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FEDERAL RESERVE BANK OF DALLAS
F IS C A L A G E N T O F THE U N ITE D STATE S

Dallas, Texas, November 19, 1959

PRELIMINARY ANNOUNCEMENT
OFFERING OF PUBLIC DEBT OBLIGATIONS

To all Banking Institutions and Others Concerned
in the Eleventh Federal Reserve District:
There is quoted below a press statement issued today by the Treasury Department in regard to the
current financing:
“ The Treasury Department announced today the following offerings of Public Debt obligations:
$2,000,000,000, or thereabouts, for cash, of 320-day Treasury bills to be dated December
2, 1959, and to mature October 17, 1960.
“Series F and G savings bonds issued in 1948, and maturing in 1960 ($1,600,000,000 outstand­
ing), may be exchanged during period from November 23 to November 30, at face value, with certain
interest and other adjustments to December 15, 1959, for 4 % percent Treasury notes, dated July
20, 1959, maturing M ay 15, 1964, to be issued at 99% percent and accrued interest to December
15, 1959.
“The Treasury also made a preliminary announcement concerning a proposal to permit holders
of Series E savings bonds, and unmatured Series F and J savings bonds to exchange them, effective
January 1, 1960, and thereafter, for Series H savings bonds, subject to deferral of gain on the
exchange for Federal income tax purposes.
TREASURY BILLS

“The $2,000,000,000 of 320-day Treasury bills will be offered for cash on an auction basis to
cover the current requirements of the Treasury. This is the fourth and final step in the Treasury’s
program for the establishment of a pattern of one-year maturities on quarterly dates in January,
April, July and October, which was initiated on April 1, 1959.
“Tenders for the Treasury bills will be received at the Federal Reserve Banks and Branches
up to the closing hour at 1:30 o’clock p.m., Eastern Standard time, on Tuesday, November 24, 1959.
The bills will be dated December 2, 1959, and will mature October 17, 1960.
“All subscribers to this issue of Treasury bills are required to agree not to purchase or to sell,
or to make any agreements with respect to the purchase or sale or other disposition of the Treasury
bills for which tenders are submitted under this offering, until after the closing hour for tenders
on November 24. The bills may be paid for by credit in Treasury Tax and Loan accounts.
“Full details regarding the offering of these 320-day Treasury bills are being released at this time.
EXCHANGE OFFERING TO HOLDERS OF SERIES F AND G SAVINGS BONDS, ISSUED IN 1948 AND MATURING IN 1960.

“The Treasury also announced that it is offering to the holders of approximately $1,600,000,000
of Series F and G savings bonds issued in 1948, which mature in 1960, an opportunity to exchange
them at their face amount, with certain interest and other adjustments as of December 15, 1959, for
4 % percent Treasury notes, dated July 20, 1959, maturing M ay 15, 1964, to be issued at a price
of 99 % percent. These 4 % percent Treasury notes will constitute an additional amount to the
$4,184,000,000 of such notes now outstanding (including $2,666,000,000 held by the Federal Reserve
Banks and Treasury investment accounts), and which were issued on July 20, 1959. Interest is
payable on the notes on M ay 15 and November 15.

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

“The subscription books for exchanges of the Series F and G savings bonds maturing in 1960
will be open only during the period from November 23 to November 30, 1959, inclusive. Any
subscription addressed to a Federal Reserve Bank or Branch, or to the Treasurer of the United
States, and placed in the mail before midnight Monday, November 30, 1959, will be considered timely.
“The delivery date for the 43 percent Treasury notes will be December 15, 1959. The notes
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will be made available in registered form, as well as bearer form. Notes in registered form, however,
may not be available for immediate delivery on December 15, as special printing arrangements have
to be made for registered notes. In the interim, notes in conventional bearer form will be available
to subscribers.
“Exchange of Series F and G savings bonds maturing in 1960, will be made on the basis of
equal face amounts and will be allotted in full. Since holders of the Series F and G bonds will receive
interest on the new notes at the rate of 4 3 percent from November 15, 1959, interest adjustments
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will be made as follows:
All subscribers will be charged accrued interest on the 4 3 percent notes from
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November 15, 1959, to December 15, 1959, ($4.00 per $1,000), and will be credited
with the discount on the issue price of the notes ($2.50 per $1,000).
“The Series F and G bonds will be accepted in the exchange at amounts set forth in the
offering circular. These exchange values have been fixed to provide the holders of such bonds an
investment yield approximately 1 percent more than otherwise would accrue from December 15,
1959, until their respective maturity dates, less an amount equal to the interest which will accrue
on the 4 3 percent Treasury notes during the corresponding period. The effect of these adjustments
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will also provide for the 4 % percent Treasury notes an investment yield of approximately 4.81
percent per annum from the respective maturity dates of the Series F and G bonds to M ay 15, 1964,
the maturity date of such notes.
“The lowest denomination of the 4 % percent Treasury note is $1,000. Holders of smaller
denomination Series F and G bonds may exchange them for the next higher multiple of $1,000
upon payment of any cash difference.
“Full details of this offering to holders of Series F and G bonds appear in the official circular
being released at this time and which will be available at banking institutions on Monday, November
23. Holders may consult their local banks for further information after that time.
EXCHANGE OF SERIES E, F, AND J FOR SERIES H SAVINGS BONDS

“The Treasury further announced that regulations will be issued in December, under which
holders of outstanding Series E savings bonds, and unmatured Series F and J savings bonds, effective
on January 1, 1960, and thereafter, may exchange them at current redemption values for Series H
bonds, and have the privilege of treating the increase in redemption value (to the extent not previously
included in gross incom e) in excess of the amount paid for such Series E, and unmatured Series
F or J bonds, includable in gross income in the taxable year in which the Series H bonds are finally
redeemed or disposed of, or in the taxable year of final maturity, whichever is earlier. Exchanges
of Series E and unmatured Series F and J savings bonds under these conditions are authorized in
the law requested by the Treasury, and enacted by the Congress during its last session, approved
September 22, 1959.
“The offering circular will contain a provision with respect to this exchange, reading as follows:
Tursuant to the provisions of Section 1037(A ) of the Internal Revenue Code of 1954
as added by Public Law 86-346 (approved September 22, 1959), the Secretary o f the
Treasury hereby declares that no gain or loss shall be recognized for Federal income tax
purposes upon the exchange with the United States of the Series E, F and J savings bonds
solely for the Series H savings bonds. Gain or loss, if any, upon the obligations surrendered
in exchange will be taken into account upon the disposition or redemption of the new
obligations.’
“The effect of this proposed action by the Treasury will permit many persons who hold amounts
of Series E and unmatured Series F and J bonds on which the interest earnings are reflected in the
increase in redemption value from date of issue until maturity, or earlier redemption prior to
maturity, to exchange them for Series H current income bonds on which interest is payable each
six months by check isued to the bondowner.
“Presently, persons redeeming their Series E, F and J savings bonds to purchase Series H bonds
are required to include the increase in value (difference between cost and redemption value) in
their income tax returns in the years in which the transactions occurred, unless such increment has
been included previously in their gross income. Under the proposed exchanges effective after

January 1, 1960, payment of income taxes on the increase in value may be deferred until the Series
H bonds are finally redeemed or disposed of, or until the taxable year of final maturity, whichever
is earlier.
“Exchanges of the Series E and unmatured Series F and J bonds for Series H bonds will be
authorized without regard to the annual limitation of $10,000 of Series H bonds which may be
purchased under current regulations.
“Series H savings bonds are issued at par. They are dated the first day of the month in which
payment is received and mature ten years thereafter. Interest is payable on a graduated basis and is
equivalent to a rate of 3 % percent if the bonds are held until maturity. The bonds are issued in
denominations of $500, $1,000, $5,000 and $10,000. For each $100 of investment, interest is paid
amounting to $2.25 for the first year, $3.60 for the second year, and $4.00 for each year thereafter
until maturity. Further details governing the exchange and instructions to bondowners are now
being prepared, and will be released near the middle of December 1959, at which time additional
information may be obtained from local banking institutions.
“Series H savings bonds are issued only at Federal Reserve Banks and Branches, and at the
Treasury Department in Washington.”
Tender forms for the special issue of Treasury bills are being placed in the mails today. Subscription
forms for the exchange of Series F and G savings bonds, maturing in 1960, for 4 3 percent Treasury Notes
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of Series A-1964, maturing M ay 15, 1964, will be mailed in time to reach all banking institutions by Monday,
November 23.
Further details and instructions governing the exchange of Series E and unmatured Series F and J
bonds for savings bonds of Series H will be forwarded when they become available near the middle of
December 1959.
Yours very truly,
Watrous H. Irons
President

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