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F E D E R A L R E S E R V E B A N K O F N EW Y O R K Fiscal Agent of the United States [ Circular No. 5 7 5 4 January 5, 1966 ] OFFERING OF TWO SERIES OF TREASURY BILLS $1,300,000,000 of 91-Day Bills, Additional Amount, Series Dated October 14, 1965, Due April 14, 1966 (To Be Issued January 13, 1966) $1,000,000,000 of 182-Day Bills, Dated January 13, 1966, Due July 14, 1966 To A ll Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal R eserve D istrict: Following is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Standard time: The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $2,300,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing January 13, 1966, in the amount of $2,200,555,000, as follow s: 91-day bills (to maturity date) to be issued January 13, 1966, in the amount of $1,300,000,000, or thereabouts, representing an additional amount of bills dated October 14, 1965, and to mature April 14, 1966, originally issued in the amount of $998,759,000, the additional and original bills to be freely interchangeable. 182-day bills, for $1,000,000,000, or thereabouts, to dated January 13, 1966, and to mature July 14, 1966. be The bills of both series will be issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided, and at maturity their face amount w ill be payable without interest. They will be issued in bearer form only, and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000 (maturity value). Tenders w ill be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty p.m., Eastern Standard time, Monday, January 10, 1966. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, and in the case of competi tive tenders the price offered must be expressed on the basis of 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 Fed eral Reserve Banks or Branches on application therefor. Banking institutions generally may submit tenders for account of customers, provided the names of the customers are set forth in such tenders. Others than banking institutions will not be permitted to submit tenders except for their own account. Tenders w ill be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment of 2 percent of the face amount of Treasury bills applied for, unless the tenders are accompanied by an express guaranty of 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 ing which public announcement will be made by the T reasury Department of the amount and price range of accepted bids. T hose sub mitting tenders w ill be advised of the acceptance or rejection thereof. The Secretary of 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 each issue for $200,000 or less without stated price from any one bidder will be accepted in full at the average price (in three decim als) of 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 January 13, 1966, in cash or other immediately available funds or in a like face amount of Treasury bills maturing January 13, 1966. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills ac cepted in exchange and the issue price of the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and loss from the sale or other disposition of Treasury bills does not have any special treat ment, as such, under the Internal Revenue Code of 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all ta x a tion now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. F or purposes of taxation the amount of discount at which Treasury bills are originally sold by the United States is considered to be interest. Under Sections 454(b) and 1221(5) of the Internal Revenue Code of 1954, the amount of discount at which bills issued hereunder are sold is not considered to accrue until such bills are sold, redeemed or otherwise disposed of, and such bills are excluded from consideration as capital assets. A ccordingly, the owner of Treasury bills (other than life insurance com panies) issued hereunder need include in his income ta x 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 N o. 418 (current revision) and this notice prescribe the terms of the Treasury bills and govern the conditions of their issue. Copies of 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, January 10, 1966, 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 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 T ax and Loan Account. Settlement must be made in cash or other immediately available funds or in maturing Treasury bills. Results o f the last weekly offering of Treasury bills (91-day bills to be issued January 6, 1966, representing an additional amount of bills dated October 7, 1965, maturing April 7, 1966; and 182-day bills dated January 6, 1966, maturing July 7, 1966) are shown on the reverse side of this circular. A lfred H a y e s , President. ( OVER) RESULTS OF LAST W EEKLY OFFERING OF TREASURE BILLS (TW O SERIES TO BE ISSUED JANUARY 6, 1966) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing April 7,1966 182-Day Treasury Bills Maturing July 7,1966 Price A p prox. equiv. annual rate Price Approx. equiv. annual rate 98.860a 4.510% 97.624b 4.700% H igh .................................. L ow ..................................... 98.844 4.573% 97.608 4.731% A v e r a g e .............................. 98.854 4.532% x 97.615 4.718% x a Excepting one tender of $800,000. t> Excepting two tenders totaling $310,000. 1 These rates are on a bank discount basis. 4.90 percent for the 182-day bills. The equivalent coupon issue yields are 4.65 percent for the 91-day bills, and (48 percent o f the amount o f 91-day bills bid for at the low price was accepted.) (7 percent of 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-Day Treasury Bills Maturing April 7,1966 Applied, fo r District B o s t o n ............... ................. $ 34,770,000 182-Day Treasury Bills Maturing July 7,1966 Accepted $ 34,770,000 Applied f o r $ 18,449,000 Accepted $ 18,222,000 New Y o r k ......... ................. 1,308,249,000 787,649,000 1,264,646,000 637,036,000 . .. ................. 30,685,000 24,685,000 17,624,000 9,624,000 ......... ................. 26,867,000 26,867,000 49,748,000 49,748,000 Richmond ......... ................. 14,363,000 14,363,000 3,740,000 3,740,000 ............. ................. 44,101,000 44,101,000 28,187,000 15,397,000 Chicago ............. ................. 266,936,000 141,884,000 235,964,000 111,314,000 St. L o u i s ........... ................. 50,564,000 45,564,000 24,211,000 14,746,000 . . . ................. 17,844,000 17,844,000 11,078,000 10,078,000 Kansas City .. . ................. 26,413,000 26,413,000 13,749,000 13,249,000 ............... ................. 28,329,000 23,329,000 14,065,000 10,135,000 San Francisco , ................. 112,725,000 112,725,000 249,224,000 107,382,000 ................. $1,961,846,000 $1,300,194,000° $1,930,685,000 Philadelphia Cleveland Atlanta Minneapolis Dallas T otal c Includes $250,907,000 noncompetitive tenders accepted at the average price of 98.854. d Includes $115,304,000 noncompetitive tenders accepted at the average price of 97.615. $1,000,67^OOO1