been given at an aggregate purchase price of approximately $1,000,000; and that the manufacturers of these machines had already completed a considerable number of them.

That the facts thus given by you were not before the Acting Comptroller General at the time his letter of December 6, 1938, was written is shown by that letter itself. Under them the administrative interpretation of the applicable statutes, which appears to have been consistently followed theretofore, fully supports your authority to enter into the agreements at the time they were consummated. The Acting Comptroller General in another case involving similar facts, of which he was fully advised, approved the payments.2 Also, it appears that this construction and the practice developed thereunder was known to and had been acquiesced in by the Congress.3

As bearing upon your right at this time to continue to allow disbursements to be made under the agreements, attention is invited to Public Resolution No. 1, 76th Congress, approved February 4, 1939, 53 Stat. 507, which contains the following provision:

66* * *

no funds appropriated in the Emergency Relief Appropriation Act of 1938 or herein appropriated shall be used by any Federal agency, to establish mills or factories which would manufacture for sale articles or materials in competition with existing industries."

This statute, enacted since the agreements were made, unquestionably prohibits the making of similar agreements in the future, and, since the moneys involved in the loan agreements mentioned in your letter were appropriated by the Emergency Relief Appropriation Act of 1938, the questions arise (1) whether the act should be construed retroactively, and (2) if so, whether the funds involved in the

1 Sec. 208 of the National Industrial Recovery Act, 48 Stat. 205; sec. 1 of the Emergency Relief Appropriation Act of 1935, 49 Stat. 115; sec. 1 of the Emergency Relief Appropriation Act of 1936, 49 Stat. 1608; sec. 1 of the Emergency Relief Appropriation Act of 1937, 50 Stat. 352; sec. 43 of the Bankhead-Jones Farm Tenant Act, 50 Stat. 530; sec. 1 (3) of the Emergency Relief Appropriation Act of 1938, 52 Stat. 809.

216 Dec. Comp. Gen. 1043.

See sec. 43 of the Bankhead-Jones Farm Tenant Act, supra.

instant cases, since they may be expended only upon checks countersigned by your designated representative, are so under your jurisdiction or control as to make the statute applicable to them.

Your Solicitor, in his opinion which you furnished me, points out that the courts have generally held that a statute will not be construed retroactively unless it clearly appears that such was the legislative intent, United States v. Magnolia Co., 276 U. S. 160, 162; United States v. St. Louis, etc. Ry. Co., 270 U. S. 1, 2; Fullerton Co. v. Northern Pacific, 266 U. S. 435, 437; Shwab v. Doyle, 258 U. S. 529, 534; U. S. Fidelity Co. v. Struthers Wells Co., 209 U. S. 306, 314; Miller v. United States, 294 U. S. 435, 439; Hassett v. Welch, 303 U. S. 303, 314; and that this rule of construction is particularly applicable when the statute, if construed retroactively, would affect or impair vested rights accrued under an earlier statute. United States v. Heth, 3 Cranch 399, 413; Southwestern Coal Co. v. McBride, 185 U. S. 499, 503; Hathaway v. Mutual Life Ins. Co., 99 Fed. 534 (C. C. D. Wash., 1900); Western Pac. R. Corporation v. Baldwin, 89 F. (2d) 269 (C. C. A. 8th Cir., 1937); New York Life Ins. Co. v. Truesdale, 79 F. (2d) 481 (C. C. A. 4th Cir., 1935); Hoyt Metal Co. v. Atwood, 289 Fed. 453 (C. C. A. 7th Cir., 1923). The above provision of Public Resolution No. 1 contains no language indicating such an intent; nor do I find in its legislative history anything requiring such a construction.

4

Your Solicitor further points out that the agreements involved were consummated and the loans paid over to the cooperative associations prior to the enactment of the statute and that your only control and jurisdiction over the funds is that conferred by the requirement that checks drawn against them be countersigned by a designated representative of the Farm Security Administration, as provided for in the agreements; and in this connection he calls attention to the case of National Surety Co. v. Winslow, 143 Minn. 66, 68; 173 N. W. 181. In that case the defendant had secured a contract to lay the flooring in a certain building and had bor

• Congressional Record, January 13 and 26, 1939, v. 84, pp. 468, 1141-1143.

rowed from a creditor the necessary funds to enable him to perform the contract. The lending creditor required that the funds advanced be deposited by the contractor in a bank account to be withdrawn only by checks countersigned by the creditor. The National Surety Company brought suit against the contractor, attaching the funds in the bank, and the lending creditor intervened, claiming a right to such funds superior to the plaintiff's attachment. The court said:

"The contention that the contract referred to gives rise to an equitable lien upon the funds in question in interveners' favor, or a right similar to such a lien, is not sustained. We find nothing in the contract taken as a whole to justify the conclusion of the creation of any relation between defendant and interveners, other than that of debtor and creditor, with the privilege on the part of interveners, as creditors, obviously to guard against a diversion or dissipation of the money advanced by them, to supervise and in effect direct the expenditure of * * * the funds so advanced. And it is clear that a relation of that character though coupled with the supervisory right mentioned, can vest in interveners no legal or equitable personal claim to the funds arising out of the transaction."

While I find no decision of a Federal court passing directly upon this question, neither do I find any decision of a State court holding to the contrary.

Under all the circumstances, I am of the opinion that the weight of authority sustains the view that the agreements referred to in your letter are not affected by the above provision of Public Resolution No. 1, and that you are justified in continuing to permit disbursements to be made under them, and in insisting upon their full performance according to their terms. It follows that the officer of the Farm Security Administration designated for that purpose may continue to countersign checks properly drawn in accordance with, and for purposes designated in, the agreements.

Respectfully,

FRANK MURPHY.

COUNTERVAILING DUTIES ON IMPORTS FROM GERMANY

The practices and devices of the German Government described herein constitute the paying or bestowing of bounties or grants within the meaning of sec. 303, Tariff Act of 1930, and it is the duty of the Secretary of the Treasury to impose countervailing duties upon articles affected thereby.

The proposed Treasury decision is appropriate in form to carry out that purpose.

The SECRETARY OF THE TREASURY.

MARCH 18, 1939.

MY DEAR MR. SECRETARY: Reference is made to your memorandum to the President, dated November 28, 1938, in which you outline certain practices now prevailing in Germany, and to your recent informal request for my opinion as to whether those practices require the imposition by the Treasury Department of countervailing duties under section 303 of the Tariff Act of 1930.

You state in your memorandum that the following practices now prevail in Germany:

"(1) The prospective American importer of German goods 'buys' one of a limited number of kinds of merchandise (cotton or copper in most, if not all, cases) for dollars at the world price. The kind of merchandise to be admitted into Germany for the purpose of the 'barter' must be approved by the German import control authorities, and such approval is strictly limited to a very few kinds of goods.

"(2) The merchandise is shipped into Germany, having theretofore been sold to a German purchaser for free marks (which, as appears below, are immediately blocked) at a price substantially higher than the mark equivalent of the total cost to the vendor, if such cost is calculated at the current official rate of exchange. This spread or 'uberpreis' (over-price) is uniformly 333 percent in the case of cotton. It has been less uniform but usually greater in amount in the case of copper. In every case the price to be paid by the German vendee must receive prior approval by the German import control authorities.

"(3) The marks paid by the German vendee are required to be paid into special accounts in German banks, where,

as mentioned above, they are held as 'blocked' or controlled funds for the account of the prospective American importer mentioned above.

"(4) Whatever the formal limitations upon the use of such controlled funds by their American owner may be, their only practical use is in payment for German goods to be shipped to the United States. The kinds of goods for which such payment may be made are restricted to those set forth in detail in a list published by the German exchange control authorities on July 19, 1938. Excluded from this list are, in general:

"(a) Articles and commodities in which Germany has a virtual international monopoly to such extent that their export at the current high German prices requires no assist

ance.

"(b) Goods of which there is a shortage in Germany so that their export is not favored by the German Government.

"(c) Goods composed of foreign materials to such a large extent that their export is objectionable to the German Government because of the drain on Germany's foreign balances which would result from the purchase of the materials used in their manufacture."

From a subsequent memorandum, dated January 20, 1939, it appears that the following example will serve to illustrate how the present German practices operate:

An American importer desires to import into the United States from Germany certain German cameras. Before this can be done approval of the transaction must be obtained from the German exchange control authorities, without whose approval nothing can be exported from Germany. This approval is obtained, and under an arrangement approved by the German import control authorities, without whose approval nothing can be imported into Germany, a German agent acting for the American importer buys American cotton at the world price for $1,000 and sells it in Germany for 2,500 Reichsmarks (the world price at the prevailing rate of exchange of 40 cents), plus a premium of 33% percent, making a total sales price of 3,333 Reichsmarks, the