OCTOBER 11, 1922, 2 COMP. GEN. 276
Highlights
1922: I HAVE YOUR LETTER OF SEPTEMBER 28. IS THE AMOUNT OF THE COMMISSION CHARGED ON THE PURCHASE OF LIBERTY BONDS AND VICTORY NOTES WHEN PURCHASED ON THE STOCK EXCHANGE TO BE REGARDED AS A PART OF THE COST WITHIN THE MEANING OF THE PROVISION IN THE ACT OF MARCH 3. THE FIRST QUESTION IS ANSWERED IN THE AFFIRMATIVE. - THAT IS TO SAY. I DO NOT THINK SUCH COULD HAVE BEEN THE CONTEMPLATION OF THE LAW. NO COMMISSION IS INVOLVED WHEN BONDS OR NOTES ARE REDEEMED AT PAR AT MATURITY OR WHEN CALLED. AS IT WAS THE EVIDENT INTENT OF THE LAW THAT NO GREATER AMOUNT WAS TO BE PAID FROM THE SINKING FUND ON ACCOUNT OF THE PRINCIPAL OF THE BONDS AND NOTES PURCHASED THEREUNDER THAN THE AGGREGATE PAR VALUE OF ALL SUCH BONDS SO PURCHASED.
OCTOBER 11, 1922, 2 COMP. GEN. 276
RETIREMENT OF LIBERTY BONDS AND VICTORY NOTES THE COMMISSION CHARGED ON THE PURCHASE BY THE GOVERNMENT OF LIBERTY BONDS AND VICTORY NOTES UNDER SECTION 6 OF THE ACT OF MARCH 3, 1919, 40 STAT., 1311, BEING A PART OF THE COST, MUST BE ADDED TO THE PURCHASE PRICE WHEN COMPUTING THE AVERAGE COST UNDER THE LIMITATIONS IMPOSED BY SAID ACT, AND ALL BONDS AND NOTES PURCHASED SINCE JULY 1, 1920, FROM THE SINKING FUND CREATED BY SAID ACT, MUST BE CONSIDERED IN THE COMPUTATION WITHOUT REGARD TO THEIR SERIES OR DESIGNATION.
COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, OCTOBER 11, 1922:
I HAVE YOUR LETTER OF SEPTEMBER 28, 1922, REQUESTING DECISION OF TWO QUESTIONS WHICH MAY BE STATED AS FOLLOWS:
1. IS THE AMOUNT OF THE COMMISSION CHARGED ON THE PURCHASE OF LIBERTY BONDS AND VICTORY NOTES WHEN PURCHASED ON THE STOCK EXCHANGE TO BE REGARDED AS A PART OF THE COST WITHIN THE MEANING OF THE PROVISION IN THE ACT OF MARCH 3, 1919, 40 STAT., 1311, TO THE EFFECT THAT THE "AVERAGE COST OF THE BONDS AND NOTES PURCHASED" FROM THE SINKING FUND CREATED UNDER SECTION 6 OF SAID ACT "SHALL NOT EXCEED PAR AND ACCRUED INTEREST?
2. WHETHER THE LIMITATION AS TO AVERAGE COST APPLIES TO EACH ISSUE OF BONDS AND NOTES SEPARATELY OR TO THE AGGREGATE OF ALL BONDS AND NOTES PURCHASED FROM THE SINKING FUND SINCE JULY 1, 1920?
THE FIRST QUESTION IS ANSWERED IN THE AFFIRMATIVE--- THAT IS TO SAY, THE AMOUNT OF THE COMMISSION MUST BE REGARDED AS A PART OF THE COST IN DETERMINING THE "AVERAGE COST" FOR THE PURPOSE OF THE LIMITATION PRESCRIBED IN SECTION 6 OF THE ACT OF MARCH 3, 1919. TO HOLD OTHERWISE MIGHT RESULT IN THE PAYMENT OF MORE THAN THE FULL PAR VALUE OF THE BONDS AND NOTES, AND I DO NOT THINK SUCH COULD HAVE BEEN THE CONTEMPLATION OF THE LAW. NO COMMISSION IS INVOLVED WHEN BONDS OR NOTES ARE REDEEMED AT PAR AT MATURITY OR WHEN CALLED, AND AS IT WAS THE EVIDENT INTENT OF THE LAW THAT NO GREATER AMOUNT WAS TO BE PAID FROM THE SINKING FUND ON ACCOUNT OF THE PRINCIPAL OF THE BONDS AND NOTES PURCHASED THEREUNDER THAN THE AGGREGATE PAR VALUE OF ALL SUCH BONDS SO PURCHASED, IT MUST BE HELD THAT THE COMMISSION, WHICH IS IN FACT A PART OF THE COST, MUST BE ADDED TO THE PURCHASE PRICE IN DETERMINING THE "AVERAGE COST.'
WITH REFERENCE TO THE SECOND QUESTION, I FIND NOTHING IN THE LANGUAGE OF THE PROVISION TO INDICATE AN INTENT THAT ANY SERIES OF BONDS OR NOTES IS TO BE CONSIDERED SEPARATELY IN DETERMINING THE AVERAGE COST. YOU ARE ADVISED, THEREFORE, THAT THE LIMITATION WITH RESPECT TO AVERAGE COST APPLIES TO ALL BONDS AND NOTES PURCHASED UNDER AUTHORITY OF SECTION 6 OF THE ACT OF MARCH 3, 1919, FROM JULY 1, 1920, WITHOUT REGARD TO SERIES OR DESIGNATION.