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'D J.N : B. >!• I f I. COL0.. I r, nr. wmrmn^^ MARilm"'*' iwwr fUBBO WTWBW VA. Hitnileb JSAcA** COMMITTEE ON FINANCE February 17, 19 U8 Hon. Marriner S. Eccles, Chairman Board of Governors Federal Reserve System Hy dear Mr. Chairman: I have received a l e t t e r from Mrs. David N. H u l f i s h , 607 S. "Washington S t r e e t , Alexandria, V i r g i n i a , asking me f o r information regarding the prices and y i e l d s of government bonds i n 1939 compared with p r i c e s and y i e l d s on some recent d a t e . I wonder i f your organization can f u r n i s h me with a t a b u l a t i o n showing the trend of these f a c t o r s from 1939 to the present time. Very sincerely yours, HtK^TBUTLER, U.S.S. Nebraska HB:cs T!0.\ March h> 19^8* Honorable Hugh Butler* United S t a t e s 8ea&ta# Bobraska* Dear Senator Butler* I m a t t o apologise f o r tho delcy i n an s p r i n g your l e t t e r of Fofcruary 17* I had requested t h a t a- t a b l e indicating t h e troad iti p r i c e s and y i e l d s of Goverm&nt bonds since 1939 fco prepsr$d # but m e so busy t h a t a dol&y i n i t s preparation escaped x^r a t t e n t i o n It id 11 bo sent yot* iaa th& f i r s t p a r t of next week* Si&oaroly yours* (Signed) W. S. Ecclss M* Eoclos* Ch&iman pro teia« March lolfi. Banorable Hugh Butler, United S t a t e s Senate, Nebraska* Bear Senator Butler* Tabulations shoeing change* i n prices and yields of Government bonds since 1939# which I promised i n my l e t t e r of &arch a r e attached* The comparison of prices and yields Is complicated by the foet t h a t so many of the current issues d i f f e r from those outstanding in 1939 with respect t o various s p e c i a l character* i s t i c s a f f e c t i n g p r i c e and yield * there were no f u l l y taxable issues or Issues r e s t r i c t e d a s t o ownership outstanding i n 1939* and the coupon i n t e r e s t carried and t h e periods t o maturity of t h e issues were d i f f e r e n t * I have had Issues selected f o r cos** parison In Table I whose s p e c i a l f e a t u r e s a r e a s a l i k e as poss i b l e in order t o r e f l e e t only the s i g n i f i c a n t changes i n price and yield* Table I shews t h a t by the end of igitf prices had declined and yields r i s e n with respect t o a l l but t h e longest term bonds* Instead of a general t r e n d , however, prices and yields f l u c t u a t e d considerably, a s i s shown on Sable I I attached* during the six years 1939-19U5* long-term p a r t i a l l y tax-exempt bonds r o s e In price and declined in yield* During t h e war years, I9I1Z i n t o 191*5* p r i c e s and yields of long-term f t i l l y taxable bonds were fttlrly s t a b l e , but t h e i r prices began t o r i s e i n l a t t e r 19i*5, reached a peak i n the spring of 1 & 6 , end u n t i l t h e l a s t quarter of 19^7 prides continued Trail above and yields w e l l below t h e i r wartime averages* In the l a s t quarter o f I 9 h l , prices and yields of long-term taxable bonds drew very close t o t h e i r war l e v e l s and, in the case of short and Intermediate f u l l y taxable and p a r t i a l l y tax-exempt bonds, prices f e l l below and yields r o s e above t h e i r war levels* Sincerely yours $ (Signed) fc. S. Eccles H* S* Eccles* Chairman pro tern* Attachments TlStdb vol 1 Table I PHICES A3D YIELDS OF SELECTED IT* IEKASBRY BONDS (Price® i n thirty-seconds) iSaturity (Tears to first c a l l date) Security June 30, igi+2 A* Billy-taxable» 1. « 3 / J & 9/15A5-V7 2. 3/15/^8-51 5. 2 I2/I5/5I-53 101 l l A 2 100 9/32 102 30/32 101 5 3A 9 1/2 1. 2 3/15AB-50 2 . 2 j s . 12A5/51-55 5 . 2 3/fe. 3/15^6-58 B« P a r t i a l l y tax-exempt Prioe Yield t o earliest oall (per cent) 13 3A 25 * A j A* Pally-taxablet 1.75 1,96 2.25 2.1*5 Deoenber JO, 1939 5 3A 8 lA 12 1 108 77/32 108 10/32 102 30/^2 Security Maturity (Tears to f i r s t (m i l d a t e 1 1. 2 2, 2 12A5/52-5U 9A5/56-59S It. 2 1/fej 9/15/67-72 5 . 2 1/2^, 12/15/67-72 r B. P a r t i a l l y tax-exemptt^/ 1.27 1.66 1.97 1. 2 JS, 6/15/53-55 2. 2 9/15A6-59 3 . 2 3A^» 12/15/60-65 Prioe Yield t o earliest call (per cent} December 31, 1 ^ 7 f/LOl fOlOl ft/101 19 3 A ?/101 20 100 5 , 6/^2 I 1/1.75 9/32 9/32 , £ . 0 9 9/32 Deoenber 31, 19U7 5 V M 3/102 2 A 2 A06 8/^2 8 3A 3T108 13 2/23 1.50 1.97 2.QU (B) Bestricted mmershipj i n e l i g i b l e f o r coismeroial bank ownership T»ith minor exceptions. y the price would be 9/32 lo*er and yield •OB per cent higher i f m t u r i t y wore i d e n t i c a l with i s s u e selected f o r comparison i n 2/ JSrice higher than issue with comparable maturity selected f o r comparison i n V^Z, because of l a r g e r coupon, J / Price would be about 10/5*2 higher and yield #02 per c m t lower i f were u n r e s t r i c t e d a s t o ownership* E/ The price would tend to be very s l i g i r t l y lower and the yield s l i g h t l y higher i f the period t o f i r s t c a l l date were 25 years as i n the case of t h e issue i n selected f o r comparison* Price i s 23/^2 lower and yield «Q5 per coat higher than the comparable 20-year bond i s s u e i n 1947 (Al*) v h i c h i s u n r e s t r i c t e d as t o oroership# 6/ I*iee higher and market yield lower than f o r comparable taxable i s s u e s , since a r e exsmpt from noriaal income tax* 2 / Price lower than issue with comparable maturity selected for comparison in 1959, because of smaller coupon. II Table UNITED STATES GOVERNMENT SECURITY YIELDS AND PRICES ^/Yields In per cent per annum* Averages of dally f i g u r e s used for weeks ending on dates indicated* In some cases highs or lows of the year occurred i n -various weeks. In suoh cases e a r l i e s t dates have been used*^ Yields 3- to High Low Average 1939 191*0 19142 19UX 19143 1M 191*5 19U6 191*? taxable issues — mm Bonds j 7 - t o 9-year taxable High Low Average Bondsi 15 years and over P a r t i a l l y tax-exempt High Low Average mm «« —— 9/23 2.71* 6 / 1 2*149 6/10 2.20 12/11* 1*99 2.26 2.14 Bondst 15 years and over Taxable High Loir Average friees (In 32nd«) Long-term bonds* 3/ 12/13 9/6 — 1939 High Low Average 6/10 9/23 107 J ; 12/lU 100.1 6/1 1014.5 19U0 uo.1* 103.1* 106.6 1.13 .58 .78 mm mm trntmm 10/17 3/7 1.1*9 1.01 1.29 1/2 7/10 149 1.28 1.31* 3/25 9/9 1.39 1.27 1.33 1/6 1.3U 12/15 1.12 1.18 12/21 1.32 .92 3/9 1.16 12/2!* 3/29 1.65 1.14 1.32 10/2U 1.99 1.80 1-93 3/20 2.01 1.91 7/5 1.96 i/fe 8/26 1.99 1.92 1.9k 1.93 12/29 1.37 1.60 llAo 2/16 1.61* I.27 1.1*5 12/27 6/7 1.88 1.1*5 1.58 2.13 2.GU 2.09 1/2 7/10 2.13 I.89 1.98 2/5 12/30 1.96 1.81+ 1.92 12/fet 1.83 1.51 1.66 * * • V? 9/9 2.1*9 2.47 2.I4& 1/6 2.1*5 12/fe 2.32 2.37 k/lB 2/22 11/1 2.2I4, 1.93 2.05 12A 12/13 li/fe 2.50 2.33 12A 5/28 l$kl 8/2 12/27 5/30 2.1+9 11/20 2.1*9 2.1*3 5/29 2.1*5 2.1*6 2-1*7 I9l»2 6/27 110.7 100. 01 12/19 109.5 101.10 5/29 10020 12/18 100)2 19U 3 100.86 12A0 100.18 2 / 5 100.50 I9bh l / 9/21 8/13 1915 2.30 2.03 2.19 191+6 100.1*71 12/29 :.02.eu U/6 107.38 100.13 1/6 300.66 9/21 103.11 100.25 102.Oli IOU.77 1 / Regative y i e l d . 2 / Series Started l a t e in year. 3 / Price derived from average yield of p a r t i a l l y tax-exempt bonds on basis of 2 3 A P®r ceaat 16-year bond through October I9I4JL* prices of taxable bonds due or c a l l a b l e in 15 years or more. Hone outstanding. * * * 12/21* 2.1*5 li/12 2.18 2.25 191+7 lj/12 101+.77 12/21* 101.28 103.76 Thereafter, average
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