A-81857, JANUARY 17, 1940, 19 COMP. GEN. 652

A-81857, JANUARY 17, 1940, 19 COMP. GEN. 652

EXCHANGE - LOSS BY - OFFICERS AND EMPLOYEES IN FOREIGN COUNTRIES - CONVERSION RATE - DOLLAR AND FOREIGN CURRENCY PAYMENTS IN THE COMPUTATION OF CURRENCY APPRECIATION LOSSES OF AN EMPLOYEE OF THE UNITED STATES IN A FOREIGN COUNTRY, THE RATE AT WHICH HIS TREASURY CHECK OR DOLLAR DRAFT DRAWN IN PAYMENT OF SALARY CAN OR COULD BE NEGOTIATED ON THE ACCRUAL DATE IS THE CONVERSION RATE TO BE USED, WHETHER HIS PLACE OF SERVICE IS WITHIN OR WITHOUT AN ESTABLISHED STATE DEPARTMENT FISCAL DISTRICT, AND WHETHER THE PAYMENT IS BY A DISTRICT ACCOUNTING AND DISBURSING OFFICER, A SPECIAL DISBURSING OFFICER OR AGENT, A FOREIGN SERVICE OFFICER, OR OTHERWISE--- SUCH CONVERSION RATE IN BANKING TERMS BEING THE FOREIGN BANK'S "BUYING RATE"--- AND WHERE THE TOTAL SALARY, ALLOWANCES, AND EXCHANGE LOSS DUE, SO COMPUTED IN AMERICAN MONEY, ARE TO BE CONVERTED INTO FOREIGN MONEY FOR PAYMENT IN THE LATTER CURRENCY, THE FOREIGN MONEY PAYABLE SHOULD BE IN SUCH AMOUNT AS THE TOTAL DOLLARS PAYABLE WILL PURCHASE AT THE ,BUYING RATE" AT THE TIME AND PLACE OF PAYMENT, BUT THE "BUYING RATE" TO BE USED MUST BE EXCLUSIVE OF ANY COMMERCIAL FEES CHARGED. 19 COMP. GEN. 144, AND A 81857, SEPTEMBER 6, 1939, AMPLIFIED. THE ADMINISTRATIVE PROPOSAL TO PAY, IN FOREIGN MONEY, SALARIES ETC., "UPON WHICH CURRENCY APPRECIATION LOSSES ARE NOT ALLOWABLE," AT THE BANK'S SELLING RATE FOR SIGHT DRAFTS ON NEW YORK, MAY NOT BE APPROVED, SALARIES, ETC., PAYABLE TO EMPLOYEES OF THE UNITED STATES ABROAD WHICH, WHILE STATED IN DOLLARS, ARE PAID IN THE CURRENCY OF A FOREIGN COUNTRY, ORDINARILY BEING FOR CONVERSION INTO THAT CURRENCY AT THE "BUYING RATE" OF EXCHANGE-- - THE RATE AT WHICH THE FOREIGN BANK WILL BUY DOLLARS FOR FOREIGN CURRENCY --- AT THE TIME AND PLACE OF PAYMENT AND NOT AT THE BANK'S "SELLING RATE.' TERMS "BUYING RATE" AND "SELLING RATE" EXPLAINED. 3 COMP. GEN. 571 AND OTHER DECISIONS AMPLIFIED AND DISCUSSED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF STATE, JANUARY 17, 1940:

I HAVE YOUR LETTER OF DECEMBER 4, 1939, AS FOLLOWS:

REFERENCE IS MADE TO YOUR DECISION OF SEPTEMBER 6, 1939, A-81857, REGARDING THE COMPUTATION AND PAYMENT OF CURRENCY APPRECIATION LOSSES UNDER THE PROVISIONS OF EXECUTIVE ORDER NO. 7972, DATED SEPTEMBER 15, 1938, IN WHICH DECISION PART OF DECISION A-81857 OF AUGUST 3, 1939, WAS CLARIFIED AS FOLLOWS:

"IT IS SETTLED, HOWEVER, THAT OFFICERS AND EMPLOYEES ARE ENTITLED TO PAYMENT IN UNITED STATES DOLLARS ONLY, AND IF THEY BE PAID IN A FOREIGN CURRENCY BY GOVERNMENT DISBURSING OFFICER, ONLY THE AMOUNT OF SUCH CURRENCY ACTUALLY PROCURABLE FOR THE DOLLARS AT THE TIME AND PLACE OF PAYMENT IS AUTHORIZED TO BE PAID IN LIEU OF PAYMENT IN DOLLARS; PROVIDED, HOWEVER, THAT IN NO EVENT MAY THE BANK'S CHARGES FOR CONVERSION BE BORNE BY THE GOVERNMENT.'

COPIES OF DECISIONS A-81857 OF AUGUST 3, 1939, AND SEPTEMBER 6, 1939, WERE FORWARDED TO MR. CECIL M. P. CROSS, DISTRICT ACCOUNTING AND DISBURSING OFFICER, PARIS, FRANCE, AND HE STILL SEEMS TO BE UNCERTAIN AS TO THE CORRECT PROCEDURE FOR THE COMPUTATION AND PAYMENT OF THOSE LOSSES AS EVIDENCED BY TELEGRAM OF NOVEMBER 1 (21), 1939, A COPY OF WHICH IS ENCLOSED FOR YOUR INFORMATION.

IT WOULD APPEAR THAT THE ABOVE-QUOTED RULING SHOULD NOT BE FOR UNIVERSAL APPLICATION UNDER THE PRESENT METHODS OF COMPUTATION AND PAYMENT OF LOSSES SINCE IT IS NOW REQUIRED THAT LOSSES BE COMPUTED BY USE OF THE BANK'S BUYING RATE IN FISCAL DISTRICTS AND BY THE BANK'S SELLING RATE OUTSIDE OF FISCAL DISTRICTS, AND ONLY IN FISCAL DISTRICTS AND AT FIVE OTHER POSTS IN THE FOREIGN SERVICE ARE PAYMENTS MADE IN DOLLARS BY CHECK ON THE TREASURER OF THE UNITED STATES.

DUE TO THE OUTBREAK OF HOSTILITIES IN EUROPE THE ACTIVITIES OF THE DISTRICT ACCOUNTING AND DISBURSING OFFICE IN PARIS HAVE BEEN LIMITED TO DISBURSEMENTS FOR PARIS ONLY. MAIL SERVICE HAS BEEN DISCONTINUED BETWEEN PARIS AND MANY POSTS FORMERLY IN THAT DISTRICT NECESSITATING THE RETURN OF THOSE OFFICES TO THE DRAFT SYSTEM. THEREFORE THOSE OFFICES AS WELL AS ALL OTHER OFFICES OPERATING UNDER THE DRAFT SYSTEM ARE UNABLE TO PAY SALARIES AND ALLOWANCES BY TREASURY CHECK AND DUE TO THE WITHDRAWAL OF UNITED STATES CURRENCY FROM CIRCULATION ABROAD ON ACCOUNT OF EXCHANGE RESTRICTIONS IMPOSED BY FOREIGN GOVERNMENTS AND FOR OTHER REASONS, IT IS SELDOM THAT ANY SUCH OFFICE HAS UNITED STATES CURRENCY WITH WHICH TO PAY SALARIES AND ALLOWANCES. THEREFORE, SUCH PAYMENTS MUST OF NECESSITY BE MADE WITH FOREIGN CURRENCY OBTAINED BY NEGOTIATING DRAFTS DRAWN ON THE SECRETARY OF STATE FOR DOLLARS.

IN FISCAL DISTRICTS UNDER THE PRESENT PRACTICE OF COMPUTING CURRENCY APPRECIATION LOSSES BY USE OF THE BANK'S BUYING RATE FOR DOLLAR EXCHANGE AS OF THE DATE OF ACCRUAL IF PAYMENT IS MADE IN DOLLARS, OR IN FOREIGN CURRENCY AT THE COST OR BANK'S BUYING RATE, THE EMPLOYEE IS NEITHER OVERPAID NOR UNDERPAID, BUT IF PAYMENT IS MADE AT THE BANK'S SELLING RATE, AS IS NOW CUSTOMARY OUTSIDE OF FISCAL DISTRICTS, THE EMPLOYEES IN SUCH DISTRICTS ARE OVERPAID AND SUSPENSIONS RESULT.

OUTSIDE OF FISCAL DISTRICTS BY COMPUTING CURRENCY APPRECIATION LOSSES AS OF THE DATE OF ACCRUAL BY USE OF THE BANK'S SELLING RATE FOR SIGHT DRAFTS ON NEW YORK, I.E., THE RATE AT WHICH THE FOREIGN BANK WILL SELL A DOLLAR DRAFT ON NEW YORK AND ACCEPT PAYMENT THEREFOR IN THE CURRENCY OF THE FOREIGN COUNTRY, AND BY PAYING THE SALARIES AND EXCHANGE LOSSES AT THE BANK'S SELLING RATE ON THE DATE OF ACCRUAL THE CORRECT AMOUNTS ARE PAID, BUT IF PAYMENT IS MADE IN UNITED STATES CURRENCY OR BY INDIVIDUAL DRAFT AS IS SOMETIMES NECESSARY THE PAYEES ARE USUALLY UNDERPAID IN THAT THEY CANNOT EXCHANGE THE DOLLARS SO PAID FOR FOREIGN CURRENCY IN AN AMOUNT EQUIVALENT TO THAT WHICH IT IS CONTEMPLATED THEY SHOULD RECEIVE AS SET FORTH IN PARAGRAPH 5 OF THE APPLICABLE EXECUTIVE ORDERS. ALSO IN CASE PAYMENT IS NOT EFFECTED AS OF THE DATE OF ACCRUAL AND PAYMENT IS MADE AT THE BANK'S SELLING RATE PREVAILING ON THE DATE OF PAYMENT AS IS NOW CUSTOMARY EITHER AN OVERPAYMENT OR AN UNDERPAYMENT USUALLY RESULTS.

UNDER THE PRESENT PLAN IF THE BUYING RATE SHOULD BE USED FOR THE COMPUTATION OF LOSS ON SALARIES AND ALLOWANCES WHICH ARE PAID IN DOLLARS OUTSIDE OF FISCAL DISTRICTS, TO ENABLE THE PERSONS SO PAID TO RECEIVE THE AMOUNTS TO WHICH THEY ARE JUSTLY ENTITLED IT WOULD NECESSITATE THE USE OF BOTH THE BUYING AND SELLING RATES FOR COMPUTATIONS OF CURRENCY APPRECIATION LOSSES ON THE SAME PAY ROLL, I.E., THE LOSSES WHICH WOULD BE PAID IN DOLLARS WOULD BE COMPUTED BY USE OF THE BUYING RATE AND THOSE PAID ENTIRELY IN FOREIGN CURRENCY WOULD BE COMPUTED BY USE OF THE SELLING RATE, THUS MAKING A MOST UNDESIRABLE LACK OF UNIFORMITY.

IN THE INTEREST OF ESTABLISHING A DESIRABLE AND UNIFORM PRACTICE FOR THE PROPER COMPUTATION AND PAYMENT OF CURRENCY APPRECIATION LOSSES THE DEPARTMENT SUBMITS FOR YOUR CONSIDERATION AND APPROVAL THE FOLLOWING PLAN:

"ALL COMPUTATIONS OF FOREIGN SERVICE PAY ADJUSTMENTS ON ACCOUNT OF APPRECIATION OF FOREIGN CURRENCIES SHALL BE MADE BY TAKING THE DIFFERENCE BETWEEN THE "COST RATE" (THE RATE AT WHICH THE FOREIGN BANK WILL BUY DOLLARS FOR FOREIGN CURRENCY) PREVAILING ON THE DATE OF ACCRUAL OF THE SALARY OR ALLOWANCE AND THE BASIC RATE FIXED BY EXECUTIVE ORDERS, AND AFTER FIXING SUCH DIFFERENCE UPON A PERCENTAGE BASIS THE LOSS SHALL BE ASCERTAINED BY MULTIPLYING THE EMPLOYEE'S NET PAY OR ALLOWANCE BY THE PERCENTAGE SO FIXED, WHICH LOSS SHALL THEN BE ADDED TO THE BASIC PAY, THE TOTAL THEREOF BEING THE TOTAL AMOUNT OF DOLLARS TO WHICH THE PAYEE SHALL BE ENTITLED AND SUCH TOTAL AMOUNT SHALL BE PAYABLE IN DOLLARS, OR IF DOLLARS ARE NOT AVAILABLE AND PAYMENT IS MADE IN FOREIGN CURRENCY, PAYMENT SHALL BE MADE IN SUCH AMOUNT OF THE FOREIGN CURRENCY AS THE TOTAL DOLLARS PAYABLE WILL PURCHASE AT THE "COST RATE" (THE RATE AT WHICH THE FOREIGN BANK WILL BUY DOLLARS FOR FOREIGN CURRENCY) PREVAILING AT THE TIME AND PLACE OF PAYMENT.'

IT IS BELIEVED THAT THIS PROPOSED PLAN FULLY COMPLIES WITH DECISIONS 16 COMP. GEN. 664 OF JANUARY 19, 1937, A-81857 OF AUGUST 3, 1939, AND SEPTEMBER 6, 1939.

FURTHERMORE, IT IS PROPOSED THAT ALL SALARIES, ALLOWANCES, OR OTHER DOLLAR OBLIGATIONS UPON WHICH CURRENCY APPRECIATION LOSSES ARE NOT ALLOWABLE SHALL CONTINUE TO BE PAYABLE AT THE BANK'S SELLING RATE FOR SIGHT DRAFTS ON NEW YORK AS PROVIDED IN 3 COMP. GEN. 571 AND OTHER DECISIONS.

YOUR EARLY DECISION ON THE PROPOSED PLAN WILL BE APPRECIATED IN AS MUCH AS IT IS FELT THAT THE QUESTIONS ADVANCED BY MR. CROSS CANNOT BE ANSWERED SPECIFICALLY NOR CAN PROPER INSTRUCTIONS BE ISSUED UNTIL A MORE UNIFORM AND PRACTICABLE PROCEDURE HAS BEEN ESTABLISHED.

THE TELEGRAM REFERRED TO IN YOUR LETTER READS AS FOLLOWS:

REFERENCE IS MADE TO FORMULA FOR DETERMINATION OF PERCENTAGE OF LOSS PRINTED UPPER RIGHT-HAND SIDE OF NEW FORM 275. NUMEROUS OFFICES FORMERLY IN THIS DISTRICT ARE REQUESTING ADVICE AS TO WHETHER BANKS BUYING OR SELLING RATE SHOULD BE USED--- PROVISION HAVING BEEN MADE FOR USE OF EITHER RATE IN THE FIRST ITEM OF THE FORMULA. THE QUESTION ALSO DIRECTLY CONCERNS THIS OFFICE IN CONNECTION WITH PAYMENTS FOR OTHER DEPARTMENTS THROUGHOUT EUROPE. IN PRESENTING THE FOLLOWING QUESTIONS THIS OFFICE IS NOT UNMINDFUL THAT IN COMPUTING LOSS ON A GIVEN SUM AT THE BUYING RATE OF SAY MARKS 2 DECIMAL 481 AND CONVERTING THE DOLLAR PRODUCT INTO MARKS AT THE SAME RATE THE DOLLAR COST AND FOREIGN CURRENCY PRODUCTS WOULD BE IDENTICAL TO THOSE OBTAINABLE BY USING THE SELLING RATE OF 2 DECIMAL 491 FOR BOTH OPERATIONS ALSO THAT THE LOSS BY EXCHANGE CHARGEABLE TO CONTINGENT EXPENSES OF SIXTY EIGHT CENTS PER DOLLARS 100 WHICH RESULTS FROM THE USE OF THE SECOND METHOD IS ABSORBED AND BECOMES A PART OF THE CHARGE AGAINST THE CURRENCY LOSS APPROPRIATION WHEN THE FIRST METHOD IS APPLIED. IN ORDER TO AVOID A REPETITION OF THE UNFORTUNATE CIRCUMSTANCES WHICH LEAD UP TO THE COMPTROLLER'S DECISION OF AUGUST 3, 1939, A-81857, MODIFIED BY HIS LETTER OF SEPTEMBER 6, 1939, THE DEPARTMENT'S TELEGRAPHIC ANSWERS TO THE FOLLOWING QUESTIONS WILL BE APPRECIATED.

ONE. IS THE PROCEDURE SET FORTH IN SECTION V-46, NOTE 1 SUBPARAGRAPH (B) FOR PAYMENTS OF CURRENCY LOSS AT THE BANKS SELLING RATE WHEN DOLLAR CURRENCY IS NOT AVAILABLE MODIFIED OR LIMITED BY THE COMPTROLLER'S DECISION A-81857.

TWO. IS THE PERCENTAGE OF LOSS FOR DETERMINATION BY USE OF THE BANKS BUYING RATE OR SELLING RATE WHEN PAYMENT OF LOSS IS MADE IN UNITED STATES CURRENCY OR BY TREASURY CHECKS OR DRAFTS.

THREE. IS THE PERCENTAGE OF LOSS FOR DETERMINATION BY USE OF THE BANKS BUYING OR SELLING RATE WHEN UNITED STATES CURRENCY IS NOT AVAILABLE.

IT IS NOT PERCEIVED HOW THE PLACE OF SERVICE OF AN EMPLOYEE OF THE UNITED STATES IN A FOREIGN COUNTRY--- THAT IS WHETHER RENDERED WITHIN OR WITHOUT AN ESTABLISHED FISCAL DISTRICT--- CAN AFFECT THE AMOUNT OF SALARY OR CURRENCY APPRECIATION LOSS TO WHICH HE IS ENTITLED. IN EITHER CASE, IN THE COMPUTATION OF CURRENCY LOSSES, THE RATE AT WHICH HIS TREASURY CHECK OR DOLLAR DRAFT DRAWN IN PAYMENT OF SALARY CAN OR COULD BE NEGOTIATED ON THE ACCRUAL DATE IS THE CONVERSION RATE TO BE USED, AND THIS SHOULD APPLY WHETHER THE PAYMENT IS MADE BY A DISTRICT ACCOUNTING AND DISBURSING OFFICER, BY A SPECIAL DISBURSING OFFICER OR AGENT, BY A FOREIGN SERVICE OFFICER, BY A CLAIMS SETTLEMENT, OR OTHERWISE. CF. FIRST DISTRICT ACCOUNTING AND DISBURSING OFFICE CIRCULAR NO. 58 CONSIDERED IN A-44014, AUGUST 26, 1937. THE BANKING TERM FOR THE CONVERSION RATE ORDINARILY IS "BUYING RATE," AND SUCH RATE APPEARS TO HAVE BEEN CORRECTLY INCORPORATED IN THE PROPOSED PLAN.

THE PLAN FURTHER PROPOSES THE USE OF THAT RATE AS THE CONVERSION FACTOR WHERE THE TOTAL SALARY, ALLOWANCES, AND EXCHANGE LOSS, FIGURED IN AMERICAN MONEY, ARE TO BE CONVERTED INTO FOREIGN MONEY FOR PAYMENT IN THE LATTER CURRENCY. OF COURSE, WHEREVER THE LATTER COMPUTATION IS MADE AND PAYMENT IS EFFECTED ON THE DAY THE SALARY ACCRUES, OR BEFORE THE RATE HAS CHANGED, IT WOULD BE OF NO PARTICULAR CONSEQUENCE TO THE EMPLOYEE WHAT RATES ARE USED BECAUSE WHEN THE CONVERSION AND RECONVERSION RATES ARE THE SAME, THE TOTAL SUM PAYABLE IN FOREIGN MONEY WILL IN ANY CASE NECESSARILY BE EQUAL TO THE PRODUCT OF THE NUMBER OF DOLLARS DUE AND THE VALUE OF THE DOLLAR IN FOREIGN MONEY AT THE BASIC RATE PRESCRIBED BY EXECUTIVE ORDER.

WHEN PAYMENT IS DELAYED FOR ANY REASON, USE OF THE BUYING RATE (AS ABOVE DEFINED) IS LIKEWISE CORRECT. FOR, WHERE THE EMPLOYEE IS DUE A FIXED SUM IN DOLLARS, (FOR SALARY AND/OR APPRECIATION LOSSES) AND HE REQUESTS OR ACCEPTS PAYMENT IN A FOREIGN CURRENCY, THE PROPER RULE IS, AS STATED IN THE CITED DECISION OF SEPTEMBER 6, 1939, THAT "* * * IF THE DISBURSING OFFICER SHOULD BE IN POSSESSION OF SUCH FOREIGN CURRENCY HE MIGHT UTILIZE IT TO MAKE PAYMENT, GIVING THE EMPLOYEE ONLY SUCH AMOUNT IN FOREIGN CURRENCY AS COULD BE PROCURED LOCALLY FOR THE AMOUNT OF DOLLARS OTHERWISE DUE THE EMPLOYEE * * *.' THE RESULT IS TO GIVE THE EMPLOYEE, WHEREVER LOCATED, EITHER AN AMERICAN DOLLAR DRAFT OR CHECK FOR THE AMOUNT DUE HIM OR ITS FULL AND EXACT MARKET EQUIVALENT IN LOCAL CURRENCY AT THE TIME AND PLACE OF PAYMENT, THUS DISCHARGING THE GOVERNMENT'S OBLIGATION IN THE MATTER. A-2002, MAY 24, 1924.

THE PROPOSED "PLAN" IS ACCORDINGLY APPROVED, SAVING, HOWEVER, TWO SUGGESTED CHANGES, TO WIT, (1) TO AVOID UNCERTAINTY AND TO CONFORM WITH THE BANKING TERM COMMONLY APPEARING IN THE BANKER'S CERTIFICATES OF RATES, CHANGE THE WORDS "COST RATE" TO "BUYING RATE," AND (2) FOR THE REASONS STATED IN THE DECISION OF SEPTEMBER 6, THE FOLLOWING MAY BE APPENDED TO THE STATEMENT PREPARED: ,THE BUYING RATES MUST BE THE BANKERS' QUOTATIONS EXCLUSIVE OF ANY COMMERCIAL FEES CHARGED FOR CONVERTING THE CHECKS.'

YOUR LETTER PRESENTS THE FURTHER PLAN TO PAY IN FOREIGN MONEY SALARIES, ETC., "UPON WHICH CURRENCY LOSSES ARE NOT ALLOWABLE" AT THE BANK'S SELLING RATE FOR SIGHT DRAFTS ON NEW YORK "AS PROVIDED IN 3 COMP. GEN. 571 AND OTHER DECISIONS.' IT IS ASSUMED THIS REFERS TO SALARIES, ETC., EARNED WITHIN THE NUMEROUS FOREIGN COUNTRIES WHERE DUE TO CURRENT DEPRECIATION OF THE LOCAL CURRENCIES BELOW THE BASIC RATES FIXED BY EXECUTIVE ORDER, NO APPRECIATION LOSSES ARE INCURRED OR PAYABLE. NO REASON IS SUGGESTED, NOR DOES THERE APPEAR ANY, FOR USING A DIFFERENT RATE IN THAT SITUATION. THE SELLING RATE--- THE RATE AT WHICH A FOREIGN BANK, IN EXCHANGE FOR THE CURRENCY OF ITS COUNTRY, WILL DELIVER TO ITS CUSTOMER A DOLLAR DRAFT PAYABLE IN THIS COUNTRY--- GENERALLY EXCEEDS THE BUYING RATE BY ABOUT 1 TO 2 PERCENT IN UNITS OF FOREIGN MONEY PER DOLLAR, THE DIFFERENCE BEING UNDERSTOOD AS COMPRISING THE BANK'S CHARGES TO COVER EXPENSES AND RISK OF LOSS. IT IS OBVIOUS THE CRITERION SET FORTH IN YOUR LETTER, I.E., WHETHER AN APPRECIATION LOSS IS ALLOWABLE UPON THE SALARY AND OTHER PAYMENTS DUE, HAS NO LOGICAL RELATION TO THE RESULT--- THE USE OF DIFFERENT RATES IN PAYING IN FOREIGN CURRENCY AN OBLIGATION STATED IN DOLLARS. IN FACT, THE ANOMALY IS DISTINCTLY POSSIBLE, WHEREVER THE CURRENT RATES CLOSELY APPROACH THE BASIC RATES, THAT A LOSS MIGHT BE DUE AT THE ONE RATE BUT NOT AT THE OTHER, WITH RESULTING CONFUSION AND INEQUITIES. CONSIDERED UPON ITS MERITS, THE PAYMENT OF DOLLAR OBLIGATIONS TO EMPLOYEES ABROAD IN ANY SUM OF FOREIGN CURRENCY HIGHER THAN THE MARKET VALUE OF THE DOLLAR CHECK OR DRAFT, I.E., AT THE "BUYING RATE," APPEARS UNTENABLE AND IS NOT AUTHORIZED. THE DECISION CITED, 3 COMP. GEN. 571, DOES NOT MENTION "SELLING RATE; " NEITHER DOES IT CONSIDER THE DIFFERENCE BETWEEN THE TWO RATES (BUYING AND SELLING). WHILE CERTAIN LANGUAGE THEREIN REASONABLY SUGGESTS THE SELLING RATE, A CONSIDERATION OF WHAT WAS HELD THEREIN SHOWS OTHERWISE, SINCE THE PAYMENT DISAPPROVED WAS OF ANY SUM IN EXCESS OF THE FOREIGN MONEY RECEIVED UPON CASHING THE DOLLAR CHECK, AND IN FACT, IN AN EARLIER DECISION IN THE SAME CASE, A 896, DECEMBER 3, 1923, IT WAS HELD THAT THE PAYMENT, IF NOT BY AMERICAN CHECK SHOULD BE "IN THE FOREIGN MONEY OF THE SUM FOR WHICH SUCH CHECK CAN BE NEGOTIATED AT THE CURRENT RATE OF EXCHANGE ON THE DAY OF PAYMENT.' THE TRUE RULE WAS STATED IN DECISION OF JUNE 19, 1930, A 31044, TO WIT:

* * * IT IS WELL SETTLED THAT SUCH DOLLAR OBLIGATIONS ALTHOUGH PAID IN A FOREIGN COUNTRY MAY BE DISCHARGED BY PAYMENT IN DOLLARS, AND THAT IF THEY ARE PAID IN A FOREIGN CURRENCY BY A GOVERNMENT DISBURSING OFFICER, FOR THE CONVENIENCE OF THE PAYEE, ONLY THE AMOUNT OF SUCH FOREIGN CURRENCY ACTUALLY PROCURABLE FOR THE DOLLARS AT THE TIME AND PLACE OF PAYMENT IS AUTHORIZED TO BE PAID IN LIEU OF PAYMENT IN DOLLARS. SEC. 3 COMP. GEN. 571, 574; HILL V. UNITED STATES, 62 CT. CLS. 412. * * * VARIOUSLY STATED, THAT IS THE RULE ACTUALLY APPLIED IN DECISIONS OF MANY YEARS. SEE 4 COMP. DEC. 405 (1898); 22 ID. 341, 345 (1916); 3 MS COMP. GEN. 1551, 1555; 25 ID. 566; 2 COMP. GEN. 511; 16 ID. 664, 665; A-1181, SEPTEMBER 30, 1924; A- 2002, MAY 24, 1924; A 95007, AUGUST 4, 1938. SIMILARLY, IN CLAY V. UNITED STATES, 8 CT. CLS. 209, IT WAS HELD:

IT IS CLEAR THAT IF THE GOVERNMENT RESORT TO THE COMMERCIAL USAGE OF PAYING A MINISTER ABROAD BY MEANS OF BILLS OF EXCHANGE DRAWN ON ITS BANKERS IN LONDON TO BE NEGOTIATED BY HIM AT HIS STATION, THE FOREIGN MONEY IN WHICH HE IS PAID SHOULD BE RECKONED AT ITS CURRENT COMMERCIAL VALUE AT THE TIME AND PLACE OF PAYMENT, IN THE COIN OF THE UNITED STATES. HE IS ENTITLED TO RECEIVE HIS SALARY IN THE MONEY OF THE UNITED STATES, OR IN ITS ACTUAL MARKET EQUIVALENT. * * *

THERE THUS APPEARS NO PROPER BASIS FOR PAYMENT TO AN OFFICER OR EMPLOYEE OF THE SLIGHTLY LARGER SUM OF FOREIGN CURRENCY REQUIRED TO RECONVERT SUCH MONEY RECEIVED INTO AMERICAN MONEY OR A NEW YORK DRAFT. THE PAYMENT IN FOREIGN MONEY IS ORDINARILY FOR THE CONVENIENCE OF THE EMPLOYEE, AND SHOULD NOT BE OF ANY SUM GREATER THAN HE COULD REALIZE BY CASHING HIS OWN DOLLAR CHECK OR DRAFT AT THE SAME TIME AND PLACE. THERE MAY BE AN ISOLATED INSTANCE WHERE AN EMPLOYEE REQUIRES AND DEMANDS DOLLARS, WHICH CANNOT BE SUPPLIED EITHER BY CASHING A DRAFT FROM AMERICAN FUNDS RECEIVED FOR FEES, OR BY A TREASURY CHECK OR INDIVIDUAL DRAFT ( FOREIGN SERVICE REGULATIONS SECTION V-54 (C) AND NOTE 4), OR BY A REGULAR ALLOTMENT UNDER THE ACT OF MAY 14, 1937, 50 STAT. 166 ( REGULATIONS, V-42 (F) (, AND IT IS POSSIBLE THE USE OF THE SELLING RATE IN SUCH CASE MIGHT BE FOUND JUSTIFIED. BUT, AS A RULE, WHERE DOLLARS ARE IN FACT AVAILABLE BY ONE OF THE PAYMENT METHODS JUST SUGGESTED, THERE IS NO PROPER BASIS FOR PAYING IN FOREIGN MONEY THE PREMIUM WHICH WOULD NECESSARILY BE PAID BY AN EMPLOYEE FOR THE RECONVERSION OF SUCH FUNDS TO AMERICAN DOLLARS--- THERE APPEARING NO USUAL NEED FOR SUCH TRANSACTION TO TAKE PLACE. THEREFORE, THE FURTHER SUGGESTED PROPOSAL IS NOT APPROVED. INSTEAD, THE BUYING RATE (AS ABOVE REFERRED TO) SHOULD BE USED WHERE DOLLAR OBLIGATIONS ARE PAID IN FOREIGN CURRENCY, WHETHER AN APPRECIATION LOSS IS OR IS NOT PAYABLE.

THERE HAVE BEEN, AS YOU STATE, CERTAIN DECISIONS USING THE WORDS "SELLING RATE" INSTEAD OF ,BUYING RATE.' UPON EXAMINATION, IT APPEARS THAT IN THOSE CASES THE DIFFERENCE IN THE TWO RATES WAS NOT THE QUESTION PRESENTED OR CONSIDERED, OR THE SELLING RATE MAY HAVE BEEN SPECIFIED BY CONTRACT, OR THE TERM WAS ACTUALLY INTENDED AS THE RATE AT WHICH THE AMERICAN CHECK WAS SOLD, NOW DEFINED AS THE BUYING RATE, OR THERE WAS CONTEMPLATED A SITUATION WHERE DOLLARS WERE SPECIALLY REQUIRED AND WERE ACTUALLY IN NO MANNER AVAILABLE FOR PAYMENT. IN THESE CIRCUMSTANCES, ACCOUNTS WHEREIN THE SELLING RATE WAS USED FOR SUCH PAYMENTS DURING PERIODS PRIOR TO JANUARY 1, 1940, AND WHICH HAVE NOT HITHERTO BEEN SUBJECT TO QUESTION FOR THAT REASON, WILL NOT BE QUESTIONED FOR THAT DIFFERENCE IN THE AUDIT OF SAID ACCOUNTS.