private, domestic exporters under the Export Credit Sales Program for resale to private importers abroad. The Attorney General reserved the question of the applicability of the preference to resales by American exporters to a foreign government, or its agency, on credit, for decision pending the development of the facts and circumstances in particular cases as they might arise. The issue here is whether the United States advances credit in connection with the furnishing of commodities to a foreign nation within the meaning of Public Law 664 (supra) in these transactions under the Export Credit Sales Program. We think it does not.

By its terms, the preference stemming from credit transactions would appear to apply only where the United States advances credit to a foreign government. The credit advanced by the United States in these transactions is to American exporters alone, to facilitate through such channels dollar sales of commodities in the Government's hands. It is neither in form nor substance an advance of credit to a foreign government. There is no intergovernmental agreement involved. The United States looks solely to the obligation of the American exporter, buttressed by an American bank's irrevocable undertaking, for dollar payment for the commodities sold. The United States acquires no legal right in these transactions to exercise any control over the terms or conditions including the credit terms on which the American exporter resells the commodities abroad. In the Mexican transaction the Mexican Government arranged independently its own credit with a private New York bank in aid of the desired dollar purchase from American exporters. In the prospective Indian transaction, it is our understanding that the American exporters will independently arrange for the irrevocable American bank undertakings required by CCC. In these circumstances, it would seem immaterial within the contemplation of the preference statute that the foreign buyer, to whom the American exporter extends credit, is a Government agency rather than a private importer.

It is our opinion, therefore, that these transactions do not constitute an advance of credit in connection with the furnishing of commodities to a foreign nation within the

meaning of Public Law 664 (supra), and that the preference provided by that law does not apply to these and similar transactions.

Sincerely yours,

W. WILSON WHITE,
Assistant Attorney General
Office of Legal Counsel.

EXPORT SALES OF AGRICULTURAL COMMODITIES TO SOVIET UNION AND EASTERN EUROPEAN BLOC COUNTRIES Credit sales of agricultural commodities to nations in default of their obligations to the United States are not loans prohibited by the Johnson Act, 18 U.S.C. 955, if the credit extended is within the range of that commonly encountered in export sales of such commodities. Assignment of a credit buyer's obligation to a third party is not a purchase or sale of "other obligations" within the meaning of 18 U.S.C. 955

Section 2(c) of the Agricultural Act of 1961, 75 Stat. 294 (7 U.S.C. 1282 note), declaring the policy of Congress not to subsidize the export, sell or make available subsidized agricultural commodities to certain nations, does not affect specific operative provisions of law so as to bar such sales, but sets out policy to be interpreted by the President in the light of changing circumstances. Subsidies paid by Commodity Credit Corporation to United States exporters in connection with export sales of agricultural commodities are not "assistance" to purchasing nations within the meaning of the Mutual Defense Assistance Control Act of 1951, 65 Stat. 644, as amended (22 U.S.C. 1611 et seq.), regulating assistance to nations which permit shipment of war materials, etc., to certain countries.

THE SECRETARY OF STATE.

OCTOBER 9, 1963.

MY DEAR MR. SECRETARY: This is in response to Acting Secretary George W. Ball's letter of September 23, 1963, requesting my opinion concerning the application of certain Federal statutes to sales of United States wheat and other agricultural products to the Soviet Union and Eastern European bloc countries. I understand that the precise form which these sales might take has not been determined, but that in any case they would be made for United States dollars, gold, or convertible currencies at not less than world market prices, and would not involve extensions of credit except within the range of those commonly encountered in connection with other commercial sales for export of the commodities involved. I have reviewed the relevant statutes and have concluded that they present no legal obstacle to such sales.

I

THE JOHNSON ACT

The Johnson Act, 18 U.S.C. 955, prohibits certain financial transactions by private persons in the United States involving foreign governments which are in default in the payment of their obligations to the United States. The prohibited transactions include the making of "loans" to, and the purchase or sale of "bonds, securities, or other obligations" of, a foreign government which is within the statutory category.1 The Acting Secretary's letter states that the Soviet Union is a government in default for the purposes of the act.

It is, of course, apparent that if the proposed sales of agricultural products to the Soviet Union should be made entirely for cash, no question under the Johnson Act would be presented. Moreover, since the act is expressly made inapplicable to Federal corporations, it would not apply to sales that might be made by the Commodity Credit Corporation. The latter is a corporation created by act of Congress (June 29, 1948, c. 704, 62 Stat. 1070, as amended, 15 U.S.C. 714), empowered to procure agricultural commodities for sale to foreign governments and to export or cause such commodities to be exported (62 Stat. 1072, supra, 15 U.S.C. 714c). It should also be noted that, as provided by section 11 of the Export-Import Bank Act of 1945 (July 31, 1945, c. 341, 59

118 U.S.C. 955 provides:

"Whoever, within the United States, purchases or sells the bonds, securities, or other obligations of any foreign government or political subdivision. thereof or any organization or association acting for or on behalf of a foreign TM government or political subdivision thereof, issued after April 13, 1934, or makes any loan to such foreign government, political subdivision, organization or association, except a renewal or adjustment of existing indebtedness, while such government, political subdivision, organization or association, is in default in the payment of its obligations, or any part thereof, to the United States, shall be fined not more than $10,000 or imprisoned for not more than five years, or both.

"This section is applicable to individuals, partnerships, corporations, or associations other than public corporations created by or pursuant to special authorizations of Congress, or corporations in which the United States has or exercises a controlling interest through stock ownership or otherwise. While any foreign government is a member both of the International Monetary Fund and of the International Bank for Reconstruction and Development, this section shall not apply to the sale or purchase of bonds, securities, or other obligations of such government or any political subdivision thereof or of any organization or association acting for or on behalf of such government or political subdivision, or to making of any loan to such government, political subdivision, organization, or association."

Stat. 529, as amended, 12 U.S.C. 635h), the Johnson Act does not apply to persons acting for or participating with the Export-Import Bank in any transaction engaged in by the Bank. The Bank itself, as a corporation created by act of Congress, supra (12 U.S.C. 635), is exempted from the operation of the Johnson Act. Accordingly, the act would not interfere with export sales in which the Bank participated by issuing a guarantee of payment of the purchase price or otherwise. Nor would it apply to private insurance companies, acting through the Foreign Credit Insurance Association, which might participate with the Bank in the issuance of such guarantees. The Acting Secretary informs me that such guarantees are a common feature of similar export transactions with other foreign governments and their agencies.

There remains for consideration the propriety under the Johnson Act of possible sales by private American firms on a deferred-payment basis. It is my opinion that such sales would not involve the making of "loans" within the meaning of the act. This view is consistent with the position taken by this Department under Attorney General Homer Cummings (37 Op. A.G. 505 (1934)), and more recently in Assistant Attorney General Nicholas deB. Katzenbach's letter of January 19, 1962, to the General Counsel of the Department of Agriculture. The term "loan" in ordinary commercial usage denotes a contract by which one delivers a sum of money to another, and the latter agrees to return at a future time a sum equal to that borrowed, with or without interest. See, e.g., In re Grand Union Co., 219 Fed. 353 (C.A. 2, 1915); National Bank of Paulding v. Fidelity & Casualty Co., 131 F. Supp. 121 (S.D. Ohio 1954). The right to defer payment for goods sold is not a loan but credit. See, e.g., Dunn v. Midland Loan Finance Corp., 206 Minn. 550, 289 N.W. 411 (1939); Bernhardt v. Atlantic Finance Corp., 311 Mass. 183, 40 N.E. 2d 713 (1942); Whitney, The Law of Modern Commercial Practices, sec. 12 (1958). And the payment of consideration by a third party for an assignment of the buyer's obligation does not constitute a loan to either the buyer or the seller. See Oil City Motor Co. v. C.I.T. Corp., 76 F. 2d 589 (C.A. 10, 1935); General Motors Acceptance Corp. v. Mid-West Chevrolet Co., 66 F. 2d 1 (C.A. 10, 1933) ;