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FEDERAL RESERVE BANK OF DALLAS
F IS C A L . A G E N T O F T H E U N IT E D S T A T E S

Dallas, Texas, May 12, 1952

To All Savings Bond Issuing and Paying Agents
and Others Concerned:

There is enclosed a copy of a letter addressed to Paying and
Issuing Agents for United States Savings Bonds by the Fiscal
Assistant Secretary of the Treasury, which this bank has been
requested to transmit to all such agents in this district.
Your cooperation in acquainting holders of savings bonds with
the information contained in the letter will be appreciated.
Additional copies of the letter will be forwarded on request.
Yours very truly,
R. R. GILBERT
President

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

TREASURY DEPARTMENT
WASHINGTON

May 5, 1952

TO PAYING AN ISSUING AGENTS FOR UNITED STATES SAVINGS BONDSt
D
The increase in the in terest rates on Series E Savings Bonds issued on
and a fte r May 1, which was announced on A pril 29, may raise a question in the
minds o f some bond owners whether they should cash any o f th e ir bonds issued
p rio r to May 1 in order to reinvest the proceeds in one o f the new Series E
bonds*
I t is believed that paying and issuing agents fo r United States Savings
Bonds are in a p osition to render a valuable service to th eir customers in
order to avoid ill-a d v is e d cashing o f Series E bonds which were issued p rior
to May 1, and p a rticu la rly those which are more than 4 months old* Special
attention i s ca lled to the fa c t that outstanding Series E bonds which were
purchased p rio r to January 3, 1952, by th e ir orig in a l terms and con dition s,
w il l earn more than Z% in terest compounded semiannually fo r the period from
May 1, 1952 to maturity*
As you know, the annual y ie ld to maturity increases with the age o f the
bonds* Series E bonds, which have been outstanding fo r 5 years, fo r example,
earn in te re st on th e ir current redemption value fo r the remaining 5 years o f
th e ir l i f e at an annual rate o f approximately 4% per annum* The Treasury, o f
course, is anxious that paying and issuing agents fo r United States Savings
Bonds cooperate as fu lly as possible where the owner o f a savings bond issued
p rior to May 1 wishes to reinvest in the new Series E bond; on the other hand
i t would be helpfu l from the standpoint o f both the bond owner as w ell asthe
Government i f paying and issuing agents fo r United States Savings Bonds would
make a sp ecia l e ff o r t to acquaint bond owners, when i t seems appropriate, o f
the investment values o f th e ir Series E bonds which have been outstanding fo r
several months*
In order to avoid misunderstanding i t does not appear to be practicable
to make a general announcement concerning th is matter* I t is believed that
b etter resu lts oould be obtained i f "the situation should be handled on a
personal basis* This is because o f the varying personal factors which are
involved in the purchase or redemption o f savings bonds* Because o f your
clo se contacts with owners o f Series E savings bonds you are in a p osition to
render valuable services to your customers in a d ire ct and personal manner by
bringing to the attention o f any holders who are contemplating switching in to
new E bonds the investment return on the current redemption value o f th e ir
present Series E savings bonds* These values are shown in Table B attached
to Treasury C ircular No* 653, revised A pril 29, 1952, previously furnished to
you.
Very tru ly yours,

F iscal Assistant Secretary

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