and cooperation with the Government and other contractors in supplying technical assistance;

(vi) character of business, including complexity of manufacturing technique, character and extent of subcontracting, and rate of turn-over;

(vii) such other factors the consideration of which the public interest and fair and equitable dealing may require, which factors shall be published in the regulations of the Board from time to time as adopted. (B) The term "profits derived from contracts with the Departments and subcontracts" means the excess of the amount received or accrued under such contracts and subcontracts over the costs paid or incurred with respect thereto. Such costs shall be determined in accordance with the method of cost accounting regularly employed by the contractor in keeping his books, but if no such method of cost accounting has been employed, or if the method so employed does not, in the opinion of the Board or, upon redetermination, in the opinion of The Tax Court of the United States properly reflect such costs, such costs shall be determined in accordance with such method as in the opinion of the Board or, upon redetermination, in the opinion of The Tax Court of the United States does properly reflect such

costs. Irrespective of the method employed or prescribed for determining such costs, no item of cost shall be charged to any contract with a Department or subcontract or used in any manner for the purpose of determining such cost, to the extent that in the opinion of the Board or, upon redetermination, in the opinion of The Tax Court of the United States, such item is unreasonable or not properly chargeable to such contract or subcontract. Notwithstanding any other provisions of this section, all items estimated to be allowable as deductions and exclusions under Chapters 1 and 2 E of the Internal Revenue Code (excluding taxes measured by income) shall, to the extent allocable to such contracts and subcontracts (or, in the case of the recomputation of the amortization deduction, allocable to contracts with the Departments and subcontracts), be allowed as items of cost, but in determining the amount of excessive profits to be eliminated proper adjustment shall be made on account of the taxes so excluded, other than Federal taxes, which are attributable to the portion of the profits which are not excessive.

(C) Notwithstanding any of the provisions of this section to the contrary, no amount shall be allowed as an item of cost (i) by reason of a recomputation of the amortization deduction pursuant to section 124 (d) of the Internal Revenue Code until after such recomputation has been made in connection with a determination of the taxes imposed by Chapters 1, 2A, 2B, 2D, and 2E of the Internal Revenue Code for the fiscal year to which the excessive profits determined by the renegotiation are attributable or (ii) by reason of the application of a carry-over or carry-back under any cir- . cumstances. The absence of such a recomputation of the amortization deductions referred to in clause (i) above shall not constitute a cause for postponing the making of an agreement, or the entry of an order, determining the amount of excessive profits, or for staying the elimination thereof.

(D) Notwithstanding any of the provisions of subsection (c) (4) of this section to the contrary, in the case of a renegotiation which is made prior to such recomputation, there shall be repaid by the United States (without interest) to the contractor- or subcontractor after such recomputation the amount of a net renegotiation rebate computed in the following described manner. There shall first be ascertained the portion of the excessive profits determined by the renegotiation which is attributable to the fiscal year with respect to which a net renegotiation rebate is claimed by the contractor or subcontractor (hereinafter referred to as "renegotiated year"). There shall then be ascertained the amount of the gross renegotiation rebate for the renegotiated year, which amount shall be an allocable part of the additional amortization deduction which is allowed for the renegotiated year upon the recomputation made pursuant to section 124 (d) of the Internal Revenue Code in connection with the determination of the taxes for such year and which is attributable to contracts with the Departments and subcontracts, except that the amount of the gross renegotiation rebate shall not exceed the amount of excessive profits eliminated for the renegotiated year pursuant to the renegotiation. The allocation of the additional amortization deduction attributable to contracts with the Departments and subcontracts, and the allocation of the additional amortization deduction to the renegotiated year shall be determined in accordance with regulations prescribed by the Board. There shall then be ascertained the amount of the contractor's or subcontractor's Federal tax benefit from the renegotiation for the renegotiated