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by the German government which has established the machinery for the benefit of the German exporter and which assists him in the operation of it.
For the foregoing reasons it is my opinion that the Treasury Decision proposed to be issued by the Secretary of the Treasury is within the requirements of Section 303 of the Tariff Act of 1930, and its form is appropriate to carry out the mandate of that statute. Respectfully,
HOMER CUMMINGS. To the SECRETARY OF THE TREASURY.
VALIDITY OF A PROPOSED BOND ISSUE OF PUERTO RICO
The proposed bond issue of Puerto Rico in the amount of $1,000,000
for the construction of insular and municipal roads is authorized under the acts cited herein; and the form of bond submitted complies with the law and the determinations of the Treasurer of Puerto Rico approved by the Governor.
DEPARTMENT OF JUSTICE,
June 24, 1936. Sir: I have your letter of June 23, stating that your Department has been authorized to sell for the account of the Government of Puerto Rico bonds of the face value of $1,000,000, the proceeds to be used for the construction of insular and municipal roads, and requesting my opinion concerning their legality.
It is proposed to issue the bonds under authority contained in Section 3 of the Act of Congress approved March 2, 1917, entitled “An Act to provide a civil government for Puerto Rico, and for other purposes," as amended by the Act of March 4, 1927 (c. 145, 39 Stat. 951, 953; c. 503, 44 Stat. 1418, U. S. C., Title 48, Secs. 741, 745), and Act No. 123 of the Legislature of Puerto Rico, approved May 15, 1936.
You state that they are to be issued in coupon form, in the denomination of $1,000 each, to be dated July 1, 1936, and to bear interest as indicated below, payable at the Treasury of the United States semi-annually on January 1 and July 1 of each year, the bonds to mature and the principal thereof to be payable in series as follows:
$500,000, Series “A” on July 1, 1937.
$500,000, Series “B” on July 1, 1938. The rate of interest has not been definitely fixed and the advertisement for sealed proposals will invite each bidder “to name the lowest coupon rate which will permit him to submit a bid of at least par for the bonds, said rates, however, to be stated as a multiple of 1/4 of 1% or to of 1%, as the bidder may prefer,” one rate to apply to the entire issue. A copy of the form of the proposed bond was submitted with your letter.
Section 3 of the Act of March 2, 1917, as amended, provides:
and when necessary to anticipate taxes and revenues, bonds and other obligations may be issued by Puerto Rico or any municipal government therein as may be provided by law, and to protect the public credit: Provided, however, That no public indebtedness of Puerto Rico and the municipalities of San Juan and Ponce shall be allowed in excess of 10 per centum of the aggregate tax valuation of its property * In computing the indebtedness of the people of Puerto Rico, municipal bonds for the payment of interest and principal of which the good faith of the people of Puerto Rico has heretofore been pledged and bonds issued by the people of Puerto Rico secured by bonds to an equivalent amount of bonds of municipal corporations or school boards of Puerto Rico shall not be counted, but all bonds hereafter issued by any municipality or subdivision
for which the good faith of the people of Puerto Rico is pledged shall be counted.”
Your letter and the documents submitted by you show that the aggregate assessed valuation of real and personal property in Puerto Rico on May 15, 1936, amounted to $294,069,663, that on the said date there were outstanding bonds of the Government of Puerto Rico of the face value of $27,580,000 and notes evidencing temporary loans of the face value of $557,494.54, that since the amendatory Act of March 4, 1927, the good faith of the people of Puerto Rico has been pledged to the payment of principal and interest on outstanding municipal bonds aggregating $1,198,500 which, under the statute, must be added to the foregoing, making a total of $29,335,994.54. From this amount, however, there is to be deducted $875,502.39, representing the amount accumulated in the various sinking funds, pledged by statute and applicable only to the payment of unmatured obligations included in the foregoing total figures (35 Op. 9, 14; 37 id., 30, 32), and a further sum of $250,000, representing 1914 refunding bonds (also included in the foregoing total figures), secured by municipal bonds held by the insular government and therefore to be deducted when ascertaining the amount of the permitted indebtedness of that government, as provided in the Act of Congress, making a net total of $28,210,492.15.
Considering the foregoing figures, it is apparent that the indebtedness of the Government of Puerto Rico when increased by the amount of the contemplated issue will be within the maximum permitted by law (10% of the aggregate tax valuation).
The pertinent provisions of Act No. 123 of the Legislature of Puerto Rico are as indicated below.
Section 2 authorizes and directs the Treasurer of Puerto Rico, with the approval of the Governor, to issue bonds in an amount not greater than $6,000,000, the proceeds from the sale of the bonds to be applied to the completion and construction of roads and bridges, in furtherance of a general plan previously adopted and in accordance with the directions and tables set forth in the statute.
Sections 5, 6, 9, 10 and 13 read, in part, as follows:
"SECTION 5. The bonds the issuance of which is hereby authorized may be in the form of coupon or registered bonds, or in both forms. Registered bonds shall be recorded and transferred in the office of the registrar of the Treasury Department of the United States, Washington, District of Columbia. The bonds shall be dated as of July 1 of the year when issued, and shall bear interest at a rate of not to exceed four and one-half (412) percent per annum, payable every six months on the first of January and the first of July of each year. The bonds issued in coupon form shall be of the value of one thousand (1,000) dollars each, and those issued in the form of registered bonds shall have a value of five thousand (5,000) dollars each."
“SECTION 6. Said bonds shall be paid in twelve annual installments, as follows:
“Five hundred thousand (500,000) dollars on July first of each of the years from 1937 to 1948, both inclusive; *.” [with reservation of a right of redemption after six years—which does not affect series “A” and “B” presently under consideration].
“SECTION 9. * * Provided, That for the payment of the principal of, and the interest on, said bonds, as they become due, the good faith of The People of Puerto Rico is hereby irrevocably pledged.”
“SECTION 10. The bonds the issuance of which is authorized by this Act, may be sold by the Treasurer of Puerto Rico, or by the Secretary of the Interior of the United States, or by any fiscal agent appointed for that purpose by the Treasurer of Puerto Rico, with the approval of the Governor, under conditions most advantageous for The People of Puerto Rico and as near as possible to their dates of issuance.
“With the approval of the Governor, the Treasurer of Puerto Rico shall have absolute authority, within the limitations prescribed in this Act, in connection with all matters related to said bonds, including the conditions and denominations thereof and the manner, time, and method of their issuance and sale; he shall adopt such measures as may be necessary to carry out the provisions of this Act and shall provide whatever may be necessary for the issuance of interim bonds or certificates pending the preparation of the definitive bonds.”
"SECTION 13. The bonds authorized by this Act shall be issued by the Treasurer of Puerto Rico in series of five hundred thousand (500,000) dollars each, but during no fiscal year can bonds be issued for a sum greater than the amount of such margin for incurring indebtedness as may be at the disposition of The People of Puerto Rico; *
Other sections create an amortization fund, direct the depositing therein of the proceeds of an internal revenue tax on gasoline, levied by virtue of provisions in earlier Acts, and provide that all laws or parts of laws in conflict are repealed, mentioning specifically the conflicting provisions of earlier statutes directing other dispositions of the pro
ceeds of the gasoline tax. The Act further recites the existence of an emergency and declares that it shall become effective immediately after approval—in accordance with Section 34 of the Organic Act (U. S. C., Title 48, Sec. 827).
There was transmitted with your letter a statement signed by the Treasurer of Puerto Rico, setting forth his determinations in those matters left to his discretion, and this has been approved by the Governor, as provided in the Act of the Legislature.
I find that all the statutory requirements regarding the issue and sale of the said bonds have been complied with and that the form of bond submitted is in compliance with the law and the determinations of the Treasurer, approved by the Governor. The form of bond properly recites that "under the provisions of Section 3 of the Act of Congress, approved March 2, 1917, as amended by the Act of March 4, 1927, this bond is exempt from taxation by the Government of the United States, or by the Government of Puerto Rico or of any political or municipal subdivision thereof, or by any State, Territory, or possession, or by any county, municipality, or other municipal sub-division of any State, Territory, or possession of the United States, or by the District of Columbia.”
It is therefore my opinion that the bonds, when issued in the amount and form proposed, will constitute valid and binding obligations of the People of Puerto Rico. Respectfully,
HARRY W. BLAIR,
Acting Attorney General. To the SECRETARY OF THE INTERIOR.
JURISDICTION OF SECRET SERVICE DIVISION, TREASURY
DEPARTMENT, UNDER SECTION 12B OF FEDERAL RESERVE ACT
Under Section 12B of the Federal Reserve Act, as amended, the
Secret Service Division of the Treasury Department is given jurisdiction with respect to all acts and omissions made offenses against the Federal Deposit Insurance Corporation and punishable by fine, imprisonment, or other penalty as prescribed in that section, including offenses of the character covered by