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FED ERAL RESER VE BANK O F N EW YORK
Fiscal A g e n t o f the U nited States
r Circular No. 3 6 8 0 T
L
March 27, 1951 J

OPTIONS OPEN TO OWNERS OF MATURING
SERIES E SAVINGS BONDS
To all Banking Institutions, and Others Concerned,
in the Second Federal Reserve D istrict:

Secretary o f the Treasury Snyder issued the following statement which was released for pub­
lication March 26, 1951:
I am sure that the signing today by President Truman o f H . R. 2268 w ill be welcomed by the many
holders o f Series E Savings Bonds who have expressed a desire fo r a convenient reinvestment plan. I was
deeply gratified b y the dispatch with which Congress passed this necessary legislation to effectuate such
a plan.
A n official circular giving the details o f the reinvestment privileges available to owners o f m aturing
Series E Savings Bonds w ill be issued immediately. In the meantime, I desire to briefly outline the various
options which the Treasury will offer holders o f these bonds:
O ption 1. Cash.— The owner o f any Series E bond may receive, if he wishes, full cash paym ent fo r his
bond at maturity. This is, o f course, in accordance with the original terms o f his contract. H e may receive
his cash b y presenting his matured bond to any qualified bank or other paying agent, any Federal Reserve
Bank or branch, or to the United States Treasury. I want to make it absolutely clear that the offerings
under Options 2 and 3 with respect to m aturing bonds do not in any way restrict this right o f the investor
to cash his bond at any time.
O ption 2. Extension o f E Bonds.— U nder this option, the owner will be given the privilege o f retaining
his bond fo r a period not to exceed 10 additional years during which time interest w ill accrue at the rate
o f 2 y 2 percent simple interest each year for the first 7y 2 years, and then increase fo r the remaining 2 y2
years to bring the aggregate interest return to approxim ately 2.9 percent, compounded semiannually. This
choice requires no action on the part o f the owner. A n y bond which is not turned in fo r cash at its original
m aturity date will be extended until such time as the owner does present it fo r paym ent. However, again
I wish to emphasize that the extended bonds w ill also be redeemable at the ow ner’s option, and when
presented fo r payment the holder will receive the fu ll face value o f the bond plus interest which has accrued
at the new rates. (A table showing the redem ption values for a $100 bond during the extended ten-year
period is attached at the end o f this statement.) Congress has continued the existing option o f paying
Federal income taxes on interest on Series E bonds currently or in the year in which the extended bonds
finally mature or are redeemed.
O ption 3. E xchange fo r a Series G B ond.— This third option was specifically designed for those who
are desirous o f receiving current interest income. Series G bonds are registered bonds issued at face amount
and bear interest at the rate o f 2 y 2 percent per annum, payable semiannually from issue date until their
m aturity in 12 years. A holder o f m aturing E bonds may exchange such holdings fo r the current income
G bonds within a period o f time prescribed by Treasury regulations. H e may redeem the G bonds at his
option at any time after six months from the issue date upon one calendar m onth’s notice. Also, G bonds
issued in exchange fo r m aturing E bonds will be redeemable at fu ll face value whenever they are presented
fo r payment. However, the privilege o f deferring taxes on the interest on a Series E bond does not apply
if the E bond is exchanged fo r a G bond.
The privileges which I have ju st outlined w ill apply to all outstanding E bonds as they mature, and
will apply to all new Series E savings bonds issued in the future.
The Treasury’s program fo r voluntary reinvestment was decided upon after long deliberation,
extensive consultation, and cooperative effort. Many groups and individuals met with officials o f the Treasury
and gave considerable time and thought to the measures which would be in the best interests o f both the
Government and the bondholders. I wish to express my sincere appreciation to them and to the Congress
fo r helping to effectuate this program .

The table showing the redemption values for a $100 bond during the extended ten-year period
is printed on the reverse side o f this circular.
Treasury Department Circular No. 885, dated March 26, 1951, sets forth the details of the rein­
vestment privileges available to owners of maturing Series E Savings Bonds. A copy of the circular
is enclosed.
Additional copies of this circular and of the enclosure will be furnished upon request.




A lla n

S p r o u l,

President.
C v e r -)
o




T A B L E O F R E D E M PT IO N VALU ES D U R IN G P E R IO D OF
E XTE N SIO N O F $100 SERIES E BOND

Period Elapsed
A fter Extension
Less tlian

Redemption
Value

y e a r ................................................ $100.00

V2 to 1 y e a r .............................................................101.25
1 to lVo y e a r s ...................................................... 102.50
IV2 to 2 y e a r s .................................... ....................... 103.75
2 to 2% y e a r s .......................................................105.00
2 V2 to 3 y e a r s ...................................................... 106.25

3 to 3y 2 years

....................................................... 107.50

SV2 to 4 y e a r s ...................................................... 108.75
4 to 4V2 y e a r s ...................................................... 110.00
4 1/i> to 5 years

.......................................................111.25

5 to 5V2 y e a r s ...................................................... 112.50
5M to 6 y e a r s ...................................................... 113.75
>
6 to 6^2 y e a r s ...................................................... 115.00
6 V2 to 7 y e a r s ...................................................... 116.25

7 to IV 2 y e a r s ...................................................... 117.50
IV2 to 8 y e a r s ...................................................... 120 .0 0
8 to 8 V2 y e a r s ...................................................... 122.67
8 V2 to 9 y e a r s ...................................................... 125.33

9 to 9 ^2 y e a r s ...................................................... 128.00
9 V to 10 y e a r s ...................................................... 130.67
2

End of 10 years (from date of extension)

.

.

133.33

REGULATIONS GOVERNING OPTIONS OPEN TO OWNERS OF MATURING
UNITED STATES SAVINGS BONDS OF SERIES E
TREASU RY DEPARTM ENT,

1951
D ep a rtm e n t C irc u la r N o . 885

n

_________

O

f f ic e o f t h e

S ecretary,

Washington, March 26, 1951.

Subpart
A

Offering to owners o f Series E Savings Bonds heretofore or hereafter
issued.

B

Further interest after maturity.

C

Exchange for Series G Bonds bearing special par redemption privilege.

D

Federal income tax.

E

General provisions.

Subpart A — O F FE R IN G TO OW N ERS O F SERIES E SAVING S BONDS
H E R E TO FO R E O R H E R E A F T E R ISSUED.
Sec. 329.1. Pursuant to Section 22 ( b ) ( 2 ) o f the Second Liberty Bond A ct, as amended (31 U .S.C.
757c ( b ) ( 2 ) 1) , the Secretary of the Treasury offers to owners of United States Savings Bonds of Series E
(hereinafter referred to as Bonds o f Series E ) who wish to continue their investment beyond maturity, the
options hereinafter set forth. Bonds of Series E were first issued on May 1, 1941 and will mature beginning
on May 1, 1951. Such options are hereby granted for the benefit o f owners of Bonds o f Series E heretofore
or hereafter issued and are as binding on the United States as if expressly set forth in the text o f the bonds.
The term “ owners” as used in these regulations is defined in Subpart E.
Sec. 329.2. The provisions o f Subpart B hereof do not in any way restrict the right o f owners o f Bonds
of Series E to cash their bonds A T A N Y T I M E in accordance with the terms of such bonds.

Subpart B— F U R T H E R IN T E R E S T A F T E R M A T U R IT Y .
Sec. 329.3. Owners of Bonds o f Series E, which mature on and after May 1, 1951, have the option of
retaining the matured bonds for a further 10 -year period and earning interest upon the maturity values thereof
to accrue at the rate of 2 ]/ percent simple interest per annum for the first 7 ^ years and at a higher rate
2
thereafter so that the aggregate return for the 10-year extension period will be about 2.9 percent compounded
semiannually. N O A C T IO N IS R E Q U IR E D O F O W N E R S D E S IR IN G T O T A K E A D V A N T A G E
O F T H E E X T E N S IO N . M E R E L Y B Y C O N T IN U IN G T O H O L D T H E IR B O N D S A F T E R
M A T U R IT Y O W N E R S W I L L E A R N F U R T H E R IN T E R E S T IN A C C O R D A N C E W I T H T H E
S C H E D U L E S E T F O R T H IN T H E T A B L E A T T H E E N D O F T H E S E R E G U L A T IO N S .
Sec. 329.4. Interest hereunder accrues at the end of the first half-year period following maturity and
each successive half-year period thereafter. I f the bonds are redeemed before the end o f the first half-year period
following maturity, the owner is entitled to payment only at the face value thereof.

Subpart C— E X C H A N G E FO R SERIES G BONDS B E A R IN G
S PE C IA L P A R R E D E M PT IO N PR IV IL E G E .
Sec. 329.5. Owners of Bonds o f Series E which mature on and after M ay 1, 1951, who prefer to have
an investment paying current income rather than to exercise their right to request cash, or to retain the
1 Act of March 26, 1951.




bonds under Subpart B, have the option of presenting their matured bonds in amounts of $500 (maturity
value) or multiples thereof in exchange for Series G bonds which will bear the special privilege of redemption
A T P A R A T A N Y T I M E at the owner’s option as set forth in section 329.6. The exchange will be gov­
erned by the rules set forth in section 329.7. Except as set forth in this Subpart, the Series G bonds issued
upon exchange will in all other respects be the same as the Series G bonds currently on sale which mature 12
years from issue date and bear interest at the rate of 2 y 2 percent per annum payable semiannually by check
drawn to the order o f the registered owner.
Sec. 329.6. The Series G bonds issued upon exchange will be specially stamped to indicate that they are
unconditionally redeemable by the owner A T P A R A T A N Y T I M E after 6 months from the issue date
upon one calendar month’s notice to a Federal Reserve Bank or Branch or to the Treasury Department. The
Series G bonds currently on sale for cash subscription may not be redeemed at par prior to maturity except
in the event of death as set forth in the regulations governing United States Savings Bonds.
Sec. 329.7. The following rules govern the exchange under this Subpart: (1 ) The Series G bonds will
be registered in the names of the owners o f the matured Bonds o f Series E in any authorized form of registra­
tion; (2 ) Series G bonds will be issued upon exchange O N L Y in denominations o f $500, $1,000, $5,000
and $10,000 (maturity value) ; ( 3 ) The Bonds of Series E used in the exchange must be presented to a
Federal Reserve Bank or Branch or to the Treasury Department, Washington 25, D. C., not later than two
calendar months after the month of maturity and the bonds of Series G issued upon exchange will be dated
as of the first day of the month in which the Bonds of Series E matured; but ( 4 ) If an owner desires to
accumulate a number of Bonds of Series E for exchange to bonds o f Series G in any authorized denomination
set forth in ( 2 ) he may accumulate such bonds during any twelve consecutive calendar months and present
them for exchange not later than two calendar months after the month of maturity of the last bond in the
group to be exchanged and the Series G bonds issued upon such exchange will be dated on a weighted average
dating basis which will afford an adequate interest adjustment for the period during which the owner has
accumulated the Bonds o f Series E for the exchange; and ( 5 ) Cash subscriptions in whole or in part will not
be accepted for the Series G bonds offered under this Subpart.

Subpart D — FE D E R A L IN COM E T A X .
Sec. 329.8. A taxpayer who has been reporting the increase in redemption value o f his Bonds of Series E,
for Federal income tax purposes, each year as it accrues, must continue to do so if he retains the bonds under
Subpart B, unless in accordance with income tax regulations (Regulations 111, section 29.42-6) the taxpayer
secures permission from the Commissioner of Internal Revenue to change to a different method of reporting
income from such obligations. A taxpayer who has not been reporting the increase in redemption value of such
bonds currently for tax purposes may in any year prior to final maturity, and subject to the provisions of
section 42 ( b ) of the Internal Revenue Code and of the regulations prescribed thereunder, elect for such year
and subsequent years to report such income annually. Holders o f Bonds o f Series E who have not reported
the increase in redemption value currently are required to include such amount in gross income for the taxable
year o f actual redemption or for the taxable year in which the period of extension ends, whichever is earlier.
Sec. 329.9. Taxpayers who exchange their matured Bonds of Series E for Series G bonds under the
provisions of Subpart C must report the difference between the purchase price o f their Series E bonds and
the maturity value thereof in their returns for the year in which the bonds mature to the extent to which such
difference has not been reported in previous returns. The interest payable on the Series G bonds issued upon
exchange must be reported as income for the taxable year in which received or accrued.
Sec. 329.10. I f further information concerning the income tax is desired, inquiry should be addressed to
the Collector of Internal Revenue o f the taxpayer’s district or to the Bureau o f Internal Revenue, Washington
25, D. C.
Subpart E— G E N E R A L PROVISION S.
Sec. 329.11. Definition of terms.— (a ) The term “ Bonds of Series E ” as used in these regulations
includes all Bonds o f Series E issued as United States Defense Savings Bonds, United States W ar Savings
Bonds and all those issued as Series E savings bonds without special designation; ( b ) The term “ owners” as



used in these regulations includes registered owners, coowners, surviving beneficiaries, next of kin and legatees
of a deceased owner, and persons who have acquired bonds pursuant to judicial proceedings against the owner,
except that judgment creditors, trustees in bankruptcy and receivers o f insolvents’ estates will have the right
only to payment of Bonds of Series E in accordance with the regulations governing United States Savings
Bonds.
Sec. 329.12. Right to purchase Bonds of Scries E and G currently.— The amount of matured Bonds of
Series E retained after maturity and the amount of bonds o f Series G issued upon exchange in accordance
with these regulations will not be included in the limitation on holdings applicable to the amount o f bonds of
such series which may be purchased by an investor each calendar year; except that nothing herein contained
shall be construed to permit the current purchase of savings bonds o f Series E for the account o f organizations
and fiduciaries or the purchase o f savings bonds o f either series for the account of persons who are not
entitled to have them on original issue, contrary to the provisions o f the regulations governing United States
Savings Bonds.
Sec. 329.13. Modification of other circulars.— The provisions o f these regulations shall be considered as
amendatory o f and supplementary to the ottering circular for savings bonds o f Series E (Department Circular
No. 653 and its revisions), the offering circular for savings bonds o f Series G (Department Circular N o. 654
and its revisions) and the circular containing the regulations governing United States Savings Bonds2, which
circulars are hereby modified to accord with the provisions hereof.
Sec. 329.14. Other circulars generally applicable.— Except as provided in these regulations, the circulars
referred to in the preceding section will continue to be generally applicable.
Sec. 329.15. Supplements and amendments.— The Secretary o f the Treasury may at any time or from
time to time supplement or amend the terms of these regulations, or o f any amendment or supplement thereto.
JO H N W . SN YDER
Secretary of the Treasury

1 The regulations currently in force governing United States Savings Bonds are set forth in Department Circular No. 530, Sixth Revision,
as amended.




O P T IO N A L EXTEN SIO N OF U N ITED STATES SAVIN G S BONDS— SERIES E
T A B L E O F R E D E M P TIO N V A LU ES A N D IN V E ST M E N T Y IE LD S R E L A T IN G T O E X TE N D E D BONDS
Table fo r the 10-year extension period show in g: (1 ) H ow bonds o f Series E, b y denominations, increase in redemption
value during successive half-year periods follow in g date o f original m aturity; (2 ) the approxim ate investment yield on the
purchase price from issue date to the beginning o f each h alf-yea r p e rio d ; and ( 3 ) the approxim ate investment yield on the
current redemption value from the beginning o f each half-year period to extended maturity. Y ields are expressed in terms o f
rate percent per annum, com pounded semiannually.

Extended m a tu rity v a l u e . . . . $13.33
Original m a tu rity (or face)
v alu e..............................................
10.00
7.50

Period after issue date

10 to 10Y
10 Yi to 11
11 to 11 Yz
11Y to 12
12 to 12'A
12 Y to 13
13 to IZ Y i
13 Y> to 14
14 to l^ Y i
14 Y to 15
%
15 to 153^
15 Y i to 16
16 to 1 6 ^
16 Y to 17
17 to \ iy 2
17 Y i to 18
18 to 1 8 ^
18 Y i to 19
19 to 19 Y i
19 Y i to 20

$33.33

$66.67

$133.33

$266.67

$666.67

$1,333.33

25.00
18.75

60.00
37.60

100.00
75.00

200.00
150.00

500.00
375.00

1,000.00
750.00

A p p ro x im a te in vestm en t y ield s1

(1 ) R edem ption values during each half-year period

(3) On current re­
(2) On purchase demption value
price from orig­ from beginning of
each half-year
inal issue date to
beginning of each
period to ex­
half-year period tended maturity

y e a rs..............................
years..............................
y e a rs..............................
yea rs..............................
y e a rs..............................
vea rs..............................
v e a rs..............................
y e a rs..............................
y e a rs..............................
y e a rs..............................
y e a rs .............................
y e a r s .............................
y e a rs ..............................
y e a rs ..............................
y e a rs ..............................
y e a rs ..............................
ye a rs..............................
y e a r s ..............................
y e a rs ..............................
y e a rs ..............................

10.00
10.12
10.25
10.37
10.50
10.62
10.75
10.87
11.00
11.12
11.25
11.37
11.50
11.62
11.75
12.00
12.27
12.53
12 .80
13.07

2 5 .00
25.31
2 5 .6 2
2 5 .94
2 6 .25
2 6 .56
2 6 .87
2 7 .19
2 7 .50
27.81
2 8 .1 2
2 8 .4 4
2 8 .7 5
2 9 .0 6
2 9 .3 7
3 0 .0 0
3 0 .6 7
3 1 .3 3
3 2 .0 0
3 2 .6 7

5 0 .00
5 0 .6 2
5 1 .25
5 1 .87
5 2 .5 0
5 3 .12
53 .75
5 4 .37
5 5 .00
55 .62
5 6 .2 5
5 6 .8 7
5 7 .5 0
5 8 .1 2
5 8 .7 5
6 0 .0 0
6 1 .3 3
6 2 .6 7
6 4 .0 0
6 5 .3 3

100.00
101.25
102.50
103.75
105.00
106.25
107.50
108.75
110.00
111.25
112.50
113.75
115.00
116.25
117.50
120.00
122.67
125.33
1 2 8 .0 0
130.67

200.00
202.50
205.00
207.50
210.00
212.50
215.00
217.50
220.00
222.50
22 5 .0 0
22 7 .5 0
23 0 .0 0
2 3 2 .5 0
235.00
240.00
245.33
25 0 .6 7
25 6 .0 0
26 1 .3 3

500.00
506.25
512.50
518.75
525.00
531.25
537.50
543.75
550.00
556.25
56 2 .5 0
568.75
57 5 .0 0
5 8 1 .2 5
5 8 7 .5 0
600.00
613.33
626.67
64 0 .0 0
653.33

1,0 0 0 .0 0
1 ,0 1 2 .5 0
1 ,0 2 5 .0 0
1,037 50
1 ,0 5 0 .0 0
1 ,0 6 2 .5 0
1 ,0 7 5 .0 0
1 ,0 8 7 .5 0
1 ,1 0 0 .0 0
1 ,1 1 2 .5 0
1 ,1 2 5 .0 0
1 ,1 3 7 .5 0
1 ,1 5 0 .0 0
1 ,1 6 2 .5 0
1 ,1 7 5 .0 0
1 ,2 0 0 .0 0
1 ,2 2 6 .6 7
1 ,2 5 3 .3 3
1 ,2 8 0 .0 0
1 ,3 0 6 .6 7

2 .9 0 %
2 .8 8
2 .8 6
2 .8 4
2 .8 2
2.8 1
2 .7 9
2 .7 7
2 .7 5
2 .7 4
2 .7 2
2 .7 1
2 .6 9
2 .6 7
2 .6 6
2 .7 0
2 .7 5
2 .7 9
2 .8 3
2 .8 7

Extended m a tu rity value (20
years fro m issue date)

13.33

33.33

66.67

133.33

266.67

666.67

1,3 3 3 .3 3

2.90

1 C a lcu lated on basis o f $1,000 b o n d (fa c e v a lu e ).




2 .9 0 %
2 .9 2
2 .9 4
2 .9 7
3 .0 1
3 .0 5
3 .1 0
3 .1 6
3 .2 3
3 .3 2
3 .4 3
3 .5 6
3 .7 3
3 .9 6
4 .2 6
4 .2 6
4 .2 1
4 .1 7
4 .1 2
4 .0 8


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102