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Fiscal Agent of the United States
r Circular No. 2 6 6 8 1
L August 18, 1943 J


To all Banking Institutions in the
Second Federal Reserve District:

For your information we quote below from an announcement by the Treasury Department, released for publication on August 16, 1943, regarding the Third War Loan and the
refunding of the 3^4% Treasury Bonds of 1943-45.
Secretary of the Treasury Morgenthau today released the official circulars containing the
detailed terms and conditions of the 2l/2% and 2 % bonds, and the7/$%certificates of indebtedness, which will be sold during the Third W a r Loan Drive beginning September 9.
These securities, as well as Series E W a r Savings Bonds, Series F and G United States
Savings Bonds and Series C Treasury Savings Notes, will be available during the entire period of
the Drive for subscription by individuals, insurance companies, savings banks, savings and loan
associations and all other classes of subscribers except commercial banks, which are defined for
this purpose as banks accepting demand deposits, which will not be permitted to subscribe for their
own account.
On July 22, the Secretary announced that the securities to be sold during the Third W a r Loan
Drive would be sold entirely to nonbanking investors. In keeping with this objective, the official
circulars governing the 2 % bonds and the certificates of indebtedness contain an express request
that commercial banks not purchase and that subscribers not trade in these securities until ten days
after the close of the Drive, or until after the books close on an offering of the same or similar
securities for the exclusive subscription of commercial banks for their own account shortly after
the conclusion of the Drive, whichever is earlier. The circular offering the 2 b o n d s contains
a provision that these bonds may not be held by commercial banks before September 15, 1953.
Secretary Morgenthau pointed out that because life insurance companies receive substantial
funds at a steady and predictable rate, arrangements have been made so that such companies may
subscribe during the Drive to the 2 l / i % and 2 % bonds in anticipation of funds which will be
available to them for investment up to November 1, and defer payments accordingly. Provisions
to carry out such arrangements are included in the official circulars. These arrangements are
limited to companies whose principal business is the writing of life insurance. Bonds allotted to
such companies may be paid for, in whole or in part, at par and accrued interest, at any time or
times not later than November 1, 1943.
The Secretary again emphasized the importance of having subscriptions entered and paid for
through the banking institutions where the funds of the subscribers are located, in order to avoid
unnecessary movement of banking funds between various sections of the country.
The Secretary further announced that holders of the 3^4% Treasury Bonds of 1943-45, which
have been called for redemption on October 15, will be given an opportunity to exchange their called
bonds for other securities shortly after the close of the Third W a r Loan Drive. Holders other
than commercial banks will be given the option of exchanging for either the 2 % or the 2 y 2 % bonds
which are to be sold during the Drive, in authorized denominations. Commercial banks will be
permitted to exchange their holdings for the new 2°/o bonds. In all cases exchanges will be made
par for par with interest adjustments as of October 15.

Additional copies of this circular will be furnished upon request.




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