his discretion and under such regulations as he may prescribe and notwithstanding the provisions of any other Act and upon recommendation of the Director of the Budget, to meet losses sustained on and after July 15, 1933, by officers, enlisted men, and employees of the United States while in service in foreign countries due to the appreciation of foreign currencies in their relation to the American dollar, Provided, That such action as the President may take shall be binding upon all executive officers of the Govern(48 Stat. 466). ment: * * Paragraph numbered 5 of Executive Order No. 6657-A is as follows: "From and after the effective date of this order, each employee shall be entitled to receive in foreign currency such amount as he would have received by converting into such foreign currency, at the basic rates specified in section 4, his net salary and net allowances, or his net pay and allowances, as provided in section 3." It appears that the Union of Soviet Socialist Republics maintains for purposes of accounting a monetary unit (nominally based on the theoretical gold content of the ruble) which is used as a basis for establishing the ruble exchange rate of foreign moneys but which is actually nonexistent as a currency. Prices of commodities and services are quoted in gold rubles, but payment is required to be made in foreign currencies at the rate for the gold ruble. Hence, purchases by officers and employees of the United States Government in the Union of Soviet Socialist Republics are actually paid for with American dollars. Although there is a circulating medium in the form of a paper ruble, it is available officially to foreigners only at the gold ruble rate of exchange, and it is of limited utility for the reason that it is not acceptable for purchases made in the Torgsin stores especially established for foreigners for the purchase of food, clothing, and other necessities. With respect to such transactions, the Comptroller General holds in his decision of August 31, as follows: 66 * * * In so far as this office is concerned there appears involved only the allowance of a payment for fictitious losses, that is to say, a loss by exchange which was never incurred for the reason that payments generally are made in United States dollars, which would be contrary to the provisions of the act of March 26, 1934, and the Executive orders issued by the President in pursuance thereof. Whether the payment in United States currency is based upon a price fixed in Russian gold ruble and converted at the time of the purchase, or payment, does not appear to be material under said law and Executive orders. The losses contemplated thereunder are actual losses as distinguished from fictitious losses which it is understood are involved in the Russian matter. In the final analysis, it must be considered that if payment is made in United States currency, the manner or means whereby the price to be paid in such currency is ascertained is not material, the law and Executive Orders in relation to this matter contemplating compensation for exchange losses but no provision is made when no conversion is necessary in the foreign country." I am unable to agree with the views of the Comptroller General. In the first place, the statute does not require conversion in any respect, and the Executive order requires only that losses be computed on the basis of conversion. The statute authorizes reimbursement of losses "due to the appreciation of foreign currencies in their relation to the American dollar." The Executive order (paragraph numbered 5) provides that employees shall be entitled to receive in foreign currency such amount as he would have received by converting his salary, etc., into such foreign currency. However, when the employee pays in American currency for a commodity or service, the price of which is computed and quoted (although not payable) in terms of the gold ruble, there is for all practical purposes a conversion of American currency into the gold ruble. Since the evident purpose of the Executive order and the statute pursuant to which it was issued, is to authorize reimbursement for losses sustained on account of the appreciation of foreign currencies in relation to the American dollar, it is immaterial that the gold ruble is a non-circulating currency. In the second place there is no doubt that actual losses are sustained by reason of the transactions involved. Paragraph numbered 4 of the Executive order, which pre scribes the basic exchange rates for computation of losses, designates the ruble as the monetary unit of the Union of Soviet Socialist Republics, and fixes the basic rate of exchange at 51.74 cents. This figure represents the value of the ruble in American currency before the devaluation of the gold dollar. The present value of the ruble, I am informed by representatives of the State Department, is approximately 88.59 cents. Hence, there is an appreciation of the ruble in relation to the dollar of approximately 71 percent, and the difference between the former and the present value of the ruble in terms of the dollar represents the loss sustained by officers and employees of this Government in purchasing goods and services in the Union of Soviet Socialist Republics and paying for them in American currency. It is also my opinion that the question as to what constitutes losses within the meaning of the statute is a matter solely for the determination of the President. The statute provides that "such action as the President may take shall be binding upon all executive officers of the Government." By this provision the President is made responsible only to the Congress for such action as he may take in carrying out the purposes of the statute. Nor is the authority of the President under this Act in any wise affected by the language of the appropriation made by the Congress for carrying out the purposes of the Act (Sec. 5, Public No. 268, 73d Congress; [48 Stat. 834]). Hence, the Comptroller General is without jurisdiction to determine whether losses for which the President has authorized reimbursement are allowable under the terms of the statute. However, in view of the ruling of the Comptroller General in the matter, and the fact that in all probability the Comptroller General would in the absence of any further order by the President disallow any payments made for such losses, with consequent embarrassment to the State Department, I believe it desirable that the proposed order, which specifically authorizes the reimbursement of such losses as those incurred under the circumstances above set out, be issued. Your attention is invited to the fact that the order is made retroactive to April 1, 1934, the effective date of the order which it amends. The effect of this provision is to make the original order read in its amended form as of April 1, 1934. The proposed order has my approval as to form and legality. Respectfully, To the PRESIDENT. HOMER CUMMINGS. GUARANTY BY UNITED STATES OF BONDS OF HOME OWNERS LOAN CORPORATION AND FEDERAL FARM MORTGAGE CORPORATION The Home Owners Loan Act of 1933, as amended, and the Federal Farm Mortgage Corporation Act authorize, respectively, the Home Owners Loan Corporation and the Federal Farm Mortgage Corporation to issue bonds in prescribed amounts and provide, “Such bonds shall be fully and unconditionally guaranteed both as to interest and principal by the United States", and all bonds issued thereunder recite that they are so guaranteed. Held, if either corporation should default in payment of either principal or interest when due, the United States would thereupon become obligated to make such payment, and its obligation would not be conditioned upon the institution of any proceeding by the bondholder against the corporation. DEPARTMENT OF JUSTICE, SIR: I have the honor to comply with your request of this date for my opinion upon the question hereinafter indicated. The Home Owners' Loan Act of 1933, as amended by the Act of April 27, 1934, authorized the Home Owners' Loan Corporation to issue bonds in a prescribed amount [48 Stat. 643]. The Federal Farm Mortgage Corporation Act, approved January 31, 1934 [48 Stat. 344], likewise authorized the Federal Farm Mortgage Corporation to issue bonds in a prescribed amount. Each statute contained the following provisions: "Such bonds shall be fully and unconditionally guaranteed both as to interest and principal by the United States, and such guaranty shall be expressed on the face thereof * *. In the event that the Corporation shall be unable to pay upon demand, when due, the principal of, or interest on, such bonds, the Secretary of the Treasury shall pay to the holder the amount thereof which is hereby authorized to be appropriated out of any moneys in the Treasury not otherwise appropriated, and thereupon to the extent of the amount so paid the Secretary of the Treasury shall succeed to all the rights of the holders of such bonds." All bonds issued thereunder recite upon their face, over the signature of the Secretary of the Treasury, that "This bond is fully and unconditionally guaranteed both as to interest and principal by the United States." You state that "the Treasury regards this guaranty, in each case, as a guaranty of payment, not merely of collection", with the effect that "should either corporation fail to pay upon demand when due the principal of, or interest on, its obligations issued under the sections referred to, the United States would be obligated to make such payment immediately without requiring the respective holders first to proceed against the defaulting corporation;" and you request my opinion concerning the correctness of your conclusion. Of course, as you point out, no such failure has arisen and probably never will arise; and it might be said that there is pending before you no question upon which my opinion may properly be requested. However, I acquiesce in your view that it is in the interest of the United States, as the sole stockholder in each of these corporations as well as the guarantor of their obligations, to have the question decided now. The guaranty of principal and interest is a guaranty of payment. Greysonia-Nashville Lumber Co. v. Goldman, 247 Fed. 423, 427. Between private parties, at least, if the guaranty is "unconditional " the obligation of the guarantor arises immediately upon failure of the debtor to pay according to the terms. First National Bank v. Jones, 219 N. Y. 312, 315. The guaranty being stated by the statute as full and unconditional, there is no occasion to consider whether a condition should be implied. The separable provision that the Secretary of the Treasury shall pay if the corporation is unable to pay upon demand is no part of the guaranty, but |