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FEDERAL RESERVE BANK O F N EW YORK Fiscal Agent of the United States r C ir c u la r N o . 5 0 2 6 L A p r il 19, 1961 OFFERING OF TW O SERIES OF TREASURY BILLS $1,100,000,000 o f 91-Day Bills, Additional Amount, Series Dated Jan. 26, 1961, Due July 27, 1961 (To Be Issued April 27, 1961) $400,000,000 o f 182-Day Bills, Dated April 27, 1961, Due October 26, 1961 T o A ll Incorporated Banks and Trust Companies, and O thers Concerned, in the Second Federal R eserv e D istrict: Following is the text o f a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Standard time: T h e Treasury Department, by this public notice, invites tenders fo r tw o series o f Treasury bills to the aggregate amount o f $1,500,000,000, o r thereabouts, fo r cash and in exchange for Treasury bills maturing A pril 27, 1961, in the amount o f $1,500,565,000, as follo w s: 91-day bills ( t o maturity date) to be issued A pril 27, 1961, in the amount o f $1,100,000,000, or thereabouts, repre senting an additional amount o f bills dated January 26, 1961, and to mature July 27, 1961, originally issued in the amount o f $500,051,000, the additional and original bills to be freely interchangeable. 182-day bills, fo r $400,000,000, or thereabouts, to be dated A pril 27, 1961, and to mature O ctober 26, 1961. T he 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. T h ey 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 (m aturity valu e). Tenders w ill be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o ’clock p.m., Eastern Standard time, Monday, A pril 24, 1961. Tenders will not be received at the Treasury Department, W ashington. Each tender must be fo r 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 m ore than three decimals, e.g., 99.925. Fractions may not be used. It is urged that tenders be made on the printed form s and forw arded in the special envelopes which will be supplied by Federal Reserve Banks o r Branches on application therefor. O thers than banking institutions will not be permitted to submit tenders except fo r their ow n account. Tenders w ill 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 w ill be opened at the Federal Reserve Banks and Branches, follow in g which public announcement will be made by the Treasury Department o f the amount and price range o f accepted bids. Those sub mitting tenders w ill be advised o f the acceptance o r rejection thereof. T h e Secretary o f the Treasu ry expressly reserves the right to accept or reject any o r all tenders, in w hole o r in part, and his action in any such respect shall be final. Subject to these reservations, noncompetitive tenders fo r $200,000 o r less fo r the additional bills dated January 26, 1961, (91 days re maining until maturity date on July 27, 1961) and noncom petitive tenders f o r $100,000 or less f o r the 182-day bills without stated price from any one bidder will be accepted in fu ll at the average price (in three decim als) o f accepted competitive bids for the respective issues. Settlement fo r accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on A pril 27, 1961, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing A pril 27, 1961. Cash and exchange tenders will receive equal treatment. Cash adjustments w ill be made fo r differences between the par value o f maturing bills accepted in exchange and the issue price o f the new bills. T h e income derived fro m Treasury bills, whether interest o r gain from the sale or other disposition o f the bills, does not have any exemption, as such, and loss fro m the sale o r other disposition o f Treasury bills does not have any special treat ment, as such, under the Internal Revenue Code o f 1954. T he bills are subject to estate, inheritance, g ift or other excise taxes, whether Federal or State, but are exem pt fro m all taxa tion now or hereafter imposed on the principal o r interest thereof by any State, or any o f the possessions o f the United States, or by any local taxing authority. F o r purposes o f taxa tion the amount o f discount at which Treasu ry bills are originally sold by the United States is considered to be interest. Under Sections 4 5 4 (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. A ccordingly, the owner o f Treasury bills (other than life insurance com panies) issued hereunder need include in his incom e ta x return only the difference between the price paid f o r such bills, whether on original issue o r on subsequent purchase, and the amount actually received either upon sale or redemption at maturity during the taxable year fo r which the return is made, as ordinary gain or loss. Treasury Department Circular N o. 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 o r Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Standard time, Monday, April 24, 1961, at the Securities Department of its Head Office and at its Buffalo Branch. Tender forms for the respective series are enclosed. Please use the appropriate forms to submit tenders and return them in an envelope marked “Tender for Treasury Bills.” Tenders may be submitted by telegraph, subject to written confirmation; they may not be submitted by telephone. Payment for 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 o f the last offerin g o f T reasury bills (9 1 -d a y bills to be issued A p ril 20, 1961, representing an additional amount o f bills dated January 19. 1961, and maturing July 20, 1 961; and 182-day bills dated A pril 20, 1961, m aturing O ctober 19, 1961) are shown on the reverse side o f this circular. A lfred H ayes, President. (O V E R ) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED APRIL 20, 1961) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing July 20,1961 Approx. equiv. annual rate Price ....... High ....................... . 99.427 Low.......... ................ Average ................... ................ 182-Day Treasury Bills Maturing October 19, 1961 99.421 Price Approx. equiv. annual rate 2.267% 98.762 2.449% 2.306% 98.756 2.461% 2.292% 1 98.758 2.458% 1 1 O n a coupon issue o f the same length and for the same amount invested, the return on these bills would provide yields o f 2.34 percent for the 91-day bills, and 2.52 percent for the 182-day bills. Interest rates on bills are quoted in terms o f bank discount, with the return related to the face amount o f the bills payable at maturity rather than the amount invested, and their length in actual number o f days related to a 360-day year. In contrast, yields on certificates, notes, and bonds are computed in terms o f interest on the amount invested, and relate the number o f days remaining in an interest payment period to the actual number o f days in the period, with semiannual com pounding if m ore than one coupon period is involved. (82 percent of the amount of 91-day bills bid for at the low price was accepted.) (89 percent of the amount of 182-day bills bid for at the low price was accepted.) Total Tenders Applied for and Accepted (By Federal Reserve Districts) 91-Day Treasury Bills Maturing July 20,1961 Accepted Applied for District Boston .......................... ....... $ 47,594,000 New Y ork......... .......... 182-Day Treasury Bills Maturing October 19, 1961 $ 22,014,000 Applied for $ 6,289,000 Accepted $ 3,874,000 695,239,000 908,696,000 279,058,000 Philadelphia ............... ....... 28,820,000 13,820,000 7,396,000 2,396,000 Cleveland.......... ........ ....... 37,358,000 34,613,000 16,386,000 6,086,000 Richmond .......... ......... ....... 12,649,000 11,849,000 1,701,000 1,701,000 Atlanta.,........................ ....... 31,777,000 24,297,000 5,239,000 4,093,000 Chicago ....... ................ ....... 253,223,000 169,503,000 106,603,000 41,720,000 St. Louis..................... ....... 34,942,000 29,287,000 7,692,000 3,692,000 Minneapolis............... . 9,913,000 5,686,000 3,136,000 Kansas City .............. . 28,069,000 13,076,000 5,875,000 Dallas........................... ....... 17,789,000 16,089,000 4,535,000 4,180,000 San Francisco............. ....... 53,306,000 45,536,000 58,739,000 44,375,000 Total......... . ....... $1,933,977,000 $1,142,038,000 $400,186,000 $1,100,229,000a “ Includes $244,096,000 noncompetitive tenders accepted at the average price of 99.421. b Includes $51,725,000 noncompetitive tenders accepted at the average price of 98.758.
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