B-36435, SEPTEMBER 24, 1943, 23 COMP. GEN. 212

B-36435: Sep 24, 1943

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LOSSES INCIDENT TO RECONVERSION OF FOREIGN FUNDS THE COST OF TRAVELERS' CHECKS PURCHASED IN ORDER FOR AN OFFICIAL TRAVELER TO TAKE EXPENSE MONEY OUT OF THIS COUNTRY FOR TRAVEL ABROAD AND TO REENTER THIS COUNTRY WITH UNEXPENDED FOREIGN CURRENCY IS NOT A TRAVEL EXPENSE ITEM ALLOWABLE UNDER THE STANDARDIZED GOVERNMENT TRAVEL REGULATIONS. THE RELATION OF SUCH RECONVERSION TO THE NECESSITIES OF PUBLIC TRAVEL IS ESTABLISHED BY A SHOWING THAT THE AMOUNT ORIGINALLY CONVERTED BORE SOME REASONABLE RELATIONSHIP TO THE ESTIMATED OFFICIAL NEEDS (ANTICIPATED PER DIEM. THE UNUSED BALANCE OF LOCAL FUNDS OBTAINED TO DEFRAY TRAVELING EXPENSES DURING HIS STAY THERE MAY NOT BE REIMBURSED FOR A LOSS SUSTAINED BY REASON OF A VARIATION IN THE BASIC VALUE OF THE DOLLAR DURING THE PERIOD THE LOCAL MONEY WAS HELD BY HIM.

B-36435, SEPTEMBER 24, 1943, 23 COMP. GEN. 212

TRAVELING EXPENSES INCIDENT TO FOREIGN TRAVEL - COSTS OF TRAVELERS' CHECKS; LOSSES INCIDENT TO RECONVERSION OF FOREIGN FUNDS THE COST OF TRAVELERS' CHECKS PURCHASED IN ORDER FOR AN OFFICIAL TRAVELER TO TAKE EXPENSE MONEY OUT OF THIS COUNTRY FOR TRAVEL ABROAD AND TO REENTER THIS COUNTRY WITH UNEXPENDED FOREIGN CURRENCY IS NOT A TRAVEL EXPENSE ITEM ALLOWABLE UNDER THE STANDARDIZED GOVERNMENT TRAVEL REGULATIONS, IN THE ABSENCE OF A PROVISION THEREIN, EXPRESS OR IMPLIED, FOR SUCH AN ITEM. WHERE AN OFFICIAL TRAVELER ABROAD RECONVERTS TO DOLLARS, UPON LEAVING A PARTICULAR COUNTRY, THE UNUSED BALANCE OF LOCAL FUNDS OBTAINED DURING HIS STAY THERE, AND THE RELATION OF SUCH RECONVERSION TO THE NECESSITIES OF PUBLIC TRAVEL IS ESTABLISHED BY A SHOWING THAT THE AMOUNT ORIGINALLY CONVERTED BORE SOME REASONABLE RELATIONSHIP TO THE ESTIMATED OFFICIAL NEEDS (ANTICIPATED PER DIEM, TRANSPORTATION, AND MISCELLANEOUS ACTUAL EXPENSES) OF THE TRAVELER, HE MAY BE REIMBURSED--- UNDER PARAGRAPH 8 (C) OF THE STANDARDIZED GOVERNMENT TRAVEL REGULATIONS -- FOR A LOSS SUSTAINED BY REASON OF THE DIFFERENCE BETWEEN THE BUYING RATE AND SELLING RATE FOR DOLLARS ON THE DAY OF RECONVERSION. WHERE AN OFFICIAL TRAVELER ABROAD RECONVERTS TO DOLLARS, UPON LEAVING A PARTICULAR COUNTRY, THE UNUSED BALANCE OF LOCAL FUNDS OBTAINED TO DEFRAY TRAVELING EXPENSES DURING HIS STAY THERE, HIS CLAIM FOR REIMBURSEMENT FOR A LOSS SUSTAINED BY REASON OF THE DIFFERENCE BETWEEN THE BUYING RATE AND SELLING RATE FOR DOLLARS SHOULD BE SUPPLIED BY A SHOWING, BY APPROPRIATE BANK TICKETS OR OTHER EVIDENCE, OF THE RATES AND AMOUNTS OF BOTH THE ORIGINAL CONVERSION AND RECONVERSION AS WELL AS THE PREVAILING BUYING RATE FOR DOLLARS ON THE DAY OF RECONVERSION. AN OFFICIAL TRAVELER ABROAD WHO RECONVERTS TO DOLLARS, UPON LEAVING A PARTICULAR COUNTRY, THE UNUSED BALANCE OF LOCAL FUNDS OBTAINED TO DEFRAY TRAVELING EXPENSES DURING HIS STAY THERE MAY NOT BE REIMBURSED FOR A LOSS SUSTAINED BY REASON OF A VARIATION IN THE BASIC VALUE OF THE DOLLAR DURING THE PERIOD THE LOCAL MONEY WAS HELD BY HIM, AS DISTINGUISHED FROM A LOSS SUSTAINED BY REASON OF THE DIFFERENCE BETWEEN THE BUYING RATE AND SELLING RATE FOR DOLLARS.

ACTING COMPTROLLER GENERAL YATES TO THE DIRECTOR, OFFICE OF ECONOMIC WARFARE, SEPTEMBER 24, 943:

REFERENCE IS MADE TO A LETTER OF AUGUST 16, 1943, FROM THE VICE PRESIDENT OF THE EXPORT-IMPORT BANK OF WASHINGTON, AS FOLLOWS:

ATTACHED HERETO IS A SUPPLEMENTARY EXPENSE REPORT ON STANDARD FORM NO. 1012 OF JAMES F. MERSEREAU, COUNSEL TO THE EXPORT-IMPORT BANK OF WASHINGTON, WITH RESPECT TO THE RECENT TRIP WHICH HE MADE ON OFFICIAL BUSINESS TO SOUTH AMERICA. AS INDICATED THEREIN, HIS EXPENSES INCLUDED THE COST OF PURCHASING TRAVELERS' CHECKS BEFORE LEAVING THIS COUNTRY AND AGAIN BEFORE RETURNING THE COST OF COMMISSIONS CHARGED ON EXCHANGE OF TRAVELERS' CHECKS INTO THE CURRENCY OF THE VARIOUS SOUTH AMERICAN COUNTRIES, AS WELL AS VARIOUS LOSSES INCURRED IN FOREIGN CURRENCY EXCHANGES WHICH ARE LUMPED UNDER THE HEADING " COMMISSION ON EXCHANGE.' ACCORDINGLY, WE SHOULD APPRECIATE A RULING ON TWO POINTS WHICH ARE NOT CLEARLY COVERED BY THE TEXT OF THE GOVERNMENT TRAVEL REGULATIONS:

1. DO COMMISSIONS PAID FOR THE PURCHASE OF TRAVELERS' CHECKS IN ORDER TO TAKE EXPENSE MONEY OUT OF THIS COUNTRY AND FOR THE EXCHANGE OF SUCH CHECKS INTO FOREIGN CURRENCY, AS WELL AS FOR THE REPURCHASE OF SUCH CHECKS IN ORDER TO REENTER THIS COUNTRY WITH ANY UNEXPENDED FOREIGN CURRENCY, CONSTITUTE AN ALLOWABLE TRAVELING EXPENSE?

2. DO LOSSES ON FOREIGN CURRENCY EXCHANGES CONSTITUTE AN ALLOWABLE EXPENSE WHEN SUCH LOSSES ARE DUE TO THE FACT THAT THE SELLING RATE IS HIGHER THAN THE BUYING RATE FOR UNITED STATES OLLARS?

WE BELIEVE THAT BOTH ITEMS SHOULD BE ALLOWED. ATTACHED HERETO IS A MEMORANDUM IN SUPPORT OF OUR POSITION WHICH WAS PREPARED BY OUR LEGAL DEPARTMENT.

IN VIEW OF THE FREQUENT APPEARANCE OF THESE PROBLEMS, WE REQUEST A RULING ON THE TWO ITEMS LISTED AT YOUR EARLY CONVENIENCE.

AS THE OPERATIONS OF THE EXPORT-IMPORT BANK WERE TRANSFERRED TO THE OFFICE OF ECONOMIC WARFARE BY EXECUTIVE ORDER OF JULY 15, 1943, NO. 9361, THE REQUEST FOR DECISION WILL BE CONSIDERED AS HAVING BEEN MADE UPON YOUR BEHALF. SEE 19 COMP. GEN. 150, 400.

ON THE VOUCHER ENCLOSED WITH THE BANK'S LETTER, THE SUM OF $1.50 IS CLAIMED AS THE COST OF TRAVELERS' CHECKS FOR $200 BOUGHT IN THIS COUNTRY PREPARATORY TO MR. MERSEREAU'S TRIP TO SOUTH AMERICA IN JANUARY 1943, AND $5.52 IS CLAIMED AS THE SUM OF CERTAIN COMMISSIONS ON EXCHANGE PAID ON THE ENCASHMENT OF THE CHECKS IN COLOMBIA, ECUADOR, PERU, AND BOLIVIA. THE FUND INTENDED TO BE CHARGED WITH THE AMOUNT OF THE CLAIM IS NOT STATED ON THE VOUCHER OR IN THE LETTER, SUPRA, BUT FOR PRESENT PURPOSES, IT WILL BE ASSUMED TO BE THE ITEM FOR ADMINISTRATIVE EXPENSES OF THE EXPORT-IMPORT BANK CONTAINED IN THE ACT OF JUNE 27, 1942, 56 STAT. 400, WHICH AUTHORIZES EXPENDITURES FOR, AMONG OTHER THINGS---

* * * TRAVEL EXPENSES, IN ACCORDANCE WITH THE STANDARDIZED GOVERNMENT TRAVEL REGULATIONS AND THE ACT OF JUNE 3, 1926, AS AMENDED (5 U.S.C. 821- 833) * * *.

AS TO THE COST OF TRAVELERS' CHECKS: THE MEMORANDUM ENCLOSED WITH THE LETTER DISCUSSES A DECISION OF APRIL 21, 1925, 4 COMP. GEN. 883, TO THE EFFECT THAT AN EXPENDITURE OF $35 FOR TRAVELERS CHECKS AGGREGATING $6,960, PURCHASED AT THE BEGINNING OF A JOURNEY, IS NOT REIMBURSABLE, SINCE AN EXPENSE OF THAT NATURE, FOR THE SAFEKEEPING OF FUNDS, IS PERSONAL. THE MEMORANDUM CONTINUES, IN PART---

COMMISSIONS FOR THE PURCHASE OF TRAVELERS' CHECKS

THE DECISION OF THE COMPTROLLER GENERAL MADE ON APRIL 21, 1925, 4 COMPTROLLER GENERAL 883 (A-8553), HELD "THE COST OF TRAVELERS' CHECKS" TO BE A "PERSONAL EXPENSE * * * THE SAFEKEEPING OF PRIVATELY OWNED FUNDS IS NOT A MATTER WITH WHICH THE GOVERNMENT IS CONCERNED * * *.' IT IS CLEAR THAT THE DECISION IS BASED ON THE GROUND THAT CHARGES SOLELY FOR THE SAFEKEEPING OF FUNDS, AND FOR NO OTHER PURPOSE, DO NOT CONSTITUTE AN ALLOWABLE EXPENSE.

UNDER THE PRESENT WARTIME CONDITIONS, HOWEVER, SAFEKEEPING IS NO PART OF THE MOTIVATING FACTOR IN THE PURCHASE OF TRAVELERS' CHECKS, WHICH IS NOT ONLY AUTHORIZED BUT IS PRACTICALLY MANDATORY TODAY. THIS IS TRUE BECAUSE OF THE PRESENT CURRENCY REGULATIONS WHICH WERE EXPLAINED BY PRESS SERVICE NO. 33-68 RELEASED BY THE TREASURY DEPARTMENT OCTOBER 16, 1942. IT IS THEREIN STATED, INTER ALIA:

"* * * * AFTER OCTOBER 31, 1942, PERSONS ENTERING THE UNITED STATES FROM ANY PLACE OTHER THAN MEXICO, GREAT BRITAIN, BERMUDA, CANADA AND NEWFOUNDLAND WILL BE REQUIRED TO TURN OVER TO CUSTOMS AUTHORITIES ALL THE CURRENCY IN THEIR POSSESSION IN EXCESS OF $50.00. * * * * THE NEW RULING CONSTITUTES A TIGHTENING OF THE CONTROLS AIMED AT PREVENTING THE DISPOSITION IN THIS COUNTRY OF CURRENCY LOOTED BY THE AXIS. * * * * THE TREASURY HAS REPEATEDLY WARNED PERSONS LEAVING THE UNITED STATES TO CARRY SOME MEANS OF PAYMENT OTHER THAN UNITED STATES CURRENCY WHEN TRAVELING OUTSIDE THE UNITED STATES. * * * * REGULATIONS ADOPTED IN COOPERATION WITH THIS GOVERNMENT'S CURRENCY PROGRAM MAKE THE GENERAL USE OF DOLLAR CURRENCY ILLEGAL IN MOST OF THE OTHER AMERICAN REPUBLICS. * * * * TRAVELERS' CHECKS, DRAFTS, OR TELEGRAPHIC TRANSFERS ARE THE BEST MEANS OF SATISFYING FINANCIAL NEEDS WHILE TRAVELING OUTSIDE THE UNITED STATES AT THE PRESENT TIME. IT IS EVIDENT THAT, AS A PRACTICAL MATTER UNDER CURRENT CONDITIONS, AN EXPENSE FOR TRAVELERS' CHECKS OR OTHER CREDIT ARRANGEMENTS IS NECESSARY FOR CIVILIAN COMMERCIAL TRAVEL ABROAD.

AT THE TIME OF THE DECISION REFERRED TO, AND PREVIOUSLY, THERE WERE NO STANDARDIZED GOVERNMENT TRAVEL REGULATIONS; THE REGULATIONS OF THE DEPARTMENTS VARIED CONSIDERABLY, AND WITHIN THE MORE OR LESS BROAD LIMITS OF SUCH REGULATIONS, TRAVEL EXPENSES WERE REIMBURSED UPON A SHOWING OF NECESSITY THEREFOR AND THE APPROVAL OF THE PARTICULAR DEPARTMENT INVOLVED. SEE 1 COMP. DEC. 404; 5 ID. 224; 9 ID. 156; 18 ID. 300; 25 ID. 487; 2 COMP. GEN. 236; 3 ID. 352; 5 ID. 802. IN THE STANDARDIZED REGULATIONS, WHICH WERE FIRST APPROVED IN 1926, IN THE EFFORT TO MAKE TRAVEL EXPENSES UNIFORM THROUGHOUT THE GOVERNMENT SERVICE THE ITEMS TO BE REIMBURSED WERE LISTED WITH PARTICULARITY, AND IT WAS NOT LEFT TO THE DISCRETION OF THE EMPLOYEE TRAVELING, OR HIS DEPARTMENT HEAD, OR THIS OFFICE, TO ALLOW EVEN NECESSARY ITEMS NOT PROVIDED FOR BY REGULATION. COMP. GEN. 311. ALTHOUGH THE THEN RECENT DECISIONS WITH RESPECT TO TRAVELERS' CHECKS (4 COMP. GEN. 883, SUPRA; A10005, AUGUST 5, 1925) DOUBTLESS WERE CONSIDERED, NO ITEMS OF THAT CHARACTER WERE INCLUDED, AND ANY INFERENCE FROM PARAGRAPH 1 (" EMPLOYEES * * * WILL PROVIDE THEMSELVES WITH SUFFICIENT FUNDS FOR ALL CURRENT EXPENSES") WOULD SEEM TO BE CONTRARY TO THEIR ALLOWANCE. IN THE PRESENT REGULATIONS, THE ONLY UNLISTED MISCELLANEOUS EXPENDITURES PROVIDED ARE THOSE INCURRED IN CONNECTION WITH THE TRANSACTION OF OFFICIAL BUSINESS (PARAGRAPH 79), WHILE PARAGRAPH 75 LISTS CERTAIN ITEMS PECULIAR TO TRAVEL ABROAD (PASSPORTS, VISAS, PHOTOGRAPHS, BIRTH CERTIFICATES, INOCULATIONS), BUT THE REGULATIONS DO NOT SPECIFY OR IMPLY AN ITEM FOR THE COST OF TRAVELERS' CHECKS.

IN SUCH CIRCUMSTANCES, AND NOTING THAT THE STATUTE WITH RESPECT TO THE EXPORT-IMPORT BANK PERMITS REIMBURSEMENT OF TRAVEL EXPENSES ONLY IN ACCORDANCE WITH THE STANDARDIZED GOVERNMENT TRAVEL REGULATIONS, THE ALLOWANCE OF ANY ITEMS NOT AUTHORIZED THEREIN--- HOWEVER NECESSARY IN FACT --- WOULD AMOUNT TO A WAIVER OF THE STATUTE OR AN AMENDMENT OF THE REGULATIONS, NEITHER OF WHICH HAS THIS OFFICE BEEN EMPOWERED TO MAKE. RATHER, THE INDICATED REMEDY, IN THE VIEW THAT TRAVELERS' CHECKS ARE NECESSARY, IS TO PROPOSE AN AMENDMENT TO THE REGULATIONS. AS NOW CONSTITUTED, THE REGULATIONS DO NOT PROVIDE FOR AN EXPENSE OF THAT NATURE, AND YOUR FIRST QUESTION IS ANSWERED ACCORDINGLY. AS TO THE REPURCHASE OF TRAVELERS' CHECKS WITH ANY FOREIGN CURRENCY UNEXPENDED AT THE END OF THE TRIP (ASIDE FROM THE REASONS JUST STATED) IT IS NOT CLEAR WHY ANY SUCH EXPENSE NEED BE INCURRED AT THE TIME OF DEPARTURE FOR THE RETURN TRIP OVER AND ABOVE THE COST OF AN ORDINARY COMMERCIAL DRAFT ON A BANK IN THIS COUNTRY.

LIMITING YOUR SECOND QUESTION TO THE SITUATION EVIDENTLY IN CONTEMPLATION, YOUR INQUIRY APPEARS TO BE WHETHER THEY MAY BE REIMBURSED THE LOSS INCURRED BY A TRAVELER ABROAD WHO, HAVING PROCURED MORE LOCAL FUNDS THAN WERE USED FOR HIS STAY IN A PARTICULAR COUNTRY, RECONVERTS THE UNUSED BALANCE TO DOLLARS AND PAYS A COMMISSION ON THE LATTER TRANSACTION IN THE FORM OF A SLIGHTLY HIGHER EXCHANGE RATE THAN THAT FOR WHICH THE DOLLARS FIRST WERE SOLD. THE DIFFERENCE BETWEEN THE BUYING AND SELLING RATES NORMALLY IS VERY SMALL--- ONE OR TWO PERCENT AND FREQUENTLY EVEN LESS--- AND ARISES FROM THE BANKERS' DEDUCTIONS AND CHARGES FOR THE SALE OF A DOLLAR DRAFT ON NEW YORK. SEE 19 COMP. GEN. 652; ID. 993.

IT FORMERLY WAS HELD THAT THE EXPENSE OF RECONVERSION OF EXCESS PURCHASES OF LOCAL FUNDS IS PERSONAL TO THE TRAVELER AND NOT REIMBURSABLE. A-6449, DECEMBER 4, 1924; A-10005, AUGUST 5, 1925. SUBSEQUENTLY THERE WAS INCORPORATED INTO THE STANDARDIZED GOVERNMENT TRAVEL REGULATIONS, 1934 EDITION, UNDER PARAGRAPH 8 (C)," FOREIGN CURRENCY.--- COMMISSIONS FOR CONVERSION OF CURRENCY IN FOREIGN COUNTRIES MAY BE ALLOWED. (SEE PARS. 90, 91.) " PERHAPS DUE TO THE COMPARATIVELY MINUTE SUMS INVOLVED, NO RECONSIDERATION OF THE EARLIER DECISIONS HAS BEEN REQUESTED, BUT, SO FAR AS SUCH RECONVERSIONS REASONABLY ARE RELATED TO THE NECESSITIES OF PUBLIC TRAVEL, THEIR EXPENSE IS REIMBURSABLE UNDER THAT PARAGRAPH. SUCH RELATION WOULD BE ESTABLISHED IF THE AMOUNT ORIGINALLY CONVERTED INTO THE LOCAL CURRENCY BORE SOME REASONABLE RELATION TO THE ESTIMATED OFFICIAL NEED OF THE TRAVELER IN THAT COUNTRY, THAT IS, THE ANTICIPATED PER DIEM, TRANSPORTATION, AND MISCELLANEOUS ACTUAL EXPENSES. IN CLAIMING ANY SUCH ITEM IT WOULD BE NECESSARY FOR THE TRAVELER TO SHOW, BY APPROPRIATE BANK TICKETS OR OTHER EVIDENCE, THE RATES AND AMOUNTS OF BOTH THE ORIGINAL CONVERSION AND THE RECONVERSION, AS WELL AS THE PREVAILING BUYING RATE ON THE DAY OF RECONVERSION, SINCE IT IS THE DIFFERENCE BETWEEN THAT BUYING RATE AND THE SELLING RATE AT WHICH DOLLARS WERE REPURCHASED THAT IS REIMBURSABLE, NOT ANY VARIATION IN THE BASIC VALUE OF THE DOLLAR DURING THE PERIOD THE LOCAL MONEY IS HELD BY THE TRAVELER. ANY GAIN OR LOSS IN THE LATTER CONNECTION IS FOR THE TRAVELER'S ACCOUNT ALONE. FINALLY, CONTRARY TO THE SUGGESTION CONTAINED IN THE MEMORANDUM SUBMITTED, NEITHER QUESTION IS AFFECTED OR CONTROLLED BY THE ACT OF MARCH 26, 1934, 48 STAT. 466, WHICH PROVIDES A PROGRAM FOR REIMBURSEMENT OF CURRENCY LOSSES OF AN ENTIRELY DIFFERENT NATURE, NAMELY, THOSE LOSSES INCURRED BY OFFICERS OF THE GOVERNMENT IN THE SERVICE ABROAD DUE TO THE APPRECIATION OF FOREIGN CURRENCY EXCHANGE RATES OVER THE PREVAILING RATES OF EXCHANGE IN EFFECT AT THE TIME THE AMERICAN DOLLAR WAS DEVALUED. SEE EXECUTIVE ORDER 7972, AS AMENDED.

THE VOUCHER FORWARDED WITH THE BANK'S LETTER IS RETURNED HEREWITH. SINCE IT REPRESENTS A RECLAIM OF ITEMS SUSPENDED IN A PRIOR PAYMENT, THE PRESENT VOUCHER SHOULD BE FORWARDED TO THE CLAIMS DIVISION OF THIS OFFICE FOR DIRECT SETTLEMENT AS A CLAIM. IF THE ACCOUNT CONTAINING THE ORIGINAL VOUCHER HAS NOT BEEN FORWARDED TO THIS OFFICE BY SUCH TIME, THE ORIGINAL VOUCHER MAY BE WITHDRAWN FROM SUCH ACCOUNT AND FORWARDED FOR ADVANCE CONSIDERATION WITH THE PRESENT CLAIM.

REFERRING TO THE ITEMS LISTED ON THE CLAIM, THE COST OF THE TRAVELERS' CHECKS WILL BE FOR ELIMINATION IN VIEW OF THE FOREGOING. THE ITEMS FOR COMMISSION ON EXCHANGE OF TRAVELERS' CHECKS ON JANUARY 10, 21, 22, 25, 27, AND 28 WILL BE EXPECTED TO BE ESTABLISHED BY EXCHANGE RECEIPTS ATTACHED TO THE ORIGINAL VOUCHER. SEE PARAGRAPHS 80 (D) AND 90 OF THE TRAVEL REGULATIONS. THE FIVE ITEMS TOTALING $1.26, COMPRISING THE COMMISSION ON EXCHANGE AT QUITO, ECUADOR, APPEAR TO MERIT A SOMEWHAT MORE CLARIFYING STATEMENT THAN THAT SUBMITTED, IN ORDER THAT IT MAY BE MADE PLAINLY TO APPEAR IN WHAT WAY THE AMOUNTS CLAIMED ARE IN FACT THE COST OF CONVERTING DOLLAR CHECKS INTO LOCAL FUNDS, OR VICE VERSA.