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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 Fiscal A g e n t o f the U nited States r C ircular No. 4 8 4 6 T L January 21, 1960 I OFFERING OF TW O SERIES OF TREASURY BILLS $1,000,000,000 of 91-Day Bills, Additional Amount, Series Dated Oct. 29, 1959, Due April 28, 1960 (To Be Issued January 28, 1960) $400,000,000 of 182-Day Bills, Dated January 28, 1960, Due July 28, I960 T o A ll In corporated B anks and Trust Companies, and O thers C oncerned, in the Second Federal R eserv e D istrict: Follow ing is the text o f a notice issued by the Treasury Department, released for publication in morning new spapers, Th u rsday, January 21, 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 28, 1960, in the am ount o f $1,400,773,000, as f o l lo w s : 91-d a y bills (to m aturity date) to be issued January 28, 1960, in the amount o f $1,000,000,000, o r thereabouts, representing an additional amount o f bills dated O ctober 29, 1959, and to mature A p ril 28, 1960, o rig in a lly issued in the am ount o f $400,794,000, the addition al and origin al bills to be freely interchangeable. 182-day bills, fo r $400,000,000, or thereabouts, to be dated January 28, 1960, and to mature July 28, 1960. T h e bills o f both series w ill be issued on a discou nt basis under com petitive and n oncom petitive bid d in g as hereinafter provided , and at m aturity their face am ount w ill be payable w ithout interest. T h ey w ill be issued in bearer form only, and in denom inations o f $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (m aturity va lu e). T en ders w ill be received at F ed eral R eserve Banks and Branches up to the clo s in g hour, on e-thirty o ’c lo ck p.m., E astern Standard time, M on day, January 25, 1960. Tenders w ill n ot be received at the T reasu ry D epartm ent, W ash ington. E a ch tender must be fo r an even m ultiple o f $1,000, and in the case o f com petitive tenders the price offered must be expressed on the basis o f 100, w ith not 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 Federal R eserve Banks o r B ranches on application therefor. O thers than banking institutions w ill not be perm itted to subm it tenders excep t fo r their ow n account. Tenders w ill be received w ithout deposit from in corporated banks and trust com panies and from responsible and recogn ized dealers in in vestm ent securities. T en ders fro m others must be accom panied b y paym ent o f 2 percent o f the fa ce am ount o f T reasu ry bills applied for, unless the tenders are accom panied b y an express gu aranty o f paym ent by an in corporated bank or trust com pany. Im m ediately after the closin g hour, tenders w ill be opened at the Federal R eserve Banks and Branches, fo llo w in g w hich pu blic announcem ent w ill be made b y the T reasu ry Departm ent o f the am ount 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 expressly reserves the right to accep t o r reject any o r all tenders, in w hole o r in part, and his action in any such respect shall be final. S u b ject to these reservations, n oncom petitive tenders fo r $200,000 or less for the addition al bills dated O ctober 29, 1959, (91 days re m aining until m aturity date on A p ril 28, 1960) and n on com petitive tenders f o r $100,000 or less for the 182-day bills without stated price from any one b idder w ill be a ccepted in fu ll at the average price (in three decim a ls) o f a ccep ted com petitive bids for the respective issues. Settlem ent f o r a ccepted tenders in a ccord a n ce with the bids must be m ade o r com pleted at the Federal R eserve B ank on January 28, 1960, in cash o r other im m ediately available funds or in a like fa c e am ount o f T reasu ry bills m aturing January 28, 1960. Cash and exchange tenders w ill receive equal treatment. Cash adjustm ents w ill be m ade fo r differences betw een the par valu e o f m aturing bills a ccepted in exch ange and the issue price o f the new bills. T h e incom e derived from T reasu ry bills, w hether interest or gain from the sale o r oth er disposition o f the b ills, does not have any exem ption, as such, and loss from the sale or other disposition o f T rea su ry bills does n ot have any special treat ment, as such, under the Internal Revenue C ode o f 1954. T he bills are subject to estate, inheritance, g ift o r oth er excise taxes, whether Federal o r State, but are exem pt from a ll ta x a tion n ow or hereafter im posed on the principal or interest th ereof by any State, or any o f the possessions o f the United States, o r by any loca 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 origin a lly sold b y the U n ited States is con sid ered to be interest. U nder Sections 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 not con sidered to accrue until such bills are sold, redeem ed or otherw ise disposed of, and such bills are exclu d ed from con sidera tion as capital assets. A cco rd in g ly , the ow n er o f T reasu 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 origin al issue or on subsequent purchase, and the am ount actually received either upon sale or redem ption at m aturity du rin g the taxable year fo r w hich the return is made, as ord in a ry gain o r loss. Treasu ry Departm 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. C opies o f the circu la r m ay be obtained from any Federal Reserve 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 25, 1960, at the Securities Departm ent o f its H ead Office and at its B uffalo Branch. T en d er form s for the respective series are enclosed. Please use the appropriate form s to subm it tenders and return them in an envelope marked “ T en d er fo r T reasu ry B ills.” T en d ers m ay be subm itted b y telegraph, su bject to written confirmation; they may not be submitted by telephone. Payment 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 funds or in maturing Treasury bills. R esults o f the last offerin g o f T reasury bills (91-day bills to be issued January 21, 1960, representing an additional am ount o f bills dated O ctob er 22, 1959, and m aturing A pril 21, 1960; and 182-day bills dated January 21, 1960, m aturing July 21, 1960) are show n on the reverse side o f this circular. A lfred H a y e s , President. ( over ) RESULTS OF LAST OFFERING OF TREASURY BILLS (TW O SERIES ISSUED JANUARY 21, 1960) Range o f Accepted Competitive Bids 91 -Day Treasury Bills Maturing A pril 21, 1960 A p p ro x . equiv. annual rate P rice A p p ro x . equiv. annual rate 98.886 4.407% 97.650a 4.648% 98.875 4.451% 97.636 4.676% 98.879 4 .43 6% 1 9?.641 4.665 % ! P rice ........................ ........ H ig h L o w .......................... ................. ........ A verage 182-Day Treasury Bills Maturing July 21, 1960 a E x cep tin g one tender o f $24,000. 1 A v era ge rate on a cou pon issue equivalent yield basis is 4.56% fo r the 91-day bills and 4.86% 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 con trast, yields on certificates, notes, and bonds are com pu ted 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 with sem iannual com pou nding if m ore than one coupon period is involved. (59 percent o f the am ount o f 91-day bills bid fo r at the lo w price w as accep ted .) (54 percent o f the am ount o f 182-day bills bid fo r 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 21, 1960 A ccepted A pplied for D istrict B oston .......................... ........... $ 33,763,000 182-Day Treasury Bills Maturing July 21, 1960 $ 20,833,000 A pplied for $ 4,711,000 A cccpted $ 4,606,000 N ew Y o r k ................... ........... 1,363,199,000 641,536,000 704,552,000 285,126,000 Philadelphia ............... ........... 32,712,000 17,162,000 7,394,000 2,394,000 ................... ........... 43,073,000 28,583,000 18,548,000 11,996,000 R ich m on d ................... ........... 15,080,000 13,617,000 6,088,000 5,038,000 A t la n t a .......................... ........... 22,701,000 19,335,000 5,765,000 4,516,000 C h icago ....................... ........... 182,547,000 105,434,000 68,348,000 32,944,000 St. L ouis ..................... ........... 30,372,000 24,570,000 15,166,000 10,156,000 ............... ........... 12,195,000 9,772,000 4,333,000 2,832,000 Kansas C ity ............... ........... 50,328,000 36,578,000 8,710,000 8,143,000 D a l l a s ............................ ........... 22,337,000 21,437,000 7,402,000 6,858,000 San F r a n c is c o ............. 70,097,000 61,830,000 36,482,000 25,532,000 C leveland M inneapolis T ota l ........... ........... $1,878,404,000 $1,000,687,000h Includes $286,022,000 noncom petitive tenders accepted at the average price o f 98.879. c Includes $80,622,000 noncom petitive tenders accepted at the average price o f 97.641. $887,499,000 .$400,141,000c a J fc Federal R eserve NEW Ba nk of N ew York Y O R K 4 5 , N.Y. January 20, i960 To Presidents of the Federal Reserve Banks; In view of the Board's decision not to accept the Presidents' recommendation that the furnishing of free wrapped coin on a limited basis be permitted to continue at any Reserve Bank which feels that the imposition of charges might create substantial bank relations problems, I thought you might like to know that we have decided to discontinue our coin-wrapping operation. Enclosed for your information is a copy of a letter which I am addressing to the member banks in the head office territory now receiving wrapped coin from this Bank. A similar letter will be addressed to member banks in our Buffalo Branch territory by the Vice President in charge of that branch. ALFRED HAYES, President. Enclosure Federal R eserve NEW Ba n k of N ew York Y O R K 4 5 , N.Y. January 20 , i960 To the Banking Office Addressed: This Bank has been furnishing a limited amount of wrapped coin to smaller banks and out-of-town branches. This service was inaugurated many years ago for smaller banks (originally banks with demand deposits under $1 million) to provide enough wrapped coin for their internal needs; the cost of wrapping coin by hand was considerably in excess of the cost of machine-wrapping, and the small amount needed at that time probably did not justify the purchase of a machine. The situation has changed substan tially since then. Banks generally have grown larger, their customers' demand for wrapped coin has increased, and inexpensive coin-wrapping equipment, suitable to the needs of smaller banks, has become readily available. After a long and careful study of the matter by the Federal Reserve System, it has been decided that it is inappropriate for a Federal Reserve Bank to furnish wrapped coin to banks without charge. Some of the other Reserve Banks will furnish wrapped coin at a charge which recovers their wrapping costs. We have concluded that we should not provide wrapped coin at a charge because (a) there is no sub stantial economy in centralizing coin-wrapping in New York City with its relatively high cost of space and personnel; (b) the cost to individual banks of wrapping coin is small when it can be done in the spare time of its employees; and (c) centralization would wastefully increase the cost of shipping coin into and out of New York City. In order to minimize the hardship that this change may impose upon you and to give your bank ample opportunity to consider the various wrapping equipment that is available, we shall continue to furnish coin to those banks and branches now receiving it until they have made other arrangements, but in no case beyond September 30, i960. The members of our Bank Relations Department will be glad to furnish you with informa tion about available wrapping equipment and to suggest simplified procedures for its use. President
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