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FEDERAL RESERVE BANK O F N EW YORK Fiscal Agent of the United States f Circular No. 5 0 6 9 L August 9, 1961 O FFE R IN G OF T W O SERIES OF T R E A SU R Y BILLS $1,100,000,000 o f 91-Day Bills, Additional Amount, Series Dated M ay 18, 1961, Due N ov. 16, 1961 (T o Be Issued August 17, 1961) $600,000,000 o f 182-Day Bills, Dated August 17, 1961, Due February 15, 1962 T o A ll In corporated Banks and Trust Companies, and O thers Concerned, in the Second Federal R eserv e D istrict: Following is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern D aylight Saving tim e: T h e T reasu ry D epartm ent, by this p u b lic n otice, invites tenders fo r tw o series o f T rea su ry bills to the a ggregate am ount o f $1,700,000,000, o r thereabouts, fo r cash and in exch an ge for T re a su ry bills m aturing A u gu st 17, 1961, in the am ount o f $1,700,558,000, as fo llo w s : 91-day bills (to m aturity date) to be issued A u gu st 17, 1961, in the am ount o f $1,100,000,000, or thereabouts, repre senting an addition al am ount o f bills dated M ay 18, 1961, and to mature N ovem ber 16, 1961, o rigin a lly issued in the am ount o f $600,832,000 (in clu din g $100,104,000 issued June 14, 1961), the addition al and origin a l bills to be fre e ly interchangeable. 182-day bills, fo r $600,000,000, or thereabouts, to be dated A u gu st 17, 1961, and to mature Febru ary 15, 1962. T h e bills o f both series w ill be issued on a discou nt basis under com petitive and noncom petitive bid d in g as h ereinafter provid ed , and at m aturity their face am ount w ill be payable w ith ou t interest. T h e y w ill be issued in bearer fo rm on ly, and in denom inations o f $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (m atu rity valu e). T en ders w ill be received at F ed eral R eserve Banks and B ran ches up to the clo s in g h our, on e-th irty o ’ c lo ck p.m., E a st ern D a yligh t S a vin g time, M on day, A u gu st 14, 1961. Tenders w ill n ot be received at the T reasu ry Departm ent, W ash ington. E ach tender must be fo r an even m ultiple o f $1,000, and in the case o f com petitive tenders the p rice offered m ust 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 u rged that tenders be m ade on the printed form s and forw a rd ed in the special envelopes w h ich w ill be supplied by F ed eral R eserve Banks or Branches on application th erefor. O thers than banking institutions w ill n ot be perm itted to subm it tenders excep t fo r th eir ow n account. T en ders 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 from others m ust be accom panied by paym ent o f 2 percent o f the fa ce am ount o f T reasu ry bills applied fo r, unless the tenders are accom panied by an express guaranty o f paym ent by an in corpora ted bank or trust com pany. Im m ediately a fter the closin 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 pu blic announcem ent w ill be m ade b y the T reasu ry Departm ent o f the am ount and price range o f a ccepted bids. T h ose sub m itting tenders w ill be advised o f the accep tance o r rejection th ereof. T h e S ecretary o f the T reasu ry exp ressly reserves the righ t to accep t o r reject any o r a ll tenders, in w hole or in part, and his a ction in any such respect shall be final. S u b ject to these reservations, noncom petitive tenders fo r $200,000 o r less for the a dd ition al bills dated M a y 18, 1961 (91 days rem aining until m aturity date on N ovem ber 16, 1961) and n oncom peti tive tenders fo r $100,000 or less fo r the 182-day bills w ithout stated price from any one bidder w ill be a ccepted in fu ll at the average p rice (in three decim als) o f a ccepted com petitive bids for the respective issues. Settlem ent fo r a ccepted tenders in accord a n ce w ith the bids must be made or com pleted at the F ed eral R eserve B ank on A u gu st 17, 1961, in cash or other im m ediately available funds or in a like face am ount o f T re a s u ry bills m aturing A u gu st 17, 1961. Cash and exch a n ge tenders w ill receive equal treatment. Cash adjustm ents w ill be made fo r differences betw een the p a r value o f m aturing bills accepted in exch a n ge and the issue price o f the n ew bills. T h e in com e derived fro m T reasu ry b ills, whether interest or ga in from the sale or oth er d isp osition o f the bills, does not have any exem ption, as such, and loss from the sale o r other d isp osition o f T reasu ry bills does not 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 or oth er e x cise ta xes, w hether F ed eral o r State, but are exem pt from a ll ta x a tion n ow or hereafter im posed on the prin cip a l or interest th ereof b y any State, or any o f the possessions o f the U nited States, or by any lo ca l ta x in g authority. F o r pu rposes o f ta x a tion the am ount o f discou nt at w hich T reasu ry bills are origin a lly sold by the U n ited States is con sidered to be interest. U nder S ections 4 5 4(b) and 1221(5) o f the Internal Revenue C ode o f 1954 the am ount o f discou nt at w h ich bills issued hereunder are sold is not con sidered to accru e until such bills are sold , redeem ed or oth erw ise disp osed o f, and such bills are ex clu 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 between the price pa id fo r such bills, w hether on origin a l issue o r on subsequent purchase, and the am ount actu a lly received either upon sale or redem ption at m aturity du rin g the ta x ab le yea r fo r w hich the return is m ade, as ord in a ry gain o r loss. T rea su ry D epartm ent C ircu la r N o . 418, R evised , and this notice, prescribe the term s 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 obtain ed from any F ed eral R eserve B ank o r B ranch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Daylight Saving time, Monday, August 14, 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 jor 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. Results of the last offering of Treasury bills (91-day bills to be issued August 10, 1961, representing an additional amount of bills dated May 11, 1961, and maturing November 9, 1961; and 182-day bills dated August 10, 1961, maturing February 8, 1962) are shown on the reverse side of this circular. A lfred H ayes, President. ( over) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED AUGUST 10, 1961) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing N ovem ber 9, 1961 P rice 182-Day Treasury Bills Maturing February 8, 1962 A p p ro x . equiv. annual rate P r ice A p p ro x . equiv. annual rate .. 99.411 2.330% 98.686a 2 .5 9 9 % L ow . . . 99.398 2 .3 8 2 % 98.673 2 .6 2 5 % Average 99.402 2 .3 6 6 % 1 98.677 2 .6 1 7 % ! H igh a E x ce p tin g on e tender o f $100,000. 1 O n a cou p on issue o f the same length and fo r the same am ount invested, the return on these bills w ou ld provide yield s o f 2.41 percent fo r the 91-day bills, and 2.69 percent f o r the 182-day b ills. Interest rates on bills are quoted in term s o f bank discount, w ith the return related to the face am ount o f the bills payable at m aturity rather than the amount invested, and th eir length in actual num ber o f days related to a 360-day year. In con trast, yield s on certificates, notes, and bonds are com pu ted in term s o f interest on the am ount invested, and relate the num ber o f days rem ainin g in an interest paym ent p eriod to the actual num ber o f days in the p eriod, w ith sem iannual com p ou n d in g if m ore than one cou pon p e rio d is in volved. (1 percent of the amount of 91-day bills bid for at the low price was accepted.) (4 8 percent of the amount of 182-day bills bid for at the low price was accepted.) Total Tenders Applied for and Accepted (B y Federal Reserve Districts) 91-Day Treasury Bills Maturing N ovem ber 9, 1961 D istrict A pplied for Boston .............................. ......... $ 29,254,000 182-Day Treasury Bills Maturing February 8,1962 A ccep ted $ 15,254,000 A pplied for $ 3,120,000 A ccepted $ 3,120,000 N ew Y o r k ....................... ......... 1,450,122,000 694,682,000 885,836,000 471,236,000 Philadelphia .................. ......... 24,733,000 9,733,000 6,410,000 1,410,000 ....................... ......... 25,318,000 20,368,000 24,851,000 24,851,000 Richmond ....................... ......... 10,781,000 10,781,000 1,156,000 1,156,000 ........................... ......... 23,527,000 22,827,000 5,070,000 4,670,000 Chicago ............................ ......... 251,723,000 187,833,000 113,696,000 61,096,000 St. L o u i s ......................... ......... 22,973,000 18,973,000 4,011,000 3,011,000 ................... ......... 22,006,000 18,810,000 5,060,000 3,560,000 Kansas City ................... ......... 46,824,000 30,894,000 20,404,000 14,204,000 .............................. ......... 23,282,000 18,282,000 12,628,000 2,628,000 72,671,000 51,756,000 11,236,000 9,211,000 Cleveland Atlanta Minneapolis Dallas San Francisco .............. T ota l ......................... $2,003,214,000 $1,100,193,000b $1,093,478,000 v y b Includes $222,487,000 n on com petitive tenders accepted at the average price o f 99.402. c Includes $39,540,000 n on com petitive tenders accepted at the average price o f 98.677. $600,153,000°
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