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FED ERAL RESER VE BANK O F N EW YO RK Fiscal Agent of the United States r C ir c u la r N o . 4 8 7 5 L A p r il 14, 1960 OFFERING OF TWO SERIES OF TREASURY BILLS $1,000,000,000 o f 91-Day Bills, Additional Amount, Series Dated Jan. 21, 1960, Due July 21,1960 (To Be Issued April 21, 1960) >,000,000 o f 182-Day Bills, Dated April 21, 1960, Due October 20, 1960 To A ll Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal R eserve D istrict: Following is the text o f a notice issued by the Treasury Department, released for publication in morning newspapers, Thursday, April 14, 1960: The Treasury Department, by this public notice, invites tenders for two series o f Treasury bills to the aggregate amount o f $1,400,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing April 21, 1960, in the amount o f $1,400,525,000, as follow s: 91-day bills (to maturity date) to be issued April 21, 1960, in the amount o f $1,000,000,000, or thereabouts, repre senting an additional amount o f bills dated January 21, 1960, and to mature July 21, I960, originally issued in the amount o f $400,228,000, the additional and original bills to be freely interchangeable. 182-day bills, for $400,000,000, or thereabouts, to be dated April 21, 1960, and to mature October 20, 1960. The bills o f both series will be issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided, and at maturity their face amount will be payable without interest. They will be issued in bearer form only, and in denominations o f $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (maturity value). Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o ’clock p.m., Eastern Standard time, Monday, April 18, 1960. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple o f $1,000, and in the case o f competitive tenders the price offered must be expressed on the basis o f 100, with not more than three decimals, e.g., 99.925. Fractions may not be used. It is urged that tenders be made on the printed forms and forwarded in the special envelopes which will be supplied by Federal Reserve Banks or Branches on application therefor. Others than banking institutions will not be permitted to submit tenders except for their own account. Tenders will be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in in vestment securities. Tenders from others must be accompanied by payment o f 2 percent o f the face amount o f Treasury bills applied for, unless the tenders are accompanied by an express guaranty o f payment by an incorporated bank or trust company. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and price range o f accepted bids. Those sub mitting tenders will be advised o f the acceptance or rejection thereof. The Secretary o f the Treasury expressly reserves the right to accept or reject any or all tenders, in whole or in part, and his action in any such respect shall be final. Subject to these reservations, noncompetitive tenders for $200,000 or less for the additional bills dated January 21, 1960, (91 days re maining until maturity date on July 21, 1960) and noncom petitive tenders for $100,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) o f accepted competitive bids for the respective issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on April 21, 1960, in cash or other immediately available funds or in a like face amount of Treasury bills maturing April 21, 1960. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value o f maturing bills accepted in exchange and the issue price o f the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition o f the bills, does not have any exemption, as such, and loss from the sale or other disposition o f Treasury bills does not have any special treat ment, as such, under the Internal Revenue Code o f 1954. The bills are subject to estate, inheritance, g ift or other excise taxes, whether Federal or State, but are exempt from all taxa tion now or hereafter imposed on the principal or interest thereof by any State, or any o f the possessions o f the United States, or by any local taxing authority. For purposes o f taxa tion the amount o f discount at which Treasury bills are originally sold by the United States is considered to be interest. Under Sections 454(b) and 1221(5) o f the Internal Revenue Code o f 1954 the amount o f discount at which bills issued hereunder are sold is not considered to accrue until such bills are sold, redeemed or otherwise disposed o f, and such bills are excluded from consideration as capital assets. Accordingly, the owner o f Treasury bills (other than life insurance com panies) issued hereunder need include in his income tax return only the difference between the price paid for such bills, whether on original issue or on subsequent purchase, and the amount actually received either upon sale or redemption at maturity during the taxable year for which the return is made, as ordinary gain or loss. Treasury Department Circular No. 418, Revised, and this notice, prescribe the terms o f the Treasury bills and govern the conditions o f their issue. Copies o f the circular may be obtained from any Federal Reserve Bank or Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Standard time, Monday, A pril 18, 1960, at the Securities Department o f its Head Office and at its Buffalo Branch. Tender forms for the respective series are enclosed. Please use the appropriate form s to submit tenders and return them in an envelope marked “ Tender fo r Treasury Bills.” Tenders may be submitted by telegraph, subject to written confirmation; they may not be submitted by telephone. Payment fo r the Treasury bills cannot be made by credit through the Treasury Tax and Loan Account. Settlement must be made in cash or other immediately available funds or in maturing Treasury bills. Results of the last offering of Treasury bills (91-day bills to be issued April 14, 1960, representing an additional amount of bills dated January 14, 1960, and maturing July 14, 1960; and 182-day bills dated April 14, 1960, maturing October 13, 1960) are shown on the reverse side of this circular. A lfred II ayes, President. ( over ) R E S U L T S O F L A S T O F F E R IN G OF T R E A S U R Y B IL L S (T W O S E R IE S ISSU E D A P R IL 14, 1960) Range o f Accepted Competitive Bids 182-Day Treasury Bills Maturing O ctober 13, 1960 91-D ay Treasury Bills Maturing July 14, 1960 A p p rox. equiv. annual rate P rice P rice A p p rox. equiv. annual rate H i g h ............................................ 99.115 1 3.501% 98.1 24 b L ow ............................................ 99.069 3.683% 97.952 4.051% Average ...................................... 99.084 3.622% 1 98.052 3.854% 1 3.711% b Excepting one tender o f $10,000. a Excepting three tenders totaling $382,000. 1 Average rate on a coupon issue equivalent yield basis is 3.711% for the 91-day bills and 3.99% for the 182-day bills. Interest rates on bills are quoted on the basis o f bank discount, with their length in actual number o f days related to a 360-day year. In contrast, yields on certificates, notes, and bonds are computed on the basis o f interest on the investment, with the number o f days remaining in a semiannual interest payment period related to the actual number o f days in the period, and with semiannual compounding if more than one coupon period is involved. (62 percent o f the amount o f 91-day bills bid for at the low price was accepted.) (32 percent o f the amount o f 182-day bills bid for at the low price was accepted.) Total Tenders Applied for and Accepted (By Federal Reserve Districts) 91-D ay Treasury Bills Maturing July 14, 1960 Applied f o r District Boston ........................... ........ $ 26,447,000 A ccepted $ 16,447,000 182-Day Treasury Bills Maturing O ctober 13, 1960 A pplied f o r $ 3,979,000 A ccepted $ 3,979,000 New Y o r k ..................... ........ 1,286,541,000 728,841,000 473,005,000 344,605,000 Philadelphia ................ ........ 27,829,000 27,829,000 8,451,000 8,451,000 Cleveland....................... ........ 48,924,000 40,924,000 9,969,000 9,969,000 Richmond ..................... ........ 10,055,000 10,055,000 1,014,000 1,014,000 A tlanta........................... ........ 21,942,000 20,542,000 3,974,000 3,974,000 Chicago ......................... ........ 193,980,000 131,980,000 80,502,000 58,502,000 St. Louis ....................... ........ 21,244,000 20,244,000 11,243,000 11,243,000 M inneapolis........................... 10,714,000 9,514,000 2,008,000 2,008,000 Kansas City ................ ........ 32,335,000 31,835,000 8,383,000 8,383,000 D allas............................. ........ 15,748,000 15,748,000 3,969,000 3,969,000 San F ra n cisco.............. ........ 50,112,000 46,112,000 43,927,000 43,927,000 T o ta l.............. ........ $1,745,871,000 $1,100,071,000c c Includes $226,005,000 noncompetitive tenders accepted at the average price o f 99.084. d Includes $42,924,000 noncompetitive tenders accepted at the average price o f 98.052. $650,424,000 $500,024,000d
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