B-140981, JANUARY 11, 1960, 39 COMP. GEN. 513

B-140981: Jan 11, 1960

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IS TOO DOUBTFUL TO WARRANT OR TO JUSTIFY SUCH USE IN THE ABSENCE OF SPECIFIC AUTHORITY OR OF A CLEAR INDICATION OF CONGRESSIONAL INTENT. ARE AVAILABLE FOR THE CONSTRUCTION OR ACQUISITION OF FAMILY HOUSING IN FOREIGN COUNTRIES BY THE SECRETARY OF DEFENSE. MADE THROUGH ESTABLISHED BANKING FACILITIES OF THE FRIENDLY NATION FROM WHICH THE FOREIGN CURRENCY WAS OBTAINED OR IN ANY OTHER MANNER WHICH THE PRESIDENT MAY DEEM TO BE APPROPRIATE. WHICH IS ALSO PERTINENT TO THE QUESTION RAISED. THE SECRETARY OF DEFENSE IS AUTHORIZED. FOREIGN CURRENCIES HAVE BEEN ALLOCATED. THE DEPARTMENT OF DEFENSE IS OF THE VIEW THAT FOREIGN CURRENCIES REPAID TO THE UNITED STATES. ARE AVAILABLE FOR THE PURPOSES SET FORTH IN SECTION 104 OF THE ACT.

B-140981, JANUARY 11, 1960, 39 COMP. GEN. 513

APPROPRIATIONS AND MISCELLANEOUS - FOREIGN CURRENCIES RECEIVED IN REPAYMENT OF TRADE AND ECONOMIC LOANS - AVAILABILITY THE USE OF FOREIGN CURRENCIES RECEIVED IN REPAYMENT OF LOANS MADE UNDER SECTION 104 (G) OF THE AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954, 7 U.S.C. 1704 (G), FOR CONSTRUCTION OR ACQUISITION OF FAMILY HOUSING ABROAD, OR FOR ANY PURPOSES OTHER THAN THE SPECIFIC PURPOSES IN SECTION 104 (A) AND (H) OF THE ACT AND EXCEPT SUBJECT TO SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1953, 31 U.S.C. 724, IS TOO DOUBTFUL TO WARRANT OR TO JUSTIFY SUCH USE IN THE ABSENCE OF SPECIFIC AUTHORITY OR OF A CLEAR INDICATION OF CONGRESSIONAL INTENT, AND THE MATTER SHOULD BE PRESENTED TO THE CONGRESS.

TO THE SECRETARY OF DEFENSE, JANUARY 11, 1960:

A LETTER DATED OCTOBER 12, 1959, FROM THE GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE, REQUESTS A DECISION AS TO WHETHER FOREIGN CURRENCIES PAID TO THE UNITED STATES BY FRIENDLY NATIONS IN REPAYMENT OF LOANS MADE UNDER SECTION 104 (G) OF THE AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954 (HEREINAFTER REFERRED TO AS PUBLIC LAW 480), 68 STAT. 456, 7 U.S.C. 1704 (G), ARE AVAILABLE FOR THE CONSTRUCTION OR ACQUISITION OF FAMILY HOUSING IN FOREIGN COUNTRIES BY THE SECRETARY OF DEFENSE.

SECTION 104 (G) OF PUBLIC LAW 480 PROVIDES IN PART THAT:

* * * THE PRESIDENT MAY USE OR ENTER INTO AGREEMENTS WITH FRIENDLY NATIONS OR ORGANIZATIONS OF NATIONS TO USE THE FOREIGN CURRENCIES WHICH ACCRUE UNDER THIS TITLE FOR ONE OR MORE OF THE FOLLOWING PURPOSES:

(G) FOR LOANS TO PROMOTE MULTILATERAL TRADE AND ECONOMIC DEVELOPMENT, MADE THROUGH ESTABLISHED BANKING FACILITIES OF THE FRIENDLY NATION FROM WHICH THE FOREIGN CURRENCY WAS OBTAINED OR IN ANY OTHER MANNER WHICH THE PRESIDENT MAY DEEM TO BE APPROPRIATE. STRATEGIC MATERIALS, SERVICES, OR FOREIGN CURRENCIES MAY BE ACCEPTED IN PAYMENT OF SUCH LOANS;

SECTION 407 OF THE ACT OF SEPTEMBER 1, 1954, PUBLIC LAW 765, 68 STAT. 1119, 1125, AS AMENDED, 5 U.S.C. 171Z-1, WHICH IS ALSO PERTINENT TO THE QUESTION RAISED, PROVIDES IN PART AS FOLLOWS--- QUOTING FROM THE CODE:

IN ADDITION TO FAMILY HOUSING AND COMMUNITY FACILITIES OTHERWISE AUTHORIZED TO BE CONSTRUCTED OR ACQUIRED BY THE DEPARTMENT OF DEFENSE, THE SECRETARY OF DEFENSE IS AUTHORIZED, SUBJECT TO THE APPROVAL OF THE DIRECTOR OF THE BUREAU OF THE BUDGET, TO CONSTRUCT, OR ACQUIRE BY LEASE OR OTHERWISE, FAMILY HOUSING FOR OCCUPANCY AS PUBLIC QUARTERS, AND COMMUNITY FACILITIES, IN FOREIGN COUNTRIES THROUGH HOUSING AND COMMUNITY FACILITIES PROJECTS WHICH UTILIZE FOREIGN CURRENCIES TO A VALUE NOT TO EXCEED $250,000,000 ACQUIRED PURSUANT TO THE PROVISIONS OF THE AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954 OR THROUGH OTHER COMMODITY TRANSACTIONS OF THE COMMODITY CREDIT CORPORATION.

SECTION 407, AS AMENDED, FURTHER PROVIDES THAT:

THE DEPARTMENT OF DEFENSE SHALL PAY THE COMMODITY CREDIT CORPORATION, FROM APPROPRIATIONS OTHERWISE AVAILABLE FOR THE PAYMENT OF QUARTERS ALLOWANCES FOR MILITARY PERSONNEL AND FROM APPROPRIATE ALLOTMENTS OR RENTAL CHARGES FOR CIVILIAN PERSONNEL, AMOUNTS EQUAL TO THE QUARTERS ALLOWANCES OR ALLOTMENTS OTHERWISE PAYABLE TO OR THE RENTAL CHARGES COLLECTED FROM PERSONNEL OCCUPYING ANY HOUSING CONSTRUCTED OR ACQUIRED UNDER AUTHORITY OF THIS SECTION AFTER DEDUCTING AMOUNTS CHARGEABLE FOR THE MAINTENANCE AND OPERATION OF SUCH HOUSING: PROVIDED, THAT SUCH PAYMENTS SHALL NOT EXCEED THE DOLLAR EQUIVALENT OF THE VALUE OF THE FOREIGN CURRENCIES USED FOR ALL SUCH CONSTRUCTION OR ACQUISITION.

THE GENERAL COUNSEL SAYS IN HIS LETTER THAT---

PURSUANT TO THESE TWO STATUTES, FOREIGN CURRENCIES HAVE BEEN ALLOCATED, UNDER SECTIONS 104 (C) AND 104 (F) OF PUBLIC LAW 480, FOR THE CONSTRUCTION OF MILITARY FAMILY HOUSING. (SEE FOR EXAMPLE, PAGE 19 OF THE PRESIDENT'S EIGHTH SEMIANNUAL REPORT TO THE CONGRESS ON ACTIVITIES CARRIED ON UNDER PUBLIC LAW 480). CONSEQUENTLY, THE DEPARTMENT OF DEFENSE IS OF THE VIEW THAT FOREIGN CURRENCIES REPAID TO THE UNITED STATES, SINCE THEY "ACCRUE" UNDER TITLE I OF PUBLIC LAW 480, ARE AVAILABLE FOR THE PURPOSES SET FORTH IN SECTION 104 OF THE ACT, INCLUDING THE CONSTRUCTION OF FAMILY HOUSING.

SECTION 407 OF PUBLIC LAW 765 DOES NOT SPECIFICALLY AUTHORIZE THE USE OF FOREIGN CURRENCIES RECEIVED IN REPAYMENT OF LOANS MADE UNDER SECTION 104 (G) OF PUBLIC LAW 480 FOR THE CONSTRUCTION OR ACQUISITION OF FAMILY HOUSING ABROAD. THE SECTION DOES AUTHORIZE THE USE OF FOREIGN CURRENCIES ,ACQUIRED PURSUANT TO THE PROVISIONS OF" PUBLIC LAW 480 "OR THROUGH OTHER COMMODITY TRANSACTIONS OF THE COMMODITY CREDIT CORPORATION.'

WE ARE NOT CONVINCED THAT THE LANGUAGE CONTAINED IN SECTION 407 IS BROADER THAN THE LANGUAGE OF PUBLIC LAW 480, AS STATED BY THE GENERAL COUNSEL OF YOUR DEPARTMENT. HOWEVER, BE THAT AS IT MAY, IN VIEW OF WHAT IS SAID HEREINAFTER WITH RESPECT TO SECTION 104 OF PUBLIC LAW 480, 7 U.S.C. 1704, FURTHER DISCUSSION OF SECTION 407 IS NOT NECESSARY AT THIS TIME.

WE AGREE THAT THE LANGUAGE USED IN SECTION 104 OF PUBLIC LAW 480 GIVES SOME BASIS FOR AN INTERPRETATION THAT WOULD AUTHORIZE THE USE OF FOREIGN CURRENCIES ACCEPTED IN REPAYMENT OF SECTION 104 (G) LOANS FOR ANY SECTION 104 PURPOSES. HOWEVER, EVEN UNDER THE SPECIFIC LANGUAGE OF THE LAW ITSELF THE MATTER IS NOT FREE FROM DOUBT. FOR EXAMPLE, WE WOULD LIKE TO POINT OUT THAT WHILE SECTION 104 (G) SPECIFICALLY AUTHORIZES THE ACCEPTANCE OF FOREIGN CURRENCIES IN REPAYMENT OF SUCH LOANS, IT DOES NOT NECESSARILY FOLLOW THAT SUCH FOREIGN CURRENCIES MUST BE CONSIDERED "FOREIGN CURRENCIES WHICH ACCRUE UNDER THIS TITLE" (TITLE I). A LOAN IMPLIES THAT REPAYMENT WILL BE MADE AND THUS IT MIGHT BE ARGUED THAT SUCH FOREIGN CURRENCIES ARE RECEIVED IN CONNECTION WITH THE LOAN REPAYMENT RATHER THAN UNDER PUBLIC LAW 480. WE NOTE FROM THE LEGISLATIVE HISTORY OF SECTION 104 (G) THAT THE AUTHORITY TO ACCEPT "STRATEGIC MATERIALS, SERVICES, OR FOREIGN CURRENCIES" IN REPAYMENT OF THE LOANS APPARENTLY WAS INSERTED IN SECTION 104 (G) IN ORDER TO INSURE THAT WE WOULD RECEIVE SOME TYPE OF REPAYMENT OF THE LOANS. SEE 100 CONGRESSIONAL RECORD 8301. ALSO, WE NOTE THAT IN THE ACT ITSELF THE FOLLOWING APPEARS:

TITLE I--- SALES FOR FOREIGN CURRENCY

IT COULD BE INFERRED FROM THIS HEADING THAT THE WORDS "FOREIGN CURRENCIES WHICH ACCRUE UNDER THIS TITLE" APPEARING IN SECTION 104 OF TITLE I, HAS REFERENCE ONLY TO FOREIGN CURRENCIES WHICH ACCRUE FROM SALES.

FURTHERMORE, THE LEGISLATIVE HISTORY OF PUBLIC LAW 480, AS AMENDED, WHEN CONSIDERED TOGETHER WITH THE LEGISLATIVE HISTORIES OF THE MUTUAL SECURITY ACT OF 1957, 22 U.S.C. 1752 NOTE, AND S. 1711, 86TH CONGRESS, ST SESSION (WHICH FAILED OF ENACTMENT) RAISES CONSIDERABLE DOUBT AS TO WHETHER THE CONGRESS INTENDS FOREIGN CURRENCIES ACCEPTED IN REPAYMENT OF SECTION 104 (G) LOANS TO BE AVAILABLE FOR ALL SECTION 104 PURPOSES WITHOUT REGARD TO SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1953, 31 U.S.C. 724, IN THE ABSENCE OF ADDITIONAL LEGISLATION. PERTINENT EXCERPTS FROM THE LEGISLATIVE HISTORIES REFERRED TO ABOVE ARE SET FORTH BELOW.

THE FOLLOWING STATEMENT WAS MADE BY CONGRESSMAN HILL ON THE FLOOR OF THE HOUSE DURING CONSIDERATION OF THE BILL (S. 2475) WHICH BECAME PUBLIC LAW 480:

UNDER TITLE I, SECTIONS 104, 105, 106, 107, AND 108 ALL RELATE TO DETAILS AS TO THE GENERAL USE, AND I MIGHT ADD REUSE, OF THE CURRENCIES OF FOREIGN COUNTRIES. * * * (100 CONGRESSIONAL RECORD 8278.)

HOWEVER, WE NOTE THAT THE STATEMENT OF THE MANAGERS ON THE PART OF THE HOUSE, WHICH ACCOMPANIED THE CONFERENCE REPORT ( HOUSE REPORT NO. 1947, 83D CONGRESS, 2D SESSION) ON THE BILL WHICH BECAME PUBLIC LAW 480 CONTAINS THE FOLLOWING:

THESE PROVISOS IN SECTION 104 SPELL OUT THE SITUATION IN WHICH GOVERNMENT AGENCIES AND DEPARTMENTS MUST, IN THE ABSENCE OF A PRESIDENTIAL DETERMINATION TO THE CONTRARY, PAY DOLLARS TO THE TREASURY AS A PREREQUISITE TO EXPENDING FOREIGN CURRENCY PROCEEDS OF SALES MADE UNDER THIS ACT. SECTION 105 (IN WHICH THE CONFERENCE COMMITTEE MADE NO CHANGE) REQUIRES THAT ANY DOLLARS THUS DISBURSED TO THE TREASURY BY GOVERNMENT AGENCIES AND DEPARTMENTS OUR OF APPROPRIATED FUNDS, AS A PREREQUISITE TO THEIR USE OF FOREIGN CURRENCY SALES PROCEEDS, SHALL BE USED AS PART OF THE TOTAL REIMBURSEMENT TO THE COMMODITY CREDIT CORPORATION. ( ITALICS SUPPLIED.)

THE PHRASES "FOREIGN CURRENCY PROCESS OF SALES" AND "FOREIGN CURRENCY SALES PROCEEDS" IN THE QUOTED STATEMENT INDICATE THAT THE PHRASE "FOREIGN CURRENCIES WHICH ACCRUE UNDER THIS TITLE" WAS APPARENTLY INTENDED TO ENCOMPASS ONLY THOSE FOREIGN CURRENCIES ACCRUING FROM TITLE I SALES; OTHERWISE, WE CAN PERCEIVE NO REASON WHY THE ABOVE QUOTED STATEMENT MAKES REFERENCE ONLY TO ,PROCEEDS OF SALES" AND "SALES PROCEEDS," AND MAKES NO MENTION OF "LOAN REPAYMENT.'

AS INDICATED IN THE GENERAL COUNSEL'S LETTER, SENATOR HUMPHREY MADE THE FOLLOWING STATEMENT ON THE FLOOR OF THE SENATE ON SEPTEMBER 12, 1959, THE DAY FOLLOWING THE SENATE ADOPTION OF THE CONFERENCE REPORT ON THE BILL WHICH BECAME PUBLIC LAW 86-341, 7 U.S.C. 1691 NOTE (WHICH AMENDED AND EXTENDED PUBLIC LAW 480), THE COMMITTEE OF CONFERENCE HAVING OMITTED FROM THE BILL A PROVISION SPONSORED BY SENATORS HUMPHREY AND MUNDT WHICH APPEARED IN THE SENATE VERSION OF THE BILL. THE PROVISION WOULD HAVE ADDED A NEW SECTION 104 USE TO PUBLIC LAW 480 AND AUTHORIZED THE USE OF FOREIGN CURRENCIES PAID TO THE UNITED STATES IN REPAYMENT OF SECTION 104 (G) LOANS TO CARRY OUT SUCH USE.

THE COMMITTEE OF CONFERENCE DID NOT ADOPT A PROVISION IN THE SENATE VERSION WHICH WOULD HAVE SPECIFICALLY AUTHORIZED FOREIGN CURRENCIES WHICH ARE NOW BEGINNING TO COME IN THROUGH PAYMENTS OF PRINCIPAL AND INTEREST ON LOANS MADE UNDER SECTION 104 (G) OF PUBLIC LAW 480 TO BE USED FOR ASSISTANCE IN THE ESTABLISHMENT AND OPERATION OF BI-NATIONAL FOUNDATIONS FOR THE PURPOSE OF PROMOTING EDUCATION, HEALTH, AND PUBLIC WELFARE. THIS ACTION BY THE COMMITTEE DOES NOT MEAN THAT THESE FOREIGN CURRENCY REPAYMENTS ARE FROZEN FROM ANY USE WHATEVER. RATHER, AS I UNDERSTAND IT, THESE FOREIGN CURRENCY REPAYMENTS, LIKE THE FOREIGN CURRENCIES ORIGINALLY RECEIVED ON SALES OF SURPLUS COMMODITIES UNDER TITLE I, MAY BE USED UNDER EXISTING LAW FOR THE VARIOUS PURPOSES SET FORTH IN SECTION 104 OF PUBLIC LAW 480--- FOR EXAMPLE, TO HELP DEVELOP NEW MARKETS ABROAD FOR U.S. AGRICULTURAL COMMODITIES, OR POSSIBLY FOR BI-NATIONAL FOUNDATIONS WHICH WILL CONTRIBUTE TO ECONOMIC DEVELOPMENT. I DESCRIBED THE POSSIBILITIES UNDER THIS SECTION IN MY REMARKS OF FRIDAY, SEPTEMBER 11, ON PAGE 17533, WHEN I SAID,"CERTAIN PROVISIONS UNDER SECTION 104 ARE MAINTAINED WITHOUT CHANGE OR INTERFERENCE * * * IT SHOULD BE UNDERSTOOD THAT THE USE OF FOREIGN CURRENCIES IS SUPPLEMENTAL TO, IN ADDITION TO, REGULAR APPROPRIATIONS.' (105 CONGRESSIONAL RECORD 17749 ( SEPT. 12, 1959) (

HOWEVER, SENATOR HUMPHREY ALSO MADE THE FOLLOWING STATEMENT ON THE FLOOR OF THE SENATE ON APRIL 16, 1959, IN CONNECTION WITH S. 1711, A BILL TO AMEND PUBLIC LAW 480 (WHICH WAS NOT ENACTED INTO LAW):

THE LAST OF THE NEW TITLES TO BE DISCUSSED IS TITLE VI, WHICH I AM SURE WILL AROUSE INTENSE INTEREST AND DEBATE, FOR IT FACES UP TO THE PROBLEM, HITHERTO NEGLECTED IN LEGISLATION, OF WHAT SHALL BE DONE WITH THE LOCAL CURRENCIES WHICH ARE BEGINNING TO ACCUMULATE AS A RESULT OF THE PAYMENT OF INTEREST AND REPAYMENT OF PRINCIPAL ON LOCAL CURRENCY LOANS MADE UNDER TITLE I. PUBLIC LAW 480 HAS BEEN SILENT ON THIS POINT, BUT ALL WHO HAVE STUDIED OR THOUGHT DEEPLY ABOUT THE PROGRAMS CONDUCTED UNDER THIS LAW HAVE RECOGNIZED THAT SOONER OR LATER THE/LAW WOULD HAVE TO SPEAK. NOW IS THE TIME, BECAUSE THE INTEREST AND PRINCIPAL REPAYMENTS ARE BEGINNING TO FLOW IN AND WILL IN TIME BECOME A VERY SERIOUS PROBLEM. ( ITALICS SUPPLIED.) (105 CONGRESSIONAL RECORD 5487 ( APRIL 16, 1959).)

FURTHER, DURING FLOOR DEBATE ON THE ABOVE REFERRED-TO PROVISION SPONSORED BY SENATORS HUMPHREY AND MUNDT (SIMILAR TO A PROVISION IN S. 1711), SENATOR ELLENDER--- RANKING MAJORITY MEMBER OF THE SENATE CONFEREES ON THE BILL WHICH BECAME PUBLIC LAW 86-341--- CHAIRMAN OF THE SENATE COMMITTEE ON AGRICULTURE AND FORESTRY MADE THE FOLLOWING STATEMENT:

THIS IS AN EFFORT TO SPEND THE REPAYMENTS IN LOANS MADE FROM PROCEEDS OF SALES OF SURPLUS COMMODITIES, AS THOSE REPAYMENTS ARE COLLECTED. THIS MONEY COULD CERTAINLY BE USED BY THE UNITED STATES TO PAY SOME OF OUR OWN BILLS WITHIN THE COUNTRIES WHERE THE FOOD IS SOLD AND THE CURRENCIES COLLECTED. (105 CONGRESSIONAL RECORD 16861 ( SEPT. 7, 1959).)

SENATOR ELLENDER ALSO HAD INSERTED IN THE CONGRESSIONAL RECORD IN CONNECTION WITH THE PROVISION A STATEMENT WHICH IS IN PART AS FOLLOWS:

THE QUESTION OF THE VARIOUS USES TO BE MADE OF FOREIGN CURRENCY LOAN REPAYMENTS IS BEING STUDIED BY THE ADMINISTRATION, AND RECOMMENDATIONS WILL BE SUBMITTED TO THE CONGRESS IN AMPLE TIME FOR NECESSARY LEGISLATION TO BE ENACTED BEFORE THE VOLUME OF SUCH REPAYMENTS BECOMES SIGNIFICANT. AT THE PRESENT TIME AND DURING THE COMING YEAR SUCH REPAYMENTS DO NOT CONSTITUTE A PROBLEM EITHER IN TOTAL AMOUNT OR IN ANY INDIVIDUAL COUNTRY.

EVEN IF IT WERE ESTABLISHED THAT THE FINANCING OF FOUNDATIONS WOULD BE A WORTHY PURPOSE FOR WHICH TO USE LOAN REPAYMENTS, THE ENACTMENT OF SUCH AUTHORITY AT THIS TIME WOULD NOT BE DESIRABLE. MOST OF THE REPAYMENTS NOW BEING RECEIVED ARE IN COUNTRIES WHERE SUCH FUNDS ARE READILY USABLE BY THE U.S. GOVERNMENT FOR PURPOSES FOR WHICH DOLLARS HAVE BEEN APPROPRIATED. USE FOR THESE PURPOSES RETURNS THE APPROPRIATED DOLLARS TO THE U.S. TREASURY AS NET SAVINGS TO THE TAXPAYER. UNDER THESE CIRCUMSTANCES ANY AMOUNT OF SUCH REPAYMENTS USED FOR FINANCING BI-NATIONAL FOUNDATIONS WOULD REPRESENT DOLLAR COST TO THE U.S. GOVERNMENT. ( ITALICS SUPPLIED.) (105 CONGRESSIONAL RECORD 16862 ( SEPT. 7, 1959).) WE NOTE THAT WHILE THE PROVISION IN QUESTION WAS ADOPTED BY THE SENATE IT WAS OMITTED FROM THE CONFERENCE SUBSTITUTE THAT WAS SUBSEQUENTLY ENACTED BY THE CONGRESS. THERE IS NOTHING IN THE CONFERENCE REPORT OR IN THE HOUSE MANAGERS' STATEMENT ACCOMPANYING THE CONFERENCE REPORT TO EXPLAIN WHY THE PROVISION WAS NOT ADOPTED BY THE CONFEREES. IT APPEARS THAT THIS PROVISION WAS ONE OF ONLY TWO PROVISIONS OF THE SENATE AMENDMENT OMITTED FROM THE CONFERENCE SUBSTITUTE. SEE 105 CONGRESSIONAL RECORD 17531 ( SEPT. 11, 1959). FOREIGN CURRENCIES ACCEPTED IN REPAYMENT OF SECTION 104 (G) LOANS ARE SPECIFICALLY MADE AVAILABLE FOR SECTION 104 (A) AND SECTION 104 (H), 7 U.S.C. 1704 (A) AND (H), PURPOSES. NOTE THE FOLLOWING DISCUSSION IN CONNECTION WITH THE PUBLIC LAW 480 AMENDMENT WHICH MADE FOREIGN CURRENCY LOAN REPAYMENTS AVAILABLE FOR SECTION 104 (H) PURPOSES ( SENATE HEARINGS ON MUTUAL SECURITY ACT OF 1957, PAGES 502, 504, AND 509):

SENATOR FULBRIGHT. MR. HOLLISTER, LAST YEAR WE HAD A PROVISION IN THE BILL THAT PASSED THE SENATE AND IT WAS CHANGED IN THE HOUSE, I MEAN IN THE CONFERENCE, TO READ AS FOLLOWS; THIS IS UNDER FUNDS OF PUBLIC LAW 480;

IN THE ALLOCATION OF FUNDS AMONG THE VARIOUS PROVISIONS SET FORTH IN THIS SECTION, A SPECIAL EFFORT SHALL BE MADE TO PROVIDE FOR THE PURPOSES OF THIS SUBSECTION, INCLUDING A PARTICULAR EFFORT WITH REGARD TO (1) COUNTRIES WHERE ADEQUATE FUNDS ARE NOT AVAILABLE FROM OTHER SOURCES FOR SUCH PURPOSES; AND (2) COUNTRIES WHERE AGREEMENTS CAN BE NEGOTIATED TO ESTABLISH A FUND FOR THE INTEREST AND PRINCIPAL AVAILABLE OVER A PERIOD OF YEARS FOR SUCH PURPOSES.

THIS RELATES TO SECTION 104 (H), I BELIEVE IT IS, RELATING TO PUBLIC LAW 480 FUNDS FOR THE EXCHANGE PROGRAM AUTHORIZED UNDER THE SMITH-MUNDT ACT.

NOW THE RECORD SINCE THAT TIME HAS BEEN WORSE THAN IT WAS BEFORE. I HAVE 1 OR 2 QUESTIONS THAT I WANT TO ASK.

WHY IS IT THAT SINCE THE BEGINNING OF THE PUBLIC LAW 480 PROGRAM, UP UNTIL DECEMBER 31, 1956, LESS THAN 1 PERCENT OF THE FOREIGN CURRENCIES RECEIVED IN PAYMENT FOR COMMODITIES HAVE BEEN ALLOCATED FOR EDUCATIONAL EXCHANGE PURPOSES UNDER SECTION 104 (H) OF PUBLIC LAW 480?

SENATOR FULBRIGHT. I DON-T THINK THIS PARTICULAR THING WILL BE DIFFICULT BECAUSE IT WILL AMOUNT TO VERY LITTLE, AND IN MOST OF THESE COUNTRIES IT WILL BE AGREEABLE.

PROPOSED AMENDMENT

I WANT TO ASK YOU THIS QUESTION. WE SAID IN THAT PROVISION LAST YEAR THAT SPECIAL EFFORTS SHALL BE MADE. I WANTED TO ADD THIS FURTHER LANGUAGE, AND SEE IF YOU HAVE ANY OBJECTION TO IT. THIS WOULD MERELY BE AN ADDITION TO THAT LANGUAGE:

* * * SHALL INCLUDE THE SETTING ASIDE OF SUCH AMOUNTS FROM SALE, PROCEEDS AND LOAN REPAYMENTS UNDER THIS TITLE NOT IN EXCESS OF $1 MILLION A YEAR IN ANY ONE COUNTRY FOR A PERIOD OF NOT MORE THAN 5 YEARS IN ADVANCE AS MAY BE DETERMINED BY THE SECRETARY OF STATE AS REQUIRED BY THE PURPOSES OF THIS SUBSECTION.

I EMPHASIZE THAT IT IS PERMISSIVE. WE ARE GIVING THE SECRETARY AUTHORITY TO REQUEST THE ALLOCATION WITHIN THESE LIMITS OF THE AMOUNTS OR REPAYMENTS. DO YOU HAVE ANY OBJECTION TO SUCH LANGUAGE?

MR. HOLLISTER. SENATOR, I WOULD WANT TO STUDY IT VERY CAREFULLY. ONE MILLION DOLLARS IN A SINGLE YEAR--- I MEAN, A SINGLE COUNTRY---

SENATOR FULBRIGHT. NOT IN EXCESS OF. THIS IS MERELY TO PROVIDE FOR THOSE VERY LARGE PROGRAMS, AND THIS STILL LEAVES TO THE SECRETARY--

MR. HOLLISTER. I CAN-T SEE OFFHAND WHY THERE WOULD BE ANY OBJECTION.

SENATOR FULBRIGHT. NOW THIS AMENDMENT I AM PROPOSING GIVES AUTHORITY TO THE SECRETARY OF STATE NOT ONLY TO RESERVE, WE WILL SAY, IN A FUND UP TO 5 MILLION FOR 5 YEARS IN ANY ONE COUNTRY FROM THE ORIGINAL FUND, BUT ALSO IN REPAYMENT. YOU WOULD HAVE NO OBJECTION TO THAT?

MR. HOLLISTER. I WOULD THINK PERHAPS YOU WOULD WANT TO BE SURE THERE WAS RESERVE WITHOUT LOSS FOR DETERIORATION OF THE CURRENCY. ( ITALICS SUPPLIED.)

IT APPEARS FROM THE LAST-QUOTED STATEMENT OF SENATOR FULBRIGHT THAT ONE PURPOSE OF THE AMENDMENT WAS TO MAKE LOAN REPAYMENTS AS WELL AS SALE PROCEEDS AVAILABLE FOR SECTION 104 (H) PURPOSES.

FURTHER DURING THE SENATE HEARINGS ON THE BILL WHICH BECAME THE MUTUAL SECURITY ACT OF 1957 THE INTERNATIONAL COOPERATION ADMINISTRATION ADVISED THE SENATE FOREIGN RELATIONS COMMITTEE IN A STATEMENT AS FOLLOWS (PAGE 550 OF THE HEARINGS):

THE UNITED STATES USE OF LOAN REPAYMENTS ON PUBLIC LAW 480 LOANS HAS NOT BEEN AUTHORIZED BY THE CONGRESS EXCEPT FOR THE GENERAL AUTHORIZATION THAT TREASURY HOLDINGS OF LOCAL CURRENCY MAY BE SOLD FOR APPROPRIATED DOLLARS. IN MAKING THE LOAN AGREEMENTS, CERTAIN PROVISIONS WERE INCORPORATED CONCERNING USES IN ADDITION TO THIS GENERAL AUTHORIZATION WHICH HAVE NOT AS YET BEEN IMPLEMENTED BECAUSE OF LACK OF LEGAL AUTHORITY AND SINCE THERE HAVE BEEN NO PAYMENTS UP TO THIS TIME. THESE PROVISIONS ARE AS FOLLOWS:

1. THE CURRENCY MAY BE USED FOR ANY EXPENDITURES OF OR PAYMENTS BY THE UNITED STATES IN THE COUNTRY OR ITS TERRITORIES.

2. THE CURRENCY MAY BE USED IN OTHER AREAS OR TRANSFERRED INTO OTHER CURRENCIES BY MUTUAL AGREEMENT.

3. UNEXPENDED BALANCES ARE ELIGIBLE FOR INVESTMENT IN INTEREST BEARING OBLIGATIONS OR DEPOSITS DENOMINATED IN THE CURRENCY OF THE COUNTRY.

4. THE PARTIES AGREE TO NEGOTIATE FOR PAYMENT IN STRATEGIC MATERIALS AT PRICES AND ON TERMS TO BE MUTUALLY AGREED.

5. THE PARTIES AGREE TO NEGOTIATE FOR PAYMENT BY SUCH OTHER VALUABLE CONSIDERATION AS MAY BE MUTUALLY AGREED.

THE FIRST PAYMENTS ON THESE LOANS WILL BE RECEIVED IN FISCAL YEAR 1959, AND IT MUST BE ASSUMED THAT PAYMENTS WILL BE PRIMARILY, IF NOT ENTIRELY, IN LOCAL CURRENCY. IN THAT YEAR PAYMENTS SHOULD AMOUNT TO OVER $4 MILLION EQUIVALENT, IN FISCAL YEAR 1960 TO OVER $24 MILLION EQUIVALENT, AND IN FISCAL YEAR 1961 TO OVER $60 MILLION EQUIVALENT. THEREAFTER PAYMENTS ON PUBLIC LAW 480 LOANS UNDER EXISTING AUTHORITY AND THE PRESENT PROPOSED $1 BILLION AUTHORIZATION WILL INCREASE AT A RATE OF ABOUT 4 PERCENT PER YEAR FOR THE NEXT 34 YEARS. IT IS PROPOSED TO STUDY THIS PROBLEM AND PRESENT RECOMMENDATIONS FOR THE MOST ADVANTAGEOUS USE OF THESE LOCAL CURRENCY RECEIPTS FOR CONSIDERATION IN CONNECTION WITH THE NEXT FISCAL YEAR PROGRAMS. ( ITALICS SUPPLIED.)

THUS, AS OF JUNE 1957 THE INTERNATIONAL COOPERATION ADMINISTRATION APPARENTLY WAS OF THE VIEW THAT PUBLIC (LAW 480 LOAN REPAYMENTS COULD NOT LEGALLY BE USED FOR SECTION 104 PURPOSES, EXCEPT, OF COURSE, SUBJECT TO SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1953. AN INFORMAL MEMORANDUM RECENTLY RECEIVED FROM THE GENERAL COUNSEL OF THE INTERNATIONAL COOPERATION ADMINISTRATION DISCLOSES THAT THE PRESENT GENERAL COUNSEL OF THE ADMINISTRATION IS OF THE VIEW THAT SECTION 104 (G) LOAN REPAYMENTS MAY LEGALLY BE USED FOR ALL SECTION 104 PURPOSES.

WE WOULD ALSO LIKE TO POINT OUT THAT A REPRESENTATIVE OF THE DEPARTMENT OF DEFENSE TESTIFYING BEFORE THE COMMITTEE ON AGRICULTURE, HOUSE OF REPRESENTATIVES, 86 CONGRESS, ST SESSION, ON " EXTENSION OF PUBLIC LAW 480" INDICATED THERE IS "SOME QUESTION" AS TO WHAT CAN BE DONE WITH FOREIGN CURRENCY SECTION 104 (G) LOAN REPAYMENTS. FOR EXAMPLE NOTE THE FOLLOWING DISCUSSION (PAGES 330 AND 331) OF THE HEARINGS:

MR. HEIMBURGER. WHAT IS THE STATUS OF CURRENCIES REPAID TO THE UNITED STATES UNDER SECTION 104 (G) OF PUBLIC LAW 480; AND HAVE YOU EXPLORED THE POSSIBILITY OF USING THESE CURRENCIES FOR MILITARY CONSTRUCTION?

MR. ARRINGTON. THAT REFERS TO THE ECONOMIC LOAN PROGRAM AND OUR COUNSEL, MR. MAYER, HAS BEEN MAKING QUITE A STUDY OF THAT.

I WOULD LIKE TO SUGGEST THAT HE ANSWER.

MR. MAYER. AS YOU KNOW, SECTION 104 (G) OF PUBLIC LAW 480 PROVIDES FOR LOANS TO PROMOTE MULTILATERAL TRADE AND ECONOMIC DEVELOPMENT IN FOREIGN COUNTRIES.

WHEN THESE LOANS ARE REPAID, THERE IS SOME QUESTION AS TO WHAT CAN BE DONE WITH THE CURRENCIES THAT ARE THEREBY MADE AVAILABLE TO THE UNITED STATES.

I UNDERSTAND THAT A JOINT COMMITTEE OF ALL OF THE EXECUTIVE DEPARTMENTS INTERESTED IN THE USE OF THESE CURRENCIES HAS BEEN LOOKING INTO IT, AND SO FAR I UNDERSTAND THAT THERE IS NO ADMINISTRATION POSITION AS TO WHETHER THESE CURRENCIES MAY BE REUSED. IF THEY COULD BE REUSED FOR THE VARIOUS PURPOSES FOR WHICH OTHER FOREIGN CURRENCIES ARE NOT AVAILABLE, THEN PRESUMABLY WE COULD USE THEM FOR FAMILY HOUSING, BUT I UNDERSTAND THAT THE VARIOUS DEPARTMENTS HAVE NOT YET REACHED A COORDINATED POSITION ON THIS QUESTION.

MR. HEIMBURGER. I DO NOT REMEMBER WHERE THE EXPORT* IMPORT BANK SAID THIS HOUSING WAS TO BE BUILT. BUT THEY HAVE ESTABLISHED THE PRINCIPLE THAT THESE FUNDS COULD BE USED FOR LOANS TO AMERICAN FIRMS TO CONSTRUCT HOUSING IN A FOREIGN COUNTRY.

JUST ONE MORE QUESTION: IN YOUR OPINION WOULD ANY ADDITIONAL LEGISLATION BE NECESSARY OR DESIRABLE?

MR. MAYER. IN MY OWN OPINION, SPEAKING AS A LAWYER FOR THE DEPARTMENT OF DEFENSE, I BELIEVE THAT THE PRESENT LEGISLATION IS ADEQUATE TO AUTHORIZE THE USE OF THESE REPAYMENT CURRENCIES FOR FAMILY HOUSING AND THE OTHER PURPOSES SET FORTH IN PUBLIC LAW 480. HOWEVER, AS I HAVE STATED, THE ADMINISTRATION, AND THE VARIOUS EXECUTIVE DEPARTMENTS INTERESTED IN THIS PROBLEM, HAVE NOT REACHED A COORDINATED POSITION AND THEREFORE I AM CONSTRAINED TO SAY THAT CERTAINLY ADDITIONAL CLARIFICATION WOULD BE HIGHLY DESIRABLE ON THIS POINT.

MR. HEIMBURGER. OBVIOUSLY, SOMETHING IS NECESSARY BEFORE YOU CAN USE THE BARTER PROGRAM AGAIN TO ANY EXTENT FOR YOUR HOUSING.

MR. ARRINGTON. YES, SIR.

SO FAR AS THE STATUS OF FUNDS UNDER SECTION 104 (G) I BELIEVE MR. ALENIER HAS OBTAINED SOME RECENT INFORMATION ON THAT.

MR. ALENIER. THE TREASURY DEPARTMENT HAS ADVISED US THAT OF $670 MILLION DISBURSED BY BOB, ONLY $1 MILLION HAS BEEN REPAID TO DATE.

MR. HEIMBURGER. SO THERE ISN-T TOO MUCH FUND IN THE POT TO WORRY ABOUT AT THE PRESENT MOMENT.

MR. ALENIER. THAT IS CORRECT.

MR. GATHINGS (PRESIDING). WITH RESPECT TO THE NEED FOR ADDITIONAL LEGISLATION, I WONDER IF YOU COULD SUGGEST SOME LANGUAGE TO OUR COUNSEL, MR. MAYER?

MR. MAYER. I AM NOT AUTHORIZED TO PROPOSE ANY LEGISLATION ON THIS POINT SINCE THE ADMINISTRATION'S POSITION HAS NOT YET BEEN ESTABLISHED. HOWEVER, I COULD WORK WITH THE COMMITTEE COUNSEL.

MR. HEIMBURGER. COULDN-T YOU JUST WORK WITH THE COMMITTEE STAFF?

MR. GATHING. INFORMALLY.

MR. HEIMBURGER. AS A DRAFTING SERVICE AND ASSIST US IN DRAFTING SOME LEGISLATION?

MR. MAYER. I WOULD BE HAPPY TO. ( ITALICS SUPPLIED.)

WHILE MR. MAYER OF THE DEPARTMENT OF DEFENSE STATES THAT IN HIS OPINION HE BELIEVES THE PRESENT LEGISLATION IS ADEQUATE TO AUTHORIZE THE USE OF SECTION 104 (G) FOREIGN CURRENCY LOAN REPAYMENTS HE ALSO STATES THAT "ADDITIONAL CLARIFICATION WOULD BE HIGHLY DESIRABLE ON THIS POINT.'

AS INDICATED ABOVE, THE LANGUAGE USED IN PUBLIC LAW 480 AFFORDS A SUBSTANTIAL BASIS FOR THE CONCLUSION REACHED BY THE GENERAL COUNSEL OF YOUR DEPARTMENT THAT FOREIGN CURRENCIES ACCEPTED IN REPAYMENT OF SECTION 104 (G) LOANS MAY BE USED BY YOUR DEPARTMENT TO CONSTRUCT FAMILY HOUSING ABROAD AS WELL AS FOR OTHER SECTION 104 PURPOSES. ALSO, SOME PORTIONS OF THE LEGISLATIVE HISTORY OF PUBLIC LAW 480, AS AMENDED, TEND TO SUPPORT THE GENERAL COUNSEL'S CONCLUSION. HOWEVER, TAKING INTO CONSIDERATION THE LEGISLATIVE HISTORY OF PUBLIC LAW 480, AS AMENDED, AS A WHOLE, AS WELL AS THE OTHER PERTINENT LEGISLATIVE HISTORIES REFERRED TO ABOVE, WE FEEL THERE IS ALSO A SUBSTANTIAL BASIS FOR THE OPPOSITE CONCLUSION, NAMELY, THAT THE CONGRESS DOES NOT INTEND FOREIGN CURRENCIES ACCEPTED IN REPAYMENT OF SECTION 104 (G) LOANS TO BE USED FOR SECTION 104 PURPOSES (OTHER THAN SECTION 104 (A) AND (H) PURPOSES), OR ANY OTHER PURPOSE IN THE ABSENCE OF ADDITIONAL LEGISLATION, EXCEPT, OF COURSE, SUBJECT TO SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1953, 66 STAT. 637, 662.

THE " NINTH SEMIANNUAL REPORT ON ACTIVITIES CARRIER ON UNDER PUBLIC LAW 480, 83D CONGRESS, AS AMENDED" ( HOUSE DOCUMENT NO. 60, 86TH CONGRESS, ST SESSION) DISCLOSES THAT THE AMOUNT EARMARKED IN SALES AGREEMENTS DURING FISCAL YEARS 1955-58 TOGETHER WITH THOSE EARMARKED IN SUCH AGREEMENTS DURING THE FIRST HALF OF FISCAL YEAR 1959 FOR SECTION 104 (G) LOANS TOTALS OVER $1.6 BILLION EQUIVALENT AND THAT ON A CUMULATIVE BASIS LOAN AGREEMENTS SIGNED TOTALED ALMOST $1.3 BILLION EQUIVALENT BY DECEMBER 31, 1958, AND COVER OVER 75 PERCENT OF THE CURRENCIES SET ASIDE UNDER SECTION 104 (G). YOU WILL NOTE THAT THE ABOVE-QUOTED STATEMENT FURNISHED THE CONGRESS IN 1957 BY THE INTERNATIONAL COOPERATION ADMINISTRATION IN CONNECTION WITH THE SENATE HEARINGS ON THE MUTUAL SECURITY ACT OF 1957 DISCLOSES THAT SECTION 104 (G) LOAN REPAYMENTS WOULD BE PRIMARILY, IF NOT ENTIRELY, IN FOREIGN CURRENCIES AND THAT IT WAS CONTEMPLATED THAT IN FISCAL YEAR 1959 REPAYMENTS ON SECTION 104 (G) LOANS WOULD AMOUNT TO OVER $4 MILLION EQUIVALENT, IN FISCAL YEAR 1960 TO OVER $24 MILLION EQUIVALENT, AND IN FISCAL YEAR 1961 TO OVER $60 MILLION EQUIVALENT; AND THEREAFTER, UNDER EXISTING AUTHORITY AND A PROPOSED $1 BILLION AUTHORIZATION, WOULD INCREASE AT A RATE OF ABOUT 4 PERCENT PER YEAR FOR THE NEXT 34 YEARS. PAGE 550 AND 551 OF THE SENATE HEARINGS.

IN VIEW OF THE DOUBT RAISED BY THE ABOVE REFERRED-TO LEGISLATIVE HISTORIES AS TO WHAT THE CONGRESS INTENDS AND CONSIDERING THE MAGNITUDE OF THE PROBLEM AND THE AMOUNT OF MONEY INVOLVED, WE WOULD NOT FEEL WARRANTED OR JUSTIFIED IN HOLDING THAT YOUR DEPARTMENT MAY EXPEND FOREIGN CURRENCIES RECEIVED IN REPAYMENT OF SECTION 104 (G) LOANS FOR CONSTRUCTING OR ACQUIRING FAMILY HOUSING ABROAD, OR FOR ANY SECTION 104 PURPOSE (OTHER THAT SECTION 104 (A) OR (H) PURPOSES), EXCEPT, OF COURSE, SUBJECT TO THE PROVISIONS OF SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1953. FEEL THAT THE QUESTION OF THE USE OF FOREIGN CURRENCIES RECEIVED IN REPAYMENT OF SECTION 104 (G) LOANS SHOULD BE PRESENTED TO THE CONGRESS FOR ITS FURTHER CONSIDERATION BEFORE SUCH CURRENCIES ARE USED FOR SECTION 104 PURPOSES (OTHER THAN SECTION 104 (A) OR (H) PURPOSES), OR ANY OTHER PURPOSE, ABSENT SPECIFIC AUTHORITY, EXCEPT, AS INDICATED ABOVE, SUBJECT TO SECTION 1415 OF THE LAST-CITED APPROPRIATION ACT.

BY LETTER DATED NOVEMBER 13, 1959, THE DEPUTY GENERAL COUNSEL, DEPARTMENT OF DEFENSE, IN EFFECT, REQUESTED A DECISION WHETHER FOREIGN CURRENCIES (SCHILLINGS) RECEIVED FROM AUSTRIA IN REPAYMENT OF A LOAN MADE PURSUANT TO SECTION 104 (G) OF PUBLIC LAW 480 MAY BE USED BY THE DEPARTMENT OF DEFENSE TO PROCURE PREFABRICATED HOUSES IN AUSTRIA.

WHAT WE SAID ABOVE IN CONNECTION WITH THE QUESTION PRESENTED IN THE GENERAL COUNSEL'S LETTER OF OCTOBER 12, 1959, WOULD BE FOR APPLICATION TO THE QUESTION PRESENTED BY THE DEPUTY GENERAL COUNSEL. IN OTHER WORDS, IN VIEW OF THE DOUBT AS TO WHAT THE CONGRESS INTENDS, WE WOULD NOT FEEL WARRANTED IN HOLDING THAT FOREIGN CURRENCIES RECEIVED FOR AUSTRIA IN REPAYMENT OF A LOAN MADE UNDER SECTION 104 (G) OF PUBLIC LAW 480, AS AMENDED, MAY BE USED TO PROCURE PREFABRICATED HOUSING IN AUSTRIA UNDER EXISTING LAW, EXCEPT SUBJECT TO SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1953.