A-81857, JUNE 18, 1940, 19 COMP. GEN. 993

A-81857, JUNE 18, 1940, 19 COMP. GEN. 993

PAYMENTS - FOREIGN CURRENCY - CONVERSION RATE IN MAKING PAYMENTS IN FOREIGN CURRENCY OF SALARIES, ETC., DUE AT FOREIGN SERVICE POSTS WHERE TREASURY CHECKS ARE NOT AVAILABLE AND WHERE NO LOSS DUE TO APPRECIATION IS PAYABLE, CONVERSION OF THE UNITED STATES DOLLARS DUE SHOULD BE MADE AT THE RATE AT WHICH THE FOREIGN BANK WILL BUY DOLLARS FOR FOREIGN CURRENCY--- RATHER THAN THE BANK'S SOMEWHAT HIGHER SELLING RATE FOR DOLLARS--- THE SAME AS IN CASES WHERE THE PAYMENT IN FOREIGN CURRENCY INCLUDES REIMBURSEMENT FOR LOSS DUE TO APPRECIATION OF THE FOREIGN CURRENCY. 19 COMP. GEN. 652, AMPLIFIED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF STATE, JUNE 18, 1940:

THERE HAS BEEN CONSIDERED YOUR LETTER OF MARCH 1, 1940, DA 120.7/891, AS FOLLOWS:

REFERENCE IS MADE TO DECISION A-81857 OF JANUARY 17, 1940 (19 COMP. GEN. 652), APPROVING WITH CERTAIN AMENDMENTS THE PLAN FOR COMPUTATION AND PAYMENT OF FOREIGN SERVICE PAY ADJUSTMENTS AS SUBMITTED WITH THE DEPARTMENT'S LETTER OF DECEMBER 4, 1939, AND WITHHOLDING APPROVAL OF THE FURTHER SUGGESTED PROPOSAL FOR MAKING PAYMENTS IN FOREIGN CURRENCY AT THE BANK'S SELLING RATE OF SALARIES AND ALLOWANCES ON WHICH PAY ADJUSTMENTS ARE NOT APPLICABLE, ON THE PRESUMPTION THAT DOLLARS ARE AVAILABLE TO THE DISBURSING OFFICER FOR MAKING SUCH PAYMENTS INASMUCH AS NO REASON IS SUGGESTED FOR USING A DIFFERENT RATE IN THAT SITUATION.

THERE ARE THREE CLASSES OF PAYMENTS OF UNITED STATES DOLLAR OBLIGATIONS TO WHICH THIS DECISION APPLIES, NAMELY:

1. PAYMENTS OF OBLIGATIONS WHICH INCLUDE CURRENCY APPRECIATION LOSSES COMPUTED UNDER THE PROVISIONS OF EXECUTIVE ORDER NO. 7972, AS AMENDED;

2. PAYMENTS OF OBLIGATIONS ON WHICH CURRENCY APPRECIATION LOSSES ARE NOT ALLOWABLE, WHICH CAN BE PAID BY THE DISBURSING OFFICER IN UNITED STATES CURRENCY OR BY TREASURY CHECKS IN DOLLARS;

3. PAYMENTS OF OBLIGATIONS ON WHICH CURRENCY APPRECIATION LOSSES ARE NOT ALLOWABLE WHICH CANNOT BE PAID BY THE DISBURSING OFFICER IN UNITED STATES CURRENCY OR BY TREASURY CHECKS IN DOLLARS FOR THE REASON THAT FUNDS FOR DISBURSEMENT ARE OBTAINED BY THE DISBURSING OFFICER IN A FOREIGN CURRENCY.

WHILE NO OBJECTION IS PERCEIVED TO MAKING CLASS ONE AND CLASS TWO PAYMENTS IN FOREIGN CURRENCY AT THE BANK'S BUYING RATE, CLASS THREE OBLIGATIONS WOULD BE UNDERPAID IF PAYMENT IS MADE BY USE OF THAT RATE SINCE THESE PAYMENTS ARE MADE IN FOREIGN CURRENCY FOR THE CONVENIENCE OF THIS GOVERNMENT, NOT AT THE REQUEST OR FOR THE CONVENIENCE OF THE PAYEES.

IN THESE CASES THE DISBURSING OFFICERS OBTAIN FUNDS FOR DISBURSEMENT BY DRAWING OFFICIAL DRAFTS ON THE SECRETARY OF STATE FOR FUNDS, WHICH ARE CASHED EITHER FROM THE PROCEEDS OF COLLECTIONS ON HAND OR AT A LOCAL BANK FOR FOREIGN CURRENCY. THUS, THE DISBURSING OFFICER HAS ONLY FOREIGN CURRENCY WITH WHICH TO MAKE THE DISBURSEMENTS, AND PAYMENTS OF UNITED STATES DOLLAR OBLIGATIONS SO MADE IN FOREIGN CURRENCY MUST BE MADE IN SUCH AMOUNTS AS ARE FULLY EQUIVALENT TO THE UNITED STATES DOLLARS DUE AT THE TIME AND PLACE OF PAYMENT, I.E., AT THE BANK'S SELLING RATE FOR THE CURRENCY IN WHICH PAYMENT IS ACTUALLY MADE.

IN A.D. 6196 ( RECONSIDERATION) OF AUGUST 23, 1922 ( A.D. 6685, SEPTEMBER 19, 1922), IT IS HELD THAT SALARIES AND EXPENSES "MAY BE PAID IN THE SAME CIRCULATING CURRENCY WHICH MUST BE ACCEPTED AS LEGAL TENDER FOR PAYMENT OF CONSULAR FEES.' SINCE IT IS REQUIRED BY LAW AND REGULATION THAT FEES BE COLLECTED IN THE COIN OF THE UNITED STATES OR ITS REPRESENTATIVE VALUE IN EXCHANGE, I.E., FOREIGN CURRENCY AT THE BANK'S SELLING RATE FOR DOLLARS AS OF THE DATE OF COLLECTION, PAYMENTS IN FOREIGN CURRENCY OF DOLLAR OBLIGATIONS SHOULD BE MADE AT THE BANK'S SELLING RATE FOR DOLLARS AS OF THE DATE OF PAYMENT.

IF PAYMENTS ARE REQUIRED TO BE MADE AT THE BANK'S BUYING RATE FOR DOLLARS, NO PAYEE COULD ORDINARILY REFUND PART OR ALL OF ANY IMPROPER PAYMENT MADE TO HIM WITHOUT ADDED PERSONAL LOSS UNLESS THE GOVERNMENT WOULD LIKEWISE AGREE TO ACCEPTANCE OF SUCH REFUND IN FOREIGN CURRENCY AT THE SAME RATE OF EXCHANGE, BUT IF THE GOVERNMENT SHOULD SO AGREE IT WOULD NO DOUBT BE IMPOSSIBLE TO RESTORE TO THE APPROPRIATION THE FULL AMOUNT OF THE SUSPENSION.

UNDER THE PRESENT METHOD OF PAYING DOLLAR OBLIGATIONS IN FOREIGN CURRENCY AT THE BANK'S SELLING RATE, REFUNDS OF SUSPENDED ITEMS ARE REQUIRED TO BE MADE IN DOLLARS OR THEIR EQUIVALENT AT THE BANK'S SELLING RATE ON THE DATE OF THE REFUND, AND REFUNDS ARE EQUIVALENT TO THE AMOUNTS SUSPENDED.

THE FUNCTION OF RECEIVING AND DISBURSING FUNDS IN THE FOREIGN SERVICE THROUGHOUT THE ENTIRE WORLD IS PERFORMED BY NEARLY A THOUSAND OFFICERS, WHO ARE DISBURSING OFFICERS REGULARLY OR INTERMITTENTLY. THERE ARE NOW MAINTAINED 20 EMBASSIES, 36 LEGATIONS, 55 CONSULATES GENERAL, 168 CONSULATES, 3 VICE CONSULATES, AND 2 DIPLOMATIC AGENCIES TO WHICH FOREIGN SERVICE OFFICERS ARE ASSIGNED.

BECAUSE OF GEOGRAPHICAL ISOLATION, THE PRESENT WARTIME CONDITIONS PREVAILING, AND OTHER SIMILAR FACTORS, WITH FEW EXCEPTIONS ALL POSTS EXCEPT THOSE COMING UNDER THE DISTRICT ACCOUNTING AND DISBURSING OFFICERS AT MEXICO CITY, MEXICO, AND OTTAWA, CANADA, NOW DISBURSE UNDER THE DRAFT SYSTEM.

THE FOREIGN SERVICE REGULATIONS, CHAPTER V, SECTION V-54, PROVIDES WITH RESPECT TO THE DRAWING OF INDIVIDUAL DRAFTS FOR THE PAYMENT OF SALARIES AND ALLOWANCES:

"/C) THE SECRETARY OF STATE WHEN HE DEEMS IT NECESSARY MAY AUTHORIZE THE PAYMENT OF SALARIES AND ALLOWANCES BY SEPARATE DRAFTS DRAWN ON THE SECRETARY OF STATE TO THE ORDER OF EMPLOYEES. DRAFTS FOR OTHER EXPENSES WILL BE DRAWN IN SUCH MANNER AS THE SECRETARY OF STATE MAY DIRECT CONSISTENT WITH LAW.'

NOTE 4 TO THAT SECTION PROVIDES:

"INDIVIDUAL DRAFTS SHOULD NOT BE DRAWN FOR SALARIES AND ALLOWANCES EXCEPT WHERE EXCHANGE RESTRICTIONS OBTAIN OR OTHER DIFFICULTIES ARE ENCOUNTERED AND THEN ONLY WHERE IT IS DEEMED NECESSARY AND THE DEPARTMENT'S ADVANCE AUTHORIZATION HAS BEEN OBTAINED.

"IN THE ABSENCE OF SPECIFIC INSTRUCTIONS TO THE CONTRARY, DRAFTS FOR EXPENSES OTHER THAN SALARIES AND ALLOWANCES SHALL NOT BE DRAWN IN FAVOR OF CREDITORS OF THE GOVERNMENT BUT SHALL BE NEGOTIATED BY THE OFFICER AND PAYMENTS MADE FROM THE PROCEEDS THEREOF.'

THUS, THE UNLIMITED ISSUANCE OF INDIVIDUAL DRAFTS TO OFFICERS AND EMPLOYEES IN PAYMENT OF SALARIES AND ALLOWANCES IS CONTRARY TO THE PROVISIONS OF THE PRESENT AMENDED FOREIGN SERVICE REGULATIONS AS WELL AS TO THE HOLDING IN THE DECISION OF NOVEMBER 16, 1926, 6 COMP. GEN. 336, WHICH STATES:

"CONSULAR DRAFTS SHOULD NOT BE DRAWN IN FAVOR OF PERSONS TO WHOM PAYMENTS ARE TO BE MADE BY DIPLOMATIC AND CONSULAR OFFICERS BUT SHOULD BE DRAWN TO MAKE UP DEFICITS IN THE RECEIPTS OF THEIR OFFICES.'

IT IS NOT INTENDED TO PERMIT THE DRAWING OF INDIVIDUAL DRAFTS FOR SALARIES AND ALLOWANCES EXCEPT AT THOSE OFFICES WHERE UNUSUAL AND DIFFICULT CONDITIONS PREVAIL WHICH MAKE IT NECESSARY THAT DOLLAR EXCHANGE IN SOME FORM BE PLACED IN THE HANDS OF OFFICERS AND EMPLOYEES, WHO ON ACCOUNT OF UNSTABLE MONETARY CONDITIONS OR EXCHANGE RESTRICTIONS IMPOSED DO NOT WANT FOREIGN CURRENCY IN ANY FORM AND SPECIALLY REQUEST PAYMENT BY INDIVIDUAL DRAFTS IN LIEU OF FOREIGN CURRENCY.

ONLY SALARIES MAY BE PAID BY THE ALLOTMENT OF PAY PLAN. THE REGULATIONS EXPRESSLY EXCLUDE PAYMENT OF ALL ALLOWANCES OF WHATEVER KIND, AND NO FOREIGN SERVICE PAY ADJUSTMENT IS PERMITTED ON THE AMOUNT OF ANY ALLOTMENT OF PAY. THEREFORE, PAYMENTS OF SALARIES ARE MADE BY THIS PLAN ONLY UPON THE EXPRESS AUTHORIZATION AND AT THE REQUEST OF THE PAYEE.

SINCE PAYMENT BY THE ALLOTMENT OF PAY PLAN OR BY INDIVIDUAL DRAFTS IS USUALLY NOT DESIRED OR NOT PERMITTED, IT FOLLOWS THAT, WHERE THE DISBURSING OFFICER RECEIVES HIS FUNDS FOR DISBURSEMENT IN THE FORM OF FOREIGN CURRENCY, THE PAYMENT OF DOLLAR OBLIGATIONS IN FOREIGN CURRENCY AT THE BANK'S SELLING RATE IS JUSTIFIED AS SUGGESTED IN THE PENULTIMATE PARAGRAPH OF THE DECISION OF JANUARY 17, 1940, AND IT IS REQUESTED THAT IT BE AUTHORIZED. THIS IS NOT A NEW PROCEDURE OR A NEW FORM OF PAYMENT. HAS BEEN FOLLOWED FOR YEARS, AND THE CONTINGENT EXPENSE, FOREIGN SERVICE, APPROPRIATION GRANTED ANNUALLY PROVIDES FOR " LOSS BY EXCHANGE" TO COVER THE DIFFERENCE BETWEEN THE BUYING AND SELLING RATES.

WITH REGARD TO THE QUESTION OF CURRENCY APPRECIATION LOSSES WHERE THE CURRENT RATES CLOSELY APPROACH THE BASIC RATES, THERE SHOULD BE NO DIFFICULTY IN DETERMINING WHETHER SUCH LOSS EXISTS IF THE LOSS IS COMPUTED BY USE OF THE BANK'S BUYING RATE AS NOW AGREED UPON. THERE IS EITHER SUCH A LOSS OR THERE IS NOT ONE FOR CONSIDERATION.

AUTHORITY TO CONTINUE TO MAKE PAYMENTS OF DOLLAR OBLIGATIONS AT THE BANK'S SELLING RATE WHERE DOLLARS ARE NOT AVAILABLE IS CONSIDERED ESSENTIAL, AND IF IT IS FOUND THAT THE DATA SUBMITTED HEREWITH IS NOT SUFFICIENT TO WARRANT THE CONTINUANCE OF THE FORMER PRACTICE WITHOUT THE SUBMISSION OF FURTHER JUSTIFICATION, A CONFERENCE ON THE QUESTION IS DESIRED, AND IF YOU WILL KINDLY INDICATE A TIME AND PLACE FOR SUCH MEETING I SHALL BE GLAD TO DESIGNATE REPRESENTATIVES OF THIS DEPARTMENT TO CONFER WITH MEMBERS OF YOUR STAFF WITH A VIEW TO ESTABLISHING A PROCEDURE SATISFACTORY BOTH TO THE GENERAL ACCOUNTING OFFICE AND THIS DEPARTMENT.

THE CONFERENCE AS SUGGESTED IN THE CONCLUDING PARAGRAPH OF THE ABOVE QUOTED LETTER WAS HELD ON MARCH 28, 1940. UPON THE BASIS OF YOUR LETTER, AND THE MATTERS DISCUSSED, THERE SEEMS JUSTIFIED A REEXAMINATION OF THE MATTER WITH RESPECT TO THE EXACT SUMS WHICH THE DEPARTMENT MAY PAY, OR IS OBLIGATED TO PAY, THE PERSONNEL OF THE FOREIGN SERVICE.

AS IN THE CASE OF OTHER GOVERNMENT EMPLOYEES, THE AMOUNTS DUE OFFICERS AND EMPLOYEES OF THE FOREIGN SERVICE REST NOT UPON CONTRACT, BUT UPON THE ACTS OF CONGRESS ESTABLISHING THEIR STATUS. EMBRY V. UNITED STATES, 100 U.S. 680, 685. THE STATUTES AND THE INDIVIDUAL APPOINTMENTS OR COMMISSIONS SPECIFY A SUM CERTAIN IN DOLLARS, FROM WHICH THERE DERIVES AN OBLIGATION PAYABLE PERIODICALLY, IN THE COMPUTED NUMBER OF DOLLARS THEN DUE, BUT, OF COURSE, NO MORE. UNDER THE JOINT RESOLUTION OF JUNE 5, 1933, 48 STAT. 112, 31 U.S.C. 463, CREDITORS OF THE GOVERNMENT ARE ENTITLED TO THE EQUIVALENT IN DOLLARS OF THE VALUE OF THEIR OBLIGATIONS, WHICH CANNOT MEAN MORE THAN THE OBLIGATIONS' WORTH TO THEM, I.E., THEIR BUYING POWER. SEE PERRY V. UNITED STATES, 294 U.S. 330, 357, AND, AS APPLIED TO DEBTS PAYABLE ALTERNATIVELY IN AMERICAN OR FOREIGN MONEY, GUARANTY TRUST CO. V. HENWOOD, 307 U.S. 247. FUNDAMENTALLY, ALSO, WHERE THE PLACE OF PAYMENT OF GOVERNMENT OBLIGATIONS IS NOT ESPECIALLY PROVIDED FOR (E.G., BY CONTRACT),"THEY ARE IN LAW PAYABLE AT THE TREASURY, AND THIS IS AT THE SEAT OF GOVERNMENT AND IN THE TREASURY DEPARTMENT.' COOKE V. UNITED STATES, 91 U.S. 389, 401; ACT OF SEPTEMBER 2, 1789, 1 STAT. 65; R.S. 305, 3591.

SALARIES, HOWEVER, ARE PAID GENERALLY AT THE PLACE OF EMPLOYMENT--- HERE OR ABROAD--- IN THE FORM OF CASH, CHECK, OR DRAFT ( A.D. 6685, SEPTEMBER 19, 1922), BUT THAT IS DONE AS A MATTER OF PRACTICALITY, UNDERTAKEN FOR THE EMPLOYEES' BENEFIT AND TO PROMOTE THEIR EFFICIENCY. 3 COMP. DEC. 42. IT IS IN THIS VIEW THAT THE DECISIONS OF THIS OFFICE AND THE COURT OF CLAIMS HAVE FOR MANY YEARS HELD THAT ANY EXPENSE INCIDENT TO THE ENCASHMENT OF A SALARY CHECK IS PROPERLY TO BE ASSUMED BY THE PAYEE. COMP. DEC. 276; 6 COMP. GEN. 295; 11 ID. 213; 19 ID. 625; HILL V. UNITED STATES, 62 CT.1CLS. 412. WHERE PAYMENTS TO THE PERSONNEL OF THE FOREIGN SERVICE ARE MADE IN UNITED STATES CURRENCY, OBTAINED BY CASHING A DRAFT FROM FEE COLLECTIONS, NO QUESTION OF EXCHANGE OR CONVERSION ARISES. WHERE THE PAYMENT IS MADE BY TREASURY CHECK, THE GOVERNMENT IS ACQUITTED OF ITS OBLIGATION; AND THE MANNER OF ITS CASHING--- INTO WHAT MEDIUM OF EXCHANGE OR AT WHAT EXPENSE--- IS FOR THE PAYEE TO UNDERTAKE AND DECIDE. 22 COMP. DEC. 341; 2 COMP. GEN. 511. WHERE THE PAYMENT IS MADE IN FOREIGN CURRENCY AND INCLUDES A LOSS DUE TO APPRECIATION OF FOREIGN CURRENCIES IN THEIR RELATION TO THE AMERICAN DOLLAR (ACT OF MARCH 26, 1934, 48 STAT. 466), THE PROPOSAL CONTAINED IN YOUR LETTER OF DECEMBER 4, 1939, WAS APPROVED IN THE DECISION OF JANUARY 17, 1940, 19 COMP. GEN. 652, TO THE EFFECT THAT SUCH PAYMENTS SHOULD BE COMPUTED AT THE RATE AT WHICH THE FOREIGN BANK WILL BUY DOLLARS FOR FOREIGN CURRENCY, THAT IS, ITS LOCAL BUYING RATE OF EXCHANGE, AND THAT RULE HAS NOW BEEN PROMULGATED TO THE FIELD. DIPLOMATIC SERIAL NO. 3200, MARCH 1, 1940. THEREFORE, THERE REMAINS IN QUESTION ONLY THE TYPE OF PAYMENT NOW UNDER CONSIDERATION--- SALARIES, ETC., DUE AT POSTS WHERE TREASURY CHECKS ARE NOT AVAILABLE AND WHERE NO LOSS DUE TO APPRECIATION IS PAYABLE.

THE PREVIOUS DECISION (A-81857, DATED JANUARY 17, 1940) SUGGESTED THE AVAILABILITY OF CONSULAR DRAFTS FOR THE PURPOSE OF EFFECTING AN INDIVIDUAL PAYMENT IN DOLLARS WHEN AN EMPLOYEE ESPECIALLY REQUESTS THAT SOME OR ALL OF HIS SALARY BE PAID IN THAT FORM RATHER THAN IN FOREIGN CURRENCY. YOU REFER TO A DECISION OF NOVEMBER 16, 1926, WHICH HELD, ON THE BASIS OF A DECISION OF THE FORMER COMPTROLLER OF THE TREASURY, 27 COMP. DEC. 316, THAT DRAFTS SHOULD NOT BE DRAWN TO THE ORDER OF INDIVIDUAL EMPLOYEES AND CREDITORS. IT WILL BE NOTED THAT THE ORIGINAL HOLDING WAS NOT THAT SUCH DRAFTS ARE PROHIBITED BY LAW BUT ONLY THAT THEY SHOULD NOT BE UTILIZED WITHOUT PROPER AUTHORITY, WHICH, OF COURSE, IS STILL TRUE. ALSO, AT THAT TIME IT APPEARS TO HAVE BEEN THE PRACTICE TO APPLY CONSULAR COLLECTIONS DIRECTLY TO THE PAYMENT OF SALARIES AND EXPENSES, DRAWING PERIODICALLY A SINGLE DRAFT TO PROVIDE FOR ANY INSUFFICIENCY ONLY. CONSULAR REGULATIONS OF 1896, PAR. 517. CONSULAR COLLECTIONS NOW ARE REMITTED IN FULL TO THE TREASURY, EXCEPT WHERE DRAFTS ARE CASHED FROM SUCH FUNDS ON HAND, IN WHICH CASE THE DRAFTS ARE REMITTED AS DEPOSITS OF FEES. FOREIGN SERVICE REGULATIONS, V-23, NOTE 1 (B) (1). FURTHERMORE, THE PRESENT SECTION V-54 OF THE REGULATIONS QUOTED IN YOUR LETTER WAS DERIVED FROM AN EXECUTIVE ORDER OF AUGUST 29, 1933, NO. 6262, AND IT SPECIFICALLY SANCTIONS THE DRAWING OF SEPARATE DRAFTS "TO THE ORDER OF EMPLOYEES.' THEREFORE, THE FORMER DECISIONS RESPECTING THAT MATTER CAN NO LONGER BE CONSIDERED AS APPLICABLE. PAYMENT OF THE GOVERNMENT'S OBLIGATIONS BY DRAFTS DRAWN UPON THE TREASURY OR THE SECRETARY OF STATE HAS, SINCE A VERY EARLY PERIOD, BEEN A COMMON, IF NOT THE MOST COMMON, MODE OF DISCHARGING THEM. IN 1877 IT WAS STATED IN MCKNIGHT V. UNITED STATES, 13 CT.1CLS. 292, 305, THAT THE PRACTICE OF THE FOREIGN-SERVICE OFFICERS WAS TO DRAW DRAFTS FOR THE AMOUNTS THOUGHT TO BE DUE THEM, EITHER UPON THE SECRETARY OF STATE OR OF THE TREASURY, OR UPON FEDERAL DEPOSITORY BANKERS ABROAD. IN THE CASE OF THE FLOYD ACCEPTANCES (1869), 7 WALL. 666, 675, IT WAS SAID--

IT IS NOT TO BE DENIED, THAT IN THE EXTENSIVE AND VARIED FISCAL OPERATIONS OF THE GOVERNMENT, BILLS OF EXCHANGE ARE FOUND TO BE VALUABLE INSTRUMENTS, OF WHICH IT HAS THE RIGHT TO AVAIL ITSELF WHENEVER THEY MAY BE NECESSARY. IN THE TRANSFER OF IMMENSE SUMS OF MONEY FROM ONE PART OF THE COUNTRY TO ANOTHER, AND IN THE PAYMENT OF DUES AT DISTANT POINTS, WHERE THEY SHOULD PROPERLY BE PAID, IT USES, AS IT OUGHT TO USE, THIS TIME -HONORED MODE OF EFFECTING THESE PURPOSES. AND THE LOWER COURT, IN THE SAME CASE (1 CT.1CLS. 270, 274), REPORTS THE FOLLOWING TESTIMONY OF " GEORGE W. RIGGS, ESQ., AN EMINENT PRIVATE BANKER AT THE CITY OF WASHINGTON SINCE 1840: "

OUR BANKING HOUSE HAS BEEN IN THE CONSTANT HABIT OF PRESENTING DRAFTS ON THE STATE DEPARTMENT FROM CONSULS AND MINISTERS OF THE UNITED STATES ABROAD. UNTIL LATELY THESE WERE IN THE USUAL FORM OF BILLS OF EXCHANGE. THESE WE PRESENTED, AND IN SOME INSTANCES, ON RECEIVING ASSURANCE THAT THEY WOULD BE PAID, WE LEFT THEM AT THE DEPARTMENT FOR THAT PURPOSE; IN OTHER INSTANCES, NOT BEING YET PAYABLE, WE WOULD TAKE A VERBAL ACCEPTANCE AND THEN DISCOUNT THE PAPER FOR THE HOLDER.

RECENTLY TWO THINGS HAVE BEEN ADDED TO THE PRACTICE IN RELATION TO THESE BILLS: FIRST, THAT THEY ARE TO BE MADE PAYABLE AT FIFTEEN DAYS' SIGHT, WITH ACCEPTANCES WAIVED; AND, SECONDLY, ENDORSEMENT BY PROCURATION EXCEPTED. (THE DRAFTS ARE NOW DRAWN AT 5 DAYS' SIGHT, AND ARE PAID EVEN MORE PROMPTLY--- SOME AS EARLY AS WITHIN 1 DAY OF THE LAST BANK ENDORSEMENT--- APPARENTLY AS SOON AS THEY CAN BE SCHEDULED TO THE TREASURY.) SEE ALSO 2 OPS. ATTY. GEN. 504 (1832); 8 ID. 1 (1856); 2 LAWR. ST COMPT. DEC. 142, 146 (1881). IT IS UNDERSTOOD THE DEPARTMENT'S POLICY IN THE PAST HAS BEEN TO APPROVE DRAFTS DRAWN TO INDIVIDUAL CREDITORS, AT THE DISCRETION OF THE OFFICERS IN THE FIELD. SEE LETTER OF THE SECRETARY OF STATE DATED OCTOBER 27, 1921 ( AC). CURRENTLY, IT IS REPORTED THE DEPARTMENT PLANS TO REVERT EXCLUSIVELY TO THE DRAFT SYSTEM FOR EFFECTING DISBURSEMENTS AS A SYSTEM PREFERABLE TO THE USE OF CHECKS, BECAUSE OF THE LATTER'S INHERENT DIFFICULTIES IN THE FOREIGN FIELD, AND, IN FACT, ABOUT SIX THOUSAND DRAFTS WERE NEGOTIATED IN A FISCAL YEAR AS RECENT AS 1937. SEE YOUR LETTER OF NOVEMBER 7, 1938 ( DA), OUTLINING THE PROCEDURE FOR A "STATE ACCOUNT OF ADVANCES," NOW AUTHORIZED BY THE ACT OF APRIL 25, 1940, PUBLIC, NO. 483.

AS A MATTER OF LAW, PAYMENT BY DRAFT IS NOT SIGNIFICANTLY DIFFERENT FROM PAYMENT BY ORDINARY CHECK. WHILE THERE IS NO BINDING PRESUMPTION OF DISCHARGE WHEN A DEBT IS SO PAID ( GREENOUGH V. MUNROE ( C.C.A. 2, 1931), 53 F. (2D) 362), WHEN SUCH INSTRUMENT IS ACCEPTED BY A PUBLIC CREDITOR, NEGOTIATED IN THE OPEN MARKET, AND PAID TO THE HOLDER ON PRESENTATION, THE ORIGINAL DEBT IS DISCHARGED ( LOONEY V. DISTRICT OF COLUMBIA, 113 U.S. 258). IN SHORT, AS STATED IN SKINNER V. STONE ( ARK. 1920), 222 S.W. 360, 11 A.L.R. 808,"* * * IN ORDINARY TRANSACTIONS A CHECK OR DRAFT IS REGARDED AS THE EQUIVALENT OF MONEY.' THE EXECUTIVE ORDER OF 1933, NOW SECTION V- 54 OF THE REGULATIONS QUOTED IN YOUR LETTER, SUPRA, RECOGNIZES THIS PRINCIPLE BY AUTHORIZING THE SECRETARY OF STATE TO PAY SALARIES BY SEPARATE DRAFTS TO THE ORDER OF EMPLOYEES. IT MUST BE HELD, THEREFORE, THAT THE DELIVERY OF A DRAFT TO AN EMPLOYEE FOR THE NET NUMBER OF DOLLARS THEN DUE HIM, AND ITS PAYMENT ON HIS ENDORSEMENT, ACQUITS THE GOVERNMENT OF ITS OBLIGATION AND NOTHING MORE IS PAYABLE. A-24640, NOVEMBER 20, 1928.

THERE HAS BEEN SOME SUGGESTION THAT THIS WOULD NOT BE ACCEPTABLE TO THE PERSONNEL OF THE FOREIGN SERVICE. WHILE THAT FACTOR, IF TRUE, WOULD NOT APPEAR TO BE OF AVAIL IN VIEW OF THE EXECUTIVE ORDER REFERRED TO, IT IS NOT CLEAR THAT SUCH FACTOR REALLY EXISTS. IN THE ACCOUNTS CURRENTLY RECEIVED IN THIS OFFICE ARE DISCLOSED NUMEROUS INSTANCES WHERE, FOR DIVERSE REASONS, INDIVIDUAL DRAFTS WERE THOUGHT MOST DESIRABLE AND WERE ISSUED, SOME OF THEM BEING SENT BY THE PAYEES DIRECTLY TO THIS COUNTRY FOR DEPOSIT IN CHECKING ACCOUNTS, OTHERS BEING CASHED ABROAD. SO FAR AS APPEARS, NO COMPLAINT HAS EMANATED FROM THE PERSONNEL INVOLVED, AND THE PAYMENTS THUS EFFECTED INCLUDE SOME TO PRIVATE CREDITORS ABROAD (LANDLORDS), WHO HAVE APPARENTLY ACCEPTED DOLLAR DRAFTS FOR THE NET AMOUNTS DUE, WITHOUT CLAIMING A PREMIUM FOR EXCHANGE OR OTHERWISE. SEE, FOR EXAMPLE, THE RECENT ACCOUNTS FROM THE CONSULATE AT LA PAZ, BOLIVIA, THE ACCOUNT FROM THE CONSULATE-GENERAL AT MUKDEN, MANCHURIA, FOR SEPTEMBER 1938, AND CONSUL LANGDON'S DISPATCH NO. 98, DATED NOVEMBER 12, 1938. ONE INSTANCE, WHERE THE OFFICER APPARENTLY DESIRED A PORTION OF HIS SALARY PAID LOCALLY AND THE REMAINDER FOR SENDING TO THIS COUNTRY, TWO DRAFTS WERE DRAWN IN HIS FAVOR, ONE CASHED FROM COLLECTIONS ON HAND AND THE OTHER FORWARDED TO A BANK IN THIS CITY FOR DEPOSIT ( ALLAN DAWSON'S ACCOUNT FOR MARCH 1940, APPROVED BY THE DIVISION OF ACCOUNTS ON MAY 11, 1940).

AS YOU SAY, IT IS ONLY "WHERE UNUSUAL AND DIFFICULT CONDITIONS PREVAIL" THAT DOLLARS ARE SOUGHT TO BE PROVIDED FOR EMPLOYEES WHO "DO NOT WANT FOREIGN CURRENCY IN ANY FORM," AND AS DRAFTS TO EFFECTUATE DOLLAR PAYMENTS ARE AUTHORIZED IN LAW, ARE IN FACT AVAILABLE, AND ARE SO BEING USED, THERE CAN BE NO GENERAL PREMISE THAT DOLLARS ARE NOT AVAILABLE, ON WHICH TO JUSTIFY PAYMENT OF BANKERS' CHARGES FOR THE SALE OF EXCHANGE WHEN PAYMENTS ARE MADE IN FOREIGN MONEY. SINCE THE DRAFTS WILL BE NEEDED ONLY UNDER "UNUSUAL AND DIFFICULT CONDITIONS," IT IS NOT PERCEIVED HOW THE EXPENSE CONTENDED FOR CAN BE JUSTIFIED AS AN ECONOMY; AND NO SPECIAL AUTHORIZATION TO DRAW SUCH DRAFTS WOULD SEEM ESSENTIAL, SINCE THE TOTAL AMOUNTS PAID IN ANY MONTH TO BE CHARGED TO EACH POST'S ALLOTMENT OF FUNDS WILL NOT BE AFFECTED BY THE NUMBER OF DRAFTS DRAWN. IF A PARTICULAR EMPLOYEE HAS OCCASION TO REQUEST PAYMENT OF DOLLARS IN THIS COUNTRY, OF ALL OR PART OF HIS MONTHLY SALARY, SO REGULARLY AND CONTINUOUSLY THAT THE DRAWING OF NUMEROUS DRAFTS WOULD BE BURDENSOME, THE ACT APPROVED MAY 14, 1937, 50 STAT. 166, COMMONLY CALLED THE ALLOTMENT ACT OF 1937, PROVIDES AN ADEQUATE MEANS OF SO MAKING PAYMENT, AND, IN FACT, IN SOME ACCOUNTS IT IS NOTED THE OFFICERS HAVE ELECTED TO HAVE THEIR ENTIRE SALARY ALLOTTED TO BANKS IN THIS COUNTRY.

ACCORDINGLY, SINCE THE ULTIMATE OBLIGATION OF THE GOVERNMENT IS TO EFFECT PAYMENT IN THIS COUNTRY IN DOLLARS, AND AN ADEQUATE AND, IT IS BELIEVED, SATISFACTORY SYSTEM IS AVAILABLE AND IN USE FOR THAT PURPOSE, THE ALTERNATIVE PLAN OF PAYMENT--- IN FOREIGN MONEY DERIVED FROM THE CASHING OF A DRAFT--- MUST BE CONSIDERED TO BE FOR THE EMPLOYEES' BENEFIT RATHER THAN THE GOVERNMENT-S, WITH THE OBVIOUS PURPOSE OF SUPPLYING THEM WITH LOCAL FUNDS TO MEET THEIR LOCAL EXPENSES IN THE COMMUNITIES WHERE THEY ACTUALLY RESIDE. IN THAT VIEW THE BANKERS' BUYING RATE OF EXCHANGE APPLIES, NOT THE SELLING RATE (WHICH IS THE SLIGHTLY HIGHER RATE AT WHICH THE FOREIGN MONEY THUS PAID TO THE EMPLOYEE MAY BE RETURNED TO THE BANK IN EXCHANGE FOR A DOLLAR DRAFT ON NEW YORK), SINCE THERE IS PERCEIVED NO ORDINARY NEED FOR SUCH TRANSACTION TO TAKE PLACE. IT FOLLOWS, TOO, THAT THE BUYING RATE OBTAINS WHETHER THE DRAFT TO PURCHASE THE FOREIGN MONEY ON HAND, IT NOT BEING MATERIAL TO THE SEVERAL PAYEES THAT THE CONSULATE PROPERLY COLLECTED SUCH FEES AT THE SELLING RATE. THE FACT THAT THE SAME TYPE OF CURRENCY MAY BE USED TO PAY SALARIES AS MUST BE ACCEPTED IN PAYMENT OF CONSULAR FEES HAS NO RELATION TO THE RATES OF EXCHANGE APPLICABLE TO THE TWO TRANSACTIONS.

IF, ON THE OTHER HAND, IT BE THOUGHT THE GOVERNMENT IS BOUND AND REQUIRED TO DELIVER THE DOLLARS ABROAD, TO THE ACTUAL POSTS OF THE EMPLOYEES, THERE STILL APPEARS NO GROUND FOR THE USE OF THE SELLING RATE OF EXCHANGE WHEN THE OBLIGATION SO REGARDED IS PAID IN SOME FOREIGN MONEY, LEGAL TENDER AT THE PLACE OF PAYMENT. THE AUTHORITIES APPEAR TO HOLD THAT A DOLLAR DEBT PAYABLE ABROAD IS DISCHARGED THERE BY THE PAYMENT OF THE SUM OF LOCAL FUNDS WHICH THE DOLLARS WILL THEN AND THERE BUY IN THE LOCAL MARKET, I.E., THE CONVERSION IS AT THE BUYING RATE OF EXCHANGE. IN JELISON V. LEE (C.1CT. MASS., 1847), FED. CASE NO. 7256, AN ACTION UPON A CONTRACT DEBT IN DOLLARS PAYABLE IN ENGLAND, MR. JUSTICE WOODBURY, AT THE CIRCUIT, SAID,"BUT IT (THE AMOUNT DUE, $3,000) SHOULD, IF NOT PAID IN CURRENT SPECIE DOLLARS, BE LIQUIDATED WITH AS MANY SOVEREIGNS, OR A BILL FOR AS MANY POUNDS STERLING AS $3,000 WOULD THEN BUY IN HULL. STORY, CONFL. LAW, SECTIONS 281, 309.' LODGE V. SPOONER ( MASS., 1857), 8 GRAY 166, WAS AN ACTION UPON A CONTRACT OBLIGATING THE DEFENDANT TO PAY THE SUM OF 1,800 UNITED STATES DOLLARS IN CHINA. THE PLAINTIFF CLAIMED, ALSO, THE EXCHANGE ON CHINA, OR THE COST OF SENDING THE DOLLAR CREDIT TO THE ORIENT. THIS, HOWEVER, THE COURT DENIED, HOLDING THAT BUT $1,800 WAS DUE. IN GROUF V. STATE NATIONAL BANK OF ST. LOUIS ( C.C.A. 8, 1936), 76 F. (2D) 726, A FOREIGN BANK WAS ENTITLED TO A CERTAIN SUM IN DOLLARS, AND IT WAS HELD THAT THE PAYMENT TO THE BANK OF A SUM IN FOREIGN MONEY RESULTING FROM THE SALE OF A SUM IN DOLLARS DISCHARGED THE DEBT PRO TANTO THE FULL NUMBER OF DOLLARS THUS SOLD TO OBTAIN THE FOREIGN MONEY PAID.

MORE NUMEROUS, BUT EQUALLY IN POINT, ARE THE CASES ON THE CONVERSE SITUATION, I.E., ENFORCING AN OBLIGATION PAYABLE IN THIS COUNTRY, BUT IN FOREIGN MONEY. IN HICKS V. GUINNESS, 269 U.S. 71, WHERE GERMAN MARKS WERE PAYABLE HERE, THE COURT ALLOWED THE MARKET VALUE OF THE MARKS IN DOLLARS IN THIS COUNTRY WHEN THE PAYMENT WAS DUE, NOTWITHSTANDING THAT, THE COURT FOUND, THE DEBTOR COULD HAVE PAID ONLY IN DOLLARS--- A CASE QUITE OPPOSITE IN VIEW OF THE PRESENT CONTENTIONS. LADD V. ARKELL (1875), 40 N.Y. SUP. 150, 158, WAS AN ACTION ON AN ACCOUNT STATED IN STERLING BUT PAYABLE IN NEW YORK. SAID THE COURT:

THE CONTRACT WAS MADE, AND THE DEBT WAS INCURRED, IN THIS CITY. IT WAS NOT INCURRED IN ENGLAND, AND IS NOT IN ANY EVENT PAYABLE THERE. AND THE DEBT OR THE JUDGMENT UPON IT, WHEN PAID, WILL NOT BE, OR HAVE TO BE, TRANSMITTED TO LONDON, BUT WILL BE RETAINED HERE ALWAYS. IT IS NOT, THEREFORE, A CASE WHERE, AS WAS SAID IN GRANT V. HEALY (SUPRA), THE CREDITOR IS ENTITLED TO RECEIVE THE FULL SUM NECESSARY TO REPLACE THE MONEY IN THE COUNTRY WHERE IT OUGHT TO HAVE BEEN PAID. AND THE ERROR OF THE WITNESSES, DOUBTLESS, WAS IN THE THEORY THAT THE MONEY WAS NOT IN NEW YORK, BUT IN LONDON, AND HAD TO BE COLLECTED THROUGH OR BY A BILL OF EXCHANGE, OR WHEN COLLECTED HERE, HAD TO BE TRANSMITTED TO LONDON; NEITHER IS THE CASE. THE MONEY REMAINS HERE, PAYING A DEBT DUE UPON A CONTRACT MADE HERE AND NOT ELSEWHERE. SO, IN KANTOR V. ARISTO HOSIERY CO. ( APP. DIV., 1928), 226 N.Y.S. 582, AFFD. 162 N.E. 553, IN SUIT ON A DEBT STATED IN STERLING, IT WAS SAID,"IN THE CONTEMPLATION OF THE PARTIES, THE PROMISEE WHO IS ENTITLED TO RECEIVE POUNDS STERLING ON A CERTAIN DATE IS ENTITLED TO THE PURCHASING POWER OF THE POUND STERLING ON THAT DATE.' THIS APPEARS TO BE THE AMERICAN RULE: SEE, ALSO, SIMONOFF V. GRANITE CITY BANK ( ILL., 1917), 116 N.E. 636; COSMOPOLITAN TRUST CO. V. CIARLA ( MASS., 1921), 131 N.E. 337; MARTIN V. FRANKLIN ( N.Y., 1809), 4 JOHNS. 124; SNEHODA V. FIRST NATIONAL BANK (1924), 115 KAN. 836; HOGUE V. WILLIAMSON ( TEX., 1893), 20 L.R.A. 481; AND ADAMS V. CORD IS ( MASS., 1829), 8 PICK. 260, 267. THE FOLLOWING PECULIARLY PERTINENT LANGUAGE APPEARS IN BOOTH AND CO. V. CANADIAN GOVERNMENT MERCHANT MARINE ( C.C.A. 2, 1933), 63 F. (2D) 240, INVOLVING A CASE IN WHICH A DEBT WAS PAYABLE HERE EITHER IN STERLING, OR IN DOLLARS AT A PREVIOUSLY AGREED RATE, WHICH WAS HIGHER THAN THE RATE ON THE DAY PAYMENT WAS DUE:

THE APPELLANT IS THEREFORE FORCED TO ARGUE THAT, EVEN THOUGH THE LIBELLANT HAD THE ALTERNATIVE OF PAYING IN POUNDS OR IN DOLLARS, IT MUST PAY SUFFICIENT POUNDS AT THEIR DEPRECIATED VALUE TO EQUAL THE DOLLARS PAYABLE HAD IT ELECTED TO PAY IN DOLLARS. THIS THE COURT REJECTED.

IN AT LEAST TWO CASES THE RULE STATED GENERALLY AS ABOVE BY THE COURTS HAS BEEN SPECIFICALLY APPLIED BY THE COURT OF CLAIMS TO THE MATTER OF PAYMENTS TO GOVERNMENT EMPLOYEES ABROAD ( CLAY V. UNITED STATES, QUOTED FROM IN THE PREVIOUS DECISION (19 COMP. GEN. AT P. 657), AND HILL V. UNITED STATES (1926), 62 CT.1CLS. 412). LIKEWISE, AS STATED IN 19 COMP. GEN. 652, THAT IS THE RULE ACTUALLY APPLIED BY THE FORMER COMPTROLLER GENERAL AND THE COMPTROLLERS OF THE TREASURY OVER A PERIOD OF MANY YEARS. SEE, IN ADDITION TO THE DECISIONS PREVIOUSLY CITED, DIGEST OF DECISIONS OF THE SECOND COMPTROLLER, VOL. I, PAR. 452, AS FOLLOWS:

452. * * * AN OFFICER IN A FOREIGN COUNTRY WHO DRAWS BY PERMISSION ON AN AGENT OF THE GOVERNMENT IN STERLING, AND RECEIVES IN PAYMENT THE CURRENCY OF THE COUNTRY WHERE HE MAY BE, CANNOT BE PAID FOR ANY LOSS ON THAT CURRENCY WHEN CONVERTED INTO DOLLARS.--- CASE OF SURGEON GILCHRIST, 1848. ALSO, IT IS THE RULE APPLIED IN THE NAVY, GOVERNING ITS LARGE FORCE OF PERSONNEL STATIONED IN FOREIGN WATERS, WHERE PAYMENTS IN FOREIGN CURRENCY ARE MADE AT THE DISBURSING OFFICER'S COST RATE (THE RATE AT WHICH HE OBTAINS FOREIGN MONEY FOR HIS DOLLAR CHECK OR DRAFT, .E., THE BUYING RATE). IT HAS BEEN ADOPTED FOR THE FOREIGN SERVICE WITH REFERENCE TO PAYMENTS ON WHICH APPRECIATION LOSSES ARE DUE. IN VIEW OF WHAT HAS BEEN SAID, NO REASON APPEARS FOR A DIFFERENT RULE IN FAVOR OF THE PARTICULAR PERSONNEL NOW INVOLVED, AND IN VIEW OF THE RULE OF LAW, SUPRA, CONVERSION AT HIGHER THAN THE CURRENT BUYING RATE IS UNAUTHORIZED. IT MAY BE ADDED THAT THIS VIEW APPEARS TO BE THAT OF SOME, AT LEAST OF THE FOREIGN SERVICE PERSONNEL. SEE DISPATCH NO. 252 DATED AUGUST 5, 1932, FROM THE CONSULATE AT NAIROBI, KENYA COLONY, COPY OF WHICH YOU FURNISHED THIS OFFICE IN CONNECTION WITH PROPOSED CHANGES IN THE ACCOUNT SYSTEM, AND WHICH READS, SO FAR AS HERE MATERIAL, AS FOLLOWS:

THE DEPARTMENT IS NO DOUBT AWARE THAT THE PAYMENT OF SALARIES AT THE BANK'S SELLING RATE WHILE OTHER DISBURSEMENTS ARE MADE AT THE BUYING RATE OR AT THE ACCOUNTING RATE GIVES A DISTORTED PICTURE OF THE ACTUAL EXPENDITURES MADE BY ANY OFFICE. IT HAS BEEN NOTED FROM THE REGULATIONS PRESCRIBED FOR DISTRICT OFFICES THAT PAYMENTS FOR SALARIES AND OTHER PERSONAL SERVICES ARE MADE BY CHECK DRAWN TO THE ORDER OF THE INDIVIDUAL WHILE OTHER EXPENSES OF A NONPERSONAL NATURE ARE MADE IN FOREIGN CURRENCY AND ACCOUNTED FOR AS FOREIGN CURRENCY. IT WOULD SEEM THAT AT THE PRESENT TIME WITH SO MANY CURRENCIES BELOW PAR SOME SIMILAR METHOD MIGHT BE ADOPTED FOR FOREIGN SERVICE POSTS NOT INCLUDED IN DISBURSING DISTRICTS. INASMUCH AS ALL COMMISSIONED OFFICERS ARE POTENTIAL DISBURSING OFFICERS, IT WOULD SEEM FEASIBLE TO PERMIT THEM TO DRAW CHECKS ON THE TREASURER OR DRAFTS ON THE SECRETARY OF STATE FOR PAYMENT OF SALARIES AND OTHER PERSONAL SERVICES AND AN ADDITIONAL CHECK OR DRAFT TO BE CASHED AND THE PROCEEDS USED FOR CONTINGENT AND OTHER MISCELLANEOUS EXPENSES. IT IS BELIEVED THAT THIS METHOD WOULD RESULT IN CERTAIN ECONOMIES, NOT ONLY IN ACTUAL MONEY, BUT IN THE PREPARATION OF ACCOUNTS, THE LATTER BEING EVEN MORE IMPORTANT AT MOST SMALL OFFICES WHERE THE STAFF IS LIMITED, AND WHERE THE PREPARATION OF THE PRESENT ACCOUNTS INVOLVES CONSIDERABLE TIME. THE USE OF CHECKS OR DRAFTS DRAWN TO AN INDIVIDUAL'S ORDER WOULD PERMIT THE PAYMENT OF THE ACTUAL SALARY EARNED WHILE THE USE OF THE BANK'S SELLING RATE GIVES THE INDIVIDUAL A GREATER RATE THAN THAT TO WHICH HE IS ENTITLED ACCORDING TO HIS BASIC SALARY.

WITH RESPECT TO THE MATTER OF REFUNDING OVERPAYMENTS, IT IS NOT CLEAR THAT ANY QUESTION SHOULD ARISE IN THE ORDINARY COURSE OF EVENTS, SINCE THE REGULATIONS (V-55 AND NOTES) NOW PROVIDE A COMPLETE SYSTEM FOR EFFECTING SUCH REFUNDS BY SUBSEQUENT PAY-ROLL DEDUCTIONS, WHERE, OF COURSE, THE DEDUCTIONS ARE FIGURED IN DOLLARS. IT IS NOTED THIS WAS THE PROCEDURE UTILIZED IN EACH OF THE ACCOUNTS CITED ABOVE. IF, HOWEVER, SUCH CASE SHOULD ARISE, IT CAN BE SETTLED ON ITS INDIVIDUAL MERITS, THE PRINCIPLE YOU SUGGEST UNDOUBTEDLY BEING CORRECT THAT THE REFUND MAY NOT BE REQUIRED IN SUM GREATER THAN THE ORIGINAL OVERPAYMENT.

WITH RESPECT TO ALLOWANCES PAYABLE, AND THEIR EXCLUSION FROM THE ALLOTMENT PLAN, IT IS NOT UNDERSTOOD WHY THERE SHOULD ORDINARILY BE ANY QUESTION OF MAKING SUCH PAYMENTS IN DOLLARS, OR OF PAYING ON THEM THE SELLING RATE'S EXTRA PREMIUM TO ENABLE THE PAYEES IN TURN TO PURCHASE DOLLARS, SINCE ALL THE ALLOWANCES (FOR LIVING QUARTERS,"COST OF LIVING," ETC.) ARE GRANTED PRESUMABLY FOR EXPENDITURE ABROAD, TO PAY RENT, LIGHT, HEAT, AND OTHER LOCAL EXPENSES.

IN VIEW OF THE FOREGOING I AM UNABLE TO ACCEDE TO THE CONTINUANCE OF THE USE OF THE SELLING RATE FOR THE CONVERSION OF THE PAYMENTS IN QUESTION, AND, IN THIS CONNECTION, THE OFFICERS SHOULD BE INSTRUCTED TO FORWARD BANKING EVIDENCE OF THE DAILY BUYING RATES FOR NEW YORK SIGHT DRAFTS IN ADDITION TO THE SELLING RATES AS NOW REQUIRED ( REGULATIONS, V-46, NOTE 2). OF COURSE, THE AUDIT OF INCOMING ACCOUNTS OF DISBURSEMENT UPON THE BASIS OF THE BUYING RATE MAY BE DEFERRED FOR WHATEVER TIME MAY BE REQUISITE TO PUBLISH THE NECESSARY INSTRUCTIONS.