the Secretary of Agriculture, which sum, or so much thereof as may be necessary, shall be expended by the Secretary of Agriculture for the purpose of making loans or advances to farmers in the several States of the United States in cases where he finds that an emergency exists as a result of which farmers are unable to obtain loans for crop production during the year 1932: Provided further, That the Secretary of Agriculture shall give preference in making such loans or advances to farmers who suffered from crop failures in 1931. Such advances or loans shall be made upon such terms and conditions and subject to such regulations as the Secretary of Agriculture shall prescribe. A first lien on all crops growing, or to be planted and grown, shall, in the discretion of the Secretary of Agriculture, be deemed sufficient security for such loan or advance. All such loans or advances shall be made through such agencies as the Secretary of Agriculture may designate, and in such amounts as such agencies, with the approval of the Secretary of Agriculture, may determine. Any person who shall knowingly make any material false representation for the purpose of obtaining an advance or loan, or in assisting in obtaining such advance or loan under this section shall, upon conviction thereof, be punished by a fine of not exceeding $1,000 or by imprisonment not exceeding six months, or both.

Receipts for payments by the United States of America for or on account of such stock shall be issued by the corporation to the Secretary of the Treasury and shall be evidence of the stock ownership of the United States of America."

Section 4 provides that the Corporation shall have succession for a period of ten years; shall have power to adopt, alter and use a corporate seal; to make contracts; to lease such real estate as may be necessary for the transaction of its business; to sue and be sued; to complain and to defend in any court of competent jurisdiction, State or Federal; to select, employ and fix the compensation of such officers, employees, attorneys and agents as shall be necessary for the transaction of the business of the Corporation, without regard to the provisions of other laws applicable to the employment and compensation of officers or employees of the United States; to determine and prescribe the manner in

which its obligations shall be incurred and its expenses allowed and paid.

Joint Resolution H. J. 230 appropriates, out of any money in the Treasury not otherwise appropriated, the sum of $500,000,000 for the purchase of the capital stock of the Reconstruction Finance Corporation. (47 Stat. 14.)

Thus it appears that the scheme of the Act is that the public funds made available to the Corporation through subscriptions to its capital stock constitute the capital fund represented by shares. To impair the integrity of the capital structure, including the capital fund created by the Act, would obviously defeat the declared purpose of Congress. From this corporate structure, created by the Act, definite legal conceptions arise, including the ownership and integrity of the capital fund, which must necessarily be preserved if the purpose of the statute is to be accomplished. Consequently it follows that in construing the Act there is no room for any construction in conflict with the legal concept of a corporation having a capital fund represented by shares, unless it be required by some express provision of the Act. This fundamental principle must be the basis for any opinion as to your operations under the statute.

It follows from this principle that the funds which are to be allocated and made available to the Secretary of Agriculture out of the amount subscribed by the United States for the capital stock of the Corporation are, and will continue to be, a part of the capital of the Corporation. The Secretary is authorized to make loans or advances of these funds as provided in section 2 of the Act, and in so doing he will be lending moneys belonging to the Corporation. Under these circumstances the loans should not be made by the Secretary of Agriculture in his own name. They may properly be made either by "the United States of America, acting through the Secretary of Agriculture" or in the name of "the Reconstruction Finance Corporation, acting through the Secretary of Agriculture" or in the name of "the Secretary of Agriculture, acting pursuant to section 2 of the Reconstruction Finance Corporation Act." Such methods and perhaps some others would be consistent with the provisions of the Act, and the method chosen

should be that most convenient for administrative reasons to be determined after consultation with the officers of the Reconstruction Finance Corporation.

The funds allocated and made available to the Secretary of Agriculture from the capital of the Corporation may only be used in accordance with the provisions of the Act "for the purpose of making loans or advances to farmers in the several States of the United States in cases where he finds that an emergency exists as a result of which farmers are unable to obtain loans for crop production during the year 1932

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subject to the other provisions of section 2.

Subject to the provisions and limitations of section 2, the Secretary may continue to use, for the purpose authorized by section 2, the funds originally received from the Reconstruction Finance Corporation, together with any funds collected from loans made under the provisions of this section, treating these funds as a revolving fund to be used for the purposes authorized by the Act. But since the authority of the Secretary is limited to making loans for crop production during the year 1932 it follows that after the time has passed when loans may be made for that purpose all collections and any unexpended balance of the funds allocated to him will cease to be available for his further disposition, in accordance with the provisions of the Act, and should thereupon be returned to the Reconstruction Finance Corporation or disposed of as the Corporation may direct.

From what has been said it is apparent that the Secretary of Agriculture, in handling the funds allocated and made available to him from the capital of the Reconstruction Finance Corporation, will be engaged in making loans of its funds in accordance with the provisions, and subject to the limitations, of the statute. Thus, the Secretary is constituted the statutory agent of the corporation through whom such loans of its funds are to be made. With reference to the conduct of this business, the Act provides (section 2):

"All such loans or advances shall be made through such agencies as the Secretary of Agriculture may designate, and in such amounts as such agencies, with the approval of the Secretary of Agriculture, may determine."

There is no express limitation upon this broad power to employ any agencies which the Secretary may choose. In terms, the discretion in the selection of agencies is unlimited. Nor is there any basis in the Act for implying limitations upon the exercise of this discretion which are not expressed in the Act.

This is an emergency measure, and should be liberally construed so that its purpose may be accomplished without delay and free from undue restrictions. The Secretary is by the Act constituted the statutory agent of the Corporation, to deal with that part of its capital allocated to him, and in the execution of this agency is authorized by the statute to employ such sub-agencies as he may designate.

Section 4 of the Act authorizes the Corporation

to select, employ and fix the compensation of such officers, employees, attorneys and agents as shall be necessary for the transaction of the business of the corporation, without regard to the provisions of other laws applicable to the employment and compensation of officers or employees of the United States; determine and prescribe the manner in which its obligations shall be incurred and its expenses allowed and paid. *

*

This provision does not in terms refer to the designation of agencies under section 2, but since it defines the power of the Corporation to employ agents and authorizes it to determine and prescribe the manner in which its obligations shall be incurred and its expenses allowed and paid, and since the statute makes the Secretary the statutory agent of the Corporation in the conduct of a part of its business, with authority to create agencies for the accomplishment of this busithe fair conclusion is that the Secretary of Agriculture, in his capacity as the representative of the Corporation with respect to agricultural loans, is to be subject to no greater restrictions than the Corporation itself.

ness,

Specifically I am of the opinion and have to advise you as follows:

1. That loans made pursuant to section 2 of the Act creating the Reconstruction Finance Corporation should not be made in the name of the Secretary of Agriculture, but may be made either in the name of "the United States of America, acting through the Secretary of Agriculture" or

in the name of "the Reconstruction Finance Corporation, acting through the Secretary of Agriculture " or in the name of “the Secretary of Agriculture, acting pursuant to section 2 of the Reconstruction Finance Corporation Act," as may be most convenient for administrative reasons to be determined after consultation with the officers of the Reconstruction Finance Corporation.

2. The funds referred to in the second question, when they have served the purpose of the Act, should be returned to the Reconstruction Finance Corporation or disposed of as the Corporation may direct.

3. The Secretary of Agriculture has authority to appoint and fix compensation of persons employed by him in carrying out the provisions of the Act, without regard to other laws applicable to the employment and compensation of officers and employees of the United States, provided such persons are not otherwise employed in the service of the United States. In using such part of the funds allocated to him under the provisions of section 2 as may be necessary for the payment of personnel and for defraying all other expenses incident to carrying out the provisions of section 2, the Secretary of Agriculture is not subject to the restrictions imposed by statute upon the expenditure and disbursement of funds belonging to the United States.

Respectfully,

WILLIAM D. MITCHELL.

To the SECRETARY OF AGRICULTURE.

FILLING OF EXCEPTED-BY-LAW POSITIONS-RECONSTRUCTION FINANCE CORPORATION

The Secretary of Agriculture may make appointments under the provisions of section 2 of the Reconstruction Finance Corporation Act (47 Stat. 5), without regard to the provisions of the Civil Service Act and Rules, provided such appointees are not otherwise employed in the service of the United States.

The words "excepted position" appearing in the final clause of paragraph 3 of Civil Service Rule II should be construed by the Civil Service Commission as including positions excepted by law from the operation of the Civil Service Act and Rules.

The filling of an excepted-by-law position by original appointment from a civil service register of eligibles confers upon the person so

NOTE. The publication of this opinion was delayed.