A-39909, DECEMBER 22, 1931, 11 COMP. GEN. 252

A-39909: Dec 22, 1931

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THE EMPLOYMENT OF A BANKING EXPERT BY CONTRACT FOR SUCH PURPOSE IS NOT AUTHORIZED. AS FOLLOWS: WHEN THE VIRGIN ISLANDS WERE TAKEN OVER BY THE UNITED STATES IN 1917 CONGRESS FORMALLY CONTINUED A CHARTER THAT HAD BEEN GRANTED BY THE DANISH GOVERNMENT TO THE NATIONAL BANK OF THE DANISH WEST INDIES. THE TERM OF THAT CHARTER WILL EXPIRE IN JUNE. THIS BANK IS AUTHORIZED TO ISSUE LOCAL CURRENCY. AS A PART OF ITS PLAN TO CLOSE ITS BUSINESS IN 1934 THE BANK HAS FOR MORE THAN A YEAR BEEN CURTAILING ITS BUSINESS IN ALL DIRECTIONS SO THAT AT PRESENT ITS LOANS ARE RESTRICTED TO SHORT-TERM TRANSACTIONS THAT ARE CERTAIN OF PAYMENT IN FULL WHEN DUE. IN ORDER TO FACILITATE THE WORK OF REHABILITATION WHICH CONGRESS AUTHORIZED LAST YEAR IT IS VERY ESSENTIAL THAT BETTER BANKING FACILITIES BE ESTABLISHED FOR THE ISLANDS AT THE EARLIEST POSSIBLE MOMENT.

A-39909, DECEMBER 22, 1931, 11 COMP. GEN. 252

PERSONAL SERVICES - BANKING EXPERTS THE INVESTIGATION OF THE BANKING CONDITIONS IN THE VIRGIN ISLANDS AND REPORTING THEREON MAY NOT PROPERLY BE CONSIDERED ON ANY OTHER BASIS THAN PERSONAL SERVICE, TO BE PERFORMED BY REGULAR EMPLOYEES OF THE GOVERNMENT ENGAGED UNDER CIVIL SERVICE RULES AND REGULATIONS AT RATES OF COMPENSATION PROVIDED BY THE CLASSIFICATION LAWS, AND THE EMPLOYMENT OF A BANKING EXPERT BY CONTRACT FOR SUCH PURPOSE IS NOT AUTHORIZED.

COMPTROLLER GENERAL MCCARL TO THE CHIEF OF THE BUREAU OF EFFICIENCY, DECEMBER 22, 1931:

THERE HAS BEEN RECEIVED YOUR LETTER OF DECEMBER 11, 1931, AS FOLLOWS:

WHEN THE VIRGIN ISLANDS WERE TAKEN OVER BY THE UNITED STATES IN 1917 CONGRESS FORMALLY CONTINUED A CHARTER THAT HAD BEEN GRANTED BY THE DANISH GOVERNMENT TO THE NATIONAL BANK OF THE DANISH WEST INDIES. THE TERM OF THAT CHARTER WILL EXPIRE IN JUNE, 1934. THIS BANK IS AUTHORIZED TO ISSUE LOCAL CURRENCY, TO CONDUCT AN ORDINARY COMMERCIAL BANKING BUSINESS, AND TO MAKE LONG-TIME FARM LOANS.

THIS BANK HAS GIVEN NOTICE THAT IT DOES NOT DESIRE TO CONTINUE OPERATIONS IN THE VIRGIN ISLANDS AFTER THE EXPIRATION OF ITS CHARTER AND THAT IT HAS NO OBJECTION TO THE ESTABLISHMENT OF AN AMERICAN BANK NOW AT ANY TIME IF THAT SEEMS DESIRABLE.

AS A PART OF ITS PLAN TO CLOSE ITS BUSINESS IN 1934 THE BANK HAS FOR MORE THAN A YEAR BEEN CURTAILING ITS BUSINESS IN ALL DIRECTIONS SO THAT AT PRESENT ITS LOANS ARE RESTRICTED TO SHORT-TERM TRANSACTIONS THAT ARE CERTAIN OF PAYMENT IN FULL WHEN DUE. FOR EVEN A LONGER PERIOD IT HAS DISCONTINUED MAKING LONG-TERM LOANS TO PLANTERS AND CATTLE RAISERS.

IN ORDER TO FACILITATE THE WORK OF REHABILITATION WHICH CONGRESS AUTHORIZED LAST YEAR IT IS VERY ESSENTIAL THAT BETTER BANKING FACILITIES BE ESTABLISHED FOR THE ISLANDS AT THE EARLIEST POSSIBLE MOMENT. THIS SUBJECT HAS BEEN DISCUSSED AT LENGTH WITH THE INTERIOR DEPARTMENT AND WITH THE TREASURY DEPARTMENT AND IT IS AGREED BY ALL CONCERNED THAT THE FIRST STEP TO BE TAKEN SHOULD BE TO HAVE A THOROUGH STUDY OF THE PROBLEM MADE BY A BANKER OF SUCH STANDING THAT HIS RECOMMENDATIONS WILL RECEIVE RESPECTFUL CONSIDERATION BY BANKERS WHO MIGHT BE INTERESTED IN ESTABLISHING A BRANCH IN THE VIRGIN ISLANDS OR, IF IT IS NOT FOUND POSSIBLE TO INTEREST ANY BANKER IN ESTABLISHING SUCH A BRANCH, THEN THE COMMITTEES OF CONGRESS SHOULD BE CALLED UPON TO CONSIDER LEGISLATION TO RELIEVE THE SITUATION. AM INFORMED BY HON. OGDEN. L. MILLS, UNITED SECRETARY OF THE TREASURY, AND HON. JOHN W. POLE, COMPTROLLER OF THE CURRENCY, THAT THE FUNDS AVAILABLE TO THE TREASURY DEPARTMENT FOR BANK EXAMINATIONS CAN NOT BE USED FOR INVESTIGATIONS IN THE VIRGIN ISLANDS AND THEREFORE CAN NOT BE DRAWN UPON TO MAKE THIS STUDY, BUT THAT THEY WILL BE GLAD TO SELECT A BANKER TO MAKE THE INVESTIGATION IF WE CAN PAY FOR HIS SERVICES AND EXPENSES. WOULD BE AUTHORIZED TO DO THIS WITHIN THE SALARY LIMITS OF THE CLASSIFICATION ACT BUT WE ARE INFORMED BY THESE GENTLEMEN THAT A COMPETENT BANKER CAN NOT BE OBTAINED AT AN ANNUAL SALARY RATE WITHIN THOSE LIMITS.

I KNOW OF NO LEGAL OBJECTION IN A CASE OF THIS KIND TO OUR ENTERING INTO A CONTRACT FOR THE PREPARATION OF SUCH A REPORT, THE AMOUNT OF THE CONTRACT TO BE FIXED AT A PRICE WHICH, IN THE OPINION OF THIS OFFICE AND THE TREASURY DEPARTMENT, IS REASONABLE. SUCH A CONTRACT WOULD PROVIDE THAT THE PERSON EMPLOYED WOULD RECEIVE, IN ADDITION TO THE CONTRACT PRICE, ACTUAL EXPENSES OF TRAVEL, NOT INCLUDING SUBSISTENCE, FROM THE UNITED STATES TO THE VIRGIN ISLANDS AND RETURN, ALLOWABLE UNDER THE GOVERNMENT REGULATIONS. AS THIS IS RATHER AN UNUSUAL SITUATION, HOWEVER, I AM REQUESTING YOUR APPROVAL OF THIS PLAN BEFORE REQUESTING THE TREASURY DEPARTMENT TO SELECT A BANKER AND ENTERING INTO A CONTRACT.

THE PROPOSAL TO USE THE APPROPRIATION OF THE BUREAU OF EFFICIENCY FOR THIS PURPOSE IS BASED UPON THE JOINT REQUEST MADE UPON THIS BUREAU BY THE HOUSE COMMITTEE ON APPROPRIATIONS AND THE SENATE AND THE HOUSE COMMITTEES ON INSULAR AFFAIRS TO MAKE AN INVESTIGATION OF THE SOCIAL, FINANCIAL, AND ECONOMIC CONDITIONS IN THE VIRGIN ISLANDS. THE BANKING PHASE OF THIS STUDY IS ONE OF THE MOST IMPORTANT AND THE PROPOSAL TO UTILIZE THE EXPERT ASSISTANCE OF THE BRANCH OF THE GOVERNMENT WHICH SPECIALIZES IN BANKING MATTERS IS CONSISTENT WITH THE USUAL POLICY OF THIS BUREAU IN ALL ITS INVESTIGATIONS. THE ONLY UNUSUAL FEATURE WHICH THIS PLAN PRESENTS IS THE NECESSITY FOR GOING OUTSIDE OF THE GOVERNMENT SERVICE TO GET THE NECESSARY EXPERT ASSISTANCE.

IN VIEW OF THE EXTREME URGENCY OF THIS MATTER AN ANSWER AT YOUR EARLIEST CONVENIENCE WILL BE APPRECIATED.

THE APPROPRIATION FOR YOUR BUREAU, FISCAL YEAR 1932, AS MADE BY THE ACT OF FEBRUARY 23, 1931, 46 STAT. 1358, PROPOSED TO BE CHARGED FOR THE EXPENSES INCIDENT TO THE EMPLOYMENT OF THE BANKING EXPERT, AS SUGGESTED IN YOUR LETTER, PROVIDES FOR THE EMPLOYMENT OF PERSONAL SERVICES IN THE DISTRICT OF COLUMBIA AS DISTINGUISHED FROM AN APPROPRIATION FOR FIELD SERVICE. THEREFORE, SUCH FINANCIAL OR BANKING EXPERT AS MAY BE EMPLOYED IN CONNECTION WITH THIS MATTER, OF NECESSITY, MUST BE CONSIDERED AS A PART OF THE FORCE OF YOUR BUREAU IN WASHINGTON EVEN THOUGH THE WORK, OR AT LEAST THE MAJOR PART THEREOF, IS TO BE PERFORMED IN THE VIRGIN ISLANDS.

AS TO THE SUGGESTION IN YOUR LETTER THAT A CONTRACT MIGHT BE ENTERED INTO FOR THE FURNISHING OF REPORT IN THIS CASE, APPARENTLY TO PROVIDE FOR PAYMENT OF A LUMP SUM THEREFOR, IT MUST BE STATED THERE APPEARS NO AUTHORITY OF LAW FOR SUCH A PROCEDURE. WHILE THERE IS AUTHORITY, IN PROPER CASES, FOR THE PURCHASE OF MANUSCRIPTS ALREADY PREPARED AND IN EXISTENCE, TO BE PAID FOR UNDER AN APPROPRIATION AVAILABLE FOR SUCH A PURCHASE, THE CONTRACTING FOR THE PREPARATION OF A MANUSCRIPT OR OF A REPORT, SUCH AS IS CONTEMPLATED IN THE PRESENT CASE INVOLVES PERSONAL SERVICES WHICH ARE TO BE OBTAINED AND PAID FOR AS SUCH IN ACCORDANCE WITH THE LAWS APPLICABLE TO THE EMPLOYMENT OF PERSONAL SERVICES, REGARDLESS OF WHETHER THE SERVICES ARE TO BE ENGAGED BY AN APPOINTMENT OR BY A CONTRACT OF EMPLOYMENT. 4 COMP. GEN. 781. THIS IS PARTICULARLY APPLICABLE IN THE CASE PRESENTED BY YOUR SUBMISSION FOR THE REASON THAT THE APPROPRIATION OF YOUR BUREAU IS MAINLY AVAILABLE FOR PERSONAL SERVICES RATHER THAN FOR PURCHASES.

SECTION 2 OF THE CLASSIFICATION ACT OF 1923, 42 STAT. 1488, AS AMENDED, PROVIDES THAT THE TERM ,EMPLOYEE" MEANS "ANY PERSON TEMPORARILY OR PERMANENTLY IN A POSITION" AND THE TERM "POSITION" IS DEFINED AS "A SPECIFIC CIVILIAN OFFICE OR EMPLOYMENT WHETHER OCCUPIED OR VACANT IN A DEPARTMENT OTHER THAN THE FOLLOWING.' THE EXCEPTIONS THEREIN MENTIONED ARE NOT HERE INVOLVED, BUT IT IS TO BE NOTED THAT NO EXCEPTION IS MADE AS TO EXPERTS IN ANY PARTICULAR LINE OF BUSINESS OR ENDEAVOR, AND, THEREFORE, THE INVESTIGATION OF THE BANKING CONDITIONS IN THE VIRGIN ISLANDS AND THE REPORTING THEREON MAY NOT PROPERLY BE CONSIDERED ON ANY OTHER BASIS THAN A PERSONAL SERVICE TO BE PERFORMED BY REGULAR GOVERNMENT EMPLOYEES CLASSIFIED UNDER THE CLASSIFICATION LAWS OR BY THE EMPLOYMENT OF SUCH TEMPORARY PERSONNEL AS MAY BE NECESSARY AT RATES OF COMPENSATION PROVIDED BY SAID LAWS. 6 COMP. GEN. 140, 324, 820.

ACCORDINGLY, IN ANSWER TO THE QUESTION SUBMITTED, I MUST ADVISE THAT THERE APPEARS NO AUTHORITY FOR THE BUREAU OF EFFICIENCY TO CONTRACT WITH A FINANCIAL OR BANKING EXPERT TO INVESTIGATE BANKING CONDITIONS IN THE VIRGIN ISLANDS AT A RATE OF COMPENSATION IN EXCESS OF THOSE PROVIDED BY THE CLASSIFICATION ACT OF 1923, AS AMENDED.

IF, AS STATED IN YOUR LETTER, THERE IS NO PERSONNEL IN THE VARIOUS BANKING AGENCIES OF THE TREASURY DEPARTMENT SUCH AS THE FEDERAL RESERVE BOARD, THE FEDERAL FARM LOAN BOARD, THE COMPTROLLER OF THE CURRENCY, ETC., AVAILABLE FOR THE PERFORMANCE OF THE INVESTIGATIONAL WORK AND REPORTING UPON BANKING CONDITIONS IN THE VIRGIN ISLANDS, AND IT IS NOT POSSIBLE TO OBTAIN SUCH AN EXPERT OUTSIDE OF THE GOVERNMENT SERVICES AT RATES PROVIDED FOR BY THE CLASSIFICATION ACT OF 1923, AS AMENDED, THE MATTER WOULD APPEAR TO BE FOR PRESENTATION TO THE CONGRESS, NOW IN SESSION, WITH A VIEW TO OBTAINING SPECIFIC LEGISLATIVE AUTHORITY FOR SUCH AN EMPLOYMENT AS THE CONGRESS MAY CONSIDER NECESSARY OR DESIRABLE IN THE CIRCUMSTANCES.