MARCH 15, 1922, 1 COMP. GEN. 520

MARCH 15, 1922, 1 COMP. GEN. 520

FOREIGN CURRENCY - DISPOSITION OF, BY DISBURSING OFFICERS THE REDUCTION OF AN EXCESSIVE AMOUNT OF FOREIGN CURRENCY ON HAND BY A DISBURSING OFFICER IS AN ADMINISTRATIVE MATTER, AND WHERE HE IS DIRECTED BY PROPER ADMINISTRATIVE OFFICER TO TRANSFER A PORTION OF HIS BALANCE TO CREDIT OF A FEDERAL RESERVE BANK FOR SALE, RESULTING IN A LOSS, THE DISBURSING OFFICER IS ENTITLED TO CREDIT FOR SUCH LOSS.

DECISION BY ACTING COMPTROLLER GENERAL GINN, MARCH 15, 1922:

MAJ. IVENS JONES, G.S., UNITED STATES ARMY, MILITARY ATTACHE, AMERICAN LEGATION, BERNE, SWITZERLAND, APPLIED DECEMBER 6, 1921, FOR REVIEW OF THE ACTION OF THE WAR DEPARTMENT DIVISION, THIS OFFICE, IN SETTLEMENT NO. 68658, OF OCTOBER 11, 1921, DISALLOWING IN HIS ACCOUNTS AS LIEUTENANT COLONEL, F.A., A.Q.M., AMERICAN LEGATION, BERNE, SWITZERLAND, FOR THE QUARTER ENDED MARCH 31, 1920, AN ITEM OF $2,247.75, STATED AS BEING A LOSS BY EXCHANGE BETWEEN RATES OF PURCHASE AND SALE APPLYING TO AN AMOUNT IN SWISS FRANCS, 5.50 AND 5.84, RESPECTIVELY, THE DISALLOWANCE BEING STATED AS FOR THE REASON THE SALE WAS MADE CONTRARY TO THE PROVISIONS OF PARAGRAPH 625 OF THE ARMY REGULATIONS, 1913.

THE RECORD DISCLOSES THAT ON NOVEMBER 4, 1919, THE LEGATION OFFICE AT BERNE RECEIVED A COMMUNICATION FROM THE DIRECTOR OF FINANCE, DATED OCTOBER 14, 1919, PROVIDING IN PART AS FOLLOWS:

4. IT IS NOT THE POLICY OF THE U.S. GOVERNMENT TO PROFIT BY THE FLUCTUATING MONEY MARKET IN EUROPE AND CERTAINLY IT DOES NOT WANT TO LOSE. IT WILL BE ADVISABLE THEREFORE FOR THE DISBURSING OFFICER TO KEEP THE MINIMUM AMOUNT OF LOCAL CURRENCY ON HAND CONSISTENT WITH THE SMOOTH CONDUCT OF THE BUSINESS OF HIS OFFICE. HE SHOULD NOT BUY, UNDER ANY CIRCUMSTANCES, MORE CURRENCY THAN HE WILL NEED FOR THE MONTH WHERE THE RATE IS FIXED FOR THE MONTH BY THE TWO GOVERNMENTS, OR FOR A SHORTER PERIOD, WHERE THE RATE IS NOT SO FIXED AND FLUCTUATION IS ACTIVE. * * *

6. IT IS SUGGESTED THAT COMPLICATION WOULD BE ELIMINATED IF OBLIGATIONS CONTRACTED IN TERMS OF DOLLARS WERE PAID BY TREASURY CREDIT, AND IF THE DISBURSING OFFICER HAS NO TREASURY CREDIT, STEPS BE TAKEN TO ESTABLISH SUCH CREDIT PROMPTLY.

ON NOVEMBER 26, 1919, APPARENTLY THE DATE CLAIMANT ASSUMED THE DUTIES AT THE LEGATION AT BERNE, THERE WAS TURNED OVER TO HIM LOCAL CURRENCY IN AMOUNT OF 374,386.82 SWISS FRANCS. IN ORDER TO COMPLY WITH THE COMMUNICATION OF OCTOBER 4, 1919, AND ALSO, AS STATED, BECAUSE SOME OF THE OFFICERS AND EMPLOYEES DESIRED TO BE PAID BY TREASURY CHECK RATHER THEN IN LOCAL CURRENCY, CLAIMANT, ON JANUARY 15, 1920, INFORMED THE DIRECTOR OF FINANCE THAT HE HAD ON HAND UPWARDS OF $60,000 IN LOCAL CURRENCY, CONSIDERABLY MORE THAN NECESSARY FOR CURRENT NEEDS, AND REQUESTED AUTHORITY TO TRANSFER A PART THEREOF TO HIS CREDIT WITH THE TREASURER OF THE UNITED STATES, ASKING SPECIFICALLY WHETHER HE SHOULD BUY A DRAFT TO ACCOMPLISH THE TRANSFER. TO THIS COMMUNICATION HE RECEIVED A REPLY BY CABLE IN THE NEGATIVE WITH ADVICE THAT LETTER WAS TO FOLLOW. ON MARCH 11, 1920, A CABLE WAS RECEIVED FROM THE ADJUTANT GENERAL OF THE ARMY, READING:

INSTRUCT BANQUE NATIONALE SUISSE TO HOLD 225,000 FRANCS OF THE BALANCE NOW TO YOUR CREDIT SUBJECT TO ORDER OF FEDERAL RESERVE BANK, NEW YORK. ADVISE BY CABLE ACTION DESIGNATING APPROPRIATION TO BE CREDITED. SEE LETTER DIRECTOR OF FINANCE, FEBRUARY 20TH.

HARRIS.

ON MARCH 13, 1920, CLAIMANT REQUESTED THE BANQUE NATIONALE SUISSE, WHERE A PART OF HIS CASH IN LOCAL CURRENCY WAS DEPOSITED, TO TRANSFER 211,254.92 FRANCS SUBJECT TO THE ORDER OF THE FEDERAL RESERVE BANK, NEW YORK, AND ON MARCH 26 HE WAS NOTIFIED BY THE BANK THAT HIS INSTRUCTIONS HAD BEEN COMPLIED WITH.

SUBSEQUENT THERETO CLAIMANT RECEIVED LETTER OF FEBRUARY 20, 1920, FROM THE DIRECTOR OF FINANCE, REFERRED TO IN THE CABLEGRAM OF THE ADJUTANT GENERAL OF THE ARMY. THIS LETTER STATED IN PART:

1. IN CONFIRMATION OF CABLE OF THIS DATE, THE FOLLOWING DETAIL IS OFFERED FOR YOUR GUIDANCE:

TREASURY CREDIT WAS ESTABLISHED FOR YOUR OFFICE IN CONTEMPLATION OF REQUEST BEING MADE UPON YOU BY AMERICAN OFFICERS AND EMPLOYEES OF A PART OF THEIR SALARIES IN TREASURY CHECKS FOR FORWARDING TO THE UNITED STATES; ALSO FOR THE PURCHASE OF LOCAL CURRENCY AS NEEDED * * *.

THIS OFFICE DID NOT INTEND, WHEN IT REFERRED TO CARRYING A LIMITED AMOUNT OF CASH, THAT THE FRANCS ACTUALLY ON HAND SHOULD BE TURNED IN, BUT THAT AFTER THIS SUPPLY WAS EXHAUSTED PURCHASE OF LOCAL CURRENCY SHOULD BE MADE ONLY IN SUCH AMOUNTS AS WERE NECESSARY TO MEET CURRENT NEEDS.

IN VIEW OF THE FACT THAT YOUR AVERAGE MONTHLY DISBURSEMENT OF OCTOBER NOVEMBER, AND DECEMBER WAS SOMETHING LESS THAN $3,000, YOU ARE ADVISED THAT THE TREASURY DEPARTMENT HAS BEEN REQUESTED TO SELL FRANCS TO THE VALUE OF $45,000 AND COVER THE PROCEEDS INTO THE PROPER APPROPRIATION. THIS WILL LEAVE YOU A BALANCE OF FROM $10,000 TO $15,000 IN LOCAL CURRENCY AND A TREASURY CREDIT OF $12,960 (AS SHOWN TO-DAY), WHICH IS CONSIDERED SUFFICIENT TO CARRY YOU THROUGH THE FISCAL YEAR 1920. HOWEVER, IF THIS PROVES INSUFFICIENT TO MEET YOUR REQUIREMENTS, ADDITIONAL CREDIT WILL BE ESTABLISHED FOR YOU WITH THE TREASURER OF THE UNITED STATES UPON YOUR REQUEST.

BY LETTER OF APRIL 7, 1920, THE DIRECTOR OF FINANCE ADVISED CLAIMANT THAT THE 211,254.92 SWISS FRANCS TRANSFERRED TO THE CREDIT OF THE FEDERAL RESERVE BANK, NEW YORK, HAD BEEN SOLD BY THAT BANK AND THE PROCEEDS OF THE SALE ($36,162.23) CREDITED UNDER THE VARIOUS APPLICABLE APPROPRIATIONS, AND HE WAS DIRECTED AS FOLLOWS:

2. IN YOUR NEXT ACCOUNT CURRENT YOU SHOULD TAKE CREDIT FOR THIS DEPOSIT ($36,162.23), AND ALSO FOR ANY LOSS WHICH MAY HAVE ACCRUED ON ACCOUNT OF A CHANGE IN RATE OF EXCHANGE.

3. FROM YOUR LETTER OF JANUARY THE 15TH, 1920, 11TH PARAGRAPH, IT IS ASSUMED THAT YOU ARE CARRYING THESE FRANCS AT 5.50, AND IF THIS IS TRUE THEY COST YOU $38,409.99, AND YOUR LOSS BY EXCHANGE TO BE DROPPED IN YOUR ACCOUNT CURRENT IS $2,247.76.

UPON RECEIPT OF THIS COMMUNICATION CLAIMANT BY LETTER OF MAY 6, 1920, INFORMED THE DIRECTOR OF FINANCE THAT HIS ACCOUNT HAD BEEN SUBMITTED ON APRIL 15, 1920, AND THAT IT WAS THEREFORE IMPOSSIBLE FOR HIM TO COMPLY WITH DIRECTIONS. THIS LETTER WAS ASSOCIATED WITH CLAIMANT'S ACCOUNT FOR CONSIDERATION BY THE AUDITOR FOR THE WAR DEPARTMENT. THE AUDITOR SUSPENDED THE ITEM OF $2,247.75, AND IT WAS FINALLY DISALLOWED BY THE WAR DEPARTMENT DIVISION, THIS OFFICE, FOR THE FOLLOWING REASONS:

SECTION 625, A.R., 1913, WAS PROMULGATED BY THE SECRETARY OF WAR TO PREVENT LOSSES OF THE ABOVE-MENTIONED CHARACTER. IT APPEARS THAT THE CHIEF OF FINANCE WAS IN ERROR BY INSTRUCTING THE DISBURSING OFFICER TO DISPOSE OF HIS PUBLIC FUNDS HELD IN THE FOREIGN CURRENCY WHEN SUCH ACTION SEEMS TO BE CONTRARY TO THE TENOR OF SAID ARMY REGULATIONS. IT IS CLAIMED BY THIS DIVISION THAT NO LOSS BY EXCHANGE WOULD HAVE RESULTED FOR THE UNITED STATES IF THE DISBURSING OFFICER HAD BEEN INSTRUCTED TO HANDLE HIS FUNDS IN STRICT TENOR WITH SAID REGULATIONS, EVEN IF IT SHOULD TAKE A FEW YEARS TO USE UP THE LARGE BALANCE OF FOREIGN CURRENCY ON HAND.

IN VIEW OF THE FOREGOING SAID ITEM OF LOSS BY EXCHANGE, AMOUNTING TO $2,247.75, IS NOW DISALLOWED.

PARAGRAPH 625 OF THE ARMY REGULATIONS, 1913, PROVIDES IN PART:

ALL PUBLIC FUNDS ON HAND AT THE CLOSE OF A FISCAL YEAR, * * * EXCEPT BALANCES IN CASH IN THE HANDS OF DISBURSING OFFICERS OF THE QUARTERMASTER CORPS * * * IN * * * PLACES OUTSIDE OF THE CONTINENTAL LIMITS OF THE UNITED STATES, WHO ARE LOCATED AT POINTS REMOTE FROM DEPOSITARIES. * * * WILL BE DEPOSITED TO THE CREDIT OF THE TREASURER OF THE UNITED STATES AND THE DISBURSING OFFICERS ACCOUNT CLOSED BY A CREDIT FOR SUCH DEPOSIT. CASE OF FUNDS IN CASH IN THE HANDS OF DISBURSING OFFICERS OF SAID CORPS WHO COME WITHIN THE FOREGOING EXCEPTION, SAID OFFICERS WILL, AT THE CLOSE OF BUSINESS ON THE 30TH DAY OF JUNE EACH YEAR, OR AS SOON THEREAFTER AS POSSIBLE, INFORM THE DEPARTMENT QUARTERMASTER OF THE DEPARTMENT IN WHICH THEY ARE SERVING * * * OF THE AMOUNT OF CASH IN THEIR HANDS IN EXCESS OF WHAT IS NEEDED TO PAY OUTSTANDING LIABILITIES AND THAT THEY WILL CREDIT AND CHARGE THEMSELVES ON THEIR ACCOUNTS CURRENT FOR JUNE AND JULY, RESPECTIVELY, WITH SUCH AMOUNT AS TRANSFERRED FROM THE OLD TO THE NEW FISCAL YEAR APPROPRIATIONS.

IT IS NOT UNDERSTOOD THAT THE PROVISIONS OF PARAGRAPH 625 OF THE ARMY REGULATIONS HAS ANY DIRECT APPLICATION TO THE MATTER HERE AT ISSUE. THAT PARAGRAPH CONCERNS THE MATTER OF RETENTION AFTER THE CLOSE OF THE FISCAL YEAR, OF FUNDS THERETOFORE CONVERTED TO ACTUAL CASH IN FOREIGN CURRENCY. THERE APPARENTLY WAS NO DISBURSING NEED FOR THE LARGE AMOUNT OF SWISS FRANCS TRANSFERRED TO THE DISBURSING OFFICER AND THE REDUCTION OF THE AMOUNT AND ITS DISPOSITION WAS AN ADMINISTRATIVE MATTER IN THE PARTICULAR ACCOUNT. IT MAY HAVE BEEN MORE PROFITABLE TO HAVE DIRECTED THE OFFICER TO RETAIN THE FRANCS IN ADDITION TO THE FUNDS PLACED TO HIS CREDIT WITH THE TREASURER OF THE UNITED STATES, AND CARRYING OF LARGE BALANCES IN FOREIGN CURRENCY CAN NOT BE COUNTENANCED,BUT THE CONDITION DID NOT ARISE WITH THIS OFFICER. HE APPARENTLY SOUGHT ALMOST IMMEDIATELY TO REMEDY THE CONDITION, DISPOSED OF THE FUNDS AS DIRECTED, AND IS ENTITLED TO CREDIT ACCORDINGLY.

UPON A REVIEW OF THE MATTER THE SETTLEMENT IS REVERSED AND $2,247.75 CERTIFIED FOR CREDIT IN THE ACCOUNTS.