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FEDERAL RESERVE BANK
New

of

York

F i s c a l A g e n t o f t h e U n it e d S t a t e s

f C i r c u l a r no.
L

UNNECESSARY

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t he S e c o n d F e d e r a l R e s e r v e D i s t r i c t :

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A dditional
No.
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secretary

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Treasury,

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upon

29.

owners

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1952.

of

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to

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of
Mr.

request.

ALLAN SPROUL.
President.

Treasury
B artelt’ s

3852 j

1952

CASHING OF SERIES E SAVINGS BONDS

and P a y i n g A g e n t s

S a v i n g s Bonds

May 12 ,

C ircular
letter,

J

T R E A S U R Y DEPARTMENT
WASHINGTON
May

5, 1952

TO PAYING AM ISSUING AGENTS FOR UNITED STATES SAVINGS BONDS:
D
The in c r e a s e in the in t e r e s t r a te s on S e r ie s E Savings Bonds is s u e d on
and a f t e r May 1 , w hich was announced on A p r il 2 9 , may r a is e a q u e s tio n in th e
minds o f some bond owners whether th ey should cash any o f t h e i r bonds issu e d
p r i o r t o May 1 in ord er t o r e in v e s t the proceed s in one o f the new S e r ie s E
bonds*
I t i s b e lie v e d th a t paying and is s u in g agents f o r U nited S ta tes Savings
Bonds are in a p o s i t i o n t o render a v a lu a b le s e r v ic e t o t h e ir custom ers in
o r d e r t o a v o id i l l - a d v i s e d cash in g o f S e r ie s E bonds w hich were is s u e d p r io r
t o May 1 , and p a r t i c u l a r l y th ose which are more than 4 months old * S p e c ia l
a t t e n t io n i s c a l l e d t o the f a c t th a t ou tstan d in g S e r ie s E bonds which were
purchased p r i o r t o January 3 , 1952, by t h e i r o r ig in a l terms and c o n d it io n s ,
w i l l earn more than Z% i n t e r e s t compounded sem iannually f o r the p e r io d from
May 1 , 1952 t o m aturity*
As you know, the annual y i e l d t o m atu rity in c r e a s e s w ith the age o f the
bonds* S e r ie s E bon d s, which have been ou tsta n d in g f o r 5 y e a r s , f o r exam ple,
earn i n t e r e s t on t h e i r cu rren t redem ption valu e f o r the rem aining 5 yea rs o f
t h e i r l i f e a t an annual r a te o f ap p roxim ately
per annum* The T reasu ry, o f
c o u r s e , i s anxious th a t paying and is s u in g agents f o r United S ta tes Savings
Bonds co o p e ra te as f u l l y as p o s s ib le where the owner o f a savings bond issu e d
p r i o r t o May 1 w ishes t o r e in v e s t in the new S e r ie s E bond; on the o th e r hand
i t w ould be h e lp f u l from the sta n d p oin t o f both the bond owner as w e ll as the
Government i f paying and is s u in g agents f o r United S ta tes Savings Bonds would
make a s p e c ia l e f f o r t t o a cq u a in t bond ow ners, when i t seems a p p r o p r ia te , o f
the in vestm en t v a lu e s o f t h e i r S e r ie s E bonds w hich have been ou tsta n d in g f o r
s e v e r a l months*
In o r d e r t o a v o id m isunderstanding i t does n o t appear bo be p r a c t ic a b le
t o make a g en era l announcement con cern in g t h is m atter* I t i s b e lie v e d th a t
b e t t e r r e s u lt s co u ld be ob ta in ed i f the s it u a t io n should be handled on a
p e r s o n a l b a s is * This i s because o f the va ry in g p e rso n a l f a c t o r s which are
in v o lv e d i n the purchase o r redem ption o f savings bonds* Because o f your
c l o s e c o n t a c t s w ith owners o f S e r ie s E savings bonds you are in a p o s it io n t o
ren d er v a lu a b le s e r v ic e s t o your custom ers in a d ir e c t and p erson a l manner by
b r in g in g t o the a t t e n t io n o f any h o ld e rs who are contem platin g sw itch in g in t o
new E bonds the investm ent retu rn on the cu rre n t redem ption valu e o f t h e ir
p r e s e n t S e r ie s E savin gs bonds* These v a lu e s are shown in Table B a tta ch e d
t o T reasu ry C ir c u la r No® 653, r e v is e d A p r il 2 9 , 19b2, p r e v io u s ly fu r n ish e d t o
you*




F is c a l A s s is ta n t S e c r e ta r y

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