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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, September 22, 1959 IMPROVED INTEREST RATES ON SERIES E AND H SAVINGS BONDS To all Qualified Issuing and Paying Agents in the Eleventh Federal Reserve District: The President of the United States has signed a bill with respect to increases in interest rates on Series E and H United States Savings Bonds. The Treasury Department’s summary of these changes is shown on the reverse hereof. The official circulars are being printed by the Treasury Department in Washington. As soon as they are available, early in October, these circulars and other material will be mailed to each issuing and paying agent Stocks of bonds carrying the new terms and conditions are being printed, but at this time there will be no general withdrawal of stock of E bonds in the present design. However, all Series E and H bonds purchased on or after June 1, 1959, will carry the new interest rates and redemption values and all other provisions as fully as if expressly set forth in the text of the bonds themselves. In the meantime, issuing agents should continue to use existing bond stock until notified to the contrary — possibly several months from now — holding requisitions to a minimum consistent with sales. Yours very truly, Watrous H. Irons President This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) SUMMARY SHEET Improvements in Series E and H Savings Bonds, effective June 1, 1959 1. New Series E bonds with issue dates of June 1, 1959 and after — Earn 3 2 percent compounded 3 A semi-annually, if held to maturity (instead of former 3 Vi percent). The increase from 3 Vi percent to 3 3 percent is accomplished by reducing the term of the bond to 7 years, 9 months (instead of former A 8 years, 11 months). 2. New Series H bonds with issue dates of June 1, 1959 and after — Earn 3 3 percent if held to /i maturity (instead of former 3 Vi percent). The new H bond, like its predecessor, is a current-income bond, issued at par, redeemable at par (on one month’s notice after six months’ holding), and maturing at par at the end of its ten-year life. There are also improved redemption values and investment yields if the new E bonds are held for less than the 73 years to maturity. Here are some examples of the new values and yields: A When Held For: Redemption Value Per $1 00 Bond IV 2 y e a r s ____________ $78.04 3 y e a r s ______________________________ 82.64 5 y e a r s ______________________________ 89.60 Yield For Period Held 2.67% 3.26% 3.59% Yield For Period Remaining To Maturity 4.01% 4.05% 4.03% As before, interim yields on the new H bonds are approximately the same as the new E’s for equal periods of holding. Interest checks after the first three will be level providing 4 percent current income after IV 2 years of holding. 3. All outstanding E and H bonds purchased prior to June 1, 1959 — Earn at least V2 percent more than before from now to next maturity. Present bonds earning 3 l percent or 3 percent for their full current A maturity periods will earn V2 percent more. Those earning 2.9 percent will earn 6 /1 0 percent more. There will be lesser improvement in yields if redeemed earlier. The increase will be on a graduated scale, starting with next full interest period beginning June 1, 1959 or after. There is no retroactive increase in interest rates for periods prior to June 1, 1959. 4. Extension privileges on E bonds: ( A ) Unmatured bonds: 1. Issued June 1949 through April 1957 (which had not reached maturity before June 1, 1959) on which a 10-year 3 percent extension had already been promised, will now earn 3 3 percent for the A entire extension period if held the full 10 years, with lesser yields (beginning at approximately 3 Vi percent) if redeemed earlier. (T h e redemption value of any bond at the beginning of the new extension will be the base upon which interest will accrue during the 10-year extension period.) 2. Issued beginning with M ay 1957 will have a 10-year extension privilege, interest rates and other terms and conditions to be determined as they approach maturity. ( B ) Matured bonds: 1. Issued M ay 1941 through M ay 1949, which are already in their extension period and which willbegin to reach second maturity in M ay 1961, have been given a second 10-year extension. (Other terms and conditions including interest rates to be determined as they approach extended maturity.)