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Fiscal Agent of the United States
•Circular No. 2 4 3 0 1
May8, 1942


To all Incorporated Banks and Trust Companies in the
Second Federal Reserve District and Others Concerned:

Enclosed is a copy of this bank's circular No. 2429 containing notice of the offering
of Treasury bills dated May 13, 1942, maturing August 12, 1942. The amount of
Treasury bills offered is $250,000,000, whereas in recent weeks the offerings have been for
$150,000,000. This is in accord with the announcement of the Secretary of the Treasury
to the press on April 30, 1942, concerning the Treasury's May financing, in which he
stated that beginning with the issue dated May 13, the amount of the weekly bill offerings would be $250,000,000 for the next several weeks.
In recent years there has been a scarcity of high grade short term paper available
for temporary investment of the funds of banks, corporations and others, and a plethora
of such funds seeking investment. In these circumstances yields on Treasury bills declined
to levels so low as to be unattractive to many banks and other investors. With the increase
in weekly offerings now announced, however, Treasury bills will be more generally available, and the rise in yields that has occurred during the past six months has made them
more attractive investments.
It is believed, therefore, that the larger offerings of these securities will serve a useful
purpose in providing employment for funds which banks and others wish to keep in liquid
form because of anticipated or possible needs for the funds within relatively short periods.
The presence of a larger volume of Treasury bills in the market should be helpful in
promoting a better distribution of excess bank reserves, as the shifting of reserves from
places where there are large surpluses to points where additional reserves are needed
would be facilitated by purchases and sales of these obligations. As an added means of
assuring the liquidity of investments in Treasury bills, aside from the short maturity
and ready marketability of the securities, the Board of Governors of the Federal Eeserve
System announced on April 30 that the Federal Open Market Committee had directed the
Federal Eeserve banks to purchase for the System Open Market Account all Treasury
bills that may be offered to them, on a discount basis at the rate of % per cent per annum.
This arrangement gives assurance to purchasers of Treasury bills that, in case they have
a need for cash before the maturity of the hills, they can obtain it by selling Treasury
bills to the Federal Reserve Bank, if necessary.



Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102