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F E D E R A L R E S E R V E BANK O F N E W YORK F iscal A g e n t o f the U nited States r C ircular No. 4 8 4 4 T L January 14, 1960 J O F F E R I N G O F T W O S E R I E S O F T R E A S U R Y BILLS $1,000,000,000 of 91-Day Bills, Additional Amount, Series Dated Oct. 22, 1959, Due April 21, 1960 (To Be Issued January 21, 1960) $400,000,000 of 182-Day Bills, Dated January 21, 1960, Due July 21, 1960 T o A ll In corporated Batiks and T rust Companies, and O thers Concerned, in the Second Federal R eserv e D istrict: F ollow ing is the text o f a notice issued by the Treasury Department, released for publication in morning new spapers, Th ursday, January 14, 1960: T h e T reasu ry D epartm ent, b y this pu blic notice, invites tenders fo r tw o series o f T reasu ry bills to the a ggregate amount o f $1,400,000,000, o r thereabouts, fo r cash and in exch ange for T re a su ry bills m aturing January 21, 1960, in the am ount o f $1,400,400,000, as f o l lo w s : 91-day b ills (to m aturity date) to be issued January 21, 1960, in the am ount o f $1,000,000,000, o r thereabouts, representing an addition al amount o f bills dated O ctober 22, 1959, and to mature A p ril 21, 1960, o rigin a lly issued in the am ount o f $400,123,000, the addition al and origin a l b ills to be fre e ly interchangeable. 182-day b ills, fo r $400,000,000, o r thereabouts, to be dated January 21, 1960, and to mature July 21, 1960. T h e bills o f b oth series w ill be issued on a discou nt basis u nder com petitive and noncom petitive bid d in g as h ereinafter provided , and at m aturity their fa ce am ount w ill be payable w ith ou t interest. T h e y w ill be issued in bearer fo rm only, and in denom inations o f $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (m aturity v a lu e). T en d ers w ill be received at F ed eral R eserve Banks and B ranches up to the closin g hour, on e-thirty o ’c lo ck p.m., E astern Standard time, M on day, January 18, 1960. Tenders w ill n ot be received at the T reasu ry Departm ent, W ash ington. E a ch tender must be fo r an even m ultiple o f $1,000, and in the ca se o f com petitive tenders the price offered must be expressed on the basis o f 100, w ith n ot m ore than three decim als, e.g., 99.925. F raction s m ay not be used. It is urged that tenders be m ade on the printed form s and forw a rd ed in the special envelopes w hich w ill be supplied b y F ed era l R eserve Banks o r B ran ches o n application th erefor. O thers than banking institutions w ill n ot be perm itted to subm it tenders e xcep t fo r th eir ow n account. T en ders w ill be received w ith ou t deposit from in corpora ted banks and trust com panies and from responsible and recogn ized dealers in in vestm ent securities. T en ders from others must be accom panied b y paym ent o f 2 percent o f the fa ce amount o f T rea su ry bills applied fo r, unless the tenders are accom panied by an express gu aranty o f paym ent b y an in corporated bank or trust com pany. Im m ediately a fter the clo s in g hour, tenders w ill be opened at the F ed eral R eserve Banks and B ranches, fo llo w in g w hich p u blic announcem ent w ill be m ade b y the T reasu ry Departm ent o f the am ou nt and price range o f accepted bids. T h ose sub m itting tenders w ill be advised o f the acceptance o r rejection thereof. T h e S ecretary o f the T reasu ry exp ressly reserves the right to accep t o r reject any or all tenders, in w hole o r in part, and his action in any such respect shall be final. S u bject to these reservations, noncom petitive tenders fo r $200,000 o r less for the addition al bills dated O ctober 22, 1959, (91 days re m aining until m aturity date on A p ril 21, 1960) and n on com petitive tenders for $100,000 or less for the 182-day bills w ithout stated p rice from any one bidder w ill be a ccepted in fu ll at the average p rice (in three decim a ls) o f a ccepted com petitive bids fo r the respective issues. Settlem ent fo r a ccepted tenders in a ccord a n ce w ith the bids must be made o r com pleted at the Fed eral R eserve B ank on January 21, 1960, in cash o r other im m ediately available funds o r in a like fa ce am ount o f Treasu ry bills m aturing January 21, 1960. Cash and exchange tenders w ill receive equal treatment. Cash adjustm ents w ill be made f o r differences betw een the par value o f m aturing bills accepted in exch an ge and the issue price o f the new bills. T h e incom e derived from T reasu ry b ills, w hether interest or gain from the sale o r oth er d isp osition o f the bills, does not have a n y exem ption, as such, and loss from the sale or other disp osition o f T reasu ry bills does n ot have any special treat ment, as such, under the Internal R evenue C ode o f 1954. T he bills are subject to estate, inheritance, g ift o r other excise taxes, w hether F ed eral o r State, but are exem pt fro m all ta x a tion n ow o r hereafter im posed on the principal or interest th ereof b y any State, or any o f the possessions o f the United States, o r by any lo ca l ta x in g authority. F o r purposes o f ta x a tion the am ount o f discou nt at w hich T rea su ry bills are o rig in a lly sold by the U n ited States is con sidered to be interest. U nder S ections 454(b) and 1221(5) o f the Internal Revenue C ode o f 1954 the am ount o f discou nt at w hich bills issued hereunder are sold is n ot con sidered to a ccru e until such bills are sold , redeem ed o r otherw ise disp osed of, and such bills are exclu d ed from con sidera tion as capital assets. A cco rd in g ly , the ow ner o f T rea su ry bills (oth er than life insurance co m panies) issued hereunder need include in his in com e ta x return on ly the difference betw een the price pa id fo r such bills, w hether on orig in a l issue or on subsequent purchase, and the am ount actu ally received either upon sale o r redem ption at m aturity du rin g the ta xab le year fo r w h ich the return is made, as ord in a ry gain or loss. T reasu ry D epartm ent C ircu lar N o. 418, R evised , and this n otice, prescribe the terms o f the T reasu ry bills and govern the con dition s o f their issue. Copies o f the circu la r m ay be obtained from any F ed eral R eserve Bank o r Branch. T h is Bank w ill receive tenders for both series up to 1 :30 p.m., Eastern Standard time, M on day, January 18, 1960, at the Securities D epartm ent o f its H ead O ffice and at its B uffalo Branch. T e n d e r form s fo r the respective series are enclosed. Please use the appropriate form s to subm it tenders and return them in an envelope m arked “ T en d er fo r T reasu ry B ills.” Ten ders m ay be subm itted b y telegraph, su bject to w ritten confirmation; they may not be submitted by telephone. Paym ent for the Treasury bills cannot be made by credit through the Treasury T ax and Loan Account. Settlement must be made in cash or other immediately available futids or in maturing Treasury bills. R esults o f the last offerin g o f T reasu ry bills (91-day bills to be issued January 14, 1960, representing an additional am ount o f bills dated O ctob er 15, 1959, and m aturing A p ril 14, 1960; and 182-day bills dated January 14, 1960, m aturing July 14, 1960) are show n on the reverse side o f this circular. A lfred H ayes, President. ( over) RESULTS OF LAST OFFERING OF TREASURY BILLS (TW O SERIES ISSUED JANUARY 14, 1960) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing April 14, 1960 P r ice H igh ........ 182-Day Treasury Bills Maturing July 14, 1960 A p p ro x . equtv. annual rate P r ice A p p ro x . equiv. annual rate 98.850* 4.549% 97.484 4.977% L o w .......................... ........ 98.835 4.609% 97.477 4.991% ................. ........ 98.840 4.590% 1 97.478 4.989% 1 A verage a E x cep tin g one tender o f $4,000. 1 A vera ge rate on a cou pon issue equivalent yield basis is 4.72% fo r the 91-day bills and 5.20% fo r the 182-day bills. Interest rates on bills are quoted on the basis o f bank discount, w ith their length in actual num ber o f days related to a 360-day year. In contrast, yields on certificates, notes, and bonds are com puted on the basis o f interest on the investment, w ith the num ber o f days rem aining in a sem iannual interest paym ent period related to the actual num ber o f days in the period, and w ith sem iannual com pou n din g if m ore than one cou pon period is involved. (66 percent o f the am ount o f 91-day bills bid fo r at the low price w as accep ted .) (77 percent o f the am ount o f 182-day bills bid for at the lo w price w as accepted.) Total Tenders A pplied for and Accepted (By Federal Reserve Districts) 91-Day Treasury Bills Maturing A pril 14, 1960 A pplied for D istrict B oston .......................... ........... $ 37,046,000 182-Day Treasury Bills Maturing July 14, 1960 A ccepted $ 27,046,000 A pplied fo r $ 7,172,000 A ccepted $ 3,458,000 N ew Y o r k ................... ........... 1,479,293,000 729,843,000 773,492,000 297,957,000 Philadelphia ............... ........... 29,216,000 14,121,000 10,198,000 2,398,000 ................... ........... 45,601,000 44,983,000 28,498,000 19,398,000 R ich m on d ................... ........... 22,959,000 20,959,000 3,506,000 2,988,000 A t la n t a .......................... ........... 33,219,000 26,245,000 7,406,000 5,704,000 C h icago ....................... ........... 226,461,000 152,434,000 84,162,000 29,293,000 St. L o u i s ..................... ........... 31,903,000 26,238,000 8,349,000 7,849,000 ............... .......... 16,039,000 13,939,000 3,735,000 3,272,000 10,675,000 Cleveland M inneapolis Kansas C ity ............... ........... 39,641,000 35,181,000 12,865,000 D a l l a s ............................ ........... 25,213,000 24,963,000 5,963,000 5,963,000 San F r a n c is c o ............. 92,889,000 84,202,000 62,589,000 12,269,000 T otal ........... .......... $2,079,480,000 $1,200,154,000b $1,007,935,000 b Includes $286,325,000 noncom petitive tenders a ccepted at the a verage price o f 98.840. c Includes $89,111,000 n on com petitive tenders a ccepted at the average price o f 97.478. $401,224,000c