A-3911, SEPTEMBER 4, 1924, 4 COMP. GEN. 258

A-3911, SEPTEMBER 4, 1924, 4 COMP. GEN. 258

ACCOUNTING - REIMBURSEMENT OF APPROPRIATIONS THE EXPENSE OF RECEIPT, CUSTODY, AND ISSUE OF DISTINCTIVE PAPER FOR FEDERAL RESERVE NOTES, AND THE RECEIPT, EXAMINATION, AND DESTRUCTION OF MUTILATED FEDERAL RESERVE NOTES ARISING IN CONNECTION WITH THE PRINTING THEREOF, BEING CONSEQUENTIAL AND SUSCEPTIBLE OF SEGREGATION AND IDENTIFICATION, ADJUSTMENTS OF THE APPROPRIATIONS MAY BE MADE BY TRANSFER SETTLEMENTS, CHARGING THE APPROPRIATION FOR "PREPARATION AND ISSUE OF FEDERAL RESERVE NOTES, REIMBURSABLE," AND CREDITING THE APPROPRIATION FOR THE "PUBLIC DEBT SERVICE.' 4 COMP. GEN. 131 MODIFIED.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, SEPTEMBER 4, 1924:

I HAVE YOUR LETTER OF AUGUST 19, 1924, SUPPLEMENTING THE INFORMATION FURNISHED IN CONNECTION WITH YOUR SUBMISSION OF JULY 8, 1924, UPON WHICH WAS BASED DECISION OF JULY 30, 1924, A-3911, 4 COMP. GEN. 131, WHEREIN YOU WERE ADVISED AS TO COSTS INCURRED BY THE DIVISION OF PAPER CUSTODY IN CONNECTION WITH THE RECEIPT, EXAMINATION, AND DESTRUCTION OF MUTILATED FEDERAL RESERVE NOTES ARISING IN CONNECTION WITH THE PRINTING THEREOF, THAT:

IN ANSWER TO THAT PART OF THE SUBMISSION RELATING TO THE RECEIPT, CUSTODY, AND ISSUE OF DISTINCTIVE PAPER FOR FEDERAL RESERVE NOTES, AND THE RECEIPT, EXAMINATION, AND DESTRUCTION OF MUTILATED FEDERAL RESERVE NOTES ARISING IN CONNECTION WITH THE PRINTING THEREOF, YOU ARE ADVISED THAT SECTION 16 OF THE FEDERAL RESERVE ACT, SUPRA, CLEARLY REQUIRES THAT SUCH COSTS BE BORNE BY THE FEDERAL RESERVE BANKS; THEREFORE, THEY SHOULD BE DETERMINED AS ACCURATELY AS MAY BE UNDER THE CIRCUMSTANCES AND CHARGED UNDER THE APPROPRIATION FOR "PREPARATION AND ISSUE OF FEDERAL RESERVE NOTES, REIMBURSABLE," CITED, SUPRA; HOWEVER, BEING A CHARACTER OF EXPENSE ALWAYS HERETOFORE CHARGED UNDER THE APPROPRIATIONS FOR THE "PUBLIC DEBT SERVICE," AND SUCH EXPENSE NOT APPEARING AS SUSCEPTIBLE OF ACTUAL SEGREGATION AND IDENTIFICATION, WHICH IS THE GENERAL REQUIREMENT AS TO TRANSFERS BETWEEN TWO OPERATING APPROPRIATIONS, IT WOULD APPEAR THAT THE DEPOSIT SHOULD BE TO MISCELLANEOUS RECEIPTS RATHER THAN TO THE APPROPRIATION FOR THE "PUBLIC DEBT SERVICE.'

IN YOUR LETTER OF AUGUST 19, 1924, YOU STATE:

THE DEPARTMENT IS IN RECEIPT OF YOUR DECISION OF JULY 30, 1924 (A 3911) IN REPLY TO THE DEPARTMENT'S SUBMISSION OF JULY 8, 1924. IN ANSWER TO THAT PART OF THE SUBMISSION RELATING TO THE RECEIPT, CUSTODY, AND ISSUE OF DISTINCTIVE PAPER FOR FEDERAL RESERVE NOTES, AND THE RECEIPT, EXAMINATION, AND DESTRUCTION OF MUTILATED FEDERAL RESERVE NOTES ARISING IN CONNECTION WITH THE PRINTING THEREOF, YOU HOLD THAT SUCH COSTS SHOULD BE DETERMINED AS ACCURATELY AS MAY BE UNDER THE CIRCUMSTANCES AND CHARGED UNDER THE APPROPRIATION "PREPARATION AND ISSUE OF FEDERAL RESERVE NOTES, REIMBURSABLE," BUT THAT, BEING A CHARACTER OF EXPENSES ALWAYS HERETOFORE CHARGED UNDER THE APPROPRIATION "PUBLIC DEBT SERVICE" AND SUCH EXPENSE NOT APPEARING AS SUSCEPTIBLE OF ACTUAL SEGREGATION AND IDENTIFICATION, WHICH IS THE GENERAL REQUIREMENT AS TO TRANSFERS BETWEEN TWO OPERATING APPROPRIATIONS, IT WOULD APPEAR THAT THE DEPOSIT SHOULD BE TO MISCELLANEOUS RECEIPTS RATHER THAN TO THE APPROPRIATION "PUBLIC DEBT SERVICE.'

IN THE DEPARTMENT'S SUBMISSION IT WAS STATED: "IT IS PROPOSED TO CONTINUE TO OPERATE THE DIVISION OF PAPER CUSTODY UNDER THE ESTABLISHED ANNUAL APPROPRIATION, AND FROM TIME TO TIME TO COMPUTE THE COST ARISING THROUGH THE CUSTODY, ETC., OF PAPER FOR FEDERAL RESERVE NOTES.' THIS STATEMENT WOULD INDICATE THAT IT IS NOT POSSIBLE TO IDENTIFY AND SEGREGATE THE ITEMS CONSTITUTING EXPENSE OF HANDLING PAPER FOR FEDERAL RESERVE NOTES, AND THAT SUCH AN AMOUNT MAY ONLY BE ESTIMATED. AS A MATTER OF FACT THE ACTUAL EXPENSE OF DOING THIS WORK MAY BE EASILY IDENTIFIED. OF THE FIFTY-TWO EMPLOYES IN THE DIVISION OF PAPER CUSTODY, WHOSE ANNUAL SALARIES AGGREGATE $74,200, NINE EMPLOYES WHOSE SALARIES AGGREGATE $12,000 ARE ENGAGED IN HANDLING SUCH PAPER AND MUTILATED WORK. IN OTHER WORDS, IF THERE WERE NO FEDERAL RESERVE NOTES PRINTED, THE DIVISION WOULD BE ABLE TO DISPENSE WITH THE SERVICES OF THESE NINE EMPLOYES AND THEREBY REDUCE THE CHARGE TO THE APPROPRIATION "PUBLIC DEBT SERVICE" BY $12,000. IF THE COST OF DOING THIS WORK IS TO BE PAID FROM THE APPROPRIATION "PUBLIC DEBT SERVICE" AND THE AMOUNT RECEIVED BY WAY OF REIMBURSEMENT IS TO BE DEPOSITED AS MISCELLANEOUS RECEIPTS, IT WILL MEAN THAT THIS YEAR AND EACH SUCCEEDING YEAR THE EXPENSE OF THE PUBLIC DEBT SERVICE WILL BE INCREASED ACCORDINGLY, AND APPROPRIATIONS FOR THE PUBLIC DEBT SERVICE MUST BE SUFFICIENT TO COVER THIS ADDITIONAL EXPENSE.

AS THE COST OF HANDLING THE DISTINCTIVE PAPER FOR FEDERAL RESERVE NOTES AND THE MUTILATED WORK ARISING FROM PRINTING FEDERAL RESERVE NOTES IS CLEARLY SUSCEPTIBLE OF SEGREGATION AND IDENTIFICATION, FOLLOWING THE RULE LAID DOWN IN THE LAST PARAGRAPH OF YOUR DECISION OF JULY 30 IT IS PROPOSED TO ADOPT ONE OF TWO COURSES OF PROCEDURES--- (A) PAY THE EXPENSES OUT OF THE APPROPRIATION "PUBLIC DEBT SERVICE," AS AT PRESENT, SAID APPROPRIATION TO BE REIMBURSED FOR SAID EXPENSE FROM THE APPROPRIATION "PREPARATION AND ISSUE OF FEDERAL RESERVE NOTES, REIMBURSABLE; " OR (B) TRANSFER THE EMPLOYES ACTUALLY ENGAGED ON THIS WORK FROM THE APPROPRIATION "PUBLIC DEBT SERVICE" AND PAY THEM DIRECTLY OUT OF THE APPROPRIATION " PREPARATION AND ISSUE OF FEDERAL RESERVE NOTES, REIMBURSABLE.' THE SECOND PLAN WAS FOLLOWED PRIOR TO THIS FISCAL YEAR IN PAYING THE SALARIES OF ADDITIONAL EMPLOYES AT THE GOVERNMENT MILL WHOSE SERVICES WERE REQUIRED IN CONNECTION WITH THE MANUFACTURE OF DISTINCTIVE PAPER FOR FEDERAL RESERVE NOTES, BUT THE FIRST PLAN WILL BE FOLLOWED HEREAFTER UNDER YOUR DECISION OF JULY 30 IN CONNECTION WITH PAYING THE SALARIES OF SUCH EMPLOYES. THE FIRST PLAN IS PREFERABLE AS IT INVOLVES FEWER ACCOUNTING DIFFICULTIES.

YOUR DECISION IS, THEREFORE, REQUESTED AS TO WHETHER THE DEPARTMENT MAY CHARGE THE COST OF SALARIES OF EMPLOYES ACTUALLY ENGAGED IN HANDLING THE DISTINCTIVE PAPER FOR FEDERAL RESERVE NOTES AND THE MUTILATED WORK ARISING FROM PRINTING FEDERAL RESERVE NOTES IN ONE OF THE TWO METHODS PROPOSED.

SECTION 16 OF THE FEDERAL RESERVE ACT OF DECEMBER 23, 1913, 38 STAT. 267 AND 268, PROVIDES:

ANY APPROPRIATION HERETOFORE MADE OUT OF THE GENERAL FUNDS OF THE TREASURY FOR ENGRAVING PLATES AND DIES, THE PURCHASE OF DISTINCTIVE PAPER, OR TO COVER ANY OTHER EXPENSE IN CONNECTION WITH THE PRINTING OF NATIONAL- BANK NOTES OR NOTES PROVIDED FOR BY THE ACT OF MAY THIRTIETH, NINETEEN HUNDRED AND EIGHT, AND ANY DISTINCTIVE PAPER THAT MAY BE ON HAND AT THE TIME OF THE PASSAGE OF THIS ACT MAY BE USED IN THE DISCRETION OF THE SECRETARY FOR THE PURPOSES OF THIS ACT, AND SHOULD THE APPROPRIATIONS HERETOFORE MADE BE INSUFFICIENT TO MEET THE REQUIREMENTS OF THIS ACT IN ADDITION TO CIRCULARIZING NOTES PROVIDED FOR BY EXISTING LAW, THE SECRETARY IS HEREBY AUTHORIZED TO USE SO MUCH OF ANY FUNDS IN THE TREASURY NOT OTHERWISE APPROPRIATED FOR THE PURPOSE OF FURNISHING THE NOTES AFORESAID: PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION CONTAINED SHALL BE CONSTRUED AS EXEMPTING NATIONAL BANKS OR FEDERAL RESERVE BANKS FROM THEIR LIABILITY TO REIMBURSE THE UNITED STATES FOR ANY EXPENSES INCURRED IN PRINTING AND ISSUING CIRCULATING NOTES.

THE SUBMISSION NOW SHOWS THAT THE EXPENSES IN QUESTION ARE INCURRED SOLELY ON ACCOUNT OF AND ARE CLEARLY SEPARABLE IN AMOUNT FROM TREASURY CURRENCY DISTINCTIVE PAPER HANDLING EXPENSES, AND IT APPEARING DESIRABLE TO MAINTAIN A UNIFORM PROCEDURE WITH RESPECT TO THE EXPENSES OF PURCHASE OF DISTINCTIVE PAPER FOR FEDERAL RESERVE NOTES, AS WELL AS FOR THE EXPENSES OF THE HANDLING THEREOF, THE PLAN IS NOW APPROVED OF FIRST CHARGING UNDER THE CURRENT PUBLIC DEBT APPROPRIATION THE COSTS INCURRED IN CONNECTION WITH THE RECEIPT, EXAMINATION, AND DESTRUCTION OF MUTILATED FEDERAL RESERVE NOTES ARISING IN CONNECTION WITH THE PRINTING THEREOF, AND OF THEREAFTER REIMBURSING THAT APPROPRIATION BY TRANSFER SETTLEMENTS, CHARGING THE APPROPRIATION FOR "PREPARATION AND ISSUE OF FEDERAL RESERVE NOTES, REIMBURSABLE," AND CREDITING THE APPROPRIATION FOR THE "PUBLIC DEBT VICE," UNDER WHICH THE CHARGES WERE MADE. AS TO THE MANNER OF STATING ITEMS TO BE REIMBURSED, SEE 3 COMP. GEN. 889, 891.