B-20620, SEPTEMBER 26, 1941, 21 COMP. GEN. 268

B-20620, SEPTEMBER 26, 1941, 21 COMP. GEN. 268

PURCHASE OF SAVINGS BONDS BY GOVERNMENT EMPLOYEES - PAYMENT OF PURCHASE PRICE BY PAY-ROLL DEDUCTIONS WHERE AN EMPLOYEE VOLUNTARILY AGREES TO ACCEPT UNITED STATES SAVINGS BONDS IN LIEU OF COMPENSATION FOR SERVICES RENDERED, THERE IS NO LEGAL OBJECTION TO AN ADMINISTRATIVELY PROPOSED PROCEDURE WHEREBY A PART OF HIS CURRENT COMPENSATION IS TO BE RESERVED ON EACH PAY ROLL UNTIL SUFFICIENT WITHHOLDINGS HAVE BEEN MADE TO EQUAL THE PURCHASE PRICE OF THE BONDS FOR WHICH HE HAS SUBSCRIBED, PROVIDED THAT ADEQUATE ACCOUNTING DATA ARE FURNISHED WITH THE ACCOUNTS TO ENABLE A PROPER AUDIT THEREOF BY THIS OFFICE.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE NAVY, SEPTEMBER 26, 1941:

I HAVE YOUR LETTER OF SEPTEMBER 18, 1941, REQUESTING APPROVAL OF THE PLAN REFERRED TO IN A LETTER DATED SEPTEMBER 16, 1941, FROM THE CHIEF OF THE BUREAU OF SUPPLIES AND ACCOUNTS, AS FOLLOWS:

SUBJECT: PAY RESERVATION FOR PROCUREMENT OF UNITED STATES SAVINGS BONDS-- - CIVILIAN EMPLOYEES OF NAVY YARDS AND STATIONS.

ENCLOSURE: (A) MEMORANDUM OF PROCEDURE WITH RESPECT TO UNITED STATES SAVINGS BONDS TO BE OBSERVED BY THE TREASURY DEPARTMENT AND THE NAVY DEPARTMENT IN CONNECTION WITH THE SALE OF SAVINGS BONDS BY THE NAVY DEPARTMENT.

1. TO FACILITATE THE PROCUREMENT OF UNITED STATES BONDS BY CIVILIAN EMPLOYEES AT NAVY YARDS AND STATIONS IT IS DESIRED TO ADOPT THE PLAN SET FORTH HEREIN FOR THE DISTRIBUTION OF SUCH BONDS TO CIVILIAN EMPLOYEES AT NAVY YARDS AND STATIONS. IT IS REQUESTED THAT THE PROPOSED PLAN BE SUBMITTED TO THE COMPTROLLER FOR CONSIDERATION AND APPROVAL. IT IS DESIRED TO PLACE THE PLAN, IF APPROVED, IN OPERATION AS EARLY AS PRACTICABLE, AND IT IS THEREFORE RECOMMENDED THAT THE DEPARTMENT REQUEST THE COMPTROLLER GENERAL TO EXPEDITE CONSIDERATION THEREOF.

2. EACH EMPLOYEE WHO DESIRES TO PROCURE DEFENSE BONDS WILL SUBMIT A REQUEST ON A PRESCRIBED FORM CONFORMING TO TREASURY REGULATIONS, INDICATING THE VALUES AND ALL OTHER DATA NECESSARY FOR ISSUING AND REGISTERING THE BONDS. HE WILL SPECIFY THE AMOUNT OF HIS PAY HE DESIRES RESERVED ON EACH PAY ROLL TO BE PLACED TO HIS CREDIT FOR THIS PURPOSE. CREDITS ON SUCCESSIVE PAY ROLLS WILL BE ACCUMULATED TO HIS ACCOUNT UNTIL THE ISSUE PRICE OF THE STIPULATED BOND HAS BEEN REACHED OR EXCEEDED, WHEN SUCH BOND WILL BE ISSUED TO HIM; THE BALANCE, IF ANY, TO BE ADDED TO LATER CREDITS FOR THE SAME PURPOSE SHOWN ON SUCCEEDING PAY ROLLS.

3. AT EACH NAVY YARD OR STATION A DULY DESIGNATED ISSUING AGENT AND CERTIFYING OFFICER WILL BE STATIONED WHO WILL BE PROVIDED WITH A STOCK OF BLANK BONDS, IN ACCORDANCE WITH AN AGREEMENT ENTERED INTO BETWEEN THE SECRETARY OF THE TREASURY AND THE SECRETARY OF THE NAVY, A COPY OF WHICH IS ATTACHED HERETO. A COMPLETE RECORD OF THE ACCOUNT FOR EACH INDIVIDUAL CONCERNED WILL BE MAINTAINED, SHOWING THE ACCRUALS ON THE PARTICULAR PAY ROLLS, THE NECESSARY DETAILS OF THE BONDS ISSUED, AND ALL OTHER DATA NECESSARY FOR SUBSEQUENT IDENTIFICATION AND CHECK.

4. IN CASE AN EMPLOYEE CANCELS HIS REQUEST FOR PAY RESERVATIONS, OR IS DISCHARGED, ANY BALANCE DUE HIM (LESS THAN THE ISSUE PRICE OF A BOND) WILL BE PAID HIM BY CHECK. IN CASE OF DEATH, THE USUAL PROCEDURE FOR SETTLING UNPAID BALANCE WILL BE FOLLOWED.

5. IT WILL BE NOTED THAT THE PLAN PROPOSED MAY PROPERLY BE REGARDED AS PROVIDING, FIRST, FOR ACCUMULATING UNPAID BALANCES TO THE CREDIT OF INDIVIDUAL EMPLOYEES, AND SECOND, FOR LIQUIDATING SUCH BALANCES BY DELIVERY TO PAYEES OF GOVERNMENT OBLIGATIONS IN THE FORM OF DEFENSE SAVINGS BONDS. THE PLAN DIFFERS FROM THE ORDINARY ALLOTMENT IN THAT NO THIRD PARTY APPEARS, AND NO ASSIGNMENT OF PAY IS INVOLVED. EACH PAYEERECEIVES HIS FULL PAY EARNED, EITHER IN CHECK, CASH, OR GOVERNMENT BOND.

IN THE MEMORANDUM APPROVED AUGUST 28 AND SEPTEMBER 3, 1941, BY THE SECRETARY OF THE NAVY AND THE SECRETARY OF THE TREASURY, RESPECTIVELY, THE PROPOSED PLAN FOR THE SALE OF SAVINGS BONDS BY THE NAVY DEPARTMENT IS SET FORTH IN DETAIL AND, WITH RESPECT TO THE ACCOUNTING FOR THE PROCEEDS OF SALES OF SAVINGS BONDS SOLD BY NAVY AGENCIES, IT IS THEREIN PROVIDED:

THE MONTHLY PROCEEDS OF SALES OF SAVINGS BONDS RECEIVED BY SALES AGENCIES OF THE NAVY SHALL BE ACCOUNTED FOR IN THE OFFICIAL RETURNS OF THE NAVY DISBURSING OFFICERS CONCERNED IN SUCH A MANNER AS SHALL BE DIRECTED BY THE PAYMASTER GENERAL FOR THE PURPOSE OF EFFECTUATING THE PROMPT DEPOSIT OF THE FUNDS RECEIVED BY THE PAYMASTER GENERAL IN THE GENERAL ACCOUNT OF THE TREASURER OF THE UNITED STATES FOR THE CREDIT OF " THE PAYMASTER GENERAL OF THE NAVY--- U.S. SAVINGS BOND ACCOUNT, SYMBOL 50041.' AT THE END OF EACH MONTH THE SALES AGENCIES SHALL REMIT, BY LETTER, TO THE PAYMASTER GENERAL, INFORMATION AS TO THE TOTAL SALES DURING A MONTH, TOGETHER WITH THE ORIGINAL AND DUPLICATE REGISTRATION STUBS RELATING TO THE BONDS SOLD DURING THAT MONTH. FOLLOWING A MONTHLY RECONCILIATION OF SALES REPORTED AS SHOWN BY REGISTRATION STUBS AND PROCEEDS OF SALES RECEIVED, THE PAYMASTER GENERAL OF THE NAVY WILL FORWARD TO THE TREASURER OF THE UNITED STATES, AS PUBLIC DEBT RECEIPTS, A CHECK COVERING THE AGGREGATE PROCEEDS OF SALES OF SAVINGS BONDS BY AGENCIES OF THE NAVY DEPARTMENT, IDENTIFIED AS TO THE MONTH IN WHICH THE BONDS WERE DATED. * * *

THE CONTEMPLATED ARRANGEMENT UNDER WHICH PART OF THE CURRENT PAY OF A CIVILIAN EMPLOYEE IS TO BE RESERVED ON EACH PAY ROLL FOR THE PROCUREMENT OF SAVINGS BONDS FOR WHICH HE SUBSCRIBES IS STATED TO BE A VOLUNTARY ACT ON THE PART OF THE SUBSCRIBER, IN THE NATURE OF AN AGREEMENT TO WITHHOLD PAYMENT PERIODICALLY OF AMOUNTS SUFFICIENT IN THE AGGREGATE TO EQUAL THE PURCHASE PRICE OF THE BONDS DESIRED. IT IS ASSUMED THAT UPON DELIVERY OF THE BONDS TO THE PURCHASER WHEN SUFFICIENT WITHHOLDINGS HAVE BEEN MADE FOR THE PURCHASE PRICE OF THE BONDS EVIDENCE THEREOF WOULD BE SUBMITTED WITH THE ACCOUNTS OF THE DISBURSING OFFICER IN WHICH THE LAST WITHHOLDING WAS MADE WITH APPROPRIATE REFERENCE TO PREVIOUS WITHHOLDINGS OR DEDUCTIONS, SO THAT THE PAY-ROLL RECORDS WILL SHOW THAT EACH EMPLOYEE HAS BEEN PAID THE FULL AMOUNT OF HIS SALARY.

A SOMEWHAT SIMILAR MATTER WAS CONSIDERED BY A FORMER COMPTROLLER OF THE TREASURY IN 1918 IN CONNECTION WITH THE AUTHORITY TO MAKE DEDUCTIONS FROM THE PAY OF CIVILIAN EMPLOYEES FOR SUBSCRIPTIONS TO LIBERTY LOAN BONDS. A DECISION OF MAY 9, 1918, 85 MS COMP. DEC. 501, AFTER REFERRING TO SECTIONS 3477 AND 3620, REVISED STATUTES, WHICH, RESPECTIVELY, (1) PROHIBIT THE ASSIGNMENT OF CLAIMS AGAINST THE UNITED STATES AND (2) REQUIRE THE PUBLIC MONEYS TO BE DRAWN IN FAVOR OF ONLY THE PERSONS TO WHOM PAYMENT IS TO BE MADE, IT WAS SAID IN PERTINENT PART:

THE MATTER OF LIBERTY LOAN BOND SUBSCRIPTIONS BY GOVERNMENT EMPLOYEES AND WITHHOLDING THE INSTALLMENTS THEREFOR FROM THEIR PAY, IS LARGELY AN ADMINISTRATIVE ARRANGEMENT WITH THE EMPLOYEE, THE MAIN QUESTION FOR THE ACCOUNTING OFFICERS OF THE UNITED STATES TREASURY BEING THAT THE DISBURSING ACCOUNTS GIVE A PROPER ACQUITTANCE TO THE GOVERNMENT FOR THE PAY. I CONSIDER THE ARRANGEMENT, HOWEVER, AS NOT INVOLVING STRICTLY A DEDUCTION FROM PAY, NOR AS WITHIN THE PROHIBITION UPON ASSIGNMENT OF CLAIMS, ETC. SO FAR AS THIS IS CONCERNED, I THINK AN INTEREST OF THE GOVERNMENT ITSELF APPEARS, AN INTEREST AKIN TO A PURCHASE FROM THE GOVERNMENT, WHEREIN THE REVISED STATUTES CITED HAVE NO APPLICATION.

WHILE THERE IS NO SPECIFIC AUTHORITY OF LAW FOR THE PAYMENT OF THE ACCRUED SALARY OF A GOVERNMENT EMPLOYEE BY THE DELIVERY OF A GOVERNMENT BOND INSTEAD OF CASH OR A CHECK, THERE WOULD APPEAR TO BE NO LEGAL OBJECTION THERETO WHEN THE EMPLOYEE VOLUNTARILY AGREES TO ACCEPT THE BOND IN LIEU OF CASH OR A CHECK. THEREFORE, AND NOTWITHSTANDING THE FACT THAT THE PROPOSED PLAN MAY ENTAIL A CONSIDERABLE AMOUNT OF OTHERWISE UNNECESSARY CLERICAL AND ACCOUNTING WORK UNDER YOUR DEPARTMENT FOR THE INDIRECT BENEFIT OF THE TREASURY DEPARTMENT, AND WILL IMPOSE SOME ADDITIONAL BURDEN UPON THIS OFFICE, IN VIEW OF THE PURPOSE INTENDED TO BE SERVED BY THE COOPERATION OF YOUR DEPARTMENT WITH THE TREASURY DEPARTMENT UNDER THE PLAN AGREED UPON, I FEEL JUSTIFIED IN NOT INTERPOSING ANY OBJECTION THERETO--- IT BEING UNDERSTOOD, OF COURSE, THAT ADEQUATE ACCOUNTING DATA WILL BE FURNISHED WITH THE ACCOUNTS TO ENABLE A PROPER AUDIT THEREOF BY THIS OFFICE.