A-84565, JUNE 14, 1937, 16 COMP. GEN. 1072

A-84565, JUNE 14, 1937, 16 COMP. GEN. 1072

FEDERAL SURPLUS COMMODITIES CORPORATION FUNDS - AVAILABILITY FOR TRAVELING EXPENSES, ETC., IN FOREIGN COUNTRIES FOR MARKET STUDIES FUNDS IN THE SPECIAL DEPOSIT ACCOUNT, FEDERAL SURPLUS COMMODITIES CORPORATION, ALTHOUGH RECEIVED FROM THE STATES AND NOT APPROPRIATED DIRECTLY TO THE CORPORATION, ARE NEVERTHELESS BECAUSE INITIALLY FEDERALLY APPROPRIATED FUNDS GRANTED TO THE STATES FOR RELIEF PURPOSES, IMPRESSED WITH A DEFINITE TRUST--- THAT OF RELIEF--- AND ARE NOT AVAILABLE FOR TRAVELING EXPENSES, ETC., OF EMPLOYEES FOR FOREIGN TRAVEL FOR AGRICULTURAL MARKET STUDIES, AN UNDERTAKING THE EXPENSES OF WHICH, IF AUTHORIZED, WOULD BE CHARGEABLE TO APPROPRIATIONS OF THE DEPARTMENT OF AGRICULTURE OR THE AGRICULTURAL ADJUSTMENT ADMINISTRATION.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE PRESIDENT, FEDERAL SURPLUS COMMODITIES CORPORATION, JUNE 14, 1937:

YOUR LETTER OF JUNE 3, 1937, IS AS FOLLOWS:

RECEIPT IS ACKNOWLEDGED OF YOUR LETTER OF APRIL 1, 1937 (FILE A 84565), IN CONNECTION WITH THE DIRECT SETTLEMENT OF VOUCHERS COVERING CLAIMS FOR TRAVEL AND OTHER EXPENSES DURING THE PERIOD JUNE 30 TO SEPTEMBER 22, 1936, BY VARIOUS INDIVIDUALS TRAVELING TO GREAT BRITAIN AND CONTINENTAL EUROPE "FOR THE PURPOSE OF MAKING STUDIES OF COOPERATIVE ENTERPRISES IN EUROPE AS SUCH ENTERPRISES AFFECT THE EXPANSION OF MARKETS AND THE INCREASE AND IMPROVEMENT OF THE DISTRIBUTION OF AGRICULTURAL AND OTHER COMMODITIES AND THE PRODUCTS THEREOF," MAKING INQUIRY AS TO THE FOLLOWING MATTERS: FIRST, AN EXPLANATION AS TO WHETHER DUE CONSIDERATION WAS GIVEN TO THE STATUTORY RESTRICTION CONTAINED IN SECTION 2 OF THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935, 49 STAT. 117, WHICH LIMITS THE EXPENDITURE OF FUNDS APPROPRIATED THEREIN FOR USE ONLY IN THE UNITED STATES AND ITS TERRITORIES AND POSSESSIONS; SECOND, AN EXPLANATION AS TO HOW THE TRAVEL IN ANY WISE ACCOMPLISHED THE PURPOSE AND POLICY OF THE CORPORATION; AND THIRD, THE AUTHORITY FOR USING THE FUNDS IN QUESTION TO PAY LOSSES DUE TO UNFAVORABLE RATES OF EXCHANGE.

THE FIRST INQUIRY APPEARS TO ASSUME THAT FUNDS NOW ON DEPOSIT TO THE CREDIT OF THE FEDERAL SURPLUS COMMODITIES CORPORATION CONSIST OF FUNDS EITHER APPROPRIATED TO THE CORPORATION FROM THE EMERGENCY RELIEF ACT OF 1935 OR APPROPRIATED TO THE FEDERAL EMERGENCY RELIEF ADMINISTRATION BY THAT ACT AND SUBSEQUENTLY GRANTED TO THE CORPORATION BY THE FEDERAL EMERGENCY RELIEF ADMINISTRATION. THE CORPORATION HAS NEVER RECEIVED ANY APPROPRIATIONS FROM CONGRESS, NOR HAS IT RECEIVED ANY GRANTS FROM THE FEDERAL EMERGENCY RELIEF ADMINISTRATION. THE ONLY FEDERAL EMERGENCY RELIEF ADMINISTRATION FUNDS WHICH HAVE EVENTUALLY FOUND THEIR WAY INTO THE TREASURY OF THE CORPORATION CONSIST OF FUNDS GRANTED BY THE STATES TO THE CORPORATION, AND OF THESE NONE WERE INITIALLY 1935 FUNDS.

UNTIL NOVEMBER 16, 1935, WHEN THE CONTROL OF THE CORPORATION WAS TRANSFERRED TO THE DEPARTMENT OF AGRICULTURE, THE CORPORATION WAS FINANCED EXCLUSIVELY BY FUNDS GRANTED AND ASSIGNED TO THE CORPORATION BY THE GOVERNORS OF THE SEVERAL STATES AND ALL OF THE TERRITORIES EXCEPT HAWAII.

CONCERNING THE SECOND POINT IN YOUR LETTER, NAMELY, THE CONNECTION BETWEEN AN INQUIRY INTO THE METHODS OF MARKETING COOPERATIVES AND THE FUNCTIONS OF THE CORPORATION, THERE WAS QUOTED IN YOUR LETTER AN EXCERPT FROM THE UNITED STATES GOVERNMENT MANUAL, WHICH EMPHASIZED THE PRINCIPAL ACTIVITY OF THE CORPORATION AS BEING THE DISTRIBUTION OF SURPLUS AGRICULTURAL COMMODITIES TO STATE RELIEF AGENCIES. THIS IS TRUE AS A GENERALIZATION BUT IS NOT DESCRIPTIVE OF ALL OF THE FUNCTIONS OF THE CORPORATION.

PRIOR TO NOVEMBER 16, 1935, WHEN THE CORPORATION WAS UNDER THE CONTROL OF THE FEDERAL EMERGENCY RELIEF ADMINISTRATION, ITS POLICIES WERE DETERMINED BY RELIEF CONSIDERATIONS AND IT PROCURED CERTAIN COMMODITIES WHICH WERE NOT OF AGRICULTURAL ORIGIN. FOR INSTANCE, IN THE WINTER OF 1933-34 IT MADE DISTRIBUTION OF 1,133,890 TONS OF COAL AND COKE.

HOWEVER, WITH THE TRANSFER OF CONTROL TO THE DEPARTMENT OF AGRICULTURE, THE EMPHASIS WAS SHIFTED FROM RELIEF TO AGRICULTURAL CONSIDERATIONS, AND THE CORPORATION HAS BEEN CONSIDERED TO HAVE AUTHORITY TO ENGAGE IN ANY OPERATION CONSISTENT WITH THE POLICIES OF THE DEPARTMENT OF AGRICULTURE AND NOT INCONSISTENT WITH ITS OWN CHARTER POWERS.

EVER SINCE THE PASSAGE OF SECTION 32 OF PUBLIC, NO. 320, AS AMENDED, THE FEDERAL SURPLUS COMMODITIES CORPORATION HAS COOPERATED CLOSELY WITH THE DEPARTMENT OF AGRICULTURE IN CONNECTION WITH THE DISTRIBUTION OF AGRICULTURAL COMMODITIES PROCURED BY THE AGRICULTURAL ADJUSTMENT ADMINISTRATION PURSUANT TO SAID ACT. THE CHARTER POWERS OF THE CORPORATION WHICH PERMIT SUCH COOPERATION ARE CONTAINED IN THE THIRD ARTICLE OF THE CERTIFICATE OF INCORPORATION, WHICH PROVIDES AS FOLLOWS:

"THIRD. THE NATURE OF THE BUSINESS AND OBJECTS OR PURPOSES TO BE TRANSACTED, PROMOTED OR CARRIED ON BY THIS CORPORATION ARE:

"/A) TO RELIEVE THE EXISTING NATIONAL ECONOMIC EMERGENCY BY EXPANSION OF MARKETS FOR, REMOVAL OF, AND INCREASING AND IMPROVING THE DISTRIBUTION OF, AGRICULTURAL AND OTHER COMMODITIES AND PRODUCTS THEREOF;

"/G) TO COOPERATE WITH ANY PRIVATE, PUBLIC, OR GOVERNMENTAL AGENCY OR AGENCIES;

"/J) TO ENTER INTO AND ENCOURAGE FARMERS, PRODUCERS, AND OTHERS TO ENTER INTO MARKETING PLANS AND AGREEMENTS AND TO COOPERATE IN ANY PLAN WHICH PROVIDES FOR REDUCTION IN THE ACREAGE OR REDUCTION IN THE PRODUCTION FOR MARKET OF AGRICULTURAL COMMODITIES; * * *.'

COPIES OF THE CORPORATION'S CHARTER AND BY-LAWS ARE ON FILE IN YOUR OFFICE.

THE PURPOSE OF SECTION 32 OF PUBLIC, NO. 320, 74TH CONGRESS, AS AMENDED, IS TO RELIEVE AGRICULTURAL MARKETING SITUATIONS BY ENCOURAGING THE EXPORTATION AND THE DOMESTIC CONSUMPTION OF AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF. AN INQUIRY INTO THE METHODS OF COOPERATIVE ENTERPRISES AS THEY RELATE TO THE DISTRIBUTION OF AGRICULTURAL AND OTHER COMMODITIES AND PRODUCTS WAS CONSIDERED TO BE PERTINENT TO CERTAIN AGRICULTURAL AND MARKETING PROBLEMS. AS THE COST OF FINANCING SUCH AN INQUIRY BY THE CORPORATION DID NOT APPEAR TO CONTRAVENE ANY PROVISIONS OF EXISTING LAW, THE ADVISABILITY OF HAVING SUCH AN INQUIRY MADE WAS CONSIDERED TO BE A MATTER WITHIN THE FIELD OF ADMINISTRATIVE DISCRETION.

THE THIRD POINT IN YOUR LETTER FOR CONSIDERATION IS THE AUTHORITY FOR PAYING EXCHANGE LOSSES SUSTAINED BY EMPLOYEES ON TRAVEL STATUS IN FOREIGN COUNTRIES. THE ACT OF MARCH 26, 1934, 48 STAT. 466, WHICH WAS REFERRED TO IN YOUR LETTER, AUTHORIZES APPROPRIATIONS TO MEET LOSSES SUSTAINED BY EMPLOYEES OF THE UNITED STATES DUE TO APPRECIATION OF FOREIGN CURRENCIES IN THEIR RELATION TO THE AMERICAN DOLLAR, BUT SAID ACT DOES NOT AUTHORIZE PAYMENT OF ANY SUCH LOSSES. THE AUTHORITY FOR SUCH PAYMENTS IS TO BE FOUND IN "AMENDMENT OF EXECUTIVE ORDER NO. 6657 A OF MARCH 27, 1934, AS AMENDED," DATED DECEMBER 24, 1934. SECTION 2 OF THIS EXECUTIVE ORDER READS AS FOLLOWS:

"THE PURPOSE OF THESE REGULATIONS IS TO PROVIDE FOR REIMBURSEMENT TO OFFICERS, ENLISTED MEN, AND EMPLOYEES OF THE UNITED STATES (HEREINAFTER REFERRED TO AS EMPLOYEES), FOR LOSSES SUSTAINED FROM APPRECIATION OF FOREIGN CURRENCIES IN THEIR RELATION TO THE AMERICAN DOLLAR, AS AUTHORIZED UNDER THE AFORESAID ACT.'

THE FACT THAT THIS CORPORATION NEVER RECEIVED ANY APPROPRIATION UNDER THE ACT OF MARCH 26, 1934, 48 STAT. 466, IS NOT CONSIDERED TO PRECLUDE IT FROM REIMBURSING EMPLOYEES FOR EXCHANGE LOSSES PURSUANT TO THE EXECUTIVE ORDER CITED ABOVE.

ALTHOUGH THE ADMINISTRATIVE EXPENSES OF THIS CORPORATION COME UNDER THE SUPERVISION OF THE BUREAU OF THE BUDGET BY VIRTUE OF EXECUTIVE ORDER NO. 7126, AS AMENDED BY EXECUTIVE ORDER NO. 7150, AND APPEAR REGULARLY IN THE BUDGET OF THE UNITED STATES, CONGRESS NEVER HAS APPROPRIATED ANY FUNDS FOR THIS CORPORATION. HENCE, IF IT IS HELD THAT THE CORPORATION MAY PAY EXCHANGE LOSSES ONLY OUT OF APPROPRIATED FUNDS, THERE WOULD APPEAR TO BE NO AUTHORITY FOR PAYMENT OF SALARIES AND OTHER ADMINISTRATIVE EXPENSE ITEMS, FOR THE REASON THAT THE CORPORATION NEVER HAS HAD AN APPROPRIATION TO MEET ADMINISTRATIVE EXPENSES.

IT IS HOPED THAT, IN THE LIGHT OF THIS ADDITIONAL CLARIFYING INFORMATION, YOU WILL FIND THAT CAREFUL CONSIDERATION WAS GIVEN TO THE PROPRIETY OF THE USE OF THE FUNDS OF THE CORPORATION TO ACCOMPLISH THE PURPOSES OF THE CORPORATION AND TO THE PAYMENT OF EXCHANGE LOSSES SUFFERED BY EMPLOYEES ON TRAVEL STATUS IN FOREIGN COUNTRIES.

EXECUTIVE ORDER 7126 OF AUGUST 5, 1935, AS AMENDED BY EXECUTIVE ORDER 7150 OF AUGUST 19, 1935, REQUIRED YOUR CORPORATION TO SUBMIT TO THE BUREAU OF THE BUDGET ESTIMATES FOR ADMINISTRATIVE EXPENSES. BASED ON SUCH ESTIMATES, THE BUDGET, 1937 (PAGE 46), DISCLOSES THE SOURCE OF YOUR FUNDS AS FOLLOWS:

TABLE SOURCE OF FUNDS: ESTIMATE 1936 ACTUAL 1935

TRANSFERS FROM STATES (THROUGH FEDERAL

EMERGENCY RELIEF ADMINISTRATION):

1934 OBLIGATED FOR 1935 REGULAR

RELIEF --------------------------------- 7,351,785

ALLOTMENTS RECEIVED IN 1935:

REGULAR RELIEF ----------------------- 1,041,780 45,501,000

DROUGHT RELIEF ----------------------- 40,300,000

1935 ALLOTMENT AVAILABLE IN 1936, REGULAR

RELIEF --------------------------------- 18,010,856 18,010,856

WHILE THE FUNDS IN THE SPECIAL DEPOSIT ACCOUNT, FEDERAL SURPLUS COMMODITIES CORPORATION, WERE NOT APPROPRIATED DIRECTLY TO YOUR CORPORATION, THEY NEVERTHELESS WERE INITIALLY FEDERALLY APPROPRIATED FUNDS AND WERE GRANTED TO THE VARIOUS STATES FOR SPECIFIC PURPOSES OF RELIEF. IN TURNING SUCH FUNDS OVER TO YOUR CORPORATION THE STATES DID NOT AND COULD NOT ENLARGE THE PURPOSES FOR WHICH THEY WERE ORIGINALLY GRANTED. OBVIOUSLY, THEIR USE FOR CONDUCTING INVESTIGATIONS OR STUDIES IN EUROPE WHICH, IF AUTHORIZED, WOULD OTHERWISE HAVE BEEN CHARGEABLE TO APPROPRIATIONS OF THE DEPARTMENT OF AGRICULTURE, OR THE AGRICULTURAL ADJUSTMENT ADMINISTRATION, IS NOT APPLYING SUCH FUNDS TO THE RELIEF PURPOSES FOR WHICH THEY WERE GRANTED TO THE STATES. IT IS NOT A QUESTION OF WHAT POWERS MAY BE EXERCISED UNDER YOUR CHARTER, BUT A QUESTION OF THE PROPER USE OF FUNDS WHICH, WHEN MADE AVAILABLE TO YOUR CORPORATION, WERE IMPRESSED WITH A DEFINITE TRUST. SECTION 32 OF THE ACT OF AUGUST 24, 1935, 49 STAT. 774, AS AMENDED, REFERRED TO IN YOUR SUBMISSION, WHICH PROVIDES FUNDS FOR USE BY THE SECRETARY OF AGRICULTURE FOR CERTAIN PURPOSES, DID NOT CONFER ANY ADDITIONAL AUTHORITY UPON YOUR CORPORATION NOR AUTHORIZE THE USE OF ITS FUNDS FOR THE PURPOSES OF THAT SECTION.

IN VIEW OF THE FOREGOING, NO PART OF THE AMOUNTS CLAIMED BY THE 10 EMPLOYEES WAS PROPERLY CHARGEABLE TO THE SPECIAL DEPOSIT ACCOUNT OF YOUR CORPORATION, AND INSOFAR AS THE SETTLEMENTS AUTHORIZED THE PAYMENT TO THE CLAIMANTS OF PORTIONS OF THE AMOUNTS CLAIMED, THE SETTLEMENTS WERE IN ERROR AND WILL BE REVISED AND CHARGES RAISED AGAINST THE RESPECTIVE EMPLOYEES FOR THE AMOUNTS PAID THEREUNDER.

IN VIEW OF THE FOREGOING, IT IS NOT NECESSARY AT THIS TIME TO PASS UPON THE QUESTIONS OF EXCHANGE LOSS OR THE ALLOWANCE OF PER DIEM WHILE ONBOARD SHIP WHEN NOT PROVIDED IN THE TRAVEL ORDERS.