A-3911, JULY 30, 1924, 4 COMP. GEN. 131

A-3911, JULY 30, 1924, 4 COMP. GEN. 131

ACCOUNTING - DISTINCTIVE PAPER FOR CURRENCY, NATIONAL BANK NOTES, AND FEDERAL RESERVE NOTES THE APPROPRIATION FOR "DISTINCTIVE PAPER FOR UNITED STATES SECURITIES, 1925," MAY BE USED FOR ALL PURCHASES OF DISTINCTIVE PAPER FOR UNITED STATES CURRENCY, INCLUDING NATIONAL-BANK NOTES, AND FOR FEDERAL RESERVE NOTES, SUBJECT TO REIMBURSEMENT FROM TIME TO TIME FOR THE ACTUAL COST OF SUCH PAPER USED FOR FEDERAL RESERVE NOTES FROM THE INDEFINITE APPROPRIATION "PREPARATION AND ISSUE, FEDERAL RESERVE NOTES, REIMBURSABLE," THE LATTER APPROPRIATION TO BE REIMBURSED IN TURN BY THE FEDERAL RESERVE BANKS, AND PROVIDED THE PAPER ACTUALLY USED FOR CURRENCY ISSUED BY THE TREASURY DURING THE FISCAL YEAR 1925, DOES NOT EXCEED THE AMOUNT OF SUCH PAPER ON HAND ON JULY 1, 1924, PLUS THE 157,500,000 SHEETS AUTHORIZED TO BE PURCHASED DURING THE FISCAL YEAR 1925. THE EXPENSE OF RECEIPT, CUSTODY, AND ISSUE OF DISTINCTIVE PAPER FOR FEDERAL RESERVE NOTES, AND THE RECEIPT, EXAMINATION, AND DESTRUCTION OF MUTILATED FEDERAL RESERVE NOTES ARISING IN CONNECTION WITH THE PRINTING THEREOF, SHOULD BE DETERMINED AS ACCURATELY AS POSSIBLE AND CHARGED UNDER THE APPROPRIATION FOR "PREPARATION AND ISSUE OF FEDERAL RESERVE NOTES, REIMBURSABLE," AND DEPOSITED IN THE TREASURY AS MISCELLANEOUS RECEIPTS. (MODIFIED BY 4 COMP. GEN. 258.)

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, JULY 30, 1924:

I HAVE YOUR LETTER OF JULY 8, 1924, READING:

DISTINCTIVE PAPER FOR PAPER CURRENCY IS REQUIRED FOR TWO ACCOUNTS: (1) UNITED STATES CURRENCY, INCLUDING NATIONAL-BANK NOTES; AND (2) FEDERAL RESERVE NOTES PAPER FOR UNITED STATES CURRENCY, INCLUDING NATIONAL-BANK NOTES, IS CHARGED TO AN APPROPRIATION ANNUALLY GRANTED BY CONGRESS. PAPER FOR FEDERAL RESERVE NOTES IS CHARGED TO AN INDEFINITE APPROPRIATION ESTABLISHED BY THE FEDERAL RESERVE ACT, THE ESTABLISHED APPROPRIATION TITLE BEING "PREPARATION AND ISSUE, FEDERAL RESERVE NOTES, REIMBURSABLE," ANY CHARGE TO THIS APPROPRIATION BEING INCLUDED IN THE COST OF PRODUCING THE NOTES, REIMBURSEMENT THEREAFTER BEING MADE BY FEDERAL RESERVE BANKS.

THE PAPER USED FOR TWO CLASSES OF WORK IS IDENTICAL IN EVERY RESPECT. DISTINCTIVE PAPER IS OBTAINED UNDER CONTRACT, AND THE TOTAL AMOUNT REQUIRED ANNUALLY EXCEEDS THE CAPACITY OF A SINGLE MILL. UNTIL THE PRESENT TIME THE FORCE OF TREASURY EMPLOYEES NECESSARY FOR DUTY AT THE MILL, AS AUTHORIZED BY CONGRESS, THE SALARIES OF WHOM ARE CHARGED TO THE ANNUAL APPROPRIATION, HAS BEEN SUFFICIENT ONLY FOR THE OPERATION OF A SINGLE MILL. ACCORDINGLY, THE SALARIES OF SUCH EMPLOYEES AS ARE NECESSARY FOR THE OPERATION OF A SECOND MILL HAVE BEEN CHARGED TO THE INDEFINITE APPROPRIATION ABOVE REFERRED TO OR TO THE INDEFINITE APPROPRIATION "EXPENSES OF LOANS.' IN THE FORMER CASE ONLY PAPER FOR FEDERAL RESERVE NOTES WAS BEING MADE, AND IN THE LATTER ONLY BOND PAPER WAS BEING MADE. THIS ARRANGEMENT COVERED THE SITUATION UNTIL THE FISCAL YEAR 1924, WHEN FOR THE FIRST TIME REQUIREMENTS UNDER THE ANNUAL APPROPRIATION, SUPPLEMENTED BY A DEFICIENCY APPROPRIATION, EXCEEDED THE CAPACITY OF A SINGLE MILL. TO MEET THE SITUATION CONGRESS IN THE FIRST DEFICIENCY ACT, 1924, APPROVED APRIL 2, 1924, AUTHORIZED ADDITIONAL EMPLOYEES FOR THE OPERATION OF A SECOND MILL AND REENACTED THE SAME AUTHORITY IN THE ACT APPROVED APRIL 4, 1924, MAKING APPROPRIATIONS FOR THE TREASURY AND POST OFFICE DEPARTMENTS FOR THE FISCAL YEAR 1925.

IN ORDER TO SIMPLIFY THE MANUFACTURING PROCEDURE, RECORDS, AND REPORTS, AND TO INSURE MORE EXACT AND CONVENIENT ACCOUNTING, IT IS DESIRABLE THAT THE DISTINCTIVE CURRENCY PAPER BE MANUFACTURED UNDER ONE APPROPRIATION TITLE FOR THE CURRENT FISCAL YEAR 1925. CONGRESS HAS PROVIDED AN APPROPRIATION FOR THE PURCHASE OF 157,500,000 SHEETS OF DISTINCTIVE PAPER FOR UNITED STATES SECURITIES (REQUIRED FOR UNITED STATES CURRENCY, NATIONAL BANK CURRENCY, AND FEDERAL RESERVE BANK CURRENCY), AND POSSIBLY 40,000,000 SHEETS ADDITIONAL PAPER WILL BE REQUIRED FOR FEDERAL RESERVE NOTES. THE DEPARTMENT WISHES TO ORDER ALL PAPER MANUFACTURED AS INITIALLY CHARGEABLE TO THE ANNUAL APPROPRIATION "DISTINCTIVE PAPER FOR UNITED STATES SECURITIES," AND THEREAFTER FROM TIME TO TIME MAKE ISSUES FROM SUCH PAPER RECEIVED FOR ACCOUNT OF FEDERAL RESERVE NOTES, THE ACTUAL COST OF SUCH PAPER TO BE A CHARGE AGAINST THE INDEFINITE APPROPRIATION ,PREPARATION AND ISSUE, FEDERAL RESERVE NOTES, REIMBURSABLE," THE AMOUNT TO BE CARRIED BY COUNTER WARRANT TO THE CREDIT OF THE ANNUAL APPROPRIATION "DISTINCTIVE PAPER FOR UNITED STATES CURITIES," THE INDEFINITE APPROPRIATION THEREAFTER TO BE REIMBURSED BY FEDERAL RESERVE BANKS AS A PART OF THE COST OF THE NOTES.

WILL YOU PLEASE ADVISE IF THERE IS ANY OBJECTION TO THIS PROCEDURE.

HERETOFORE THE DEPARTMENT HAS NOT INCLUDED AS A PART OF THE COST OF FEDERAL RESERVE NOTES THE EXPENSES INCURRED IN THE DIVISION OF PAPER CUSTODY ARISING THROUGH THE RECEIPT, CUSTODY, AND ISSUE TO THE BUREAU OF ENGRAVING AND PRINTING OF PAPER REQUIRED FOR FEDERAL RESERVE NOTES, AND EXPENSES SUBSEQUENTLY INCURRED IN CONNECTION WITH THE RECEIPT, EXAMINATION, AND DESTRUCTION OF MUTILATED FEDERAL RESERVE NOTES ARISING IN CONNECTION WITH THE PRINTING. IT IS PROPOSED TO CONTINUE TO OPERATE THE DIVISION OF PAPER CUSTODY UNDER THE ESTABLISHED ANNUAL APPROPRIATION, AND FROM TIME TO TIME TO COMPUTE THE COST ARISING THROUGH THE CUSTODY, ETC., OF PAPER FOR FEDERAL RESERVE NOTES, CERTIFYING THE AMOUNT THEREOF FOR SETTLEMENT AS A CHARGE AGAINST THE INDEFINITE APPROPRIATION ,PREPARATION AND ISSUE, FEDERAL RESERVE NOTES, REIMBURSABLE," AND AS A CREDIT TO THE ANNUAL APPROPRIATION "PUBLIC DEBT SERVICE," THE AMOUNT THEREAFTER TO BE INCLUDED AS A PART OF THE COST OF THE NOTES TO BE REIMBURSED BY FEDERAL RESERVE BANKS.

WILL YOU PLEASE ADVISE IF THERE IS ANY OBJECTION TO THIS PROCEDURE?

THE PROCEDURE ABOVE PROPOSED IN THE TWO INSTANCES IS SIMILAR TO THE PROCEDURE IN EFFECT AT THE BUREAU OF ENGRAVING AND PRINTING FOR HANDLING THE COST OF REPAY WORK, THE ANNUAL APPROPRIATIONS GRANTED BY CONGRESS BEING USED FOR ALL EXPENSES INCURRED AND THEREAFTER REIMBURSED WHEN REPAY WORK IS DELIVERED.

SECTION 16 OF THE FEDERAL RESERVE ACT OF DECEMBER 23, 1913, 38 STAT. 267, PROVIDES:

ANY APPROPRIATION HERETOFORE MADE OUT OF THE GENERAL FUNDS OF THE TREASURY FOR ENGRAVING PLATES AND DIES, THE PURCHASE OF DISTINCTIVE PAPER, OR TO COVER ANY OTHER EXPENSE IN CONNECTION WITH THE PRINTING OF NATIONAL- BANK NOTES OR NOTES PROVIDED FOR BY THE ACT OF MAY THIRTIETH, NINETEEN HUNDRED AND EIGHT, AND ANY DISTINCTIVE PAPER THAT MAY BE ON HAND AT THE TIME OF THE PASSAGE OF THIS ACT MAY BE USED IN THE DISCRETION OF THE SECRETARY FOR THE PURPOSES OF THIS ACT, AND SHOULD THE APPROPRIATIONS HERETOFORE MADE BE INSUFFICIENT TO MEET THE REQUIREMENTS OF THIS ACT IN ADDITION TO CIRCULATING NOTES PROVIDED FOR BY EXISTING LAW, THE SECRETARY IS HEREBY AUTHORIZED TO USE SO MUCH OF ANY FUNDS IN THE TREASURY NOT OTHERWISE APPROPRIATED FOR THE PURPOSE OF FURNISHING THE NOTES AFORESAID: PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION CONTAINED SHALL BE CONSTRUED AS EXEMPTING NATIONAL BANKS OR FEDERAL RESERVE BANKS FROM THEIR LIABILITY TO REIMBURSE THE UNITED STATES FOR ANY EXPENSES INCURRED IN PRINTING AND ISSUING CIRCULATING NOTES.

THE AMOUNT ESTIMATED FOR THE FISCAL YEAR 1925 "FOR THE PURPOSE OF FURNISHING THE NOTES AFORESAID," TO BE APPROPRIATED FROM TIME TO TIME UNDER THE HEADING "PREPARATION AND ISSUE OF FEDERAL RESERVE NOTES, REIMBURSABLE," WAS $1,700,000. SEE "THE BUDGET, 1925," PAGE 667.

THE APPROPRIATION FOR "DISTINCTIVE PAPER FOR UNITED STATES SECURITIES, 1925," ACT OF APRIL 4, 1924, 43 STAT. 68, PROVIDES:

DISTINCTIVE PAPER FOR UNITED STATES SECURITIES: FOR DISTINCTIVE PAPER FOR UNITED STATES CURRENCY, NATIONAL-BANK CURRENCY, AND FEDERAL RESERVE BANK CURRENCY, NOT EXCEEDING 157,500,000 SHEETS, INCLUDING TRANSPORTATION OF PAPER, TRAVELING, MILL, AND OTHER NECESSARY EXPENSES, AND SALARIES OF EMPLOYEES AND EXPENSES OF OFFICER DETAILED FROM THE TREASURY DEPARTMENT, $50 PER MONTH WHEN ACTUALLY ON DUTY; IN ALL, $1,095,000.

THE FEDERAL RESERVE BANK CURRENCY REFERRED TO IN THE APPROPRIATION FOR DISTINCTIVE PAPER COMPREHENDS FEDERAL RESERVE BANK NOTES, AS DISTINGUISHED FROM FEDERAL RESERVE NOTES, THE FORMER, AS STATED IN TREASURY DEPARTMENT CIRCULAR OF NOVEMBER 14, 1923, ENTITLED "THE MONETARY SYSTEM OF THE UNITED STATES," BEING---

IDENTICAL IN ALL THEIR ATTRIBUTES WITH NATIONAL-BANK NOTES, EXCEPT THAT THE AMOUNT ISSUED IS NOT LIMITED TO THE PAID-IN CAPITAL STOCK OF THE ISSUING FEDERAL RESERVE BANK. THEY MAY BE ISSUED IN THE SAME DENOMINATIONS AS NATIONAL-BANK NOTES. ONLY A SMALL AMOUNT OF THESE NOTES ARE NOW OUTSTANDING * * *.

SEE HEARING BEFORE SUBCOMMITTEE OF HOUSE COMMITTEE ON APPROPRIATIONS, TREASURY DEPARTMENT APPROPRIATION BILL, 1925, PAGE 189.

THE APPROPRIATION FOR THE "PUBLIC DEBT SERVICE, 1924," ACT OF JANUARY 3, 1923, 42 STAT. 1092, PROVIDED:

FOR NECESSARY EXPENSES CONNECTED WITH THE ADMINISTRATION OF ANY PUBLIC DEBT ISSUES AND UNITED STATES PAPER CURRENCY ISSUES WITH WHICH THE SECRETARY OF THE TREASURY IS CHARGED, INCLUDING * * * THE SALARIES OF * * * CHIEF OF THE DIVISION OF PAPER CUSTODY AT $3,000, AND THE SALARIES OF SUCH ASSISTANTS, ACCOUNTANTS, CLERKS, AND OTHER EMPLOYEES IN THE DISTRICT OF COLUMBIA AS THE SECRETARY OF THE TREASURY MAY DEEM NECESSARY, * * *.

THE APPROPRIATION FOR THE "PUBLIC DEBT SERVICE, 1925," ACT OF APRIL 4, 1924, 43 STAT. 68-69, IS SUBSTANTIALLY SIMILAR IN TERMS TO THE APPROPRIATION FOR THE FISCAL YEAR 1924 EXCEPT THAT THE SALARIES OF THE CHIEF OF THE DIVISION OF PAPER CUSTODY AND OTHERS ARE INCLUDED UNDER THE PROVISION CONTAINED IN THE 1925 APPROPRIATION FOR "OTHER PERSONAL SERVICES IN THE DISTRICT OF COLUMBIA IN ACCORDANCE WITH "THE CLASSIFICATION ACT OF 1923.'"

THE POSSIBLE OBJECTION TO CHARGING ALL PURCHASES OF DISTINCTIVE PAPER UNDER THE APPROPRIATION FOR DISTINCTIVE PAPER, ACT OF APRIL 4, 1924, 43 STAT. 68, 69, SUPRA, WHETHER IT IS FOR CURRENCY ISSUED BY THE TREASURY OR FOR FEDERAL RESERVE NOTES, DISTINCTIVE PAPER FOR THE LATTER BEING CHARGEABLE UNDER THE APPROPRIATION FOR "PREPARATION AND ISSUE OF FEDERAL RESERVE NOTES, REIMBURSABLE," ACT OF DECEMBER 23, 1913, 38 STAT. 267, SUPRA, IS THAT THE COMBINED PURCHASES UNDER THE APPROPRIATION WITH THE LIMITATION WOULD REGISTER IN EXCESS OF SUCH LIMITATION. HOWEVER, SUCH EXCESS WOULD ONLY BE APPARENT, AND I DO NOT THINK THAT OF ITSELF SHOULD PRECLUDE CARRYING OUT THE CONTEMPLATED ARRANGEMENTS IF THEY WILL RESULT IN A MORE EFFICIENT HANDLING OF THE MATTER AND A CONSEQUENT SAVING IN THE APPROPRIATION AS A WHOLE.

IN ANSWER TO THAT PART OF THE SUBMISSION RELATIVE TO THE PURCHASE OF ALL DISTINCTIVE PAPER FROM THE APPROPRIATION FOR "DISTINCTIVE PAPER FOR UNITED STATES SECURITIES, 1925," YOU ARE ADVISED THAT THE PROCEDURE CONTEMPLATED WOULD APPEAR TO BE AUTHORIZED PROVIDED THE PAPER ACTUALLY USED FOR CURRENCY ISSUED BY THE TREASURY DURING THE FISCAL YEAR 1925 DOES NOT EXCEED THE AMOUNT OF SUCH PAPER ON HAND ON JULY 1, 1924, PLUS THE 157,500,000 SHEETS AUTHORIZED TO BE PURCHASED DURING THE FISCAL YEAR 1925.

IN ANSWER TO THAT PART OF THE SUBMISSION RELATING TO THE RECEIPT, CUSTODY, AND ISSUE OF DISTINCTIVE PAPER FOR FEDERAL RESERVE NOTES, AND THE RECEIPT, EXAMINATION, AND DESTRUCTION OF MUTILATED FEDERAL RESERVE NOTES ARISING IN CONNECTION WITH THE PRINTING THEREOF, YOU ARE ADVISED THAT SECTION 16 OF THE FEDERAL RESERVE ACT, SUPRA, CLEARLY REQUIRES THAT SUCH COSTS BE BORNE BY THE FEDERAL RESERVE BANKS; THEREFORE, THEY SHOULD BE DETERMINED AS ACCURATELY AS MAY BE UNDER THE CIRCUMSTANCES AND CHARGED UNDER THE APPROPRIATION FOR "PREPARATION AND ISSUE OF FEDERAL RESERVE NOTES, REIMBURSABLE," CITED, SUPRA; HOWEVER, BEING A CHARACTER OF EXPENSE ALWAYS HERETOFORE CHARGED UNDER THE APPROPRIATIONS FOR THE "PUBLIC DEBT SERVICE," AND SUCH EXPENSE NOT APPEARING AS SUSCEPTIBLE OF ACTUAL SEGREGATION AND IDENTIFICATION, WHICH IS THE GENERAL REQUIREMENT AS TO TRANSFERS BETWEEN TWO OPERATING APPROPRIATIONS, IT WOULD APPEAR THAT THE DEPOSIT SHOULD BE TO MISCELLANEOUS RECEIPTS RATHER THAN TO THE APPROPRIATION FOR THE "PUBLIC DEBT SERVICE.'